42 U.S.C. § 1396u–8 — Health opportunity accounts

(a) Authority. (1) The Secretary must establish a demonstration program under which States may amend their plans, including plans operating under a statewide section 1315 waiver, to provide alternative benefits consistent with (c) to eligible groups in geographic areas the State specifies. This amendment is a “State demonstration program”; this section does not otherwise define that quoted term. (2)(A) The program begins January 1, 2007. During its first five years the Secretary may approve no more than 10 States, each covering one or more specified geographic areas. After that period, a prior State program may be extended or made permanent unless the Secretary finds, considering cost-effectiveness, quality of care, and other specified criteria, that it failed. Other States may implement programs unless the Secretary finds all earlier programs failed using those considerations. (B)(i) Within three months after that five-year period, the Comptroller General must report to Congress evaluating the programs during the period. (ii) Treasury funds not otherwise appropriated include $550,000 for fiscal years 2007–2010 for that report. (3) The Secretary may approve a program only if it includes (A) awareness of high medical costs, (B) incentives for preventive care, (C) reduced inappropriate use, (D) patient responsibility for health outcomes, (E) enrollment counselors and continuing education, (F) electronic, cashless account transactions, and (G) access to negotiated provider rates consistent with this section. The section does not prevent incentives for appropriate preventive care as defined for section 223(c)(2)(C) of the 1986 Internal Revenue Code, such as extra contributions for demonstrated healthy prevention. (4) Nothing here or elsewhere requires statewide implementation. (b) Eligible groups. (1) A program must specify groups consistently with (2) and (3). (2) During the first five years it cannot cover anyone who (A) is 65 or older, (B) is disabled whether or not disability establishes eligibility, (C) qualifies only because the person is or was pregnant within the prior 60 days, or (D) has been eligible for less than three continuous months. (3) It also cannot cover anyone in a category listed in section 1396u–7(a)(2)(B). (4)(A) A State may further restrict eligibility. (B) If people enrolled in Medicaid managed-care organizations are eligible, the State must assure the Secretary that, for each organization, (i) participants are no more than 5 percent of all enrollees, (ii) their proportion is not significantly disproportionate to that in other organizations, and (iii) per-person payments are appropriately adjusted for likely differences in service use between participants and nonparticipants. (5) Enrollment must be voluntary. Except for Secretary-specified hardship cases, it lasts 12 months and may be extended for additional 12-month periods with the person’s consent. (6) Anyone disenrolled for any reason cannot reenroll until one year after the effective disenrollment date. (c) Alternative benefits. (1) They must include at least (A) yearly medical-expense coverage for items and services otherwise covered under this subchapter after the deductible in (2) is met, and (B) a contribution to a health opportunity account. Preventive care described in (a)(3) may be covered without meeting the deductible. (2) The yearly deductible must be at least 100 percent and no more than 110 percent of the annualized State contribution required by (d)(2)(A)(i), ignoring the limitation in (d)(2)(C)(i)(II). (3)(A) For a fee-for-service participant, the State must allow services from any participating provider at the rate that would apply without the deductible, or from another provider at no more than 125 percent of that rate. (B) For a participant enrolled in managed care, the State must arrange with the organization to allow services from a provider described in (A)(ii) at no more than that rate. (C) These rates ignore cost-sharing otherwise applicable under sections 1396o and 1396o–1. (D)(i) “Demonstration program Medicaid services” means services that would receive Medicaid assistance but for the deductible. (ii) “Participating provider” means, for (A), a provider with a State participation agreement for State-plan beneficiaries, and, for (B), a provider arranged to serve the organization’s enrollees under this subchapter. This section does not define these quoted terms beyond these statements. (4) Except for (1) and (2), alternative benefits are the benefits otherwise provided, including their cost-sharing. (5) Subchapter cost-sharing rules, including sections 1396o and 1396o–1, do not apply to benefits subject to the deductible, and section 1396a(a)(10)(B)’s comparability rule does not apply to alternative benefits. (6) Subject to (d)(2)(D) and (E), alternative-benefit payments, including account contributions, count as medical assistance for section 1396b(a). (7)(A) A State may vary the deductible and maximum out-of-pocket cost-sharing by family income only if the variation does not favor higher-income families. (B) Maximum out-of-pocket cost-sharing is the annual deductible applied to the person or family minus the account balance. (8) Nothing prevents an employer from providing the coverage in (c)(1)(A) to these people. (d) Health opportunity accounts. (1) A health opportunity account is an account meeting this subsection’s requirements. (2)(A) Only State contributions under this subchapter and contributions by other permitted people or entities, such as charities, under section 1396b(w), may be deposited. (B) The State must specify the State contribution. (C)(i) The State may cap yearly State contributions, stop contributions after a specified balance, and, subject to (ii), (iii), and (D)(i), may not provide State contributions, including State and Federal shares, above $2,500 yearly for each adult and $1,000 yearly for each child. (ii) After 2006 the Secretary increases these dollar amounts each year by the annual increase in the medical-care component of the CPI for all urban consumers. (iii) A State may exceed the indexed limits for specified people if it assures the Secretary that other contributions will be reduced so aggregate contributions stay within the otherwise permitted total. (D)(i) A State may contribute above the limits, but Federal participation is unavailable for the excess. (ii) Federal participation is also unavailable for private contributions. (E) The Secretary must provide a method for a State to receive the higher matching rate under section 1396b(a) when account spending is medical care for which that rate exceeds the FMAP. (3)(A)(i) Subject to this paragraph, the account may pay health-care expenditures the State specifies. (ii) Except as (B)(ii) allows, it may pay only medical care as defined in section 213(d) of the 1986 Internal Revenue Code. (iii) The State may limit payments to licensed or authorized providers and deny providers found, under this or another health program, to have failed quality standards or committed fraud or abuse; and may exclude items or services the State finds medically inappropriate or unnecessary. (iv) Withdrawals must use an electronic system; cash withdrawals are forbidden. (B)(i) If the holder becomes ineligible because income or resources increased, (I) State contributions stop, (II) subject to (iii), the balance is reduced by 25 percent, and (III) the account remains available for three years after ineligibility on the same terms, with withdrawals treated as medical assistance under (c)(6). (ii) Such withdrawals must be available for health insurance, and the State may, with Secretary approval and subject to (iv), allow specified additional uses such as job training or tuition. (iii) The 25-percent reduction does not apply to the private-contribution portion. Withdrawals are first attributed to State contributions. (iv) An additional non-health withdrawal is allowed only after the holder has participated for at least one year. (v) After losing Medicaid eligibility, the holder need not buy high-deductible or other insurance to keep or use the account. (4) A State may use a third-party administrator; reasonable costs are reimbursable like other administrative costs under section 1396b(a)(7). (5) Account balances and contributions are not income or assets for deciding eligibility under this subchapter. (6) A State may create procedures to penalize or remove a person for nonqualified withdrawals and recover resulting costs.