SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicaid and CHIP Quality 
Improvement Act of 2016''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Despite the fact that Federal and State governments 
        spend hundreds of billions of dollars every year on care for 
        Americans through the Medicaid and CHIP programs, there is no 
        nationwide, systematic method of reporting, collecting, 
        evaluating, or improving the quality of care across all payment 
        and delivery systems (fee-for-service, managed care, primary 
        care case management, or other mechanisms).
            (2) Although the quality of care delivered through Medicaid 
        health plans is frequently measured, there is no method or 
        mechanism to systematically improve the quality of care 
        provided to all Medicaid and CHIP beneficiaries.
            (3) For the majority of Medicaid and CHIP enrollees who are 
        served by primary care case management or fee-for-service 
        arrangements, there are no Federal requirements for comparable 
        quality monitoring or improvement. Thus there currently is no 
        ability to make fair assessments across all modes of care for 
        Medicaid and CHIP enrollees.
            (4) State flexibility and the resulting opportunities for 
        innovation are hallmarks of the partnership between Federal and 
        State governments in the Medicaid and CHIP programs. Without a 
        way to systematically measure quality, however, policymakers 
        cannot know which innovations are the most effective.

SEC. 3. MEASURING AND REPORTING ON COMPARABLE HEALTH CARE QUALITY 
              MEASURES FOR ALL PERSONS ENROLLED IN MEDICAID.

    (a) Quality Assurance Standards.--Section 1932(c)(1)(A) of the 
Social Security Act (42 U.S.C. 1396u-2(c)(1)(A)) is amended by 
inserting ``or comparable primary care case management services 
providers described in section 1905(t) as well as health care services 
furnished in fee-for-service settings or other delivery systems'' after 
``1903(m)''.
    (b) Adult Health Quality Measures.--Section 1139B of the Social 
Security Act (42 U.S.C. 1320b-9b) is amended--
            (1) in subsection (b)--
                    (A) by redesignating paragraphs (4) and (5) as 
                paragraphs (5) and (6), respectively; and
                    (B) by inserting after paragraph (3), the 
                following:
            ``(4) Quality reporting for medicaid eligible adults.--
        Beginning not later than January 1 of the calendar year that 
        begins on or after the date that is 2 years after the date of 
        enactment of the Medicaid and CHIP Quality Improvement Act of 
        2016, and annually thereafter, the Secretary shall require 
        States to use the measures and approaches identified in 
        paragraph (3) to report on the initial core set of quality 
        measures for Medicaid eligible adults identified in paragraph 
        (2), subject to revisions made in accordance with paragraph 
        (6)(B). Such reporting shall be stratified by delivery system, 
        including managed care organizations under section 1932, 
        benchmark plans under section 1937, primary care case 
        management services providers described in section 1905(t), 
        health care services in fee-for-service settings, and other 
        delivery systems, except that the Secretary may determine that 
        reporting on certain measures should not be stratified by 
        delivery system because such stratification would not be 
        feasible or the delivery systems are not comparable with 
        respect to the application of such measures. In addition to the 
        stratification required under the previous sentence, the 
        Secretary shall have the discretion to further stratify 
        reporting on certain measures based on factors such as 
        eligibility category, income level, or other differentiating 
        factors that could have an impact on the comparability of the 
        measure.''; and
            (2) in subsection (d)--
                    (A) in paragraph (1)(A), by striking ``under the 
                such plan'' and all that follows through ``subsection 
                (a)(5)'' and inserting ``under such plan or waiver, 
                including measures described in subsection (b)(2), 
                subject to revisions made in accordance with subsection 
                (b)(6)(B)'';
                    (B) in paragraph (1)(B), by inserting ``, or 
                comparable primary care case management services 
                providers described in section 1905(t), as well as 
                health care services furnished in fee-for-service 
                settings or other delivery systems'' after ``section 
                1937''; and
                    (C) in paragraph (2), by inserting before the 
                period the following: ``, including analysis of 
                comparable quality measures for Medicaid eligible 
                adults who receive their health services through 
                managed care, primary care case management, and fee-
                for-service settings or other delivery systems''.
    (c) Pediatric Health Care Measures.--
            (1) In general.--Section 1139A of the Social Security Act 
        (42 U.S.C. 1320b-9a) is amended--
                    (A) in subsection (a)--
                            (i) by redesignating paragraphs (5) through 
                        (8) as paragraphs (6) through (9), 
                        respectively; and
                            (ii) by inserting after paragraph (4), the 
                        following:
            ``(5) Reporting of pediatric health care measures.--
        Beginning not later than January 1 of the calendar year that 
        begins on or after the date that is 2 years after the date of 
        enactment of the Medicaid and CHIP Quality Improvement Act of 
        2016, and annually thereafter, the Secretary shall require 
        States to use the measures and approaches identified in 
        paragraph (4) to report on the initial core child health care 
        quality measures established under this subsection and as such 
        measures subsequently are updated under subsection (b)(5). Such 
        reporting shall be stratified by delivery system, including 
        managed care organizations under section 1932, benchmark plans 
        under sections 1937 and 2103, primary care case management 
        services providers described in section 1905(t), health care 
        services in fee-for-service settings, and other delivery 
        systems, except that the Secretary may determine that reporting 
        on certain measures should not be stratified by delivery system 
        because such stratification would not be feasible or the 
        delivery systems are not comparable with respect to the 
        application of such measures. In addition to the stratification 
        required under the previous sentence, the Secretary shall have 
        the discretion to further stratify reporting on certain 
        measures based on factors such as eligibility category, income 
        level, or other differentiating factors that could have an 
        impact on the comparability of the measure.''; and
                    (B) in subsection (c)--
                            (i) in paragraph (1)(A), by striking 
                        ``measures described in subparagraphs (A) and 
                        (B) of subsection (a)(6)'' and inserting ``the 
                        core measures described in subsection (a), as 
                        revised in accordance with subsection (b)(5)'';
                            (ii) in paragraph (1)(B), by inserting 
                        before the period the following: ``, or 
                        comparable primary care case management 
                        services providers described in section 
                        1905(t), as well as healthcare services 
                        furnished in fee-for-service settings or other 
                        delivery systems''; and
                            (iii) in paragraph (2), by inserting before 
                        the period the following: ``, including 
                        analysis of comparable quality measures for 
                        children eligible for medical assistance under 
                        title XIX or child health assistance under 
                        title XXI who receive their health services 
                        through managed care, primary care case 
                        management, and fee-for-service settings or 
                        other delivery systems''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect as if included in the enactment of section 
        1139A of the Social Security Act, as added by section 401(a) of 
        the Children's Health Insurance Program Reauthorization Act of 
        2009 (Public Law 111-3).

SEC. 4. PERFORMANCE BONUSES FOR SIGNIFICANT ACHIEVEMENT IN MEDICAID AND 
              CHIP QUALITY PERFORMANCE.

    Section 1903 of the Social Security Act (42 U.S.C. 1396b) is 
amended by adding at the end the following new subsection:
    ``(aa) Performance Bonus for Quality Performance Achievement.--
            ``(1) In general.--The Secretary shall establish a Medicaid 
        Quality Performance Bonus fund for awarding performance bonuses 
        to States for high attainment and improvement on a core set of 
        quality measures related to the goals and purposes of the 
        Medicaid program under this title.
            ``(2) Quality performance bonus methodology.--Not later 
        than 3 years after the date of enactment of the Medicaid and 
        CHIP Quality Improvement Act of 2016, the Secretary shall 
        establish a methodology for awarding Medicaid quality 
        performance bonuses to States not less than annually in 
        accordance with paragraph (3) and subject to the availability 
        of appropriations. Medicaid quality performance bonuses shall 
        be awarded on the basis of the annual State reports required 
        under sections 1139A and 1139B and in accordance with 
        regulations promulgated by the Secretary.
            ``(3) Quality performance measurement bonuses.--Medicaid 
        quality performance bonuses shall be awarded to the following 
        10 States:
                    ``(A) The top 5 States achieving the designation of 
                superior quality performing State under criteria 
                established by the Secretary.
                    ``(B) The 5 States that--
                            ``(i) are not among the States described in 
                        subparagraph (A); and
                            ``(ii) demonstrate the greatest relative 
                        level of annual improvement in quality 
                        performance under criteria established by the 
                        Secretary.
            ``(4) Initial appropriation.--
                    ``(A) In general.--The total amount of Medicaid 
                quality performance bonuses made under this subsection 
                for all fiscal years shall be equal to $500,000,000, to 
                be available until expended.
                    ``(B) Budget authority.--This paragraph constitutes 
                budget authority in advance of appropriations Acts and 
                represents the obligation of the Secretary to provide 
                for the payment of amounts provided under this 
                paragraph.
            ``(5) Use of quality performance bonus funds.--
                    ``(A) Designation for quality improvement 
                activities.--As a condition of receiving a Medicaid 
                quality performance bonus under this subsection, a 
                State shall agree to designate at least 75 percent of 
                the bonus funds paid to the State under this subsection 
                for a fiscal year for the development and operation of 
                quality-related initiatives that will directly benefit 
                providers or managed care entities participating in the 
                State plan under this title or under a waiver of such 
                plan, including--
                            ``(i) pay-for-performance programs;
                            ``(ii) collaboration initiatives that have 
                        been demonstrated to improve performance on 
                        quality;
                            ``(iii) quality improvement initiatives, 
                        including those aimed at improving care for 
                        special and hard-to-reach populations, and 
                        those directed to managed care entities; and
                            ``(iv) such other Secretary-approved 
                        activities and initiatives that a State may 
                        pursue to encourage quality improvement and 
                        patient-focused high value care.
                    ``(B) State option to establish criteria.--A State 
                may establish criteria for the State performance 
                program carried out under subparagraph (A) that limits 
                the award to a particular provider or entity type, that 
                limits application to a specific geographic area, or 
                that directs incentive programs for quality-related 
                activities for specific populations, including 
                individuals eligible under this title and title XVIII 
                and hard-to-reach populations.
                    ``(C) Remaining bonus funds.--A State may designate 
                up to 25 percent of the bonus funds paid to the State 
                under this subsection for a fiscal year for activities 
                related to the goals and purposes of the State program 
                under this title.''.
Medicaid and Chip Quality Improvement Act of 2016 This bill amends titles XI (General Provisions) and XIX (Medicaid) of the Social Security Act to expand reporting requirements&nbsp;with respect to the quality of care provided&nbsp;under Medicaid and the Children's Health Insurance Program (CHIP). Current law requires a state that contracts with a Medicaid managed organization&nbsp;to develop and implement a quality assessment and improvement strategy. The bill extends this requirement to state contracts with providers of&nbsp;comparable primary care case management services&nbsp;and other&nbsp;health care services under Medicaid. With respect to adults eligible for Medicaid and children enrolled in Medicaid or&nbsp;CHIP, a state must report annually on quality measures identified by the Centers for Medicare &amp; Medicaid Services (CMS). Such reporting shall be stratified by service delivery system. CMS shall establish a Medicaid Quality Performance Bonus fund to award states for high attainment and improvement on&nbsp;a core set of quality measures. A state must designate at least 75% of any bonus funds for the development and operation of quality-related initiatives that will directly benefit providers or managed care entities participating in, or under a waiver of, the state plan for medical assistance. A state may use&nbsp;the remainder of such&nbsp;funds for activities related to the goals and purposes of the state plan.
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