THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY D. EVANS, APRIL 28, 2009

REFERRED TO COMMITTEE ON HEALTH AND HUMAN SERVICES, APRIL 28, 2009  

AN ACT

Amending the act of June 13, 1967 (P.L.31, No.21), entitled "An

act to consolidate, editorially revise, and codify the public

welfare laws of the Commonwealth," further providing for

lifetime limit, for payments to counties for services to

children, for departmental administration of county child

welfare services, for needs-based budgeting process, for

review of county submissions and for limits on reimbursements

to counties; further defining "exempt hospital"; further

providing for administration; providing for managed care

organization assessments; further providing for other

prohibited acts, criminal penalties and civil remedies and

for repayment from probate estates; providing for limit on

claim reduction and for false claims; and providing for

necessary action to qualify the Commonwealth for additional

Medical Assistance funds under the American Recovery and

Reinvestment Act of 2009 (Public Law 111-5, 123 Stat. 115).

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 441.4 of the act of June 13, 1967

(P.L.31, No.21), known as the Public Welfare Code, added July 7,

2005 (P.L.177, No.42), is amended to read:

Section 441.4.  [Lifetime Limit] Reasonable Limits on

Allowable Income Deductions for Medical Expenses When

Determining Payment Toward the Cost of Long-Term Care

Services.--(a)  [Necessary medical or remedial care expenses

recognized under Federal or State law but not paid for by the

medical assistance program are allowable income deductions when

determining a recipient's payment toward the cost of long-term

care services. An allowable income deduction for unpaid medical

expenses incurred prior to the authorization of medical

assistance eligibility and those medical expenses incurred for

long-term care services after medical assistance is authorized

shall be subject to a lifetime maximum of ten thousand dollars

($10,000) unless application of the limit would result in undue

hardship.] When determining a recipient's payment toward the

cost of long-term care services, long-term care medical expenses

incurred six months or more prior to application for medical

assistance shall be disallowed as a deduction, and medical and

remedial expenses that were incurred as a result of a transfer

of assets penalty shall be limited to zero unless application of

these limits would result in undue hardship.

(b)  As used in this section, the term "undue hardship" shall

mean that either:

(1)  denial of medical assistance would deprive the

individual of medical care and endanger the individual's health

or life; or

(2)  the individual or a financially dependent family member

would be deprived of food, shelter or the necessities of life.

Section 2.  Section 704.1 of the act, amended or added July

9, 1976 (P.L.846, No.148) and August 5, 1991 (P.L.315, No.30),

is amended to read:

Section 704.1.  Payments to Counties for Services to

Children.--(a)  The department shall reimburse county

institution districts or their successors for expenditures

incurred by them in the performance of their obligation pursuant

to this act and the former act of December 6, 1972 (P.L.1464,

No.333), known as the "Juvenile Act," in the following

percentages:

(1)  [Eighty percent of] For the cost of an adoption subsidy

paid pursuant to subdivision (e) of Article VII of this act[.]:

(i)  Eighty percent.

(ii)  Beginning July 1, 2010, and ending before July 1, 2011,

eighty-two percent.

(iii)  Beginning July 1, 2011, and ending before July 1,

2012, eighty-five percent.

(iv)  Beginning July 1, 2012, and each year thereafter,

ninety percent.

(2)  No less than seventy-five percent and no more than

ninety percent of the reasonable cost including staff costs of

child welfare services[, informal adjustment services provided

pursuant to section 8 of the act of December 6, 1972 (P.L.1464,

No.333), known as the "Juvenile Act," and such services approved

by the department, including but not limited to, foster home

care, group home care, shelter care, community residential care,

youth service bureaus, day treatment centers and service to

children in their own home and any other alternative treatment

programs approved by the department] which the department may

approve and define by regulation.

(3)  [Sixty percent of] For the reasonable administrative and

staff costs approved by the department except for those staff

costs [included in clause (2) of this section] documented as

necessary for the provision of child welfare services[.]

included in paragraphs (2), (6), (7) and (8):

(i)    Sixty percent.

(ii)  Beginning July 1, 2010, and ending before July 1, 2011,

fifty-eight percent.

(iii)  Beginning July 1, 2011, and ending before July 1,

2012, fifty-five percent.

(iv)  Beginning July 1, 2012, and each year thereafter, fifty

percent.

(4)  Fifty percent of the actual cost of care and support of

a child placed by a county child welfare agency or a child

committed by a court pursuant to the former act of December 6,

1972 (P.L.1464, No.333), known as the "Juvenile Act," to the

legal custody of a public or private agency approved or operated

by the department other than those services described in clause

(2). The Auditor General shall ascertain the actual expense [for

fiscal year 1974-1975 and each year thereafter by the Department

of Public Welfare] each year by the department for each of the

several counties and each city of the first class whose children

[resident] reside within the county or city of the first class

directly received the benefit of the Commonwealth's expenditure.

The Auditor General shall also ascertain for each Commonwealth

institution or facility rendering services to delinquent or

deprived children the actual average daily cost of providing

said services. The Auditor General shall certify to each county

and city of the first class the allocated Commonwealth

expenditures incurred on behalf of its children and notify the

[Secretary of Public Welfare] secretary and each county and city

of the first class of same.

(5)  Fifty percent of the reasonable cost of medical and

other examinations and treatment of a child ordered by the court

pursuant to the former act of December 6, 1972 (P.L.1464,

No.333), known as the "Juvenile Act," for which no other public

or private payor is responsible, and the expenses of the

appointment of a guardian pendente lite, summons, warrants,

notices, subpoenas, travel expenses of witnesses, transportation

of the child, and other like expenses incurred in proceedings

under the former act of December 6, 1972 (P.L.1464, No.333),

known as the "Juvenile Act."

(6)  [Effective July 1, 1991, the department shall reimburse

county institution districts or their successors one] One 

hundred percent of the reasonable costs of providing adoption

services.

(7)  [Effective July 1, 1993, the department shall reimburse

county institution districts or their successors eighty percent

of the reasonable costs of providing foster home care, community

residential care, supervised independent living and community-

based alternative treatment programs.] For the reasonable cost

of services for dependent and delinquent children, other than

detention services, residing in their own homes and other

alternative treatment approved by the department:

(i)    Counseling services as follows:

(A)    Eighty percent.

(B)    Beginning July 1, 2010, and ending before July 1, 2011,

eighty-one percent.

(C)    Beginning July 1, 2011, and ending before July 1, 2012,

eighty-three percent.

(D)    Beginning July 1, 2012, and each year thereafter,

eighty-five percent.

(ii)  Day care services as follows:

(A)    Eighty percent.

(B)    Beginning July 1, 2010, and ending before July 1, 2011,

eighty-one percent.

(C)  Beginning July 1, 2011, and ending before July 1, 2012,

eighty-three percent.

(D)    Beginning July 1, 2012, and each year thereafter,

eighty-five percent.

(iii)  Day treatment services as follows:

(A)    Eighty percent.

(B)    Beginning effective July 1, 2010, and ending before July

1, 2011, eighty-one percent.

(C)    Beginning July 1, 2011, and ending before July 1, 2012,

eighty-three percent.

(D)    Beginning July 1, 2012, and each year thereafter,

eighty-five percent.

(iv)  Life-skills services as follows:

(A)    Eighty percent.

(B)    Beginning July 1, 2010, and ending before July 1, 2011,

eighty-one percent.

(C)    Beginning July 1, 2011, and ending before July 1, 2012,

eighty-three percent.

(D)    Beginning July 1, 2012, and each year thereafter,

eighty-five percent.

(v)  Homemaker services as follows:

(A)    Eighty percent.

(B)    Beginning July 1, 2010, and ending before July 1, 2011,

eighty-one percent.

(C)    Beginning July 1, 2011, and ending before July 1, 2012,

eighty-three percent.

(D)    Beginning July 1, 2012, and each year thereafter,

eighty-five percent.

(vi)  Intake and referral services, eighty percent.

(vii)  Protective services, eighty percent.

(viii)  Service planning, eighty percent.

(8)  [The department shall reimburse county institution

districts or their successors for the reasonable costs of

institutional services for dependent and delinquent children

other than detention services for delinquents in accordance with

the following schedule:

(i)  Effective July 1, 1992, fifty-five percent.

(ii)  Effective July 1, 1993, sixty percent.]

(i)  For the reasonable costs of services for dependent and

delinquent children, other than detention services, residing

outside their homes:

(A)  Foster home care as follows:

(I)    Eighty percent.

(II)  Beginning July 1, 2010, and ending before July 1, 2011,

eighty-two percent.

(III)  Beginning July 1, 2011, and ending before July 1,

2012, eighty-five percent.

(IV)  Beginning July 1, 2012, and each year thereafter,

ninety percent.

(B)    Supervised independent living as follows:

(I)    Eighty percent.

(II)  Beginning July 1, 2010, and ending before July 1, 2011,

eighty-one percent.

(III)  Beginning July 1, 2011, and ending before July 1,

2012, eighty-three percent.

(IV)    Beginning July 1, 2012, and each year thereafter,

eighty-five percent.

(C)  The first thirty days of an eligible child emergency

shelter services, as defined in 55 Pa. Code § 3130.37 (relating

to emergency and planned temporary placement services), as

follows:

(I)    Ninety percent.

(II)  Beginning July 1, 2010, and ending before July 1, 2011,

eighty-nine percent.

(III)  Beginning July 1, 2011, and ending before July 1,

2012, eighty-seven percent.

(IV)  Beginning July 1, 2012, and each year thereafter,

eighty-five percent.

(D)  Community-based alternative treatment programs as

follows:

(I)    Eighty percent.

(II)  Beginning July 1, 2010, and ending before July 1, 2011,

seventy-nine percent.

(III)  Beginning July 1, 2011, and ending before July 1,

2012, seventy-seven percent.

(IV)  Beginning July 1, 2012, and each year thereafter,

seventy-five percent.

(E)    Community residential care as follows:

(I)    Eighty percent.

(II)  Beginning July 1, 2010, and ending before July 1, 2011,

seventy-nine percent.

(III)  Beginning July 1, 2011, and ending before July 1,

2012, seventy-eight percent.

(IV)  Beginning July 1, 2012, and each year thereafter,

seventy-seven percent.

(ii)  Beginning July 1, 2010, and each year thereafter, the

department shall use a minimum occupancy rate of eighty-five

percent for each facility in determining the reasonable cost of

community-based alternative treatment programs and community

residential care under this paragraph.

(9)  (i)  For the reasonable costs of institutional services

for dependent and delinquent children other than detention

services for delinquents:

(A)    Sixty percent.

(B)  Beginning July 1, 2010, and ending before July 1, 2011,

fifty-eight percent.

(C)  Beginning July 1, 2011, and ending before July 1, 2012,

fifty-five percent.

(D)  Beginning July 1, 2012, and each year thereafter, fifty

percent.

(ii)  Beginning July 1, 2010, and each year thereafter, the

department shall use a minimum occupancy rate of eighty-five

percent for each facility in determining the reasonable cost of

services under this paragraph.

(a.1)  (1)  The department shall limit reimbursement to

county institution districts or their successors for the costs

of services that are not directly attributable to a particular

facility or agency site purchased from a private agency to:

(i)  Beginning July 1, 2010, and ending before July 1, 2011,

fifteen percent of the costs to operate the facility or agency

site.

(ii)  Beginning July 1, 2011, and ending before July 1, 2012,

fourteen percent of the costs to operate the facility or agency

site.

(iii)  Beginning July 1, 2012, and each year thereafter,

thirteen percent of the costs to operate the facility or agency

site.

(2)  The department shall limit reimbursement to county

institution districts or their successors to three percent of

the gross retained revenue or gross profit of the agency.

(3)  The department shall promulgate regulations to limit

reimbursement to county institution districts or their

successors for the costs of compensation for chief executive

officers for services purchased from a private agency up to the

combined salaries and benefits approved for these positions.

Until the regulations become effective, the department shall

determine maximum allowable costs of compensation for chief

executive officers pursuant to this paragraph according to the

regulations applicable to private agencies providing mental

health and mental retardation services under county mental

health and mental retardation agencies.

(4)  The department shall not reimburse county institution

districts or their successors for any services purchased from a

private agency for which the department has not received

sufficient information to determine compliance with this

subsection.

(b)  The department shall make additional grants to any

county institution district or its successor to assist in

establishing new services to children in accordance with a plan

approved by the department for up to the first three years of

operation of those services. [In order to provide necessary

information to the General Assembly relative to the grants

provided under this subsection, a report will be developed by

the Legislative Budget and Finance Committee and provided to the

members of the General Assembly no later than July 1, 1980,

concerning all grants made and expenditures accomplished under

the provisions of this subsection for the period up to and

including December 31, 1979. This report shall include

information on the amount of moneys that went to individual

counties and a description of activities and services financed

with these moneys including the number and types of clients

served under each of the grant programs and any other

information necessary in order to fully inform the General

Assembly on such programs. All officials of the Department of

Public Welfare, grant recipient county organizations, and other

agencies which receive State moneys under the provisions of this

subsection shall cooperate with the committee and its staff in

carrying out this reporting requirement, including making

available all necessary fiscal and programmatic data.]

(c)  No payment pursuant to [subsection (a)(2), (3) or (4) or

of subsection (b)] this section shall be made for any period in

which the county institution district or its successor fails to

substantially comply with the regulations of the department

promulgated pursuant to section 703 including but not limited to

those regulations relating to minimum child welfare services,

minimum standards of child welfare services and minimum

standards of child welfare administration on [a] the merit

basis.

(d)  Amounts due from county institution districts or their

successors for children committed to facilities operated by the

department shall be paid by the counties to the Department of

Revenue by orders to be drawn by the duly authorized agent of

the Department of Revenue at each youth development center or

forestry camp on the treasurers of such counties, who shall

accept and pay the same to the Department of Revenue. Promptly

after the last calendar day of each month the agent of the

Department of Revenue shall mail accounts to the commissioners

of such counties as may have become liable to the Commonwealth

during the month under the provisions of this section. These

accounts shall be duly sworn or affirmed to, and it shall be the

duty of said commissioners, immediately upon receipt of such

accounts, to notify the treasurers of their respective counties

of the amounts of said accounts, with instructions to pay

promptly to the Department of Revenue the amounts of said orders

when presented. It shall then be the duty of such county

treasurers to make such payments as instructed by their

respective county commissioners. In lieu of payments by the

county to the Commonwealth, the department may deduct the amount

due the Commonwealth from the reimbursement payments by the

department to the county institution districts or their

successors.

(e)  If, after due notice to the parents or other persons

legally obligated to care for and support the child, and after

affording them an opportunity to be heard, the court finds that

they are financially able to pay all or part of the costs and

expenses stated in subsection (a), the court may order them to

pay the same and prescribe the manner of payment. Unless

otherwise ordered, payment shall be made to the clerk of the

court for remittance to the person to whom compensation is due,

or if the costs and expenses have been paid by the county, to

the appropriate officer of the county.

(g)  The department shall, within forty-five days of each

calendar quarter, pay fifty percent of the department's share of

the county institution district's or its successor's estimated

expenditures for that quarter.

[(h)  At the end of each of calendar years 1978 and 1979,

every county shall compare the amount received in child welfare

reimbursements for calendar year 1976 pursuant to section 704 of

this act and section 36 of the act of December 6, 1972

(P.L.1464, No.333), known as the "Juvenile Act" with child

welfare reimbursements received for each of calendar years 1978

and 1979 pursuant to this section. The resulting difference in

reimbursements for child welfare services received between

calendar year 1976 and each of calendar years 1978 and 1979

shall then be compared with the amount the county paid in each

of calendar years 1978 and 1979 for youth development center or

forestry camp commitments pursuant to subsection (a)(4). If

there is an increase in reimbursements for child welfare

services and that increase is less in either or both of calendar

years 1978 and 1979 than the amount expended by the county for

its share of the cost of youth development center and forestry

camp commitments, then any such county shall be entitled to

receive additional block grants as provided in subsection (b)

equal to the amount of such difference.]

Section 3.  Section 708 of the act, amended July 9, 1976

(P.L.846, No.148), is amended to read:

Section 708.  Departmental Administration of County Child

Welfare Services.--[On and after January 1, 1968, the] The 

department shall provide, maintain, administer, manage and

operate a program of child welfare services in a county

institution district or its successor when the department

determines, after hearing, that such county institution district

or its successor is not complying with the regulations

prescribing minimum child welfare services or minimum standards

of performance of child welfare services or minimum standards of

child welfare personnel administration on a merit basis, and

that, as a result, the needs of children and youth are not being

adequately served.

When, in pursuance of this section, the department takes

charge of, and directs the operation of the child welfare

services of a county institution district or its successor, the

county shall be charged and shall pay the cost of such services,

including reasonable expenditures incident to the administration

thereof incurred by the department. The amount so charged and to

be paid by the county shall be reduced by the amount of the

payments that would have been made pursuant to section 704.1 if

the county institution district or its successor had maintained

a child welfare program in compliance with the regulations of

the department.

The amount due the Commonwealth may be deducted from any

Commonwealth funds otherwise payable to the county. All sums

collected from the county under this section, in whatever manner

such collections are made, shall be paid into the State treasury

and shall be credited to the current appropriation to the

department for child welfare.

The department shall relinquish the administration of the

child welfare program of the county institution district or its

successor when the department is assured that the regulations of

the department will be complied with thereafter and that the

needs of children and youth will be adequately served.

Section 4.  Sections 709.1, 709.2 and 709.3 of the act, added

August 5, 1991 (P.L.315, No.30), are amended to read:

Section 709.1.  Needs-Based Budgeting Process.--(a)  Prior to

[September 15, 1991, and] August 15 each year [thereafter],

counties shall submit to the department a needs-based budget in

a form prescribed by the department containing their annual

client and budget estimates and a description of proposed

changes in their annual plan for the fiscal year beginning the

following July 1. Each county submission under this subsection

shall provide sufficient information regarding the private

agencies from which the county purchases services for the

department to determine compliance with section 704.1(a.1).

(b)  Representatives of the department shall meet with

representatives of each of the counties to discuss the needs-

based budgets and proposed changes in annual plans and shall

make a thorough review of county submissions. County submissions

shall clearly distinguish funding supported by section 704.1(a)

from grants authorized by section 704.1(b). On the basis of the

discussions and review, the department shall make its

determination of each of the counties total costs and

reimbursable costs and the amount allowed each of the counties

in accordance with section 704.1(a).

(c)  The total of the amounts allowed for each county

pursuant to section 704.1(a) as determined by the department

shall be the aggregate child welfare needs-based budget. The

determination of the aggregate child welfare needs-based budget

and the child welfare needs of each county along with supporting

documentation shall be submitted to the Governor by [November

15, 1991, and] November 1 each year [thereafter].

(d)  Contemporaneously with the submission of the General

Fund budget, the Governor shall submit the aggregate child

welfare needs-based budget and the child welfare needs of each

county along with supporting documentation to the Majority

Chairman and the Minority Chairman of the Appropriations

Committee of the Senate and the Majority Chairman and the

Minority Chairman of the Appropriations Committee of the House

of Representatives. The department may modify the calculation of

the aggregate child welfare needs-based budget any time prior to

May 1 of each year, provided that such revision is based on

receipt of actual data or adopted regulatory changes which, when

compared to previously calculated projected data or regulation,

requires the revision.

Section 709.2.  Review of County Submissions.--(a)  The

department shall promulgate guidelines for reviewing and

determining county submitted needs-based budgets. [The

guidelines for the 1992-1993 fiscal year shall be published as a

bulletin. Guidelines for approving 1993-1994 fiscal year needs-

based budgets shall be adopted by regulation no later than July

1, 1992, but shall not be adopted as emergency regulations

pursuant to section 6(b) of the act of June 25, 1982 (P.L.633,

No.181), known as the "Regulatory Review Act."]

(b)  The department determination shall consider whether the

county's budget is reasonable in relation to past costs,

projected cost increases, number of children in the county and

the number of children served, service level trends, the

county's prior actual and projected outcomes for the delivery of

services and projections of other sources of revenue. The needs-

based budget shall not include funding for any services

purchased from private agencies for which the department has not

received information sufficient to determine compliance with

section 704.1(a.1).

(c)  To the extent that county staffing patterns are less

than that required to meet department staffing regulations, the

department determinations shall permit a requesting county to

hire sufficient staff to meet the minimum staffing regulations.

A determination may disallow expenditures for additional staff

if the functions for which the staff is to be hired already

meets the minimum required by department regulations.

(d)  No determination by the department may be based on

payment standards that have not been adopted as of the time of

the review in accordance with the "Regulatory Review Act."

Section 709.3.  Limits on Reimbursements to Counties.--(a)

Reimbursement for child welfare services made pursuant to

section 704.1 shall not exceed the funds appropriated each

fiscal year.

(b)  The allocation for each county pursuant to section

704.1(a) shall be calculated by multiplying the sum of the

Social Security Act (Public Law 74-271, 42 U.S.C. § 301 et seq.)

Title IV-B funds and State funds appropriated to reimburse

counties pursuant to section 704.1(a) by a fraction, the

numerator of which is the amount determined for that county's

child welfare needs-based budget and the denominator is the

aggregate child welfare needs-based budget.

(b.1)  The department shall divide each county's total

allocation under section 704.1(a) into separate allocations for

each of four major service categories. The four major service

categories and the activities and services that comprise them

shall include:

(1)  In-home and intake services, which shall include child

protective services for child abuse, child protective services

in general, counseling and intervention service, day care

service, day treatment service, homemaker and caretaker service,

information and referral service, life skills education, service

planning, adoption service and adoption assistance.

(2)  (i)  Community-based placement services, which shall

include foster family service.

(ii)  Community residential service, including group home

service.

(iii)  Supervised independent living services.

(iv)  Emergency shelter service.

(3)  Institutional placement services, which shall include

residential service, juvenile detention service and secure

residential service.

(4)  Administration services required to manage a county

children and youth social service agency and to ensure the

provision of services and the performance of functions required

by law, which shall include planning, budgeting, accounting,

recordkeeping, staff development, the operation of a volunteer

program and the proportionate costs of planning, research,

coordination and evaluation activities performed by a youth

service system, a county planning office or other human service

planning body.

(b.2)  Except as provided in subsection (b.3), the department

shall not reimburse a county for costs in a particular major

service category in excess of the following amounts:

(1)  For counties of the first or second class, three percent

more than the allocation for the major service category.

(2)  For all other counties, ten percent or one million

dollars ($1,000,000), whichever is less, more than the

allocation for the major service category.

(b.3)  At any time before the expiration of a fiscal year, a

county may submit to the department a written request to

transfer funds within its total allocation from one major

service category to another for that fiscal year. The department

may, in its discretion, approve the request in whole or in part

and reimburse the county accordingly.

(b.4)  Except as provided in subsection (b.5), the department

shall not reimburse a county for costs of any services provided

to a child placed in a residential facility outside this

Commonwealth.

(b.5)  A county may submit to the department a written

request for reimbursement for services provided to a child

placed in a residential facility outside this Commonwealth

without the department's prior consent. The department may, in

its discretion, approve the request in whole or in part and

reimburse the county accordingly.

(c)  If the sum of the amounts appropriated for reimbursement

under section 704.1(a) during the fiscal year is not at least

equivalent to the aggregate child welfare needs-based budget for

that fiscal year:

(1)  Each county shall be provided a proportionate share

allocation of that appropriation calculated by multiplying the

sum of the amounts appropriated for reimbursement under section

704.1(a) by a fraction, the numerator of which is the amount

determined for that county's child welfare needs-based budget

and the denominator is the aggregate child welfare needs-based

budget.

(2)  Notwithstanding subsection (a), a county shall be

allowed reimbursement beyond its proportionate share allocation

for that fiscal year for expenditures made in accordance with an

approved plan and needs-based budget, but not above that amount

determined to be its needs-based budget.

(d)  For the purpose of this section, an appropriation shall

be considered equivalent to the aggregate child welfare needs if

it is equivalent to the result obtained by calculating the

aggregate child welfare needs minus the county share of Youth

Development Center costs and minus the Social Security Act Title

IV-B funding[, provided, however, an appropriation shall be

deemed equivalent if it is equal to eighty-two percent of the

result in 1991-1992, ninety percent of the result in 1992-1993

and ninety-five percent of the result in 1993-1994].

(e)  The department shall, by regulation, define allowable

costs for authorized child welfare services, provided that no

regulation relating to allowable costs shall be adopted as an

emergency regulation pursuant to section 6(b) of the act of June

25, 1982 (P.L.633, No.181), known as the "Regulatory Review

Act."

Section 5.  The definition of "exempt hospital" in section

801-E of the act, added July 4, 2008 (P.L.557, No.44), is

amended to read:

Section 801-E.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Exempt hospital."  A hospital that the Secretary of Public

Welfare has determined meets one of the following:

(1)  Is excluded under 42 CFR 412.23(a), (b), (d), (e) and

(f) (relating to excluded hospitals: classifications) as of

March 20, 2008, from reimbursement of certain Federal funds

under the prospective payment system described by 42 CFR Pt. 412

(relating to prospective payment systems for inpatient hospital

services).

(2)  Is a Federal veterans' affairs hospital.

(3)  Is part of an institution with State-related status as

that term is defined in 22 Pa. Code § 31.2 (relating to

definitions) and provides over 100,000 days of care to medical

assistance patients annually.

(4)  Provides care, including inpatient hospital services, to

all patients free of charge.

* * *

Section 6.  Section 804-E of the act, added July 4, 2008

(P.L.557, No.44), is amended to read:

Section 804-E.  Administration.

(a)  Remittance.--Upon collection of the funds generated by

the assessment authorized under this article, the municipality

shall remit a portion of the funds to the Commonwealth for the

purposes set forth under section 802-E, except that the

municipality may retain funds in an amount necessary to

reimburse it for its reasonable costs in the administration and

collection of the assessment and to fund a portion of its costs

of operating public health clinics as set forth in an agreement

to be entered into between the municipality and the Commonwealth

acting through the secretary.

(b)  Establishment.--There is established a restricted

account in the General Fund for the receipt and deposit of funds

under subsection (a). Funds in the account are hereby

appropriated to the department for purposes of making

supplemental or increased medical assistance payments for

emergency department services to general acute care hospitals

within the municipality and to maintain or increase other

medical assistance payments to hospitals within the

municipality, as specified in the Commonwealth's approved Title

XIX State Plan.

Section 7.  The act is amended by adding an article to read:

ARTICLE VIII-G

MANAGED CARE ORGANIZATION ASSESSMENTS

Section 801-G.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Assessment percentage."  The rate assessed pursuant to this

article on every managed care organization.

"Assessment period."  The time period identified in the

contract or by notice from the Department of Public Welfare.

"Assessment proceeds."  The State revenue collected from the

assessment provided for in this article, any Federal funds

received by the Commonwealth as a direct result of the

assessment, and any penalties and interest received under

section 810-G.

"Comprehensive risk contract."  A contract as defined in 42

CFR § 438.2 (relating to definitions).

"Contract."  The agreement between a Medicaid managed care

organization and the Department of Public Welfare.

"County Medicaid managed care organization."  A county, or an

entity organized and controlled directly or indirectly by a

county or a city of the first class, that is a party to a

Medicaid managed care contract with the Department of Public

Welfare.

"Department of Health."  The Department of Health of the

Commonwealth.

"Insurance Department."  The Insurance Department of the

Commonwealth.

"Managed care organization."  A Medicaid managed care

organization or a managed care service entity.

"Managed care revenue."  Except for premiums paid by the

Medicare program, any of the following:

(1)  Payments made to a Medicaid managed care

organization pursuant to its contract.

(2)  Managed care product portion of the premiums

required to be reported on an annual statement filed under

any of the following:

(i)  Section 320 of the act of May 17, 1921 (P.L.682,

No.284), known as The Insurance Company Law of 1921.

(ii)  Section 630 of the Insurance Company Law of

1921 and 31 Pa. Code § 152.21 (relating to financial

statements and examinations).

(iii)  Section 2452 of The Insurance Company Law of

1921.

(iv)  Section 11 of the act of December 29, 1972

(P.L.1701, No.364), known as the Health Maintenance

Organization Act, and 31 Pa. Code § 301.81 (relating to

financial reports).

(v)  40 Pa.C.S. Ch. 61 (relating to hospital plan

corporations).

(vi)  40 Pa.C.S. Ch. 63 (relating to professional

health service plan corporations).

"Managed care service entity."

(1)  An entity that in return for a premium or other

similar charge does any of the following:

(i)  Uses a gatekeeper to manage the utilization of

services under comprehensive risk contracts.

(ii)  Integrates the financing and delivery of

services under comprehensive risk contracts to enrollees

by arrangements with health care providers selected to

participate on the basis of specific standards.

(iii)  Provides financial incentives for enrollees of

comprehensive risk contracts to use participating health

care providers in accordance with procedures established

by the entity.

(2)  The term includes entities operating under any of

the following:

(i)  (A)  The act of May 17, 1921 (P.L.682, No.284),

known as The Insurance Company Law of 1921.

(B)  Section 630 of The Insurance Company Law of

1921.

(C)  Article XXIV of The Insurance Company Law of

1921.

(ii)  The act of December 29, 1972 (P.L.1701,

No.364), known as the Health Maintenance Organization

Act.

(iii)  40 Pa.C.S. Ch. 61 (relating to hospital plan

corporations) or Ch. 63 (relating to professional health

services plan corporations).

"Medicaid."  The program established under Title XIX of the

Social Security Act (49 Stat. 620, 42 U.S.C. § 1396 et seq.).

"Medicaid managed care organization (MAMCO)."  A Medicaid

managed care organization as defined in section 1903(m)(1)(A) of

the Social Security Act (49 Stat. 620, 42 U.S.C.

§ 1396b(m)(1)(A)) that is a party to a contract. The term shall

include a county Medicaid managed care organization and a

permitted assignee of a contract but shall not include an

assignor of a contract.

"Program."  The Medical Assistance Program.

"Social Security Act."  The Social Security Act (49 Stat.

620, 42 U.S.C. § 301 et seq.).

Section 802-G.  Authorization.

To the extent that Federal law limits the department's

ability to assess MAMCOs under Article VIII-F, the department

shall implement an assessment on the managed care revenue of

each managed care organization providing managed care services

in this Commonwealth, subject to the conditions and requirements

specified in this article.

Section 803-G.  Implementation.

The assessment shall be implemented on an annual basis,

through periodic submissions not to exceed five times per year

by managed care organizations, as a health care-related fee as

defined in section 1903(w)(3)(B) of the Social Security Act, or

any amendments thereto, and may be imposed and is required to be

paid only to the extent that the revenues generated from the

assessment qualify as the State share of program expenditures

eligible for Federal financial participation.

Section 804-G.  Assessment percentage.

The assessment percentage shall be the lesser of 2% or the

maximum percentage established by 42 CFR 433.68(f)(3)(i)

(relating to permissible health care-related taxes) or any

subsequent maximum established by Federal law.

Section 805-G.  Calculation and payment.

Using the assessment percentage established under section

804-G, each managed care organization shall calculate the

assessment amount for each assessment period on a report form

and in a manner specified by the department and shall submit the

completed report form and total amount owed to the department on

a due date specified by the department. Each managed care

organization shall report managed care revenue for purposes of

the assessment calculation as specified by the department.

Section 806-G.  Use of assessment proceeds.

No managed care organization shall be guaranteed a repayment

of its assessment in derogation of 42 CFR 433.68(f) (relating to

permissible health care-related taxes) provided, however, in

each fiscal year in which an assessment is implemented, the

department shall use the assessment proceeds to maintain

actuarially sound rates for the MAMCOs and to fund other medical

assistance expenditures to the extent permissible under Federal

and State law or regulation and without creating a guarantee to

hold harmless, as those terms are used in 42 CFR 433.68(f).

Section 807-G.  Records.

Upon written request by the department, a managed care

organization shall furnish to the department such records as the

department may specify in order to determine the amount of

assessment due from the managed care organization or to verify

that the managed care organization has calculated and paid the

correct amount due. The requested records shall be provided to

the department within 30 days from the date of the managed care

organization's receipt of the written request unless required at

an earlier date for purposes of the department's compliance with

a request from a Federal or another state agency.

Section 808-G.  Payment of assessment.

In the event that the department determines that a managed

care organization has failed to pay an assessment or that it has

underpaid an assessment, the department shall provide written

notification to the managed care organization within 180 days of

the original due date of the amount due, including interest, and

the date on which the amount due must be paid, which shall not

be less than 30 days from the date of the notice. In the event

that the department determines that a managed care organization

has overpaid an assessment the department shall notify the

managed care organization in writing of the overpayment, and

within 30 days of the date of the notice of the overpayment, the

managed care organization shall advise the department to either

authorize a refund of the amount of the overpayment or offset

the amount of the overpayment against any amount that may be

owed to the department by the managed care organization.

Section 809-G.  Appeal rights.

A managed care organization that is aggrieved by a

determination of the department relating to the assessment may

file a request for review of the decision of the department by

the Bureau of Hearings and Appeals within the department, which

shall have exclusive primary jurisdiction in such matters. The

procedures and requirements of 2 Pa.C.S. Ch. 5 Subch. A

(relating to practice and procedure of Commonwealth agencies)

shall apply to requests for review filed under this section

except that, in any such request for review, a managed care

organization may not challenge the assessment percentage

established pursuant to section 804-G.

Section 810-G.  Enforcement.

(a)  Penalties.--In addition to any other remedy provided by

law, the department may enforce this article by imposing one or

more of the following remedies:

(1)  When a managed care organization fails to pay an

assessment or penalty in the amount or on the date required

by this article, the department may add interest at the rate

provided in section 806 of the act of April 9, 1929 (P.L.343,

No.176), known as The Fiscal Code, to the unpaid amount of

the assessment or penalty from the date prescribed for its

payment until the date it is paid.

(2)  When a managed care organization fails to submit a

report form concerning the calculation of the assessment or

to furnish records to the department as required by this

article, the department may impose a penalty against the

managed care organization in the amount of $1,000 per day for

each day the report form or required records are not

submitted or furnished to the department. If the $1,000 per

day penalty is imposed, it shall commence on the first day

after the date for which a report form or records are due.

(3)  When a MAMCO fails to pay all or part of an

assessment or penalty within 30 days of the date that payment

is due, the department may deduct the unpaid assessment or

penalty and any interest owed from any capitation payments

due to the MAMCO from the department until the full amount is

recovered. Any deduction shall be made only after written

notice to the MAMCO.

(4)  Upon written request by a managed care organization

to the secretary, the secretary may waive all or part of the

interest or penalties assessed against a managed care

organization under this article for good cause as shown by

the managed care organization.

(b)  Action.--The Department of Health or the Insurance

Department, or both, is authorized to take action under this

subsection. When a managed care service entity fails to pay all

or part of an assessment or penalty within 30 days of the date

that payment is due, the department shall notify the Department

of Health and the Insurance Department of the amounts that have

not been paid. The Department of Health or the Insurance

Department, or both, may take action against the managed care

service entity for a violation of this act including imposing

penalties in the amount of $1,000 per day for each day that the

outstanding amount remains unpaid. If the $1,000 per day penalty

is imposed, it shall commence on the 31st day after payment was

due.

(c)  Appeal.--A managed care organization, other than a

MAMCO, may pursue appeal rights in accordance with applicable

laws regarding enforcement actions taken under subsection (b).

Section 811-G.  Time periods.

The assessment authorized in this article shall not be

imposed or paid prior to January 1, 2010, or in the absence of

Federal financial participation as described in section 803-G.

The assessment shall cease June 30, 2013, or earlier if required

by law.

Section 812-G.  Tax exemption provisions superseded.

The provisions of the following acts shall not apply to the

assessment imposed by this article:

(1)  Section 2462 of the act of May 17, 1921 (P.L.682,

No.284), known as The Insurance Company Law of 1921.

(2)  Section 13 of the act of December 29, 1972

(P.L.1701, No.364), known as the Health Maintenance

Organization Act.

(3)  40 Pa.C.S. Ch. 61 (relating to hospital plan

corporations).

(4)  40 Pa.C.S. Ch. 63 (relating to professional health

services plan corporations).

Section 8.  Section 1408 of the act, amended June 16, 1994

(P.L.319, No.49), is amended to read:

Section 1408.  Other Prohibited Acts, Criminal Penalties and

Civil Remedies.--(a)  It shall be unlawful for any person to:

(1)  knowingly or intentionally make or cause to be made a

false statement or misrepresentation or to wilfully fail to

disclose a material fact regarding eligibility, including, but

not limited to, facts regarding income, resources or potential

third-party liability, for either themselves or any other

individual, either prior to or at the time of or subsequent to

the application for any medical assistance benefits or payments;

(2)  having knowledge of the occurrence of any event

affecting his initial or continued right to any such benefit or

payment or the initial or continued right to any such benefit or

payment of any other individual in whose behalf he has applied

for or is receiving such benefit or payment, conceal or fail to

disclose such event with an intent fraudulently to secure such

benefit or payment either in a greater amount or quantity than

is due or when no such benefit or payment is authorized;

(3)  having made application to receive any such benefit or

payment for the use and benefit of himself or another and having

received it, knowingly or intentionally converts such benefit or

any part thereof to a use other than for the use and benefit of

himself or such other person; or

(4)  knowingly or intentionally visit more than three

practitioners or providers, who specialize in the same field, in

the course of one month for the purpose of obtaining excessive

services or benefits beyond what is reasonably needed (as

determined by medical professionals engaged by the department)

for the treatment of a diagnosed condition of the recipient.

(5)  borrow or use a medical assistance identification card

for which he is not entitled or otherwise gain or attempt to

gain medical services covered under the medical assistance

program if he has not been determined eligible for the program.

(b)  (1)  Any person violating subsection (a)(1), (2) or (3)

commits the grade of crime determined from the following

schedule:

(1.1)  Pursuant to 42 Pa.C.S. § 1515(a)(7) (relating to

jurisdiction and venue), jurisdiction over cases graded a

misdemeanor of the third degree under this section shall be

vested in district justices.

(1.2)  Any person committing a crime enumerated in subsection

(a)(1), (2), (3), (4) or (5) shall be ordered to pay restitution

of any medical assistance benefits or payments made on behalf of

either themselves or another individual. A restitution order

under this subsection may be paid in a lump sum or by monthly

installments or according to such other schedule as is deemed

just by the sentencing court. Notwithstanding the provisions of

18 Pa.C.S. § 1106(c)(2) (relating to restitution for injuries to

person or property) to the contrary, the period of time during

which the offender is ordered to make restitution may exceed the

maximum term of imprisonment to which the offender could have

been sentenced for the crime of which he was convicted if the

sentencing court determines such period to be reasonable and in

the interest of justice.

(1.3)  There shall be a five-year statute of limitations on

all crimes enumerated in subsection (a).

(2)  A person who commits a violation of subsection (a)(4) or

(5) is guilty of a misdemeanor of the first degree for each

violation thereof with a maximum penalty thereof of ten thousand

dollars ($10,000) and five years imprisonment.

(c)  (1)  Anyone who is convicted of a violation of

subsection (a)(1), (2), (3), (4) or (5) shall, upon notification

by the department, forfeit any and all rights to medical

assistance benefits for any period of incarceration.

(2)  [If the department determines that a recipient misuses

or overutilizes medical assistance benefits, the] (i)  The

department is authorized to restrict a recipient to a designated 

provider [of his choice] for each medical specialty or type of

provider covered under the medical assistance program[.] if the

department determines that the recipient is receiving excessive

or unnecessary medical assistance benefits, including treatment,

diagnostic services, drugs, medical supplies or other services

based on one or more of the following:

(A)  Evidence of abusive, duplicative or wasteful utilization

or patterns that could cause harm or irreparable damage to the

recipient.

(B)  A history of prior misutilization with a current pattern

of aberrant utilization.

(C)  Utilization patterns inconsistent with peers or current

medical practices.

(D)  Evidence of drug-seeking behavior.

(E)  Evidence that a restriction will effectively manage the

recipient's utilization of medical assistance benefits and care.

(ii)  Before imposing a restriction or taking an action under

paragraph (2), the department shall provide a recipient with at

least ten days' advance written notice and the opportunity for

an administrative hearing.

(iii)  The period of a restriction imposed under this

subsection shall be determined by the department but shall not

exceed five years.

(iv)  If the department determines that a recipient who is or

has been subject to a restriction is receiving excessive or

unnecessary medical assistance benefits based upon new evidence

that one of the conditions in subparagraph (i) applies, the

department may extend the period of restriction or impose a new

restriction for a period of up to five years subject to

subparagraph (ii).

(v)  Subject to such Federal approval as may be necessary, if

the department imposes a restriction on a recipient or extends

the period of a recipient's restriction under paragraph (2), the

department may also take one or more of the following actions:

(A)  The department may terminate the recipient's rights to

any and all medical assistance benefits for a period of up to

one year.

(B)  The department may institute a civil suit against the

recipient for the amount of the excessive or unnecessary medical

assistance benefits obtained by the recipient, plus legal

interest from the date the benefits were obtained.

(C)  The department may administratively impose a monetary

penalty against the recipient in an amount up to one thousand

dollars ($1,000).

(D)  The department may require that, as a condition of

continued eligibility for medical assistance, the recipient

participate in a drug therapy management, disease management or

case management program during the period of the restriction or

such lesser period as may be determined appropriate by the

department.

(vi)  A restriction imposed under this subsection does not

apply to emergency services furnished to a recipient.

(3)  If the department determines that a general assistance

eligible person who is also a medical assistance recipient has

violated the provisions of subsection (a)(3), (4) or (5), the

department shall have the authority to terminate such

recipient's rights to any and all medical assistance benefits

for a period up to one year.

(4)  If the department determines that a person has violated

the provisions of subsection (a)(1), (3), (4) or (5), the

department shall have the authority to institute a civil suit

against such person for the amount of the benefits obtained by

the person in violation of subsection (a)(1), (3), (4) or (5),

plus legal interest from the date the violation or violations

occurred.

(5)  The department shall also have the authority to

administratively impose a one thousand dollar ($1,000) penalty

against a person for each violation of subsection (a).

(6)  (i)  If it is found that a recipient or a member of his

family or household, who would have been ineligible for medical

assistance, possessed unreported real or personal property in

excess of the amount permitted by law, the amount collectible

shall be limited to an amount equal to the market value of such

unreported property or the amount of medical assistance granted

during the period it was held up to the date the unreported

excess real or personal property is identified, whichever is

less. Repayment of the overpayment shall be sought from the

recipient, the person receiving or holding such property, the

recipient's estate and/or survivors benefiting from receiving

such property. Proof of date of acquisition of such property

must be provided by the recipient or person acting on his

behalf.

(ii)  Where a person receiving medical assistance for which

he would have been ineligible due to possession of such

unreported property and proof of date of acquisition of such

property is not provided, it shall be deemed that such real or

personal property was held by the recipient the entire time he

was on medical assistance and repayment shall be for all medical

assistance paid for the recipient or the value of such excess

property, whichever is less. Repayment shall be sought from the

recipient, the person acting on the recipient's behalf, the

person receiving or holding such property, the recipient's

estate and/or survivors benefiting from receiving such property.

(d)  The department is authorized to institute a civil suit

to enforce any of the rights established by this section.

Section 9.  Section 1412 of the act, amended June 30, 1995

(P.L.129, No.20), is amended to read:

Section 1412.  Repayment from [Probate] Estates.--(a)   

Notwithstanding any other provision of this act or any other

law, the department shall establish and implement an estate

recovery program to recover medical assistance paid with respect

to individuals who were fifty-five years of age or older at the

time that assistance was received. Under this program, the

department shall recover from the [probate] estate of an

individual the amount of medical assistance paid for [all

nursing facility services, home- and community-based services

and related hospital and prescription drug services. With the

approval of the Governor, the department may expand the estate

recovery program by regulation to include medical assistance for

services other than those listed in this section and to recover

against other real and personal property in which an individual

had any legal title or interest at the time of death. The

department's claim shall have the priority of a debt due the

Commonwealth.] all services provided to the individual. For

purposes of this section, an individual's estate shall include

all of the following:

(1)  All real and personal property and other assets subject

to inclusion within the deceased individual's estate under 20

Pa.C.S. (relating to decedents, estates and fiduciaries).

(2)  Any other real and personal property and other assets in

which the deceased individual had any legal title or interest at

the time of death, to the extent of such interest, including

such assets conveyed to a survivor, heir, or assign, of the

deceased individual through joint tenancy, tenancy by the

entireties, tenancy in common, survivorship, life estate, living

trust or other arrangement.

(a.1)  Liability for debt shall be as follows:

(1)  If property subject to the department's claim is

transferred without the department's claim being satisfied, then

the executor or administrator transferring such property, if

there is one, shall become liable to pay the department's claim.

(2)  If property subject to the department's claim is

transferred to the extent that the transfer is made without

valuable and adequate consideration in money or something worth

money at the time of the transfer and without the department's

claim being satisfied, then the executor or administrator

transferring such property, if there is one, and the person

receiving such property shall become liable to pay the

department's claim.

(3)  If property subject to the department's claim is held by

a person, including a cotenant, remainderman, or trustee, then

the person holding such property is liable to pay the

department's claim.

(b)  The executor or administrator of the estate of a

decedent who attained fifty-five years of age shall ascertain

whether the decedent received medical assistance during the five

years preceding death and, if so, shall give notice to the

department to secure from the department a statement of the