STATE FLEXIBILITY IN BENEFIT PACKAGES
(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 which would be directly contrary to the authority under this section and subject to subsection (E), a State, at its option as a State plan amendment, may provide for medical assistance under this title to individuals within one or more groups of individuals specified by the State through coverage that—
(i) provides benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2); and
(ii) for any individual described in section 1905(a)(4)(B) who is eligible under the State plan in accordance with paragraphs (10) and (17) of section 1902(a), consists of the items and services described in section 1905(a)(4)(B) (relating to early and periodic screening, diagnostic, and treatment services defined in section 1905(r)) and provided in accordance with the requirements of section 1902(a)(43).
(B) Limitation.—The State may only exercise the option under subclause (VIII) of section 1902(a)(10)(A)(i) or under subparagraph (A) for an individual eligible under an eligibility category that had been established under the State plan on or before the date of the enactment of this section.
(C) Option of additional benefits.—In the case of coverage described in subparagraph (A), a State, at its option, may provide such additional benefits as the State may specify.
(D) Treatment as medical assistance.—Payment of premiums for such coverage under this subsection shall be treated as payment of other insurance premiums described in the third sentence of section 1905(a).
(E) Rule of construction.—Nothing in this paragraph shall be construed as—
(i) requiring a State to offer all or any of the items and services required by subparagraph (A)(ii) through an issuer of benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2);
(ii) preventing a State from offering all or any of the items and services required by subparagraph (A)(ii) through an issuer of benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2); or
(iii) affecting a child’s entitlement to care and services described in subsections (a)(4)(B) and (r) of section 1905 and provided in accordance with section 1902(a)(43) whether provided through benchmark coverage, benchmark equivalent coverage, or otherwise.
(A) In general.—Except as provided in subparagraph (B), a State may require that a full-benefit eligible individual (as defined in subparagraph (C)) within a group obtain benefits under this title through enrollment in coverage described in paragraph (1)(A). A State may apply the previous sentence to individuals within 1 or more groups of such individuals.
(B) Limitation on application.—A State may not require under subparagraph (A) an individual to obtain benefits through enrollment described in paragraph (1)(A) if the individual is within one of the following categories of individuals:
(ii) Blind or disabled individuals.—The individual qualifies for medical assistance under the State plan on the basis of being blind or disabled (or being treated as being blind or disabled) without regard to whether the individual is eligible for supplemental security income benefits under title XVI on the basis of being blind or disabled and including an individual who is eligible for medical assistance on the basis of section 1902(e)(3).
(iii) Dual eligibles.—The individual is entitled to benefits under any part of title XVIII.
(iv) Terminally ill hospice patients.—The individual is terminally ill and is receiving benefits for hospice care under this title.
(v) Eligible on basis of institutionalization.—The individual is an inpatient in a hospital, nursing facility, intermediate care facility for the mentally retarded, or other medical institution, and is required, as a condition of receiving services in such institution under the State plan, to spend for costs of medical care all but a minimal amount of the individual’s income required for personal needs.
(vi) Medically frail and special medical needs individuals.—The individual is medically frail or otherwise an individual with special medical needs (as identified in accordance with regulations of the Secretary).
(viii) Children in foster care receiving child welfare services and children receiving foster care or adoption assistance.—The individual is an individual with respect to whom child welfare services are made available under part B of title IV on the basis of being a child in foster care orwith respect to whom adoption or foster care assistance is made available under part E of such title, without regard to age, or the individual qualifies for medical assistance on the basis of section 1902(a)(10)(A)(i)(IX).
(ix) TANF and section 1931 parents.—The individual qualifies for medical assistance on the basis of eligibility to receive assistance under a State plan funded under part A of title IV (as in effect on or after the welfare reform effective date defined in section 1931(i)).
(xi) Limited services beneficiaries.—The individual—
(II) is not a qualified alien (as defined in section 431 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) and receives care and services necessary for the treatment of an emergency medical condition in accordance with section 1903(v).
(C) Full-benefit eligible individuals.—
(i) In general.—For purposes of this paragraph, subject to clause (ii), the term “full-benefit eligible individual” means for a State for a month an individual who is determined eligible by the State for medical assistance for all services defined in section 1905(a) which are covered under the State plan under this title for such month under section 1902(a)(10)(A) or under any other category of eligibility for medical assistance for all such services under this title, as determined by the Secretary.
(ii) Exclusion of medically needy and spend-down populations.—Such term shall not include an individual determined to be eligible by the State for medical assistance under section 1902(a)(10)(C) or by reason of section 1902(f) or otherwise eligible based on a reduction of income based on costs incurred for medical or other remedial care.
(b) Benchmark Benefit Packages.—
(1) In general.—For purposes of subsection (a)(1), subject to paragraphs (5) and (6),each of the following coverages shall be considered to be benchmark coverage:
(A) FEHBP-equivalent health insurance coverage.—The standard Blue Cross/Blue Shield preferred provider option service benefit plan, described in and offered under section 8903(1) of title 5, United States Code.
(B) State employee coverage.—A health benefits coverage plan that is offered and generally available to State employees in the State involved.
(C) Coverage offered through hmo.—The health insurance coverage plan that—
(ii) has the largest insured commercial, non-medicaid enrollment of covered lives of such coverage plans offered by such a health maintenance organization in the State involved.
(D) Secretary-approved coverage.—Any other health benefits coverage that the Secretary determines, upon application by a State, provides appropriate coverage for the population proposed to be provided such coverage.
(2) Benchmark-equivalent coverage.—For purposes of subsection (a)(1), subject to paragraphs (5) and (6)coverage that meets the following requirement shall be considered to be benchmark-equivalent coverage:
(A) Inclusion of basic services.—The coverage includes benefits for items and services within each of the following categories of basic services:
(i) Inpatient and outpatient hospital services.
(ii) Physicians’ surgical and medical services.
(iii) Laboratory and x-ray services.
(iv) Coverage of prescription drugs.
(v) Mental health services.
(vi) Well-baby and well-child care, including age-appropriate immunizations.
(vii) Other appropriate preventive services, as designated by the Secretary.
(B) Aggregate actuarial value equivalent to benchmark package.—The coverage has an aggregate actuarial value that is at least actuarially equivalent to one of the benchmark benefit packages described in paragraph (1).
(C) Substantial actuarial value for additional services included in benchmark package.—With respect to each of the following categories of additional services for which coverage is provided under the benchmark benefit package used under subparagraph (B), the coverage has an actuarial value that is equal to at least 75 percent of the actuarial value of the coverage of that category of services in such package:
(i) Vision services.
(ii) Hearing services.
(3) Determination of actuarial value.—The actuarial value of coverage of benchmark benefit packages shall be set forth in an actuarial opinion in an actuarial report that has been prepared—
(A) by an individual who is a member of the American Academy of Actuaries;
(B) using generally accepted actuarial principles and methodologies;
(C) using a standardized set of utilization and price factors;
(D) using a standardized population that is representative of the population involved;
(E) applying the same principles and factors in comparing the value of different coverage (or categories of services);
(F) without taking into account any differences in coverage based on the method of delivery or means of cost control or utilization used; and
(G) taking into account the ability of a State to reduce benefits by taking into account the increase in actuarial value of benefits coverage offered under this title that results from the limitations on cost sharing under such coverage.
The actuary preparing the opinion shall select and specify in under subparagraphs (C) and (D).
(4) Coverage of rural health clinic and fqhc services.—Notwithstanding the previous provisions of this section, a State may not provide for medical assistance through enrollment of an individual with benchmark coverage or benchmark equivalent coverage under this section unless—
(5) Minimum standards.—Effective January 1, 2014, any benchmark benefit package under paragraph (1) or benchmark equivalent coverage under paragraph (2) must provide at least essential health benefits as described in section 1302(b) of the Patient Protection and Affordable Care Act.
(6) Mental health services paritys.—
(A) In general.—In the case of any benchmark benefit package under paragraph (1) or benchmark equivalent coverage under paragraph (2) that is offered by an entity that is not a medicaid managed care organization and that provides both medical and surgical benefits and mental health or substance use disorder benefits, the entity shall ensure that the financial requirements and treatment limitations applicable to such mental health or substance use disorder benefits comply with the requirements of section 2705(a) of the Public Health Service Act in the same manner as such requirements apply to a group health plan.
(B) Deemed compliance.—Coverage provided with respect to an individual described in section 1905(a)(4)(B) and covered under the State plan under section 1902(a)(10)(A) of the services described in section 1905(a)(4)(B) (relating to early and periodic screening, diagnostic, and treatment services defined in section 1905(r)) and provided in accordance with section 1902(a)(43), shall be deemed to satisfy the requirements of subparagraph (A).
(7) Coverage of family planning services and supplies.—Notwithstanding the previous provisions of this section, a State may not provide for medical assistance through enrollment of an individual with benchmark coverage or benchmark-equivalent coverage under this section unless such coverage includes for any individual described in section 1905(a)(4)(C), medical assistance for family planning services and supplies in accordance with such section.
(c) Publication of Provisions Affected.—With respect to a State plan amendment to provide benchmark benefits in accordance with subsections (a) and (b) that is approved by the Secretary, the Secretary shall publish on the Internet website of the Centers for Medicare & Medicaid Services, a list of the provisions of this title that the Secretary has determined do not apply in order to enable the State to carry out the plan amendment and the reason for each such determination on the date such approval is made, and shall publish such list in the Federal Register and not later than 30 days after such date of approval.
 February 8, 2006.
 P.L. 111-148, §2004(c)(2), inserts “, or the individual qualifies for medical assistance on the basis of section 1902(a)(10)(A)(i)(IX)”, to take effect on January 1, 2014.
 See Vol. II, P.L. 78-410, §2791(b)(3).