SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Special Needs 
Trust Fairness and Medicaid Improvement Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Fairness in Medicaid supplemental needs trusts.
Sec. 3. Medicaid coverage of tobacco cessation services for mothers of 
                            newborns.
Sec. 4. Eliminating Federal financial participation with respect to 
                            expenditures under Medicaid for agents used 
                            for cosmetic purposes or hair growth.
Sec. 5. Medicaid Improvement Fund.

SEC. 2. FAIRNESS IN MEDICAID SUPPLEMENTAL NEEDS TRUSTS.

    (a) In General.--Section 1917(d)(4)(A) of the Social Security Act 
(42 U.S.C. 1396p(d)(4)(A)) is amended by inserting ``the individual,'' 
after ``for the benefit of such individual by''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to trusts established on or after the date of the enactment of 
this Act.

SEC. 3. MEDICAID COVERAGE OF TOBACCO CESSATION SERVICES FOR MOTHERS OF 
              NEWBORNS.

    (a) In General.--Section 1905(bb) of the Social Security Act (42 
U.S.C. 1396d(bb)) is amended by adding at the end the following new 
paragraph:
    ``(4) A woman shall continue to be treated as described in this 
subsection as a pregnant woman through the end of the 1-year period 
beginning on the date of the birth of a child of the woman.''.
    (b) Conforming Amendments.--
            (1) Subsections (a)(2)(B) and (b)(2)(B) of section 1916 of 
        the Social Security Act (42 U.S.C. 1396o) are each amended by 
        inserting ``(and women described in section 1905(bb) as 
        pregnant women pursuant to paragraph (4) of such section)'' 
        after ``tobacco cessation by pregnant women''.
            (2) Section 1927(d)(2)(F) of the Social Security Act (42 
        U.S.C. 1396r-8(d)(2)(F)) is amended by inserting ``(and women 
        described in section 1905(bb) as pregnant women pursuant to 
        paragraph (4) of such section)'' after ``pregnant women''.
    (c) Effective Date.--
            (1) In general.--Subject to paragraph (2), the amendments 
        made by this section shall apply with respect to items and 
        services furnished on or after the date that is 2 years after 
        the date of the enactment of this Act.
            (2) Exception for state legislation.--In the case of a 
        State plan under title XIX of the Social Security Act, which 
        the Secretary of Health and Human Services determines requires 
        State legislation in order for the plan to meet any requirement 
        imposed by amendments made by this section, the plan shall not 
        be regarded as failing to comply with the requirements of such 
        title solely on the basis of its failure to meet such an 
        additional requirement before the first day of the first 
        calendar quarter beginning after the close of the first regular 
        session of the State legislature that begins after the 
        effective date specified in paragraph (1). For purposes of the 
        previous sentence, in the case of a State that has a 2-year 
        legislative session, each year of the session shall be 
        considered to be a separate regular session of the State 
        legislature.
    (d) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Inspector General of the Department of Health and 
Human Services shall submit to Congress a report that assesses the use 
of the tobacco cessation service benefit under the Medicaid program. 
Such report shall include an assessment of--
            (1) the extent that States are encouraging the use of such 
        benefit, such as through promotion of beneficiary and provider 
        awareness of such benefit; and
            (2) gaps in the delivery of such benefit.

SEC. 4. ELIMINATING FEDERAL FINANCIAL PARTICIPATION WITH RESPECT TO 
              EXPENDITURES UNDER MEDICAID FOR AGENTS USED FOR COSMETIC 
              PURPOSES OR HAIR GROWTH.

    (a) In General.--Section 1903(i)(21) of the Social Security Act (42 
U.S.C. 1396b(i)(21)) is amended by inserting ``section 1927(d)(2)(C) 
(relating to drugs when used for cosmetic purposes or hair growth), 
except where medically necessary, and'' after ``drugs described in''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to calendar quarters beginning on or after the date 
of the enactment of this Act.

SEC. 5. MEDICAID IMPROVEMENT FUND.

    Section 1941(b) of the Social Security Act (42 U.S.C. 1396w-1(b)) 
is amended--
            (1) in paragraph (2)--
                    (A) by striking ``under paragraph (1)'' and 
                inserting ``under this subsection''; and
                    (B) by redesignating such paragraph as paragraph 
                (3); and
            (2) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) Additional funding.--In addition to any funds 
        otherwise made available to the Fund, there shall be available 
        to the Fund, for expenditures from the Fund--
                    ``(A) for fiscal year 2021, $10,000,000, to remain 
                available until expended; and
                    ``(B) for fiscal year 2022, $14,000,000, to remain 
                available until expended.''.

            Passed the House of Representatives September 20, 2016.

            Attest:

                                                 KAREN L. HAAS,

                                                                 Clerk.
(This measure has not been amended since it was reported to the House on September 9, 2016.  Special Needs Trust Fairness and Medicaid Improvement Act  (Sec. 2) This bill amends title XIX (Medicaid) of the Social Security Act with respect to the treatment of revocable trusts for the benefit of an individual for purposes of meeting income requirements for Medicaid coverage.  The bill extends the supplemental needs trust exemption from treatment of a trust as resources available to the individual to supplemental needs trusts for Medicaid beneficiaries established by those beneficiaries.  (Sec. 3) Medicaid coverage of tobacco cessation services shall continue to be provided for mothers of newborns through the first year after the child's birth. The Inspector General of the Department of Health and Human Services must report to the Congress on the use of the tobacco cessation service benefit under the Medicaid program. (Sec. 4) The bill eliminates federal financial participation regarding expenditures under Medicaid for drugs used for cosmetic purposes or hair growth, except where such drugs are medically necessary.  (Sec. 5) The bill makes additional funding available to the Medicaid Improvement Fund for FY2021 and FY2022. 
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