SENATE AMENDED

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY GINGRICH, AUMENT, BAKER, BARRAR, BEAR, BENNINGHOFF, BOBACK, BOYD, BROOKS, CAUSER, CLYMER, D. COSTA, CREIGHTON, CUTLER, DENLINGER, ELLIS, EVANKOVICH, EVERETT, FLECK, GABLER, GEIST, GIBBONS, GILLEN, GILLESPIE, GODSHALL, GOODMAN, GRELL, GROVE, HAHN, HALUSKA, HARHART, HARPER, HARRIS, HEFFLEY, HESS, HICKERNELL, HUTCHINSON, KAUFFMAN, M. K. KELLER, KNOWLES, KORTZ, KRIEGER, LAWRENCE, MAJOR, MARSHALL, MARSICO, MASSER, METCALFE, MILLARD, MILLER, MILNE, MOUL, MURT, MUSTIO, OBERLANDER, O'NEILL, PAYNE, PERRY, PETRI, PICKETT, PYLE, QUIGLEY, QUINN, RAPP, READSHAW, REED, REICHLEY, ROAE, ROCK, ROSS, SAYLOR, SCAVELLO, SCHRODER, K. SMITH, SONNEY, STERN, STEVENSON, STURLA, SWANGER, TALLMAN, TOBASH, TOEPEL, TOOHIL, VULAKOVICH, WATSON, ADOLPH, FARRY, DELOZIER, MALONEY, STEPHENS AND CALTAGIRONE, MARCH 7, 2011

AS AMENDED ON THIRD CONSIDERATION, IN SENATE, JUNE 29, 2011   

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," providing for fraud

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detection system and, for income eligibility verification

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system and for inmate medical costs. in public assistance,

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adding definitions; providing for fraud detection system, for

administration of assistance programs and for copayments for

subsidized child care; further providing for determination of

eligibility; providing for verification system and for

eligibility for persons with drug-related felonies; further

providing for persons eligible for medical assistance, for

medical assistance payments for institutional care, for

reimbursement for certain medical assistance items and

services, for payments for readmissions to a hospital paid

through diagnosis-related groups and for medical assistance

benefit packages, coverage, copayments, premiums and rates;

in Statewide quality care assessment, further providing for

the definition of "net patient revenue," for implementation,

for calculation and notice of assessments under certain

conditions, for restricted account limitations and for

conditions for certain payments; and providing for inmate

medical costs.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The act of June 13, 1967 (P.L.31, No.21), known

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as the Public Welfare Code, is amended by adding sections to

read:

Section 422.1.  Fraud Detection System.--Within six months of

the effective date of this section, the department shall

establish uniform procedures for each county to use to identify,

investigate and resolve potential cases of fraud,

misrepresentation or inadequate documentation prior to

determining an applicant's eligibility for assistance. The

procedures shall ensure that every case is reviewed. Each review

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shall include utilization of apply to all applicants and

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recipients of assistance. Procedures shall utilize the income

eligibility verification system established in section 432.23.

Section 432.23.  Income Eligibility Verification System.--(a)  

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The department shall establish a computerized income eligibility

verification system in order to verify eligibility, eliminate

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duplication of assistance and deter fraud. Prior to awarding

assistance under section 432.2(b) or continuing assistance under

section 432.2(c), the department shall match the social security

number of each applicant and recipient with the following:

(1)  Unearned income information maintained by the Internal

Revenue Service.

(2)  Employer quarterly reports of income and unemployment

insurance benefit payment information maintained by the State

Wage Information Collection Agency.

(3)  Earned income information maintained by the Social

Security Administration.

(4)  Immigration status information maintained by the

Citizenship and Immigration Services.

(5)  Death register information maintained by the Social

Security Administration.

(6)  Prisoner information maintained by the Social Security

Administration.

(7)  Public housing and section 8 payment information

maintained by the Department of Housing and Urban Development.

(8)  National fleeing felon information maintained by the

Federal Bureau of Investigation.

(9)  Wage reporting and similar information maintained by

states contiguous to this Commonwealth.

(10)  Beneficiary Data Exchange (BENDEX) Title H database

maintained by the Social Security Administration.

(11)  Beneficiary Earnings Exchange Report (BEER) database

maintained by the Social Security Administration.

(12)  State New Hire database maintained by the Commonwealth.

(13)  National New Hire database maintained by the Federal

Government.

(14)  State Data Exchange (SDX) database maintained by the

Social Security Administration.

(15)  Veterans Benefits and Veterans Medical (PARIS)

maintained by the Department of Veterans Affairs with

coordination through the Department of Health and Human

Services.

(16)  Day care subsidy payments maintained by the

Commonwealth.

(17)  Low-Income Energy Assistance Program Reporting Utility

Expenses maintained by the Commonwealth.

(18)  A database which is substantially similar to or a

successor of a database set forth in this subsection.

(19)  The database of all persons who currently hold a

license, permit or certificate from a Commonwealth agency the

cost of which exceeds one thousand dollars ($1,000).

(b)  If a discrepancy results between the applicant's or a

recipient's social security number and one or more of the

databases set forth in subsection (a), the department shall

review the applicant's or recipient's case using the following

procedure:

(1)  If the information discovered under subsection (a) does

not result in ineligibility or modification of the amount or

type of assistance, the department shall take no further action.

(2)  If the information discovered under subsection (a) would

result in ineligibility or modification of the amount or type of

assistance, the applicant or the recipient shall be given an

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opportunity to explain the discrepancy. The department shall

provide written notice to the applicant or recipient which shall

describe in sufficient detail the circumstances of the

discrepancy, the manner in which the applicant or recipient may

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respond opportunity for a hearing or review and the consequences

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of failing to take action. The applicant or recipient shall have

ten business days to respond in an attempt writing to resolve

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the discrepancy. The explanation of the recipient or applicant

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shall be given in writing. After receiving the explanation, the 

department may request additional documentation if it determines

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that there is a substantial risk of fraud as necessary.

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(3)  If the applicant or recipient does not respond to the

notice, the department shall deny assistance for failure to

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cooperate, in which case the. The department shall provide 

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written notice of intent to discontinue assistance. Eligibility

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for assistance shall not be reestablished until the significant

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discrepancy has been resolved applicant or recipient complies

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with paragraph (2).

(4)  If an applicant or recipient responds to the notice and 

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or disagrees with the findings of the a match between his or her 

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social security number and one or more database a database under

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subsection (a), the department shall reinvestigate the matter.

If the department finds that determines there has been an error,

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the department shall take immediate action to correct it and no

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further action shall be taken correct the error. If, after

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investigation, the department determines that there is no error,

the department shall determine the effect on the applicant's or

recipient's case and take appropriate action. Written notice of

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the department's action shall be given to the applicant or

recipient.

(5)  If the applicant or recipient agrees with the findings

of the match between the applicant's or recipient's social

security number and one or more database, the department shall

determine the effect on the applicant's or recipient's case and

take appropriate action. Written notice of the department's take

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appropriate action.

(6)  Written notice of the department's action under

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paragraph (4) or (5) shall be given to the applicant or

recipient.

(c)  In no case shall the department discontinue or modify

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the amount or type of assistance as a result of a match between

the applicant's or recipient's social security number and one or

more database until the applicant or recipient has been given

notice of the discrepancy and the opportunity to respond.

(d) (c)  No later than one year after the effective date of

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this section and every year thereafter, the department shall

provide a written report to the Governor, the General Assembly

and the Inspector General detailing the results achieved under 

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of the implementation of this section and the amount of case

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closures and savings that resulted.

(e) (d)  As used in this section, the following words and

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phrases shall have the meanings given to them in this

subsection:

"Discrepancy" means information regarding assets, income,

resources or status of an applicant or recipient of assistance,

derived from one or more of the database in a database under 

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subsection (a), which gives the department grounds to suspect 

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that indicates that either:

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(i)  an applicant or recipient is ineligible to receive

assistance under Federal or State law; or

(ii)  the assets, income or resources of an applicant or

recipient are at least, in terms of a dollar amount, ten percent

greater than the dollar amount reflected in the information the

department possesses about the applicant or recipient with

respect to the applicant's or recipient's assets, income or

resources.

"Status" means the applicant or recipient is in the United

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States illegally, is no longer living, is an inmate in a prison

or jail or is a fleeing felon.

Section 2.  This act shall take effect immediately.

Section 2.  The act is amended by adding an article to read:

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ARTICLE XIV-A

INMATE MEDICAL COSTS

Section 1401-A.  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:

"Correctional institution."  A State or county correctional

institution or jail, group home, prerelease center, community

corrections center, parole center or facility that houses a

person convicted of a criminal offense or awaiting trial,

sentencing or extradition in a criminal proceeding. The term

does not include a facility or institution operated, supervised

or licensed under this act.

"Drug."  The term shall mean:

(1)  Substances recognized in the official United States

Pharmacopeia, or official National Formulary, or supplement

to either of them.

(2)  Substances intended for use in the diagnosis, cure,

mitigation, treatment or prevention of disease in man or

other animals.

(3)  Substances, other than food, intended to affect the

structure or function of the human body or other animal body.

(4)  Substances intended for use as a component of an

article specified in paragraph (1), (2) or (3), but not

including devices or their components, parts or accessories.

"Health care facility."  A health care facility as defined

under section 802.1 of the act of July 19, 1979 (P.L.130,

No.48), known as the Health Care Facilities Act, or an entity

licensed as a hospital under this act.

"Health care provider."  A health care facility or a person,

including a corporation, university or other educational

institution, licensed or approved by the Commonwealth to provide

health care or professional medical services. The term shall

include a physician, certified nurse midwife, podiatrist,

certified registered nurse practitioner, physician assistant,

chiropractor, hospital, ambulatory surgery center, nursing home

or birth center.

"Inmate."  A person committed to a term of imprisonment or

otherwise confined under the custody of a State or county

correctional institution.

"Inpatient care."  The provision of medical, nursing,

counseling or therapeutic services 24 hours a day in a hospital

or other health care facility, according to individualized

treatment plans.

"Medicare."  The Federal program established under Title

XVIII of the Social Security Act (49 Stat. 620, 42 U.S.C. § 1395

et seq.).

"Outpatient care."  The provision of medical, nursing,

counseling or therapeutic services in a hospital or other health

care facility on a regular and predetermined schedule according

to individualized treatment plans.

"Prescription."  A written or oral order issued by a duly

licensed medical practitioner in the course of his professional

practice for a controlled substance, other drug or device or

medication which is dispensed for use by a consumer.

Section 1402-A.  Inmate medical cost containment.

(a)  Inpatient care.--A health care provider who provides

inpatient care to an inmate shall not charge the State or county

correctional institution or its medical services contractor more

than the maximum allowable rate payable for the goods, services

and supplies under the medical assistance program. This

subsection shall include goods and services furnished by the

health care provider to the inmate, including the cost of

medications and prescription drugs.

(b)  Outpatient care.--A health care provider who provides

outpatient care to an inmate shall not charge the State or

county correctional institution or its medical services

contractor more than the maximum allowable rate payable for

goods, services and supplies under the Medicare program. This

subsection includes goods and services furnished by the health

care provider to the inmate, including the cost of medications

and prescription drugs.

(c)  Limitation.--Nothing in this article shall be construed

to prevent a health care provider from contracting with a

correctional institution to provide outpatient care to inmates

at rates higher than those established by this article.

Section 3.  This act shall take effect as follows:

(1)  The addition of Article XIV-A of the act shall take

effect in 60 days.

(2)  The remainder of this act shall take effect

immediately.

Section 1.  Section 402 of the act of June 13, 1967 (P.L.31,

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No.21), known as the Public Welfare Code, is amended by adding

definitions to read:

Section 402.  Definitions.--As used in this article, unless

the content clearly indicates otherwise:

"Applicant" means an individual who applies for assistance

under this article.

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"Recipient" means an individual who receives assistance under

this article.

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"Residence" means permanent legal residence.

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Section 2.  The act is amended by adding sections to read:

Section 403.1.  Administration of Assistance Programs.--(a)

The department is authorized to establish rules, regulations,

procedures and standards consistent with law as to the

administration of programs providing assistance, including

regulations promulgated under subsection (d), that do any of the

following:

(1)  Establish standards for determining eligibility and the

nature and extent of assistance.

(2)  Authorize providers to condition the delivery of care or

services on the payment of applicable copayments.

(3)  Modify existing benefits, establish benefit limits and

exceptions to those limits, establish various benefit packages

and offer different packages to different recipients, to meet

the needs of the recipients.

(4)  Establish or revise provider payment rates or fee

schedules, reimbursement models or payment methodologies for

particular services.

(5)  Restrict or eliminate presumptive eligibility.

(6)  Establish provider qualifications.

(b)  The department is authorized to develop and submit State

plans, waivers or other proposals to the Federal Government, and

to take such other measures as may be necessary to render the

Commonwealth eligible for available Federal funds or other

assistance.

(c)  Notwithstanding any other provision of law, the

department shall take any action specified in subsection (a) as

may be necessary to ensure that expenditures for State fiscal

year 2011-2012 for assistance programs administered by the

department do not exceed the aggregate amount appropriated for

such programs by the act of    (P.L.  , No.  ), known as the

General Appropriation Act of 2011. The department shall seek

such waivers or Federal approvals as may be necessary to ensure

that actions taken pursuant to this section comply with

applicable Federal law. During State fiscal year 2011-2012, the

department shall not enter into a new contract for consulting or

professional services unless the department determines that:

(1)  it does not have sufficient staff to perform the

services and it would be more cost effective to contract for the

services than to hire new staff to provide the services; or

(2)  it does not have staff with the expertise required to

perform the services.

(d)  For purposes of implementing subsection (c), and

notwithstanding any other provision of law, including section

814-A, the secretary shall promulgate regulations pursuant to

section 204(1)(iv) of the act of July 31, 1968 (P.L.769,

No.240), referred to as the "Commonwealth Documents Law," which

shall be exempt from the following:

(1)  Section 205 of the "Commonwealth Documents Law."

(2)  Section 204(b) of the act of October 15, 1980 (P.L.950,

No.164), known as the "Commonwealth Attorneys Act."

(3)  The act of June 25, 1982 (P.L.633, No.181), known as the

"Regulatory Review Act."

(e)  The regulations promulgated under subsection (d) may be

retroactive to July 1, 2011, and shall be promulgated no later

than June 30, 2012.

Section 405.1A.  Special Allowance Limitations.--Pursuant to

section 403.1, no later than January 1, 2012, the department

shall further reduce annual and lifetime limits for the RESET

program, including moving and transportation expenses, by up to

twenty-five percent, or eliminate any special allowances from

the program, as provided under 55 Pa.Code Ch. 165 (relating to

road to economic self-sufficiency through employment and

training RESET program).

Section 408.3.  Copayments for Subsidized Child Care.--(a)

Notwithstanding any other provision of law or departmental

regulation, the parent or caretaker of a child enrolled in

subsidized child care shall pay a copayment for the subsidized

child care as specified in a copayment schedule established by

the department pursuant to this section.

(b)  The department shall publish a notice setting forth the

copayment schedule in the Pennsylvania Bulletin.

(c)  In establishing the copayment amounts pursuant to this

section, all of the following shall apply:

(1)  Copayments shall be based upon a sliding income scale

taking into account Federal poverty income guidelines.

Copayments shall be updated annually.

(2)  At the department's discretion, copayments may be

imposed:

(i)  for each child enrolled in subsidized child care;

(ii)  based upon family size; or

(iii)  in accordance with both subparagraphs (i) and (ii).

(3)  Copayment amounts shall be a minimum of five dollars

($5) per week and may increase in incremental amounts as

determined by the department taking into account annual family

income.

(4)  A family's annual copayment under either paragraph (1)

or (2) shall not exceed:

(i)  eight percent of the family's annual income if the

family's annual income is one hundred percent of the Federal

poverty income guideline or less; or

(ii)  eleven percent of the family's annual income if the

family's annual income exceeds one hundred percent of the

Federal poverty income guideline. Notwithstanding this

subsection, beginning with State fiscal year 2012-2013, the

department may adjust the annual copayment percentages specified

in this subsection by promulgation of final-omitted regulations

under section 204 of the act of July 31, 1968 (P.L.769, No.240),

referred to as the "Commonwealth Documents Law."

(d)  Notwithstanding subsection (a), a parent or caretaker

copayment may be waived in accordance with department

regulations.

Section 422.1.  Fraud Detection System.--Within six months of

the effective date of this section, the department shall

establish uniform procedures to identify, investigate and

resolve potential cases of fraud, misrepresentation or

inadequate documentation prior to determining an applicant's

eligibility for assistance. The procedures shall apply to all

applicants and recipients of assistance. Procedures shall

utilize the income eligibility verification system established

in section 432.23.

Section 3.  Section 432.2(b) and (c) of the act, amended or

added July 15, 1976 (P.L.993, No.202) and April 8, 1982

(P.L.231, No.75), are amended to read:

Section 432.2.  Determination of Eligibility.--* * *

(b)  As a condition of eligibility for assistance, all

applicants and recipients of assistance shall cooperate with the

department in providing and verifying information necessary for

the department to determine initial or continued eligibility in

accordance with the provisions of this act. An individual

applying for assistance shall complete an application containing

such information required to establish eligibility and amount of

grant. The application shall include, but not be limited to, the

following information:

(1)  Names of all persons to receive aid;

(2)  Birth dates of all persons to receive aid;

(3)  Social security numbers of all persons to receive aid,

or proof of application for such social security number;

(4)  Place of residence for all persons to receive aid;

(5)  The names of any legally responsible relative living

in the home;

(6)  Any income or resources as defined in this act or in

regulations promulgated pursuant to this act.

The department shall provide assistance as needed to complete

the application and shall insure that all applicants or

recipients have or promptly obtain a social security number. The

department shall determine all elements of eligibility based

upon the circumstances that exist at the applicant's place of

residence prior to awarding assistance.

(c)  The department shall determine all elements of

eligibility periodically based upon the circumstances that exist

at the recipient's place of residence and in accordance with the

provisions of this section: Provided, however, [That] that such

determination shall not be less frequent than every six months.

The department shall require the completion of a continuing

application form at the time of redetermination recertifying the

information required by subsection (b) and the provisions of

section 432.15 shall be applicable to this subsection.

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Section 4.  The act is amended by adding sections to read:

Section 432.23.  Verification System.--(a)  The department

shall establish a computerized income eligibility verification

system to verify eligibility, eliminate duplication of

assistance and deter fraud: Provided, however, that the

department, in good faith, attempts to obtain the cooperation by

Federal authorities or other states, or both; and further

provided, that the data be accessible by the department. Subject

to section 432.19, prior to authorizing assistance under section

432.2(b) or continuing assistance under section 432.2(c), the

department shall match the social security number of each

applicant and recipient with the following:

(1)  Unearned income information maintained by the Internal

Revenue Service.

(2)  Employer quarterly reports of income and unemployment

insurance benefit payment information maintained by the State

Wage Information Collection Agency.

(3)  Earned income information maintained by the Social

Security Administration.

(4)  Immigration status information maintained by the

Citizenship and Immigration Services.

(5)  Death register information maintained by the Social

Security Administration.

(6)  Prisoner information maintained by the Social Security

Administration.

(7)  Public housing and section 8 payment information

maintained by the Department of Housing and Urban Development.

(8)  National fleeing felon information maintained by the

Federal Bureau of Investigation.

(9)  Wage reporting and similar information maintained by

states contiguous to this Commonwealth.

(10)  Beneficiary Data Exchange (BENDEX) Title H database

maintained by the Social Security Administration.

(11)  Beneficiary Earnings Exchange Report (BEER) database

maintained by the Social Security Administration.

(12)  State New Hire database maintained by the Commonwealth.

(13)  National New Hire database maintained by the Federal

Government.

(14)  State Data Exchange (SDX) database maintained by the

Social Security Administration.

(15)  Veterans Benefits and Veterans Medical (PARIS)

maintained by the Department of Veterans Affairs with

coordination through the Department of Health and Human

Services.

(16)  Child care subsidy payments maintained by the

Commonwealth.

(17)  Low-Income Energy Assistance Program Reporting Utility

Expenses maintained by the Commonwealth.

(18)  The database of all persons who currently hold a

license, permit or certificate from a Commonwealth agency the

cost of which exceeds one thousand dollars ($1,000).

(19)  A database which is new, substantially similar to or a

successor of a database set forth in this subsection.

(b)  If a discrepancy results between the applicant's or a

recipient's social security number and one or more of the

databases set forth in subsection (a), the department shall

review the applicant's or recipient's case using the following

procedure:

(1)  If the information discovered under subsection (a) does

not result in ineligibility or modification of the amount or

type of assistance, the department shall take no further action.

(2)  If the information discovered under subsection (a) would

result in ineligibility or modification of the amount or type of

assistance, the department shall provide written notice to the

applicant or recipient which shall describe in sufficient detail

the circumstances of the discrepancy, opportunity for a hearing

or review and the consequences of failing to take action. The

applicant or recipient shall have ten business days to respond

in writing to resolve the discrepancy. The department may

request additional documentation as necessary.

(3)  If the applicant or recipient does not respond to the

notice, the department shall deny assistance. The department

shall provide written notice of intent to discontinue

assistance. Eligibility for assistance shall not be

reestablished until the applicant or recipient complies with

paragraph (2).

(4)  If an applicant or recipient responds or disagrees with

the findings of a match between his social security number and a

database under subsection (a), the department shall

reinvestigate the matter. If the department determines there has

been an error, the department shall correct the error. If, after

investigation, the department determines that there is no error,

the department shall determine the effect on the applicant's or

recipient's case and take appropriate action.

(5)  If the applicant or recipient agrees with the findings

of the match between the applicant's or recipient's social

security number and one or more database, the department shall

determine the effect on the applicant's or recipient's case and

take appropriate action.

(6)  Written notice of the department's action under

paragraph (4) or (5) shall be given to the applicant or

recipient.

(c)  (1)  No later than one year after the effective date of

this section and every year thereafter, the department shall

provide a written report to the Governor, the General Assembly,

the chairperson and minority chairperson of the Public Health

and Welfare Committee of the Senate, the chairperson and

minority chairperson of the Health Committee of the House of

Representatives and the Inspector General detailing the results

of the implementation of this section, including, but not

limited to, the following information:

(i)  The number of case closures.

(ii)  The savings resulting from the use of the verification

system.

(iii)  A listing of the data required under subsection (a)

that the department was unable to obtain or access and a

description of the department's efforts to obtain or access the

data.

(iv)  Any actions taken by the department to qualify the

Commonwealth for continued or enhanced Federal funds and a

description of why the action was necessary.

(2)  The department shall also notify the chairperson and

minority chairperson of the Public Health and Welfare Committee

of the Senate and the chairperson and minority chairperson of

the Health Committee of the House of Representatives of any

changes in the information provided in subparagraphs (iii) and

(iv) within sixty days.

(d)  As used in this section, the following words and phrases

shall have the meanings given to them in this subsection:

"Discrepancy" means information regarding assets, income,

resources or status of an applicant or recipient of assistance,

derived from a database under subsection (a), that indicates 

that either:

(i)  an applicant or recipient is ineligible to receive

assistance under Federal or State law; or

(ii)  the assets, income or resources of an applicant or

recipient are at least, in terms of a dollar amount, ten percent

greater than the dollar amount reflected in the information the

department possesses about the applicant or recipient with

respect to the applicant's or recipient's assets, income or

resources.

Section 432.24.  Eligibility for Persons with Drug-related

Felonies.--(a)  To the extent permitted by Federal law, a person

who is otherwise eligible to receive public assistance shall not

be denied assistance solely because he has been convicted of a

felony drug offense, provided:

(1)  He is complying with or has already complied with the

obligations imposed by the criminal court.

(2)  He is actively engaged in or has completed a court-

ordered substance abuse treatment program and participates in

periodic drug screenings for five years after the drug-related

conviction or for the duration of probation, whichever is of

longer duration.

(b)  Under the screening for the drug test and retest program

the department shall:

(1)  Require a recipient be scheduled to be tested if he has

either a felony conviction for a drug offense which occurred

within five years or a felony conviction for a drug offense for

which he is presently on probation subject to the following

conditions:

(i)  An individual who is applying for public assistance is

required to be tested and shall be tested at the time the

application for public assistance is made.

(ii)  A recipient already receiving public assistance as of

the effective date of this section shall be scheduled to be

tested in accordance with paragraph (2).

(2)  Develop and implement a system for randomly testing no

less than 20% of the individuals receiving public assistance

benefits during each six-month period following the effective

date of this section who are subject to testing for the presence

of illegal drugs under this section.

(3)  Deny public assistance to an individual who refuses to

take the drug test or the drug retest required by this section

and terminate the public assistance benefits for anyone who

refuses to submit to the random drug test required by this

section.

(c)  An individual who takes the drug test or retest and

fails it shall be subject to the following sanctions:

(1)  For failing a drug test or retest the first time, an

individual shall be provided an assessment for addiction and

provided treatment for addiction as indicated by treatment

criteria developed by the Single State Authority on Drugs and

Alcohol. Assessments shall be conducted by the Single County

Authority (SCA) on Drugs and Alcohol or designee. Treatment

recommended shall be provided by facilities licensed by the

Division of Drug and Alcohol Program Licensure in the Department

of Health. Medicaid eligibility and determinations shall be

expedited to ensure access to assessment and addiction treatment

through Medicaid. If the individual cooperates with the

assessment and treatment, no penalty will be imposed. If the

individual refuses to cooperate with the assessment and

treatment, the public assistance shall be suspended for six

months. The department must notify the individual of the failed

drug test no later than seven days after receipt of the drug

test results, and the suspension in public assistance will begin

on the next scheduled distribution of public assistance and for

every other distribution of public assistance until the

suspension period lapses. After suspension, an individual may

apply for public assistance, but shall submit to a retest.

(2)  For failing a drug test or retest the second time, the

public assistance to which the individual is entitled shall be

suspended for twelve months. The department must notify the

individual of the failed drug test no later than seven days

after receipt of the drug test results, and the suspension in

public assistance shall begin on the next scheduled distribution

of public assistance and for every other distribution of public

assistance until the suspension period lapses. After suspension,

an individual may then reapply for public assistance, but shall

submit to a retest.

(3)  For failing a drug test or retest the third time, the

individual shall no longer be entitled to public assistance.

(d)  Nothing in this section shall be construed to render

applicants or recipients who fail a drug test or drug retest

ineligible for:

(1)  a Commonwealth program that pays the costs for

participating in a drug treatment program;

(2)  a medical assistance program; or

(3)  another benefit not included within the definition of

public assistance as defined under this act.

(e)  Notwithstanding any other provision in this section, the

department shall, in its sole discretion, determine when it is

cost effective to implement the provisions of this section.

(f)  Within six months of the effective date of this section,

the department shall submit a written report detailing the

department's determination whether it is cost effective to

implement the provisions of this section. Nothing in this

section shall prohibit the department from implementation of

this program prior to the issuance of the report. The report

shall be submitted to the Governor, the General Assembly, the

chairperson and minority chairperson of the Public Health and

Welfare Committee of the Senate, the chairperson and minority

chairperson of the Health Committee of the House of

Representatives and the Inspector General.

(g)  As used in this section, the following words and phrases

shall have the meanings given to them in this subsection unless

the context clearly indicates otherwise:

"Drug offense" means an offense resulting in a conviction for

the possession, use or distribution of a controlled substance,

or conspiracy to commit the offense, whether the offense

occurred in this Commonwealth or in another jurisdiction.

"Drug test" means a urinalysis, blood test or another

scientific study of an individual's body which has been

conclusively found to detect the presence or prior use of an

illegal drug or substance and for which the accuracy has been

accepted in the scientific community.

"Public assistance" means Temporary Assistance to Needy

Families (TANF), Federal food stamps, general assistance and

State supplemental assistance.

Section 4.1.  Section 441.1 of the act, added July 31, 1968

(P.L.904, No.273), is amended to read:

Section 441.1.  Persons Eligible for Medical Assistance.--(a)  

The following persons shall be eligible for medical assistance:

(1)  Persons who receive or are eligible to receive cash

assistance grants under this article[;].

(2)  Persons who meet the eligibility requirements of this

article for cash assistance grants except for citizenship,

durational residence and any eligibility condition or other

requirement for cash assistance which is prohibited under Title

XIX of the Federal Social Security Act[; and].

(3)  The medically needy.

(4)  Inmates of correctional institutions who meet the

eligibility requirements under the Commonwealth's approved Title

XIX State Plan who are receiving medical care in medical

institutions, as defined in 42 CFR 435.1010 (relating to

definitions relating to institutional status). The State share

of the medical care for inmates in county correctional

institutions shall be contributed by the inmate's county of

residence.

(5)  Inmates of correctional institutions who do not qualify

under paragraph (4) but who meet the income and resource

eligibility requirements for general assistance, provided that

such persons shall be eligible for general assistance-related

medical assistance only for services provided by a

disproportionate share hospital if the expenditures for such

assistance qualify as an additional disproportionate share

payment under the Commonwealth's approved Title XIX State Plan.

For purposes of this section, a disproportionate share hospital

is a hospital that receives a disproportionate share payment

from the department because the hospital provides services to

persons who have been determined to be low income under the

income and resource standards for the general assistance

program. The State share of the medical care for inmates of

county correctional institutions shall be contributed by the

inmates' county of residence.

(b)  For purposes of this section, "correctional institution"

means a State or county correctional institution or jail, group

home, prerelease center, community corrections center, parole

center or facility that houses a person convicted of a criminal

offense or awaiting trial, sentencing or extradition in a

criminal proceeding. The term does not include a facility or

institution operated, supervised or licensed by the department.

Section 5.  Section 443.1(1.1), (1.2), (7) and (8) of the

act, amended June 30, 2007 (P.L.49, No.16), July 4, 2008

(P.L.557, No.44) and July 9, 2010 (P.L.336, No.49), are amended

and the section is amended by adding paragraphs to read:

Section 443.1.  Medical Assistance Payments for Institutional

Care.--The following medical assistance payments shall be made

on behalf of eligible persons whose institutional care is

prescribed by physicians:

* * *

(1.1)  Subject to section 813-G, for inpatient acute care

hospital services provided during a fiscal year in which an

assessment is imposed under Article VIII-G, payments under the

medical assistance fee-for-service program shall be determined

in accordance with the department's regulations, except as

follows:

(i)  If the Commonwealth's approved Title XIX State Plan for

inpatient hospital services in effect for the period of July 1,

2010, through June 30, 2013, specifies a methodology for

calculating payments that is different from the department's

regulations or authorizes additional payments not specified in

the department's regulations, such as inpatient disproportionate

share payments and direct medical education payments, the

department shall follow the methodology or make the additional

payments as specified in the approved Title XIX State Plan.

(ii)  Subject to Federal approval of an amendment to the

Commonwealth's approved Title XIX State Plan, in making medical

assistance fee-for-service payments to acute care hospitals for

inpatient services provided on or after July 1, 2010, the

department shall use payment methods and standards that provide

for all of the following:

(A)  Use of the All Patient Refined-Diagnosis Related Group

(APR/DRG) system for the classification of inpatient stays into

DRGs.

(B)  Calculation of base DRG rates, based upon a Statewide

average cost, which are adjusted to account for a hospital's

regional labor costs, teaching status, capital and medical

assistance patient levels and such other factors as the

department determines may significantly impact the costs that a

hospital incurs in delivering inpatient services and which may

be adjusted based on the assessment revenue collected under

Article VIII-G.

(C)  Adjustments to payments for outlier cases where the

costs of the inpatient stays either exceed or are below cost

thresholds established by the department.

(iii)  Notwithstanding subparagraph (i), the department may

make additional changes to its payment methods and standards for

inpatient hospital services consistent with Title XIX of the

Social Security Act, including changes to supplemental payments

currently authorized in the State plan based on the availability

of Federal and State funds.

(1.2)  Subject to section 813-G, for inpatient acute care

hospital services provided under the physical health medical

assistance managed care program during [a] State fiscal year [in

which an assessment is imposed under Article VIII-G] 2010-2011,

the following shall apply:

(i)  For inpatient hospital services provided under a

participation agreement between an inpatient acute care hospital

and a medical assistance managed care organization in effect as

of June 30, 2010, the medical assistance managed care

organization shall pay, and the hospital shall accept as payment

in full, amounts determined in accordance with the payment terms

and rate methodology specified in the agreement and in effect as

of June 30, 2010, during the term of that participation

agreement. If a participation agreement in effect as of June 30,

2010, uses the department fee for service DRG rate methodology

in determining payment amounts, the medical assistance managed

care organization shall pay, and the hospital shall accept as

payment in full, amounts determined in accordance with the fee

for service payment methodology in effect as of June 30, 2010,

including, without limitation, continuation of the same grouper,

outlier methodology, base rates and relative weights, during the

term of that participation agreement.

(ii)  Nothing in subparagraph (i) shall prohibit payment

rates for inpatient acute care hospital services provided under

a participation agreement to change from the rates in effect as

of June 30, 2010, if the change in payment rates is authorized

by the terms of the participation agreement between the

inpatient acute care hospital and the medical assistance managed

care organization. For purposes of this act, any contract

provision that provides that payment rates and changes to

payment rates shall be calculated based upon the department's

fee for service DRG payment methodology shall be interpreted to

mean the department's fee for service medical assistance DRG

methodology in place on June 30, 2010.

(iii)  If a participation agreement between a hospital and a

medical assistance managed care organization terminates during a

fiscal year in which an assessment is imposed under Article

VIII-G prior to the expiration of the term of the participation

agreement, payment for services, other than emergency services,

covered by the medical assistance managed care organization and

rendered by the hospital shall be made at the rate in effect as

of the termination date, as adjusted in accordance with

subparagraphs (i) and (ii), during the period in which the

participation agreement would have been in effect had the

agreement not terminated. The hospital shall receive the

supplemental payment in accordance with subparagraph (v).

(iv)  If a hospital and a medical assistance managed care

organization do not have a participation agreement in effect as

of June 30, 2010, the medical assistance managed care

organization shall pay, and the hospital shall accept as payment

in full, for services, other than emergency services, covered by

the medical assistance managed care organization and rendered

during a fiscal year in which an assessment is imposed under

Article VIII-G, an amount equal to the rates payable for the

services by the medical assistance fee for service program as of

June 30, 2010. The hospital shall receive the supplemental

payment in accordance with subparagraph (v).

(v)  The department shall make enhanced capitation payments

to medical assistance managed care organizations exclusively for

the purpose of making supplemental payments to hospitals in

order to promote continued access to quality care for medical

assistance recipients. Medical assistance managed care

organizations shall use the enhanced capitation payments

received pursuant to this section solely for the purpose of

making supplemental payments to hospitals and shall provide

documentation to the department certifying that all funds

received in this manner are used in accordance with this

section. The supplemental payments to hospitals made pursuant to

this subsection are in lieu of increased or additional payments

for inpatient acute care services from medical assistance

managed care organizations resulting from the department's

implementation of payments under paragraph (1.1)(ii). Medical

assistance managed care organizations shall in no event be

obligated under this section to make supplemental or other

additional payments to hospitals that exceed the enhanced

capitation payments made to the medical assistance managed care

organization under this section. Medical assistance managed care

organizations shall not be required to advance the supplemental

payments to hospitals authorized by this subsection and shall

only make the supplemental payments to hospitals once medical

assistance managed care organizations have received the enhanced

capitation payments from the department.

(vi)  Nothing in this subsection shall prohibit an inpatient

acute care hospital and a medical assistance managed care

organization from executing a new participation agreement or

amending an existing participation agreement on or after July 1,

2010, in which they agree to payment terms that would result in

payments that are different than the payments determined in

accordance with subparagraphs (i), (ii), (iii) and (iv).

[(vii)  As used in this paragraph, the term "medical

assistance managed care organization" means 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 Medicaid managed care contract with the

department, other than a behavioral health managed care

organization that is a party to a medical assistance managed

care contract with the department.]

(1.3)  Subject to section 813-G, the department may adjust

its capitation payments to medical assistance managed care

organizations under the physical health medical assistance

managed care program during State fiscal year 2011-2012 to

provide additional funds for inpatient hospital services to

mitigate the impact, if any, to the managed care organizations

that may result from the changes to the department's payment

methods and standards specified in paragraph (1.1)(ii). If the

department adjusts a medical assistance managed care

organization's capitation payments pursuant to this paragraph,

the following shall apply:

(i)  The medical assistance managed care organization shall

provide documentation to the department identifying how the

additional funds received pursuant to this subsection were used

by the medical assistance managed care organization.

(ii)  If the medical assistance managed care organization

uses all of the additional funds received pursuant to this

subsection to make additional payments to hospitals, the

following shall apply:

(A)  For inpatient hospital services provided under a

participation agreement between an inpatient acute care hospital

and the medical assistance managed care organization in effect

as of June 30, 2010, the medical assistance managed care

organization shall pay, and the hospital shall accept as payment

in full, amounts determined in accordance with the payment terms

and rate methodology specified in the agreement and in effect as

of June 30, 2010, during the term of that participation

agreement. If a participation agreement in effect as of June 30,

2010, uses the department fee-for-service DRG rate methodology

in determining payment amounts, the medical assistance managed

care organization shall pay, and the hospital shall accept as

payment in full, amounts determined in accordance with the fee-

for-service payment methodology in effect as of June 30, 2010,

including, without limitation, continuation of the same grouper,

outlier methodology, base rates and relative weights during the

term of that participation agreement.

(B)  Nothing in clause (A) shall prohibit payment rates for

inpatient acute care hospital services provided under a

participation agreement to change from the rates in effect as of

June 30, 2010, if the change in payment rates is authorized by

the terms of the participation agreement between the inpatient

acute care hospital and the medical assistance managed care

organization. For purposes of this act, any contract provision

that provides that payment rates and changes to payment rates

shall be calculated based upon the department's fee-for-service

DRG payment methodology shall be interpreted to mean the

department's fee-for-service medical assistance DRG methodology

in place on June 30, 2010.

(C)  For an out-of-network inpatient discharge of a recipient

enrolled in a medical assistance managed care organization that

occurs in State fiscal year 2011-2012, the medical assistance

managed care organization shall pay, and the hospital shall

accept as payment in full, the amount that the department's fee-

for-service program would have paid for the discharge if the

recipient were enrolled in the department's fee-for-service

program and the discharge occurred on June 30, 2010.

(D)  Nothing in this subparagraph shall prohibit an inpatient