H.R. 3995 — State Public Option Act

This section establishes an optional Medicaid buy-in program, effective January 1, 2026, for state residents not otherwise eligible for Medicaid and not concurrently enrolled in other health insurance coverage (i.e., "previously undescribed individuals" under new SSA §1902(uu)), subject to state-imposed premiums and cost-sharing. States may limit coverage for these individuals to minimum essential benefits, as permitted for certain other Medicaid eligibility groups. This section provides a 90% federal matching rate for state administrative expenses related to the buy-in program (new SSA §1903(a)(7)). Premium and cost-sharing revenues collected offset the amount of federal Medicaid payments claimed for these individuals; states must remit to HHS 50% of any excess premiums over expenditures for such coverage. For buy-in participants, states may impose actuarially sound premiums up to 8.5% of family household income (as defined under IRC §36B(d)(2))—varying only by ACA-permitted factors (e.g., age, tobacco use, geography)—and cost-sharing subject to ACA Marketplace limits under PPACA §1302(c), with eligibility for cost-sharing reductions under PPACA §1402. (Thus, the program enables states to offer subsidized coverage akin to ACA exchanges through Medicaid infrastructure, with enhanced administrative support.)

This section directs the Secretary of Health and Human Services to review Medicaid quality measures in use and, not later than January 1, 2030, update them as necessary to ensure appropriateness for individuals eligible to buy into Medicaid coverage under new SSA section 1902(a)(10)(A)(ii)(XXIV); review and, not later than January 1, 2032, update related state reporting requirements to incorporate such measures; and award grants to states for updating and implementing the measures. The section appropriates $50 million for FY2026, available until expended, for these purposes.

This section renews and expands the Medicaid state plan requirement to pay primary care services (as defined in SSA §1902(jj)) at a rate of not less than 100% of the Medicare Part B physician fee schedule rate (or, if greater, the rate using the 2009 conversion factor under SSA §1848(d), and no less than the otherwise applicable Medicaid rate without regard to this provision). (1) The payment floor applies to such services furnished in 2013 and 2014 by physicians with a primary specialty in family medicine, general internal medicine, or pediatric medicine. (2) Beginning on the first day of the first month after enactment of the State Public Option Act, the payment floor applies to such services furnished by board-certified physicians in family medicine, general internal medicine, pediatric medicine, or obstetrics/gynecology; supervised advanced practice clinicians (as defined by the Secretary); rural health clinics, federally qualified health centers, or other clinics reimbursed on a physician fee schedule for services by qualifying physicians, nurse practitioners, physician assistants, or certified nurse-midwives; and nurse practitioners, physician assistants, or certified nurse-midwives working in accordance with state law (with direct payment to such practitioners at Medicare-equivalent levels). The section further (3) extends enhanced federal medical assistance percentage (FMAP) payments under SSA §1905(dd) for these primary care services through an additional period beginning one year after enactment (previously through 2015); (4) excludes from the primary care services definition (under SSA §1902(jj)) any such services provided in a hospital emergency department; and (5) requires Medicaid managed care organization contracts (under SSA §1903(m)(2)(A)) to ensure payments for these primary care services meet the floor (with documentation to states and the Secretary and approval of compliant capitation, partial capitation, or value-based arrangements). (As background, the primary care payment floor—originally enacted under the Affordable Care Act—increases Medicaid reimbursement for primary care to Medicare levels to support access for Medicaid enrollees, previously applicable only through 2014 for limited physicians with enhanced FMAP through 2015.)

This section revises the enhanced Federal Medical Assistance Percentage (FMAP) schedule for state Medicaid expenditures on medical assistance to newly eligible individuals (i.e., adults up to 138% of the federal poverty level made eligible by the ACA Medicaid expansion, previously ineligible for full Medicaid benefits) by tying the phase-down periods to consecutive 12-month periods beginning when the state first provides such assistance, rather than fixed calendar years: (1) first three such periods at 100% FMAP (from calendar years 2014-2016); (2) fourth such period at 95% (from 2017); (3) fifth at 94% (from 2018); (4) sixth at 93% (from 2019); and (5) seventh such period and thereafter at 90% (from 2020 and thereafter). (Thus, states newly expanding Medicaid after 2020 receive the full seven-year enhanced FMAP phase-down from their expansion start date.) The amendments apply as if included in the ACA (P.L. 111-148).

This section requires state Medicaid plans to cover comprehensive sexual and reproductive health care services, including abortion services and abortion-related services, as a mandatory benefit for medical assistance furnished on or after January 1, 2026. (1) It adds these services as a new mandatory category under SSA section 1905(a) (42 U.S.C. 1396d(a)); (2) requires their inclusion in the coverage specified in state plans under SSA section 1902(a)(10)(A) (42 U.S.C. 1396a(a)(10)(A)); and (3) makes conforming amendments to SSA sections 1932(e)(1)(B) and 1937(b) (42 U.S.C. 1396u–2, 1396u–7) to ensure benchmark and benchmark-equivalent coverage includes these services. (Medicaid is the joint federal-state program that provides health coverage to low-income individuals, including children, pregnant women, parents, seniors, and people with disabilities.)