2000
<PRE>[DOCID: f:s1244is.txt]






107th CONGRESS
  1st Session
                                S. 1244

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 25, 2001

 Mr. Kennedy (for himself, Ms. Snowe, Mr. Rockefeller, Mr. Chafee, Ms. 
  Collins, Mr. Daschle, Mr. Baucus, Mr. Breaux, Mr. Torricelli, Mrs. 
  Lincoln, Mr. Graham, Mr. Bingaman, Mr. Kerry, Mrs. Clinton, and Mr. 
   Corzine) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


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

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

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

    (a) Short Title.--This Act may be cited as the ``FamilyCare Act of 
2001''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title of title; table of contents.
Sec. 2. Renaming of title XXI program.
Sec. 3. FamilyCare coverage of parents under the medicaid program and 
                            title XXI.
Sec. 4. Automatic enrollment of children born to title XXI parents.
Sec. 5. Optional coverage of legal immigrants under the medicaid 
                            program and title XXI.
Sec. 6. Optional coverage of children through age 20 under the medicaid 
                            program and title XXI.
Sec. 7. Application of simplified title XXI procedures under the 
                            medicaid program.
Sec. 8. Improving welfare-to-work transition under the medicaid 
                            program.
Sec. 9. Elimination of 100 hour rule and other AFDC-related eligibility 
                            restrictions.
Sec. 10. State grant program for market innovation.
Sec. 11. Limitations on conflicts of interest.
Sec. 12. Increase in CHIP allotment for each of fiscal years 2002 
                            through 2004.
Sec. 13. Demonstration programs to improve medicaid and CHIP outreach 
                            to homeless individuals and families.
Sec. 14. Technical and conforming amendments to authority to pay 
                            medicaid expansion costs from title XXI 
                            appropriation.
Sec. 15. Additional CHIP revisions.

SEC. 2. RENAMING OF TITLE XXI PROGRAM.

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

                   ``TITLE XXI--FAMILYCARE PROGRAM''.

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

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

    (a) Incentives To Implement FamilyCare Coverage.--
            (1) Under medicaid.--
                    (A) Establishment of new optional eligibility 
                category.--Section 1902(a)(10)(A)(ii) of the Social 
                Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is 
                amended--
                            (i) by striking ``or'' at the end of 
                        subclause (XVII);
                            (ii) by adding ``or'' at the end of 
                        subclause (XVIII); and
                            (iii) by adding at the end the following:
                                    ``(XIX) who are individuals 
                                described in subsection (k)(1) 
                                (relating to parents of categorically 
                                eligible children);''.
                    (B) Parents described.--Section 1902 of the Social 
                Security Act is further amended by inserting after 
                subsection (j) the following:
    ``(k)(1)(A) Individuals described in this paragraph are 
individuals--
            ``(i) who are the parents of an individual who is under 19 
        years of age (or such higher age as the State may have elected 
        under section 1902(l)(1)(D)) and who is eligible for medical 
        assistance under subsection (a)(10)(A);
            ``(ii) who are not otherwise eligible for medical 
        assistance under such subsection, under section 1931, or under 
        a waiver approved under section 1115 or otherwise (except under 
        subsection (a)(10)(A)(ii)(XIX)); and
            ``(iii) whose family income exceeds the income level 
        applicable under the State plan under part A of title IV as in 
        effect as of July 16, 1996, but does not exceed the highest 
        income level applicable to a child in the family under this 
        title.
    ``(B) In establishing an income eligibility level for individuals 
described in this paragraph, a State may vary such level consistent 
with the various income levels established under subsection (l)(2) 
based on the ages of children described in subsection (l)(1) in order 
to ensure, to the maximum extent possible, that such individuals shall 
be enrolled in the same program as their children.
    ``(C) An individual may not be treated as being described in this 
paragraph unless, at the time of the individual's enrollment under this 
title, the child referred to in subparagraph (A)(i) of the individual 
is also enrolled under this title.
    ``(D) In this subsection, the term `parent' includes an individual 
treated as a caregiver for purposes of carrying out section 1931.
    ``(2) In the case of a parent described in paragraph (1) who is 
also the parent of a child who is eligible for child health assistance 
under title XXI, the State may elect (on a uniform basis) to cover all 
such parents under section 2111 or under this title.''.
                    (C) Enhanced matching funds available if certain 
                conditions met.--Section 1905 of the Social Security 
                Act (42 U.S.C. 1396d) is amended--
                            (i) in the fourth sentence of subsection 
                        (b), by striking ``or subsection (u)(3)'' and 
                        inserting ``, (u)(3), or (u)(4)''; and
                            (ii) in subsection (u)--
                                    (I) by redesignating paragraph (4) 
                                as paragraph (6), and
                                    (II) by inserting after paragraph 
                                (3) the following:
    ``(4) For purposes of subsection (b) and section 2105(a)(1):
            ``(A) FamilyCare parents.--The expenditures described in 
        this subparagraph are the expenditures described in the 
        following clauses (i) and (ii):
                    ``(i) Parents.--If the conditions described in 
                clause (iii) are met, expenditures for 
medical assistance for parents described in section 1902(k)(1) and for 
parents who would be described in such section but for the fact that 
they are eligible for medical assistance under section 1931 or under a 
waiver approved under section 1115.
                    ``(ii) Certain pregnant women.--Expenditures for 
                medical assistance for pregnant women under section 
                1902(l)(1)(A) in a family the income of which exceeds 
                the income level applicable under section 1902(l)(2)(A) 
                to a family of the size involved as of January 1, 2000.
                    ``(iii) Conditions.--The conditions described in 
                this clause are the following:
2000

                            ``(I) The State has a State child health 
                        plan under title XXI which (whether implemented 
                        under such title or under this title) has an 
                        effective income level for children that is at 
                        least 200 percent of the poverty line.
                            ``(II) Such State child health plan does 
                        not limit the acceptance of applications, does 
                        not use a waiting list for children who meet 
                        eligibility standards to qualify for 
                        assistance, and provides benefits to all 
                        children in the State who apply for and meet 
                        eligibility standards.
                            ``(III) The State plans under this title 
                        and title XXI do not provide coverage for 
                        parents with higher family income without 
                        covering parents with a lower family income.
                            ``(IV) The State does not apply an income 
                        level for parents that is lower than the 
                        effective income level (expressed as a percent 
                        of the poverty line) that has been specified 
                        under the State plan under title XIX (including 
                        under a waiver authorized by the Secretary or 
                        under section 1902(r)(2)), as of January 1, 
                        2000, to be eligible for medical assistance as 
                        a parent under this title.
                    ``(iv) Definitions.--For purposes of this 
                subsection:
                            ``(I) The term `parent' has the meaning 
                        given such term for purposes of section 
                        1902(k)(1).
                            ``(II) The term `poverty line' has the 
                        meaning given such term in section 
                        2110(c)(5).''.
                    (D) Appropriation from title xxi allotment for 
                certain medicaid expansion costs.--Subparagraph (B) of 
                section 2105(a)(1) of the Social Security Act, as 
                amended by section 14(a), is amended to read as 
                follows:
                    ``(B) FamilyCare parents.--Expenditures for medical 
                assistance that is attributable to expenditures 
                described in section 1905(u)(4)(A).''.
                    (E) Only counting enhanced portion for coverage of 
                additional pregnant women.--Section 1905 of the Social 
                Security Act (42 U.S.C. 1396d) is amended--
                            (i) in the fourth sentence of subsection 
                        (b), by inserting ``(except in the case of 
                        expenditures described in subsection (u)(5))'' 
                        after ``do not exceed'';
                            (ii) in subsection (u), by inserting after 
                        paragraph (4) (as inserted by subparagraph 
                        (C)), the following:
    ``(5) For purposes of the fourth sentence of subsection (b) and 
section 2105(a), the following payments under this title do not count 
against a State's allotment under section 2104:
            ``(A) Regular fmap for expenditures for pregnant women with 
        income above january 1, 2000 income level and below 185 percent 
        of poverty.--The portion of the payments made for expenditures 
        described in paragraph (4)(A)(ii) that represents the amount 
        that would have been paid if the enhanced FMAP had not been 
        substituted for the Federal medical assistance percentage.''.
            (2) Under title xxi.--
                    (A) FamilyCare coverage.--Title XXI of the Social 
                Security Act (42 U.S.C. 1397aa et seq.) is amended by 
                adding at the end the following:

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

    ``(a) Optional Coverage.--Notwithstanding any other provision of 
this title, a State child health plan may provide for coverage, through 
an amendment to its State child health plan under section 2102, of 
FamilyCare assistance for individuals who are targeted low-income 
parents in accordance with this section, but only if--
            ``(1) the State meets the conditions described in section 
        1905(u)(4)(A)(iii); and
            ``(2) the State elects to provide medical assistance under 
        section 1902(a)(10)(A)(ii)(XIX), under section 1931, or under a 
        waiver under section 1115 to individuals described in section 
        1902(k)(1)(A)(i) and elects an applicable income level for such 
        individuals that consistent with paragraphs (1)(B) and (2) of 
        section 1902(k), ensures to the maximum extent possible, that 
        those individuals shall be enrolled in the same program as 
        their children if their children are eligible for coverage 
        under title XIX (including under a waiver authorized by the 
        Secretary or under section 1902(r)(2)).''.
    ``(b) Definitions.--For purposes of this title:
            ``(1) FamilyCare assistance.--The term `FamilyCare 
        assistance' has the meaning given the term child health 
        assistance in section 2110(a) as if any reference to targeted 
        low-income children were a reference to targeted low-income 
        parents.
            ``(2) Targeted low-income parent.--The term `targeted low-
        income parent' has the meaning given the term targeted low-
        income child in section 2110(b) as if the reference to a child 
        were deemed a reference to a parent (as defined in paragraph 
(3)) of the child; except that in applying such section--
                    ``(A) there shall be substituted for the income 
                level described in paragraph (1)(B)(ii)(I) the 
                applicable income level in effect for a targeted low-
                income child;
                    ``(B) in paragraph (3), January 1, 2000, shall be 
                substituted for July 1, 1997; and
                    ``(C) in paragraph (4), January 1, 2000, shall be 
                substituted for March 31, 1997.
            ``(3) Parent.--The term `parent' includes an individual 
        treated as a caregiver for purposes of carrying out section 
        1931.
            ``(4) Optional treatment of pregnant women as parents.--A 
        State child health plan may treat a pregnant woman who is not 
        otherwise a parent as a targeted low-income parent for purposes 
        of this section but only if the State has established an income 
        level under section 1902(l)(2)(A)(i) for pregnant women that is 
        at least 185 percent of the income official poverty line 
        described in such section.
    ``(c) References to Terms and Special Rules.--In the case of, and 
with respect to, a State providing for coverage of FamilyCare 
assistance to targeted low-income parents under subsection (a), the 
following special rules apply:
            ``(1) Any reference in this title (other than subsection 
        (b)) to a targeted low-income child is deemed to include a 
        reference to a targeted low-income parent.
            ``(2) Any such reference to child health assistance with 
        respect to such parents is deemed a reference to FamilyCare 
        assistance.
            ``(3) In applying section 2103(e)(3)(B) in the case of a 
        family provided coverage under this section, the limitation on 
        total annual aggregate cost-sharing shall be applied to the 
        entire family.
            ``(4) In applying section 2110(b)(4), any reference to 
        `section 1902(l)(2) or 1905(n)(2) (as selected by a State)' is 
        deemed a reference to the income level applicable to parents 
        under section 1931 or under a waiver approved under section 
      
2000
  1115, or, in the case of a pregnant woman described in 
        subsection (b)(4), the income level established under section 
        1902(l)(2)(A).
            ``(5) In applying section 2102(b)(3)(B), any reference to 
        children is deemed a reference to parents.''.
                    (B) Additional allotment for states providing 
                familycare.--
                            (i) In general.--Section 2104 of the Social 
                        Security Act (42 U.S.C. 1397dd) is amended by 
                        inserting after subsection (c) the following:
    ``(d) Additional Allotments for State Providing FamilyCare.--
            ``(1) Appropriation; total allotment.--For the purpose of 
        providing additional allotments to States to provide FamilyCare 
        coverage under section 2111, there is appropriated, out of any 
        money in the Treasury not otherwise appropriated--
                    ``(A) for fiscal year 2002, $2,000,000,000;
                    ``(B) for fiscal year 2003, $2,000,000,000;
                    ``(C) for fiscal year 2004, $3,000,000,000;
                    ``(D) for fiscal year 2005, $3,000,000,000;
                    ``(E) for fiscal year 2006, $6,000,000,000;
                    ``(F) for fiscal year 2007, $7,000,000,000;
                    ``(G) for fiscal year 2008, $8,000,000,000;
                    ``(H) for fiscal year 2009, $9,000,000,000;
                    ``(I) for fiscal year 2010, $10,000,000,000; and
                    ``(J) for fiscal year 2011 and each fiscal year 
                thereafter, the amount of the allotment provided under 
                this paragraph for the preceding fiscal year increased 
                by the percentage increase (if any) in the medical care 
                expenditure category of the Consumer Price Index for 
                All Urban Consumers (United States city average).
            ``(2) State and territorial allotments.--
                    ``(A) In general.--In addition to the allotments 
                provided under subsections (b) and (c), subject to 
                paragraphs (3) and (4), of the amount available for the 
                additional allotments under paragraph (1) for a fiscal 
                year, the Secretary shall allot to each State with a 
                State child health plan approved under this title--
                            ``(i) in the case of such a State other 
                        than a commonwealth or territory described in 
                        clause (ii), the same proportion as the 
                        proportion of the State's allotment under 
                        subsection (b) (determined without regard to 
                        subsection (f)) to 98.95 percent of the total 
                        amount of the allotments under such section for 
                        such States eligible for an allotment under 
                        this subparagraph for such fiscal year; and
                            ``(ii) in the case of a commonwealth or 
                        territory described in subsection (c)(3), the 
                        same proportion as the proportion of the 
                        commonwealth's or territory's allotment under 
                        subsection (c) (determined without regard to 
                        subsection (f)) to 1.05 percent of the total 
                        amount of the allotments under such section for 
                        commonwealths and territories eligible for an 
                        allotment under this subparagraph for such 
                        fiscal year.
                    ``(B) Availability and redistribution of unused 
                allotments.--In applying subsections (e) and (f) with 
                respect to additional allotments made available under 
                this subsection, the procedures established under such 
                subsections shall ensure such additional allotments are 
                only made available to States which have elected to 
                provide coverage under section 2111.
            ``(3) Use of additional allotment.--Additional allotments 
        provided under this subsection are not available for amounts 
        expended before October 1, 2001. Such amounts are available for 
        amounts expended on or after such date for child health 
        assistance for targeted low-income children, as well as for 
        FamilyCare assistance.
            ``(4) Requiring election to provide familycare coverage.--
        No payments may be made to a State under this title from an 
allotment provided under this subsection unless the State has made an 
election to provide FamilyCare assistance.''.
                            (ii) Conforming amendments.--Section 2104 
                        of the Social Security Act (42 U.S.C. 1397dd) 
                        is amended--
                                    (I) in subsection (a), by inserting 
                                ``subject to subsection (d),'' after 
                                ``under this section,'';
                                    (II) in subsection (b)(1), by 
                                inserting ``and subsection (d)'' after 
                                ``Subject to paragraph (4)''; and
                                    (III) in subsection (c)(1), by 
                                inserting ``subject to subsection 
                                (d),'' after ``for a fiscal year,''.
                    (C) No cost-sharing for pregnancy-related 
                benefits.--Section 2103(e)(2) of the Social Security 
                Act (42 U.S.C. 1397cc(e)(2)) is amended--
                            (i) in the heading, by inserting ``and 
                        pregnancy-related services'' after ``preventive 
                        services''; and
                            (ii) by inserting before the period at the 
                        end the following: ``and for pregnancy-related 
                        services''.
            (3) Effective date.--The amendments made by this subsection 
        apply to items and services furnished on or after October 1, 
        2001, whether or not regulations implementing such amendments 
        have been issued.
    (b) Rules for Implementation Beginning With Fiscal Year 2005.--
            (1) Required coverage of familycare parents.--Section 
        1902(a)(10)(A)(i) of the Social Security Act (42 U.S.C. 
        1396a(a)(10)(A)(i)) is amended--
                    (A) by striking ``or'' at the end of subclause 
                (VI);
                    (B) by striking the semicolon at the end of 
                subclause (VII) and insert ``, or''; and
                    (C) by adding at the end the following:
                                    ``(VIII) who are described in 
                                subsection (k)(1) (or would be 
                                described if subparagraph (A)(ii) of 
                                such subsection did not apply) and who 
                                are in families with incomes that do 
                                not exceed 100 percent of the poverty 
                                line applicable to a family of the size 
                                involved;''.
            (2) Expansion of availability of enhanced match under 
        medicaid for pre-chip expansions.--Paragraph (4) of section 
        1905(u) of the Social Security Act (42 U.S.C. 1396d(u)), as 
        inserted by subsection (a)(1)(C), is amended--
                    (A) by amending clause (ii) of subparagraph (A) to 
                read as follows:
                    ``(ii) Certain pregnant women.--Expenditures for 
                medical assistance for pregnant women under section 
                1902(l)(1)(A) in a family the income of which exceeds 
                the 133 percent of the income official poverty line.''; 
                and
                    (B) by adding at the end the following:
            ``(B) Children in
2000
 families with income above medicaid 
        mandatory level not previously described.--The expenditures 
        described in this subparagraph are expenditures (other than 
        expenditures described in paragraph (2) or (3)) for medical 
        assistance made available to any child who is eligible for 
        assistance under section 1902(a)(10)(A) (other than under 
        clause (i)) and the income of whose family exceeds the minimum 
        income level required under subsection 1902(l)(2) (or, if 
        higher, the minimum level required under section 1931 for that 
        State) for a child of the age involved (treating any child who 
        is 19 or 20 years of age as being 18 years of age).''.
            (3) Offset of additional expenditures for enhanced match 
        for pre-chip expansion; elimination of offset for required 
        coverage of familycare parents.--
                    (A) In general.--Section 1905(u)(5) of the Social 
                Security Act (42 U.S.C. 1396d(u)(5)), as added by 
                subsection (a)(1)(E), is amended--
                            (i) by amending subparagraph (A) to read as 
                        follows:
            ``(A) Regular fmap for expenditures for pregnant women with 
        income above 133 percent of poverty.--The portion of the 
        payments made for expenditures described in paragraph 
        (4)(A)(ii) that represents the amount that would have been paid 
        if the enhanced FMAP had not been substituted for the Federal 
        medical assistance percentage.''; and
                            (ii) by adding at the end the following:
            ``(B) FamilyCare parents under 100 percent of poverty.--
        Payments for expenditures described in paragraph (4)(A)(i) in 
        the case of parents whose income does not exceed 100 percent of 
        the income official poverty line applicable to a family of the 
        size involved.
            ``(C) Regular fmap for expenditures for certain children in 
        families with income above medicaid mandatory level.--The 
        portion of the payments made for expenditures described in 
        paragraph (4)(B) that represents the amount that would have 
        been paid if the enhanced FMAP had not been substituted for the 
        Federal medical assistance percentage.''.
                    (B) Conforming amendments.--Subparagraph (B) of 
                section 2105(a)(1) of the Social Security Act, as 
                amended by section 14(a) and subsection (a)(1)(D), is 
                amended to read as follows:
                    ``(B) Certain familycare parents and others.--
                Expenditures for medical assistance that is 
                attributable to expenditures described in section 
                1905(u)(4), except as provided in section 
                1905(u)(5).''.
            (4) Effective date.--The amendments made by this subsection 
        apply as of October 1, 2004, to fiscal years beginning on or 
        after such date and to expenditures under the State plan on and 
        after such date, whether or not regulations implementing such 
        amendments have been issued.
    (c) Making Title XXI Base Allotments Permanent.--Section 2104(a) of 
the Social Security Act (42 U.S.C. 1397dd(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (9);
            (2) by striking the period at the end of paragraph (10) and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(11) for fiscal year 2008 and each fiscal year 
        thereafter, the amount of the allotment provided under this 
        subsection for the preceding fiscal year increased by the 
        percentage increase (if any) in the medical care expenditure 
        category of the Consumer Price Index for All Urban Consumers 
        (United States city average).''.
    (d) Optional Application of Presumptive Eligibility Provisions to 
Parents.--Section 1920A of the Social Security Act (42 U.S.C. 1396r-1a) 
is amended by adding at the end the following:
    ``(e) A State may elect to apply the previous provisions of this 
section to provide for a period of presumptive eligibility for medical 
assistance for a parent (as defined for purposes of section 1902(k)(1)) 
of a child with respect to whom such a period is provided under this 
section.''.
    (e) Conforming Amendments.--
            (1) Eligibility categories.--Section 1905(a) of the Social 
        Security Act (42 U.S.C. 1396d(a)) is amended, in the matter 
        before paragraph (1)--
                    (A) by striking ``or'' at the end of clause (xii);
                    (B) by inserting ``or'' at the end of clause 
                (xiii); and
                    (C) by inserting after clause (xiii) the following:
            ``(xiv) who are parents described (or treated as if 
        described) in section 1902(k)(1),''.
            (2) Income limitations.--Section 1903(f)(4) of the Social 
        Security Act (42 U.S.C. 1396b(f)(4)) is amended--
                    (A) effective October 1, 2004, by inserting 
                ``1902(a)(10)(A)(i)(VIII),'' after 
                ``1902(a)(10)(A)(i)(VII),''; and
                    (B) by inserting ``1902(a)(10)(A)(ii)(XIX),'' after 
                ``1902(a)(10)(A)(ii)(XVIII),''.
            (3) Conforming amendment relating to no waiting period for 
        pregnant women.--Section 2102(b)(1)(B) of the Social Security 
        Act (42 U.S.C. 1397bb(b)(1)(B)) is amended--
                    (A) by striking ``, and'' at the end of clause (i) 
                and inserting a semicolon;
                    (B) by striking the period at the end of clause 
                (ii) and inserting ``; and''; and
                    (C) by adding at the end the following:
                            ``(iii) may not apply a waiting period 
                        (including a waiting period to carry out 
                        paragraph (3)(C)) in the case of a targeted 
                        low-income parent who is pregnant.''.

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

    Section 2102(b)(1) of the Social Security Act (42 U.S.C. 
1397bb(b)(1)) is amended by adding at the end the following:
                    ``(C) Automatic eligibility of children born to a 
                parent being provided familycare.--Such eligibility 
                standards shall provide for automatic coverage of a 
                child born to an individual who is provided assistance 
                under this title in the same manner as medical 
                assistance would be provided under section 1902(e)(4) 
                to a child described in such section.''.

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

    (a) Medicaid Program.--Section 1903(v) of the Social Security Act 
(42 U.S.C. 1396b(v)) is amended--
            (1) in paragraph (1), by striking ``paragraph (2)'' and 
        inserting ``paragraphs (2) and (4)''; and
            (2) by adding at the end the following:
    ``(4)(A) A State may elect (in a plan amendment under this title) 
to provide medical assistance under this title, notwithstanding 
sections 401(a), 402(b), 403, and 421 of the Personal Responsibility 
and Work Opportunity Reconciliation Act of 1996, for aliens who are 
lawfully residing in the United States (including battered aliens 
described in section 431(c) of such Act) and who are otherwise eligible 
for such assistance, within any of the following eligibility 
categories:
            ``(i) Pregnant women.--Women during pregnancy (and during 
        the 60-day period beginning on the last day of the pregnancy).
            ``(ii) Children.--Children (as defined under such plan), 
        including optional targeted low-income children described in 
        section 1905(u)(2)(B).
            ``(iii) Parents.--If the State has elected the eligibility 
        category described in clause (ii), caretaker relatives who are 
        parents (includi
2000
ng individuals treated as a caregiver for 
        purposes of carrying out section 1931) of children (described 
        in such clause or otherwise) who are eligible for medical 
        assistance under the plan.
    ``(B) In the case of a State that has elected to provide medical 
assistance to a category of aliens under subparagraph (A), no debt 
shall accrue under an affidavit of support against any sponsor of such 
an alien on the basis of provision of assistance to such category and 
the cost of such assistance shall not be considered as an unreimbursed 
cost.''.
    (b) Title XXI.--Section 2107(e)(1) of the Social Security Act (42 
U.S.C. 1397gg(e)(1)) is amended by adding at the end the following:
                    ``(E) Section 1903(v)(4) (relating to optional 
                coverage of categories of lawful resident alien 
                children and parents), but only with respect to an 
                eligibility category under this title, if the same 
eligibility category has been elected under such section for purposes 
of title XIX.''.
    (c) Effective Date.--The amendments made by this section take 
effect on October 1, 2001, and apply to medical assistance and child 
health assistance furnished on or after such date, whether or not 
regulations implementing such amendments have been issued.

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

    (a) Medicaid.--
            (1) In general.--Section 1902(l)(1)(D) of the Social 
        Security Act (42 U.S.C. 1396a(l)(1)(D)) is amended by inserting 
        ``(or, at the election of a State, 20 or 21 years of age)'' 
after ``19 years of age''.
            (2) Conforming amendments.--
                    (A) Section 1902(e)(3)(A) of the Social Security 
                Act (42 U.S.C. 1396a(e)(3)(A)) is amended by inserting 
                ``(or 1 year less than the age the State has elected 
                under subsection (l)(1)(D))'' after ``18 years of 
                age''.
                    (B) Section 1902(e)(12) of the Social Security Act 
                (42 U.S.C. 1396a(e)(12)) is amended by inserting ``or 
                such higher age as the State has elected under 
                subsection (l)(1)(D)'' after ``19 years of age''.
                    (C) Section 1920A(b)(1) of the Social Security Act 
                (42 U.S.C. 1396r-1a(b)(1)) is amended by inserting ``or 
                such higher age as the State has elected under section 
                1902(l)(1)(D)'' after ``19 years of age''.
                    (D) Section 1928(h)(1) of the Social Security Act 
                (42 U.S.C. 1396s(h)(1)) is amended by inserting ``or 1 
                year less than the age the State has elected under 
                section 1902(l)(1)(D)'' before the period at the end.
                    (E) Section 1932(a)(2)(A) of the Social Security 
                Act (42 U.S.C. 1396u-2(a)(2)(A)) is amended by 
                inserting ``(or such higher age as the State has 
                elected under section 1902(l)(1)(D))'' after ``19 years 
                of age''.
    (b) Title XXI.--Section 2110(c)(1) of the Social Security Act (42 
U.S.C. 1397jj(c)(1)) is amended by inserting ``(or such higher age as 
the State has elected under section 1902(l)(1)(D))''.
    (c) Effective Date.--The amendments made by this section take 
effect on October 1, 2001, and apply to medical assistance and child 
health assistance provided on or after such date, whether or not 
regulations implementing such amendments have been issued.

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

    (a) Application Under Medicaid.--
            (1) In general.--Section 1902(l) of the Social Security Act 
        (42 U.S.C. 1396a(l)) is amended--
                    (A) in paragraph (3), by inserting ``subject to 
                paragraph (5)'', after ``Notwithstanding subsection 
                (a)(17),''; and
                    (B) by adding at the end the following:
    ``(5) With respect to determining the eligibility of individuals 
under 19 years of age (or such higher age as the State has elected 
under paragraph (1)(D)) for medical assistance under subsection 
(a)(10)(A) and, separately, with respect to determining the eligibility 
of individuals for medical assistance under subsection 
(a)(10)(A)(i)(VIII) or (a)(10)(A)(ii)(XIX), notwithstanding any other 
provision of this title, if the State has established a State child 
health plan under title XXI--
            ``(A) the State may not apply a resource standard;
            ``(B) the State shall use the same simplified eligibility 
        form (including, if applicable, permitting application other 
        than in person) as the State uses under such State child health 
        plan with respect to such individuals;
            ``(C) the State shall provide for initial eligibility 
        determinations and redeterminations of eligibility using 
        verification policies, forms, and frequency that are no less 
        restrictive than the policies, forms, and frequency the State 
        uses for such purposes under such State child health plan with 
        respect to such individuals; and
            ``(D) the State shall not require a face-to-face interview 
        for purposes of initial eligibility determinations and 
        redeterminations unless the State requires such an interview 
        for such purposes under such child health plan with respect to 
        such individuals.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        apply to determinations of eligibility made on or after the 
        date that is 1 year after the date of the enactment of this 
        Act, whether or not regulations implementing such amendments 
        have been issued.
    (b) Presumptive Eligibility.--
            (1) In general.--Section 1920A(b)(3)(A)(i) of the Social 
        Security Act (42 U.S.C. 1396r-1a(b)(3)(A)(i)) is amended by 
        inserting ``a child care resource and referral agency,'' after 
        ``a State or tribal child support enforcement agency,''.
            (2) Application to presumptive eligibility for pregnant 
        women under medicaid.--Section 1920(b) of the Social Security 
        Act (42 U.S.C. 1396r-1(b)) is amended by adding at the end 
        after and below paragraph (2) the following flush sentence:
``The term `qualified provider' includes a qualified entity as defined 
in section 1920A(b)(3).''.
            (3) Application under title xxi.--
                    (A) In general.--Section 2107(e)(1)(D) of the 
                Social Security Act (42 U.S.C. 1397gg(e)(1)) is amended 
                to read as follows:
                    ``(D) Sections 1920 and 1920A (relating to 
                presumptive eligibility).''.
                    (B) Conforming elimination of resource test.--
                Section 2102(b)(1)(A) of such Act (42 U.S.C. 
                1397bb(b)(1)(A)) is amended--
                            (i) by striking `` and resources (including 
                        any standards relating to spenddowns and 
                        disposition of resources)''; and
                            (ii) by adding at the end the following: 
                        ``Effective 1 year after the date of the 
enactment of the FamilyCare Act of 2001, such standards may not include 
the application of a resource standard or test.''.
    (c) Automatic Reassessment of Eligibility for Title XXI and 
Medicaid Benefits for Children Losing Medicaid or Title XXI 
Eligibility.--
            (1) Loss of medicaid eligibility.--Section 1902(a) of the 
        Social Security Act (42 U.S.C. 1396a(a)) is amended--
                    (A) by striking the period at the end of paragraph 
                (65) and inserting ``; and'', and
                    (B) by inserting after paragraph (65) the 
                following:
            ``(66) provide, in the case of a State with a State child 
        health plan under title XXI, that be
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fore medical assistance to 
        a child (or a parent of a child) is discontinued under this 
        title, a determination of whether the child (or parent) is 
        eligible for benefits under title XXI shall be made and, if 
        determined to be so eligible, the child (or parent) shall be 
        automatically enrolled in the program under such title without 
        the need for a new application.''.
            (2) Loss of title xxi eligibility and coordination with 
        medicaid.--Section 2102(b) (42 U.S.C. 1397bb(b)) is amended--
                    (A) in paragraph (3), by redesignating 
                subparagraphs (D) and (E) as subparagraphs (E) and (F), 
                respectively, and by inserting after subparagraph (C) 
                the following:
                    ``(D) that before health assistance to a child (or 
                a parent of a child) is discontinued under this title, 
                a determination of whether the child (or parent) is 
                eligible for benefits under title XIX is made and, if 
                determined to be so eligible, the child (or parent) is 
                automatically enrolled in the program under such title 
                without the need for a new application;'';
                    (B) by redesignating paragraph (4) as paragraph 
                (5); and
                    (C) by inserting after paragraph (3) the following 
                new paragraph:
            ``(4) Coordination with medicaid.--The State shall 
        coordinate the screening and enrollment of individuals under 
        this title and under title XIX consistent with the following:
                    ``(A) Information that is collected under this 
                title or under title XIX which is needed to make an 
                eligibility determination under the other title shall 
                be transmitted to the appropriate administering entity 
                under such other title in a timely manner so that 
                coverage is not delayed and families do not have to 
                submit the same information twice. Families shall be 
                provided the information they need to complete the 
                application process for coverage under both titles and 
                be given appropriate notice of any determinations made 
                on their applications for such coverage.
                    ``(B) If a State does not use a joint application 
                under this title and such title, the State shall--
                            ``(i) promptly inform a child's parent or 
                        caretaker in writing and, if appropriate, 
                        orally, that a child has been found likely to 
                        be eligible under title XIX;
                            ``(ii) provide the family with an 
                        application for medical assistance under such 
                        title and offer information about what (if any) 
                        further information, documentation, or other 
                        steps are needed to complete such application 
                        process;
                            ``(iii) offer assistance in completing such 
                        application process; and
                            ``(iv) promptly transmit the separate 
                        application under this title or the information 
                        obtained through such application, and all 
                        other relevant information and documentation, 
                        including the results of the screening process, 
                        to the State agency under title XIX for a final 
                        determination on eligibility under such title.
                    ``(C) Applicants are notified in writing of--
                            ``(i) benefits (including restrictions on 
                        cost-sharing) under title XIX; and
                            ``(ii) eligibility rules that prohibit 
                        children who have been screened eligible for 
                        medical assistance under such title from being 
                        enrolled under this title, other than 
                        provisional temporary enrollment while a final 
                        eligibility determination is being made under 
                        such title.
                    ``(D) If the agency administering this title is 
                different from the agency administering a State plan 
                under title XIX, such agencies shall coordinate the 
                screening and enrollment of applicants for such 
                coverage under both titles.
                    ``(E) The coordination procedures established 
                between the program under this title and under title 
                XIX shall apply not only to the initial eligibility 
                determination of a family but also to any renewals or 
                redeterminations of such eligibility.''.
            (3) Effective date.--The amendments made by paragraphs (1) 
        and (2) apply to individuals who lose eligibility under the 
        medicaid program under title XIX, or under a State child health 
        insurance plan under title XXI, respectively, of the Social 
        Security Act on or after October 1, 2001 (or, if later, 60 days 
        after the date of the enactment of this Act), whether or not 
        regulations implementing such amendments have been issued.
    (d) Provision of Medicaid and CHIP Applications and Information 
Under the School Lunch Program.--Section 9(b)(2)(B) of the Richard B. 
Russell National School Lunch Act (42 U.S.C. 1758(b)(2)(B)) is 
amended--
            (1) by striking ``(B) Applications'' and inserting ``(B)(i) 
        Applications''; and
            (2) by adding at the end the following:
    ``(ii)(I) Applications for free and reduced price lunches that are 
distributed pursuant to clause (i) to parents or guardians of children 
in attendance at schools participating in the school lunch program 
under this Act shall also contain information on the availability of 
medical assistance under title XIX of the Social Security Act (42 
U.S.C. 1396 et seq.) and of child health and FamilyCare assistance 
under title XXI of such Act, including information on how to obtain an 
application for assistance under such programs.
    ``(II) Information on the programs referred to in subclause (I) 
shall be provided on a form separate from the application form for free 
and reduced price lunches under clause (i).''.
    (e) 12-Months Continuous Eligibility.--
            (1) Medicaid.--Section 1902(e)(12) of the Social Security 
        Act (42 U.S.C. 1396a(e)(12)) is amended--
                    (A) by striking ``At the option of the State, the 
                plan may'' and inserting ``The plan shall'';
                    (B) by striking ``an age specified by the State 
                (not to exceed 19 years of age)'' and inserting ``19 
                years of age (or such higher age as the State has 
                elected under subsection (l)(1)(D)) or, at the option 
                of the State, who is eligible for medical assistance as 
                the parent of such a child''; and
                    (C) in subparagraph (A), by striking ``a period 
                (not to exceed 12 months) '' and inserting ``the 12-
                month period beginning on the date''.
            (2) Title xxi.--Section 2102(b)(2) of such Act (42 U.S.C. 
        1397bb(b)(2)) is amended by adding at the end the following: 
        ``Such methods shall provide 12-months continuous eligibility 
        for children under this title in the same manner that section 
        1902(e)(12) provides 12-months continuous eligibility for 
        children described in such section under title XIX. If a State 
        has elected to apply section 1902(e)(12) to parents, such 
        methods may provide 12-months continuous eligibility for 
        parents under this t
2000
itle in the same manner that such section 
        provides 12-months continuous eligibility for parents described 
        in such section under title XIX.''.
            (3) Effective date.--
                    (A) In general.--The amendments made by this 
                subsection shall take effect on October 1, 2001 (or, if 
                later, 60 days after the date of the enactment of this 
                Act), whether or not regulations implementing such 
                amendments have been issued.

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

    (a) Making Provision Permanent.--
            (1) In general.--Subsection (f) of section 1925 of the 
        Social Security Act (42 U.S.C. 1396r-6) is repealed.
            (2) Conforming amendment.--Section 1902(e)(1) of the Social 
        Security Act (42 U.S.C. 1396a(e)(1)) is repealed.
    (b) State Option of Initial 12-Month Eligibility.--Section 1925 of 
the Social Security Act (42 U.S.C. 1396r-6) is amended--
            (1) in subsection (a), by adding at the end the following:
            ``(5) Option of 12-month initial eligibility period.--A 
        State may elect to treat any reference in this subsection to a 
        6-month period (or 6 months) as a reference to a 12-month 
        period (or 12 months). In the case of such an election, 
        subsection (b) shall not apply.''; and
            (2) in subsection (b)(1), by inserting ``and subsection 
        (a)(5)'' after ``paragraph (3)''.
    (c) Simplification.--
            (1) Removal of administrative reporting requirements for 
        additional 6-month extension.--Section 1925(b)(2) of the Social 
        Security Act (42 U.S.C. 1396r-6(b)(2)) is amended--
                    (A) by striking subparagraph (B);
                    (B) in subparagraph (A)(i)--
                            (i) in the heading, by striking ``and 
                        requirements'';
                            (ii) by striking ``(I)'' and all that 
                        follows through ``(II)'' and inserting ``(i)'';
                            (iii) by striking ``, and (III)'' and 
                        inserting ``and (ii)'';
                            (iv) by redesignating such subparagraph as 
                        subparagraph (A) (with appropriate 
                        indentation); and
                    (C) in subparagraph (A)(ii)--
                            (i) in the heading, by striking ``reporting 
                        requirements and'';
                            (ii) by striking ``notify the family of the 
                        reporting requirement under subparagraph 
                        (B)(ii) and'' and inserting ``provide the 
                        family with notification of''; and
                            (iii) by redesignating such subparagraph as 
                        subparagraph (B) (with appropriate 
                        indentation).
            (2) Removal of requirement for previous receipt of medical 
        assistance.--Section 1925(a)(1) of the Social Security Act (42 
        U.S.C. 1396r-6(a)(1)) is amended--
                    (A) by inserting ``but subject to subparagraph 
                (B)'' after ``any other provision of this title'';
                    (B) by redesignating the matter after 
                ``Requirement.--'' as a subparagraph (A) with the 
                heading ``In general.--'' and with the same indentation 
                as subparagraph (B) (as added by subparagraph (C)); and
                    (C) by adding at the end the following:
                    ``(B) State option to waive requirement for 3 
                months previous receipt of medical assistance.--A State 
                may, at its option, elect also to apply subparagraph 
                (A) in the case of a family that had applied for and 
                was eligible for such aid for fewer than 3 months 
                during the 6 immediately preceding months described in 
                such subparagraph.''.
            (3) Permitting increase or waiver of 185 percent of poverty 
        earning limit.--Section 1925(b)(3)(A)(iii)(III) of the Social 
        Security Act (42 U.S.C. 1396r-6(b)(3)(A)(iii)(III)) is 
        amended--
                    (A) by inserting ``(at its option)'' after ``the 
                State''; and
                    (B) by inserting ``(or such higher percent as the 
                State may specify)'' after ``185 percent''.
            (4) Exemption for states covering needy families up to 185 
        percent of poverty.--Section 1925 of the Social Security Act 
        (42 U.S.C. 1396r-6), as amended by subsection (a), is amended--
                    (A) in each of subsections (a)(1) and (b)(1), by 
                inserting ``but subject to subsection (f),'' after 
                ``Notwithstanding any other provision of this title,''; 
                and
                    (B) by adding at the end the following:
    ``(f) Exemption for State Covering Needy Families up to 185 Percent 
of Poverty.--
            ``(1) In general.--At State option, the provisions of this 
        section shall not apply to a State that uses the authority 
        under section 1902(a)(10)(A)(ii)(XIX), section 1931(b)(2)(C), 
        or otherwise to make medical assistance available under the 
        State plan under this title to eligible individuals described 
        in section 1902(k)(1), or all individuals described in section 
        1931(b)(1), and who are in families with gross incomes 
        (determined without regard to work-related child care expenses 
        of such individuals) at or below 185 percent of the income 
        official poverty line (as defined by the Office of Management 
        and Budget, and revised annually in accordance with section 
        673(2) of the Omnibus Budget Reconciliation Act of 1981) 
        applicable to a family of the size involved.
            ``(2) Application to other provisions of this title.--The 
        State plan of a State described in paragraph (1) shall be 
        deemed to meet the requirements of section 
        1902(a)(10)(A)(i)(I).''.
    (d) Effective Date.--The amendments made by this section take 
effect on October 1, 2001, whether or not regulations implementing such 
amendments have been issued.

SEC. 9. ELIMINATION OF 100 HOUR RULE AND OTHER AFDC-RELATED ELIGIBILITY 
              RESTRICTIONS.

    (a) In General.--Section 1931(b)(1)(A)(ii) of the Social Security 
Act (42 U.S.C. 1396u-1(b)(1)(A)(ii)) is amended by inserting ``other 
than the requirement that the child be deprived of parental support or 
care by reason of the death, continued absence from the home, 
incapacity, or unemployment of a parent,'' after ``section 407(a),''.
    (b) Conforming Amendment.--Section 1905(a) of the Social Security 
Act (42 U.S.C. 1396d(a)) is amended, in the matter before paragraph 
(1), in clause (ii), by striking ``if such child is (or would, if 
needy, be) a dependent child under part A of title IV''.
    (c) Effective Date.--The amendments made by this section apply to 
eligibility determinations made on or after October 1, 2001, whether or 
not regulations implementing such amendments have been issued.

SEC. 10. STATE GRANT PROGRAM FOR MARKET INNOVATION.

    (a) In General.--The Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall establish a 
program (in this section referred to as the ``program'') to award 
demonstration grants under this section to States to allow States to 
demonstrate the effectiveness of innovative ways to increase access to 
health insurance through market reforms and other innovative means. 
Such innovative means may include any of the following:
            (1) Alternative group purchasing or pooling arrangements, 
        such as purchasing cooperatives for small businesses, 
        reinsurance pools, or high risk pools.
            (2) Individual or small group market reforms.
            (3) Consumer education and outreach.
            (4) Su
2000
bsidies to individuals, employers, or both, in 
        obtaining health insurance.
    (b) Scope; Duration.--The program shall be limited to not more than 
10 States and to a total period of 5 years, beginning on the date the 
first demonstration grant is made.
    (c) Conditions for Demonstration Grants.--
            (1) In general.--The Secretary may not provide for a 
        demonstration grant to a State under the program unless the 
        Secretary finds that under the proposed demonstration grant--
                    (A) the State will provide for demonstrated 
                increase of access for some portion of the existing 
                uninsured population through a market innovation (other 
                than merely through a financial expansion of a program 
                initiated before the date of the enactment of this 
                Act);
                    (B) the State will comply with applicable Federal 
                laws;
                    (C) the State will not discriminate among 
                participants on the basis of any health status-related 
                factor (as defined in section 2791(d)(9) of the Public 
                Health Service Act (42 U.S.C. 300gg-91(d)(9)), except 
                to the extent a State wishes to focus on populations 
                that otherwise would not obtain health insurance 
                because of such factors; and
                    (D) the State will provide for such evaluation, in 
                coordination with the evaluation required under 
                subsection (d), as the Secretary may specify.
            (2) Application.--The Secretary shall not provide a 
        demonstration grant under the program to a State unless--
                    (A) the State submits to the Secretary such an 
                application, in such a form and manner, as the 
                Secretary specifies;
                    (B) the application includes information regarding 
                how the demonstration grant will address issues such as 
                governance, targeted population, expected cost, and the 
                continuation after the completion of the demonstration 
                grant period; and
                    (C) the Secretary determines that the demonstration 
                grant will be used consistent with this section.
            (3) Focus.--A demonstration grant proposal under this 
        section need not cover all uninsured individuals in a State or 
        all health care benefits with respect to such individuals.
    (d) Evaluation.--The Secretary shall enter into a contract with an 
appropriate entity outside the Department of Health and Human Services 
to conduct an overall evaluation of the program at the end of the 
program period. Such evaluation shall include an analysis of 
improvements in access, costs, quality of care, or choice of coverage, 
under different demonstration grants.
    (e) Option To Provide for Initial Planning Grants.--Notwithstanding 
the previous provisions of this section, under the program the 
Secretary may provide for a portion of the amounts appropriated under 
subsection (f) (not to exceed $5,000,000) to be made available to any 
State for initial planning grants to permit States to develop 
demonstration grant proposals under the previous provisions of this 
section.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated $100,000,000 for each fiscal year to carry out this 
section. Amounts appropriated under this subsection shall remain 
available until expended.
    (g) State Defined.--In this section, the term ``State'' has the 
meaning given such term for purposes of title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.).

SEC. 11. LIMITATIONS ON CONFLICTS OF INTEREST.

    (a) Limitation on Conflicts of Interest in Marketing Activities.--
            (1) Title xxi.--Section 2105(c) of the Social Security Act 
        (42 U.S.C. 300aa-5(c)) is amended by adding at the end the 
        following:
            ``(8) Limitation on expenditures for marketing 
        activities.--Amounts expended by a State for the use of an 
        administrative vendor in marketing health benefits coverage to 
        low-income children under this title shall not be considered, 
        for purposes of subsection (a)(2)(D), to be reasonable costs to 
        administer the plan unless the following conditions are met 
        with respect to the vendor:
                    ``(A) The vendor is independent of any entity 
                offering the coverage in the same area of  the State in 
which the vendor is conducting marketing activities.
                    ``(B) No person who is an owner, employee, 
                consultant, or has a contract with the vendor either 
                has any direct or indirect financial interest with such 
                an entity or has been excluded from participation in 
                the program under this title or title XVIII or XIX or 
                debarred by any Federal agency, or subject to a civil 
                money penalty under this Act.''.
    (b) Prohibition of Affiliation With Debarred Individuals.--
            (1) Medicaid.--Section 1903(i) of the Social Security Act 
        (42 U.S.C. 1396b(i))is amended--
                    (A) by striking the period at the end of paragraph 
                (20) and inserting ``; or''; and
                    (B) by inserting after paragraph (20) the 
                following:
            ``(21) with respect to any amounts expended for an entity 
        that receives payments under the plan unless--
                    ``(A) no person with an ownership or control 
                interest (as defined in section 1124(a)(3)) in the 
                entity is a person that is debarred, suspended, or 
                otherwise excluded from participating in procurement or 
                non-procurement activities under the Federal 
                Acquisition Regulation; and
                    ``(B) such entity has not entered into an 
                employment, consulting, or other agreement for the 
                provision of items or services that are material to 
                such entity's obligations under the plan with a person 
                described in subparagraph (A).''.
            (2) Title xxi.--Section 2107(e)(1) of the Social Security 
        Act (42 U.S.C. 1397gg(e)(1)), as amended by sections 5(b) and 
        7(b)(3), is further amended--
                    (A) in subparagraph (B), by striking ``and (17)'' 
                and inserting ``(17), and (21)''; and
                    (B) by adding at the end the following:
                    ``(F) Section 1902(a)(67) (relating to prohibition 
                of affiliation with debarred individuals).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures made on or after October 1, 2001, whether or not 
regulations implementing such amendments have been issued.

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

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

SEC. 13. DEMONSTRATION PROGRAMS TO IMPROVE MEDICAID AND CHIP OUTREACH 
              TO HOMELESS INDIVIDUALS AND FAMILIES.

    (a) Authority.--The Secretary of Health and Human Services may 
award demonstration grants to not more than 7 States (or other 
qualified entities) to conduct innovative programs that are designed to 
improve outreach to homeless individuals and families under the 
programs described in subsection (b) with respect to enrollment of such 
individuals and families under such programs and the provision of 
services (and coordinating the provision of such services) under such 
programs.
    (b) Programs for Homeless Described.--The programs described in 
this subsection are as follows:
            (1) Medicaid.--The program under title XIX of the Soc
2000
ial 
        Security Act (42 U.S.C. 1396 et seq.).
            (2) CHIP.--The program under title XXI of the Social 
        Security Act (42 U.S.C. 1397aa et seq.).
            (3) TANF.--The program under part of A of title IV of the 
        Social Security Act (42 U.S.C. 601 et seq.).
            (4) SAMHSA block grants.--The program of grants under part 
        B of title XIX of the Public Health Service Act (42 U.S.C. 
        300x-1 et seq.).
            (5) Food stamp program.--The program under the Food Stamp 
        Act of 1977 (7 U.S.C. 2011 et seq.).
            (6) Workforce investment act.--The program under the 
        Workforce Investment Act of 1999 (29 U.S.C. 2801 et seq.).
            (7) Welfare-to-work.--The welfare-to-work program under 
        section 403(a)(5) of the Social Security Act (42 U.S.C. 
        603(a)(5)).
            (8) Other programs.--Other public and private benefit 
        programs that serve low-income individuals.
    (c) Appropriations.--For the purposes of carrying out this section, 
there is appropriated for fiscal year 2002, out of any funds in the 
Treasury not otherwise appropriated, $10,000,000, to remain available 
until expended.

SEC. 14. TECHNICAL AND CONFORMING AMENDMENTS TO AUTHORITY TO PAY 
              MEDICAID EXPANSION COSTS FROM TITLE XXI APPROPRIATION.

    (a) Authority To Pay Medicaid Expansion Costs From Title XXI 
Appropriation.--Section 2105(a) of the Social Security Act (42 U.S.C. 
1397ee(a)) is amended to read as follows:
    ``(a) Allowable Expenditures.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this section, the Secretary shall pay to each State with a plan 
        approved under this title, from its allotment under section 
        2104, an amount for each quarter equal to the enhanced FMAP of 
        the following expenditures in the quarter:
                    ``(A) Child health assistance under medicaid.--
                Expenditures for child health assistance under the plan 
                for targeted low-income children in the form of 
                providing medical assistance for expenditures described 
                in the fourth sentence of section 1905(b).
                    ``(B) Reserved.--[reserved].
                    ``(C) Child health assistance under this title.--
                Expenditures for child health assistance under the plan 
                for targeted low-income children in the form of 
                providing health benefits coverage that meets the 
                requirements of section 2103.
                    ``(D) Assistance and administrative expenditures 
                subject to limit.--Expenditures only to the extent 
                permitted consistent with subsection (c)--
                            ``(i) for other child health assistance for 
                        targeted low-income children;
                            ``(ii) for expenditures for health services 
                        initiatives under the plan for improving the 
                        health of children (including targeted low-
                        income children and other low-income children);
                            ``(iii) for expenditures for outreach 
                        activities as provided in section 2102(c)(1) 
                        under the plan; and
                            ``(iv) for other reasonable costs incurred 
                        by the State to administer the plan.
            ``(2) Order of payments.--Payments under a subparagraph of 
        paragraph (1) from a State's allotment for expenditures 
        described in each such subparagraph shall be made on a 
        quarterly basis in the order of such subparagraph in such 
        paragraph.
            ``(3) No duplicative payment.--In the case of expenditures 
        for which payment is made under paragraph (1), no payment shall 
        be made under title XIX.''.
    (b) Conforming Amendments.--
            (1) Section 1905(u).--Section 1905(u)(1)(B) of the Social 
        Security Act (42 U.S.C. 1396d(u)(1)(B)) is amended by inserting 
        ``and section 2105(a)(1)'' after ``subsection (b)''.
            (2) Section 2105(c).--Section 2105(c)(2)(A) of the Social 
        Security Act (42 U.S.C. 1397ee(c)(2)(A)) is amended by striking 
        ``subparagraphs (A), (C), and (D) of''.
    (c) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of the Balanced Budget Act of 
1997 (Public Law 105-33; 111 Stat. 251), whether or not regulations 
implementing such amendments have been issued.

SEC. 15. ADDITIONAL CHIP REVISIONS.

    (a) Limiting Cost-Sharing to 2.5 Percent for Families With Income 
Below 150 Percent of Poverty.--Section 2103(e)(3)(A) of the Social 
Security Act (42 U.S.C. 1397cc(e)(3)(A)) is amended--
            (1) by striking ``and'' at the end of clause (i);
            (2) by striking the period at the end of clause (ii) and 
        inserting ``; and''; and
            (3) by adding at the end the following new clause:
                            ``(iii) total annual aggregate cost-sharing 
                        described in clauses (i) and (ii) with respect 
                        to all such targeted low-income children in a 
                        family under this title that exceeds 2.5 
                        percent of such family's income for the year 
                        involved.''.
    (b) Reporting of Enrollment Data.--
            (1) Quarterly reports.--Section 2107(b)(1) of such Act (42 
        U.S.C. 1397gg(b)(1)) is amended by adding at the end the 
        following: ``In quarterly reports on enrollment required under 
        this paragraph, a State shall include information on the age, 
        gender, race, ethnicity, service delivery system, and family 
income of individuals enrolled.''.
            (2) Annual reports.--Section 2108(b)(1)(B)(i) of such Act 
        (42 U.S.C. 1397hh(b)(1)(B)(i)) is amended by inserting 
        ``primary language of enrollees,'' after ``family income,''.
    (c) Employer Coverage Waiver Changes.--Section 2105(c)(3) of such 
Act (42 U.S.C. 1397ee(c)(3)) is amended--
            (1) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii) and indenting appropriately;
            (2) by designating the matter beginning with ``Payment may 
        be made'' as a subparagraph (A) with the heading ``In general'' 
        and indenting appropriately; and
            (3) by adding at the end the following new subparagraphs:
                    ``(B) Application of requirements.--In carrying out 
                subparagraph (A)--
                            ``(i) the Secretary shall not require a 
                        minimum employer contribution level that is 
                        separate from the requirement of cost-
                        effectiveness under subparagraph (A)(i), but a 
                        State shall identify a reasonable minimum 
                        employer contribution level that is based on 
                        data demonstrating that such a level is 
                        representative to the employer-sponsored 
                        insurance market in the State and shall monitor 
                        employer contribution levels over time to 
                        determine whether substitution is occurring and 
                        report the findings in annual reports under 
                        section 2108(a);
                            ``(ii) the State shall establish a waiting 
                        period of at least 6 months without group 
                        health coverage, but may establish reasonable 
                        exceptions to such period and shall not apply 
                        such a waiting period to a child who is 
                        provided coverage under a group health plan 
                        under section 1906;
                            ``(iii) subject to clause (iv), the State 
                        shall provide s
124e
atisfactory assurances that the 
                        minimum benefits and cost-sharing protections 
                        established under this title are provided, 
                        either through the coverage under subparagraph 
                        (A) or as a supplement to such coverage; and
                            ``(iv) coverage under such subparagraph 
                        shall not be considered to violate clause (iii) 
                        because it does not comply with requirements 
                        relating to reviews of health service decisions 
                        if the enrollee involved is provided the option 
                        of being provided benefits directly under this 
                        title.
                    ``(C) Access to external review process.--In 
                carrying out subparagraph (A), if a State provides 
                coverage under a group health plan that does not meet 
                the following external review requirements, the State 
                must give applicants and enrollees (at initial 
                enrollment and at each redetermination of eligibility) 
                the option to obtain health benefits coverage other 
                than through that group health plan:
                            ``(i) The enrollee has an opportunity for 
                        external review of a--
                                    ``(I) delay, denial, reduction, 
                                suspension, or termination of health 
                                services, in whole or in part, 
                                including a determination about the 
                                type or level of services; and
                                    ``(II) failure to approve, furnish, 
                                or provide payment for health services 
                                in a timely manner.
                            ``(ii) The external review is conducted by 
                        the State or a impartial contractor other than 
                        the contractor responsible for the matter 
                        subject to external review.
                            ``(iii) The external review decision is 
                        made on a timely basis in accordance with the 
                        medical needs of the patient. If the medical 
                        needs of the patient do not dictate a shorter 
                        time frame, the review must be completed--
                                    ``(I) within 90 calendar days of 
                                the date of the request for internal or 
                                external review; or
                                    ``(II) within 72 hours if the 
                                enrollee's physician or plan determines 
                                that the deadline under subclause (I) 
                                could seriously jeopardize the 
                                enrollee's life or health or ability to 
                                attain, maintain, or regain maximum 
                                function (except that a State may 
                                extend the 72-hour deadline by up to 14 
                                days if the enrollee requests an 
                                extension).
                            ``(iv) The external review decision shall 
                        be in writing.
                            ``(v) Applicants and enrollees have an 
                        opportunity--
                                    ``(I) to represent themselves or 
                                have representatives of their choosing 
                                in the review process;
                                    ``(II) timely review their files 
                                and other applicable information 
                                relevant to the review of the decision; 
                                and
                                    ``(III) fully participate in the 
                                review process, whether the review is 
                                conducted in person or in writing, 
                                including by presenting supplemental 
                                information during the review 
                                process.''.
    (d) Effective Date.--The amendments made by this section apply as 
of October 1, 2001, whether or not regulations implementing such 
amendments have been issued.
                                 &lt;all&gt;

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