(a) State Plan Amendment- Title XIX of the Social Security Act (42 U.S.C. 1396a et seq.), as amended by sections 2201 and 2305, is amended by adding at the end the following new section:

‘Sec. 1945. State Option To Provide Coordinated Care Through a Health Home for Individuals With Chronic Conditions-

‘(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 for which the Secretary determines it is necessary to waive in order to implement this section, beginning January 1, 2011, a State, at its option as a State plan amendment, may provide for medical assistance under this title to eligible individuals with chronic conditions who select a designated provider (as described under subsection (h)(5)), a team of health care professionals (as described under subsection (h)(6)) operating with such a provider, or a health team (as described under subsection (h)(7)) as the individual’s health home for purposes of providing the individual with health home services.

‘(b) Health Home Qualification Standards- The Secretary shall establish standards for qualification as a designated provider for the purpose of being eligible to be a health home for purposes of this section.

‘(c) Payments-

‘(1) IN GENERAL- A State shall provide a designated provider, a team of health care professionals operating with such a provider, or a health team with payments for the provision of health home services to each eligible individual with chronic conditions that selects such provider, team of health care professionals, or health team as the individual’s health home. Payments made to a designated provider, a team of health care professionals operating with such a provider, or a health team for such services shall be treated as medical assistance for purposes of section 1903(a), except that, during the first 8 fiscal year quarters that the State plan amendment is in effect, the Federal medical assistance percentage applicable to such payments shall be equal to 90 percent.

‘(2) METHODOLOGY-

‘(A) IN GENERAL- The State shall specify in the State plan amendment the methodology the State will use for determining payment for the provision of health home services. Such methodology for determining payment--

‘(i) may be tiered to reflect, with respect to each eligible individual with chronic conditions provided such services by a designated provider, a team of health care professionals operating with such a provider, or a health team, as well as the severity or number of each such individual’s chronic conditions or the specific capabilities of the provider, team of health care professionals, or health team; and

‘(ii) shall be established consistent with section 1902(a)(30)(A).

‘(B) ALTERNATE MODELS OF PAYMENT- The methodology for determining payment for provision of health home services under this section shall not be limited to a per-member per-month basis and may provide (as proposed by the State and subject to approval by the Secretary) for alternate models of payment.

‘(3) PLANNING GRANTS-

‘(A) IN GENERAL- Beginning January 1, 2011, the Secretary may award planning grants to States for purposes of developing a State plan amendment under this section. A planning grant awarded to a State under this paragraph shall remain available until expended.

‘(B) STATE CONTRIBUTION- A State awarded a planning grant shall contribute an amount equal to the State percentage determined under section 1905(b) (without regard to section 5001 of Public Law 111-5) for each fiscal year for which the grant is awarded.

‘(C) LIMITATION- The total amount of payments made to States under this paragraph shall not exceed $25,000,000.

‘(d) Hospital Referrals- A State shall include in the State plan amendment a requirement for hospitals that are participating providers under the State plan or a waiver of such plan to establish procedures for referring any eligible individuals with chronic conditions who seek or need treatment in a hospital emergency department to designated providers.

‘(e) Coordination- A State shall consult and coordinate, as appropriate, with the Substance Abuse and Mental Health Services Administration in addressing issues regarding the prevention and treatment of mental illness and substance abuse among eligible individuals with chronic conditions.

‘(f) Monitoring- A State shall include in the State plan amendment--

‘(1) a methodology for tracking avoidable hospital readmissions and calculating savings that result from improved chronic care coordination and management under this section; and

‘(2) a proposal for use of health information technology in providing health home services under this section and improving service delivery and coordination across the care continuum (including the use of wireless patient technology to improve coordination and management of care and patient adherence to recommendations made by their provider).

‘(g) Report on Quality Measures- As a condition for receiving payment for health home services provided to an eligible individual with chronic conditions, a designated provider shall report to the State, in accordance with such requirements as the Secretary shall specify, on all applicable measures for determining the quality of such services. When appropriate and feasible, a designated provider shall use health information technology in providing the State with such information.

‘(h) Definitions- In this section:

‘(1) ELIGIBLE INDIVIDUAL WITH CHRONIC CONDITIONS-

‘(A) IN GENERAL- Subject to subparagraph (B), the term ‘eligible individual with chronic conditions’ means an individual who--

‘(i) is eligible for medical assistance under the State plan or under a waiver of such plan; and

‘(ii) has at least--

‘(I) 2 chronic conditions;

‘(II) 1 chronic condition and is at risk of having a second chronic condition; or

‘(III) 1 serious and persistent mental health condition.

‘(B) RULE OF CONSTRUCTION- Nothing in this paragraph shall prevent the Secretary from establishing higher levels as to the number or severity of chronic or mental health conditions for purposes of determining eligibility for receipt of health home services under this section.

‘(2) CHRONIC CONDITION- The term ‘chronic condition’ has the meaning given that term by the Secretary and shall include, but is not limited to, the following:

‘(A) A mental health condition.

‘(B) Substance use disorder.

‘(C) Asthma.

‘(D) Diabetes.

‘(E) Heart disease.

‘(F) Being overweight, as evidenced by having a Body Mass Index (BMI) over 25.

‘(3) HEALTH HOME- The term ‘health home’ means a designated provider (including a provider that operates in coordination with a team of health care professionals) or a health team selected by an eligible individual with chronic conditions to provide health home services.

‘(4) HEALTH HOME SERVICES-

‘(A) IN GENERAL- The term ‘health home services’ means comprehensive and timely high-quality services described in subparagraph (B) that are provided by a designated provider, a team of health care professionals operating with such a provider, or a health team.

‘(B) SERVICES DESCRIBED- The services described in this subparagraph are--

‘(i) comprehensive care management;

‘(ii) care coordination and health promotion;

‘(iii) comprehensive transitional care, including appropriate follow-up, from inpatient to other settings;

‘(iv) patient and family support (including authorized representatives);

‘(v) referral to community and social support services, if relevant; and

‘(vi) use of health information technology to link services, as feasible and appropriate.

‘(5) DESIGNATED PROVIDER- The term ‘designated provider’ means a physician, clinical practice or clinical group practice, rural clinic, community health center, community mental health center, home health agency, or any other entity or provider (including pediatricians, gynecologists, and obstetricians) that is determined by the State and approved by the Secretary to be qualified to be a health home for eligible individuals with chronic conditions on the basis of documentation evidencing that the physician, practice, or clinic--

‘(A) has the systems and infrastructure in place to provide health home services; and

‘(B) satisfies the qualification standards established by the Secretary under subsection (b).

‘(6) TEAM OF HEALTH CARE PROFESSIONALS- The term ‘team of health care professionals’ means a team of health professionals (as described in the State plan amendment) that may--

‘(A) include physicians and other professionals, such as a nurse care coordinator, nutritionist, social worker, behavioral health professional, or any professionals deemed appropriate by the State; and

‘(B) be free standing, virtual, or based at a hospital, community health center, community mental health center, rural clinic, clinical practice or clinical group practice, academic health center, or any entity deemed appropriate by the State and approved by the Secretary.

‘(7) HEALTH TEAM- The term ‘health team’ has the meaning given such term for purposes of section 3502 of the Patient Protection and Affordable Care Act.’.

(b) Evaluation-

(1) INDEPENDENT EVALUATION-

(A) IN GENERAL- The Secretary shall enter into a contract with an independent entity or organization to conduct an evaluation and assessment of the States that have elected the option to provide coordinated care through a health home for Medicaid beneficiaries with chronic conditions under section 1945 of the Social Security Act (as added by subsection (a)) for the purpose of determining the effect of such option on reducing hospital admissions, emergency room visits, and admissions to skilled nursing facilities.

(B) EVALUATION REPORT- Not later than January 1, 2017, the Secretary shall report to Congress on the evaluation and assessment conducted under subparagraph (A).

(2) SURVEY AND INTERIM REPORT-

(A) IN GENERAL- Not later than January 1, 2014, the Secretary of Health and Human Services shall survey States that have elected the option under section 1945 of the Social Security Act (as added by subsection (a)) and report to Congress on the nature, extent, and use of such option, particularly as it pertains to--

(i) hospital admission rates;

(ii) chronic disease management;

(iii) coordination of care for individuals with chronic conditions;

(iv) assessment of program implementation;

(v) processes and lessons learned (as described in subparagraph (B));

(vi) assessment of quality improvements and clinical outcomes under such option; and

(vii) estimates of cost savings.

(B) IMPLEMENTATION REPORTING- A State that has elected the option under section 1945 of the Social Security Act (as added by subsection (a)) shall report to the Secretary, as necessary, on processes that have been developed and lessons learned regarding provision of coordinated care through a health home for Medicaid beneficiaries with chronic conditions under such option.