SECTION 1. SHORT TITLE.

    This Act may be referred to as the ``Eliminating Health Disparities 
Act of 2017''.

SEC. 2. HEALTH DISPARITIES ELIMINATION STATE PLAN OPTION.

    Title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) is 
amended by adding at the end the following:

``SEC. 1947. HEALTH DISPARITIES ELIMINATION PROGRAM STATE PLAN OPTION.

    ``(a) In General.--Notwithstanding section 1902(a)(1) (relating to 
statewideness), section 1902(a)(10)(B) (relating to comparability), and 
any other provision of this title that the Secretary determines is 
necessary to waive in order to implement this section, beginning fiscal 
year 2018, a State, at its option as a State plan amendment, may 
establish a Health Disparities Elimination Program for purposes of 
reducing health disparities among targeted populations in communities 
served by qualified community health systems under which the State 
provides incentive payments to qualified community health systems for 
initiatives approved under subsection (c), if the State meets the 
requirements specified in subsection (c).
    ``(b) State Plan Amendment.--Each State seeking a State plan 
amendment under this section shall submit such amendment to the 
Secretary for approval. The Secretary shall approve any such amendment 
that meets the requirements of subsection (c) and includes--
            ``(1) State goals for reducing health disparities through 
        the Health Disparities Elimination Program to be established by 
        the State;
            ``(2) any requirements for the development and approval of 
        action plans described in subsection (c)(1);
            ``(3) eligibility criteria for any qualified community 
        health system seeking to establish a health disparities 
        elimination initiative (in this section referred to as an 
        `initiative') pursuant to this section;
            ``(4) the methodology for determining the amount of 
        incentive payments to be made to a qualified community health 
        system through an initiative, based on the size of the target 
        population to be served through the initiative and the 
        potential of the initiative for reducing health disparities; 
        and
            ``(5) the period during which initiatives may be 
        implemented, in accordance with subsection (c)(3).
    ``(c) State Requirements.--The requirements specified in this 
subsection with respect to a State are the following:
            ``(1) Health system action plan.--The State shall require 
        that a qualified community health system submit an action plan 
        for an initiative to the State agency with responsibility for 
        administering the State plan under this title for approval that 
        identifies--
                    ``(A) the target population or populations to be 
                served by the initiative;
                    ``(B) specific, evidence-based projects that the 
                system will undertake through the initiative to reduce 
                health disparities for such population or populations;
                    ``(C) targets and benchmarks associated with such 
                projects that must be met in order to receive incentive 
                payments pursuant to this section;
                    ``(D) measures for evaluating the effectiveness of 
                the initiative in reducing health disparities with 
                respect to the goals established by the State pursuant 
                to subsection (b)(1); and
                    ``(E) the amount of any proposed initial incentive 
                payments to be made pursuant to this section to support 
                startup costs of the initiative.
            ``(2) Priority in selection of health systems for 
        participation.--In selecting qualified community health systems 
        to establish an initiative under a State plan amendment 
        approved under this section, the State shall give priority to 
        health systems--
                    ``(A) that have submitted action plans (under 
                paragraph (1)) that include the use of evidence-based 
                interventions shown to reduce or eliminate health 
                disparities;
                    ``(B) that demonstrate the potential to have a high 
                impact in the elimination of health disparities, 
                improved health care access, improved health outcomes, 
                or health care savings compared to the total incentive 
                funding requested;
                    ``(C) that have prior experience working on 
                projects with the goal of reducing health disparities;
                    ``(D) that demonstrate long-term commitment to 
                providing health services to the target population or 
                populations; and
                    ``(E) with a demonstrated need for additional 
                financial resources in order to strengthen and advance 
                existing efforts of the health system to reduce health 
                disparities.
            ``(3) Duration of action plan.--
                    ``(A) In general.--The State may not approve an 
                action plan submitted under paragraph (1) for a period 
                exceeding 5 years.
                    ``(B) Report.--At the end of any such period, the 
                State shall require each participating qualified 
                community health system to submit a report to the State 
                describing the effectiveness of its initiative using 
                the measures described in paragraph (1)(D).
                    ``(C) Extension.--A State may extend the initiative 
                of such health system upon approval of a new action 
                plan to extend, improve, or expand the initiative, if 
                the State determines that the initiative has proved 
                effective, taking into account the report submitted 
                under subparagraph (B).
    ``(d) State Report and Evaluation.--
            ``(1) In general.--A State with a State plan amendment 
        approved under this section shall submit to the Secretary, in a 
        time and manner to be specified by the Secretary--
                    ``(A) an annual report on the progress of the 
                Health Disparities Elimination Program of the State 
                towards meeting the goals of the State described under 
                subsection (b)(1); and
                    ``(B) not less than once every 5 years, an 
                evaluation of the effectiveness of the Health 
                Disparities Elimination Program of the State.
            ``(2) Contents.--The evaluation described in paragraph 
        (1)(B) shall include--
                    ``(A) an assessment of the effectiveness of 
                initiatives receiving incentive payments pursuant to 
                this section during the period covered by the report in 
                meeting the goals of the State described under 
                subsection (b)(1); and
                    ``(B) a description of the activities of such 
                initiatives.
            ``(3) Publication.--The Secretary shall publish on the 
        public Web site of the Centers for Medicare & Medicaid Services 
        each evaluation submitted under paragraph (1)(B).
    ``(e) Funding.--
            ``(1) State funding.--
                    ``(A) In general.--For the purpose of making 
                allocations to States under subparagraph (C), there is 
                appropriated for fiscal year 2018 and each subsequent 
                fiscal year, out of any money in the Treasury not 
                otherwise appropriated, an amount equal to one half of 
                one percent of the total of the Federal share of 
                expenditures with respect to all State plans under this 
                title in the most recent fiscal year for which complete 
                expenditure data is available.
                    ``(B) Incentive payment fund.--The Secretary shall 
                deposit all funds appropriated under subparagraph (A) 
                into an incentive payment fund. Such funds shall remain 
                available until expended.
                    ``(C) Allocation among states.--Of the total amount 
                appropriated for this section for a fiscal year, the 
                Secretary shall, except as provided in subparagraph 
                (D), allocate for such fiscal year to each State an 
                amount in proportion to the ratio of--
                            ``(i) the State's total expenditures under 
                        the State plan under this title in the most 
                        recent fiscal year for which complete 
                        expenditure data is available; to
                            ``(ii) the sum of all States' total 
                        expenditures under all State plans under this 
                        title in the fiscal year described in clause 
                        (i).
                    ``(D) Funds not used by the state.--If the 
                Secretary determines, on the basis of information 
                available on the first day of a fiscal year, that any 
                allocation under subparagraph (C) to a State for such 
                fiscal year will not be required because a State does 
                not have a State plan amendment approved under 
                subsection (b) for such fiscal year, then such State's 
                allocation shall be treated as an unused allocation for 
                such fiscal year and re-allocated in accordance with 
                subparagraph (E)(i).
                    ``(E) Qualifying states.--
                            ``(i) Re-allocation to qualifying states.--
                        In addition to the allocation available to a 
                        State under subparagraph (C), the Secretary 
                        shall allocate to each qualifying State for a 
                        fiscal year, out of the sum of unused 
                        allocations, as described in subparagraph (D), 
                        for such fiscal year, an amount in proportion 
                        to the ratio of--
                                    ``(I) each such State's total 
                                expenditures under the State plan under 
                                this title in the most recent fiscal 
                                year for which complete expenditure 
                                data is available; to
                                    ``(II) the sum of all such States' 
                                total expenditures under all State 
                                plans of such States under this title 
                                in the fiscal year described in 
                                subclause (I).
                            ``(ii) Availability of funds.--Allocations 
                        made to a qualifying State under clause (i) and 
                        subparagraph (C) shall remain available until 
                        expended.
                            ``(iii) Definitions.--In this section, the 
                        term `qualifying State' means a State with a 
                        State plan amendment approved under this 
                        section that--
                                    ``(I) has in effect an agreement 
                                with one or more qualified community 
                                health system initiatives; and
                                    ``(II) in any fiscal year other 
                                than the first fiscal year for which 
                                such State receives an allocation under 
                                subparagraph (C) that is not re-
                                allocated under subparagraph (D), has a 
                                Health Disparities Elimination Program 
                                established under this section that, as 
                                determined by the Secretary, has made 
                                measurable progress towards meeting the 
                                State's goals, as described under 
                                subsection (b)(1), based on reports and 
                                evaluations submitted under subsection 
                                (d).
            ``(2) Payments.--
                    ``(A) In general.--Subject to the provisions of 
                this section, the Secretary shall pay to each State 
                with a State plan amendment approved under this 
                section, from its allocation under paragraph (1)(C) 
                and, in the case of a qualifying State, from its 
                allocation under paragraph (1)(E)(i), an amount for 
                each quarter equal to 90 percent of the sum expended by 
                the State in such quarter for incentive payments made 
                to qualified community health systems for initiatives 
                approved pursuant to this section.
                    ``(B) Status of incentive payments.--Incentive 
                payments made under a State plan amendment approved 
                under this section shall not be considered payment for 
                health care items or services and shall not count 
                towards any limit with respect to the maximum amount of 
                payments that may be made to a provider under the State 
                plan under this title (or under a waiver of such plan).
    ``(f) Definitions.--In this section:
            ``(1) The term `health disparity' means a disparity in care 
        provided to a health disparity population, as defined in 
        section 903(d) of the Public Health Service Act (42 U.S.C. 
        299a-1(d)).
            ``(2) The term `qualified community health system' means--
                    ``(A) a hospital described in a report submitted 
                under section 1900(b)(6)(B)(ii)(III); or
                    ``(B) an affiliated group of health care providers 
                anchored by such hospital.
            ``(3) The term `State' means each of the several States and 
        the District of Columbia.
            ``(4) The term `target population' means a population of 
        individuals that has empirically experienced disparities in 
        health care access and quality and shall not be limited by 
        source of coverage or lack thereof.''.
Eliminating Health Disparities Act of 2017 This bill amends title XIX (Medicaid) of the Social Security Act to allow a state to establish a Health Disparities Elimination Program, through which the state shall provide incentive payments to qualified community health systems (i.e., hospitals or affiliated groups of health care providers) for approved initiatives to reduce health disparities. In selecting qualified community health systems for participation, a state shall give priority to those that: (1) have included, in their required action plans, the use of evidence-based interventions; (2) have had relevant prior experience; and (3) demonstrate a long-term commitment to serving the target populations, a need for additional financial resources, and the potential for high impact relative to the amount of funding requested. Federal funding for program support shall be allocated based on each state's share of total federal Medicaid expenditures.
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