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(vi) review to determine that payments made

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do not exceed those allowable;

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'(vii) review to determine and recover any 4

third party liability; 5

" (viii) review which reasonably safeguards 6

against duplicate billing.". ñ (b) Section 1902 (a) (6) is amended by adding the 8 following at the end: "the reports are to be accurate and 9 filed within sixty days following the close of the reporting 10 period for monthly and quarterly reports, and within one 11 hundred and five days following the close of reporting 12 periods for yearly reports;”. 13 (c) Amend section 1903 by adding at the end the 14 following subsection:

"(n) (1) Effective with each calendar quarter beginning 16 October 1, 1978 the amount paid to each State under para17 graphs (a) (2), (a) (3), and (a) (6) shall be reduced or 18 terminated unless the State demonstrates to the Secretary

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19 that

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“(A) 95 percent of eligibility determinations are made within the time periods specified under section 1902 (a) (37) (A) and (B), except that in determin

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ing whether a State has met the requirements of this

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paragraph there shall not be included eligibility determinations for persons whose eligibility is determined

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under State plans approved under title I, X, XIV; XVI, or part A of title IV, or by the Secretary under sec

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tion 1634;

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"(B) the State's eligibility determination error rate does not exceed the rate specified in section 1911 (b), except that in determining whether a State has met the requirements of this paragraph there shall not be included error rates for those persons whose eligibility is determined under a State plan approved under titles I, X, XIV, XVI, or part A of title IV or by the Secretary under section 1634;

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“(C) the State is processing claims for payment 13 within the time period specified in section 1902 (a) 14 (39) (A) and applying prepayment and postpayment. 15 claims review procedures specified in section 1902 (a) 16 (39) (B); and 17

“(D) the State is making timely and complete 18

reports to the Secretary on the operation of its medi19 cal assistance program within the time period includ20 ing the information specified in section 1902 (a) (6). 21 “(2) The Secretary shall conduct an onsite survey in 22 each State, at least annually, of State performance in each 23 category under paragraph (1). The methodology and pro 24 cedures (which may involve onsite evaluation) employed, 25 including procedures for any necessary followup of any de

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1 ficiencies, must be formally approved by the Comptroller

2 General of the United States;

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“(3) Any State which fails to meet one or more of the 4 requirements specified in subparagraph (A), (B), (C) 5 or (D) of paragraph (1) shall be formally notified within 6 thirty days of the survey of the deficiencies. The State shall 7 be given an appropriate period of time, not to exceed six

8 months, to correct the deficiencies;

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“(4) Any State which fails to correct deficiencies within 10 the time period specified under paragraph (3) as determined 11 by the Secretary shall be notified and subject to a reduction 12 in Federal matching as specified in paragraph (5) beginning

on the first day of the first calendar quarter following the 14 date on which the Secretary specified the deficiencies must be 15 corrected under paragraph (3); 16 “(5) (A) Where the Secretary finds that a State failed 17 to meet the requirements of one of the subparagraphs (A), 18 (B), (C), or (D) of paragraph (1) and has not made cor19 rections required under paragraph (4), Federal matching 20 shall be reduced to 50 percent of what the State would other21 wise receive under subsections (a) (2), (a) (3), and (a) 22 (6) .

“ (B) Where the Secretary determines that a State fail24 ed to meet requirements of two or more of subparagraphs 25 (A), (B), (C), or (D) of paragraph (1) and that it has

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1 not made the corrections as determined under paragraph

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(4), its Federal matching shall be terminated under sub

3 sections (a) (2), (a) (3), and (a) (6). 4 “(6) (A) Any State which had had Federal matching 5 reduced or terminated under paragraph (5) shall continue to 6 have the matching reduced or terminated until the Secretary

7 determines that the deficiencies have been corrected.

8. “(B) A State determined to have corrected all cate9 gories specified as deficient shall be entitled to the matching 10 rate specified in subsections (a) (2), (a) (3), and (a) (6) 11 begiming ou the first day of the calendar quarter in which

12 the corrections were made.

13 " (C) In a State where matching has been terminated 14 under subsections (a) (2), (a) (3), and (a) (6) as pro15 vided under subparagraph (5) (B) and where the Secretary 16 determines that deficiencies continue in only one of the four 17 specified categories, that State shall, beginning on the first 18 day of the calendar quarter in which the correction was 19 made, be entitled to the reduced matching rate specified in

20 subparagraph (5) (A).

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(7) Where a State is determined by the Secretary 22 based upon an onsite evaluation to substantially exceed the 23 requirements of at least two of subparagraphs (A), (B), 24 (C), or (D) of paragraph (1) and meets the requirements 25 of the remaining subparagraphs, that State shall be notified

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1 and entitled to a Federal matching rate under subsection

2 (a) (6) of 75 percent and that amount shall apply in each

3 calendar quarter for which the Secretary finds the State con4 tinues to meet the requirements of this paragraph; 5 “(8) The Secretary shall provide or arrange for the 6 reasonable provision of technical assistance by experienced 7 and qualified Federal, State, or local governmental person8 nel to any State which requests assistance in meeting the 9 requirements of paragraph (1). 10 “(9) If the Secretary notifies a State of deficiencies, or

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a reduction, termination, or increase in Federal matching,

12 simultaneous notification shall also be made to the Governor

13 of the State, and the respective chairmen of the legislative 14 and appropriation committees of that State's legislature

15 having jurisdiction over the medical assistance program

16 authorized under this title.".

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(d) Title XIX of the Social Security Act is amended by 18 adding at the end the following new sections:

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“QUALITY CONTROL

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"SEC. 1911. The Secretary shall

* (a) determine the eligibility error rates, including cases incorrectly approved and cases incorrectly denied, for each State for the six-month period commencing with the first calendar quarter beginning six months

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following enactment of this title. The Secretary shall

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