work, Inc., a prepaid health plan licensed and operating as an HMO under Tennessee law, that has been receiving payment under a prepaid Medicaid contract since May, 1984. The committee is informed that, as of July, 1989, the Network's private enrollees exceed 15 percent of its total enrollees, and that the Network is aggressively seeking additional commercial enrollees. To give the Network additional time to increase its private enrollment, the committee bill would direct the Secretary to continue to waive, on the same terms and conditions, the application of the 75 percent limit through June 30, 1992.

(n) Day Habilitation and Related Services. Under current law, States may include among the services covered under their Medicaid programs (1) clinic services and (2) other diagnostic, screening, preventive, and rehabilitative services. Some States have elected, under one or the other of these optional service categories, to pay for day habilitation services to individuals with mental retardation or a related condition, including those who are not residents of ICF's/MR and are not participating in a 1915(c) home and community-based services waiver. The committee understands that 15 States have been providing such services (Arkansas, Idaho, Maine, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Rhode Island, Utah, Vermont, Virginia, and Washington) under State Medicaid plans approved by the Secretary.

It has come to the committee's attention that HCFA is threatening to rescind or revoke previously approved State plan provisions for coverage of day habilitation services to individuals with mental retardation or a related condition who do not reside in ICF's/MR. In the view of the committee, HCFA should be encouraging States to offer community-based services to this vulnerable population, not restricting their efforts to do so. Accordingly, the committee bill would prohibit the Secretary from withholding, suspending, disallowing, or denying Federal Medicaid matching funds for day habilitation and related services under a State plan provision approved on or before June 30, 1989. The committee specifically intends that this prohibition apply with respect to such States as Arkansas and Maine, who were providing day habilitation services under an approved State plan but who were notified by HCFA prior to June 30, 1989, that their State plan approvals were being rescinded. The committee bill would further prohibit the Secretary from withdrawing Federal approval of any State plan provision under which day habilitation services have been or are being offered. Thus, HCFA would be required to reinstate the approvals of the plan provisions of such States as Arkansas and Maine that HCFA has attempted to withdraw.

Under the committee bill, these prohibitions would apply until the Secretary promulgates a regulation specifying the types of services that a State may cover under the optional service categories of clinic or other rehabilitative services. The committee bill would not require the Secretary to issue such a regulation. However, the Secretary would be prohibited from withholding, suspending, disallowing, or denying Federal Medicaid matching funds with respect to day habilitation or related services offered by a State under a State plan provision approved on or before June 30, 1989, unless and

until the Secretary issues a final regulation and determines that a State plan does not comply with the regulation. The regulation, if any, would have to be promulgated after a notice of proposed rulemaking and at least 60 days for public comment, and would have to specify the types of day habilitation and related services that a State may cover under the optional service categories and any requirements respecting such coverage. If the Secretary finds that a State plan does not comply with the final regulation, the committee bill would require the Secretary to notify the State of the determination and its basis. The committee bill would preclude the Secretary from withholding, suspending, disallowing, or denying any Federal Medicaid matching funds pursuant to such a determination for day habilitation services provided before the first day of the first calendar quarter beginning after the date of the notice to the State.

The committee notes that, under section 4221 of the committee bill, States would have the option to offer community habilitation and supportive services to individuals with mental retardation or a related condition. One element of this new optional service benefit is day habilitation and related services. The committee emphasizes that day habilitation and related services offered by States under the optional service categories of clinic services or other rehabilitative services are not subject to the same requirements that would apply to day habilitation and related services offered as an element of community habilitation and supportive services. For example, under section 4221, day habilitation and related services could only be offered as a supplement to the core benefits of case management, respite care, and personal attendant care. This core benefits requirement would not apply to day habilitation services offered under the optional service categories of clinic or other rehabilitative services.

Other Matters (Not Addressed in the Committee Bill)

The committee wishes to clarify with respect to payments by States under Medicaid that providers may use Medicaid receivables as collateral for loans, or may sell such receivables, so long as payment by States under Medicaid for services rendered by the provider is always made directly to the provider.

SUBTITLE D-MATERNAL AND CHILD HEALTH PROGRAM

Established in 1981 at Title V of the Social Security Act, the Maternal and Child Health (MCH) Block Grant (also known as "Title V") represents a consolidation of seven previous formula and categorical programs designed to serve mothers, pregnant women, infants, and children. Under the MCH Block Grant, Federal funds are available to the States for the provision or the purchase of a broad range of maternal and child health services that will help States in (i) reducing infant mortality; (ii) increasing the availability of prenatal, delivery, and postpartum care to low-income women; (iii) reducing the incidence of preventable and handicapping conditions among low-income children; (iv) increasing the number of children immunized against disease and receiving health assessments; and (v) providing medically necessary services

to children with handicaps or "children with special health care needs."

Eligibility criteria under the MCH Block Grant are set by the States themselves. States may elect to charge for services provided. No charges may be imposed, however, for services provided to mothers and children whose incomes fall below the Federal poverty level.

Funds are allocated among the States based on their proportional share of 1981 outlays for the various programs consolidated into the MCH Block Grant. In order to receive their allocation, however, States must meet a matching requirement: for every $4 in Federal funds a State receives under Title V, the State must spend $3 of its own moneys on maternal and child health services.

The Title V law provides that between 10 and 15 percent of the amounts appropriated in each fiscal year are to be withheld from the States and administered by the Secretary. Known as the Federal "set-aside", these funds support a variety of designated activities. An additional amount of funds has been withheld through fiscal year 1989 to establish and operate projects for the screening of sickle-cell anemia and other genetic disorders.

The authorization level for the MCH Block Grant in fiscal year 1990 and subsequent years is $561 million. Appropriations for Title V for fiscal year 1989 are $554.3 million.

Sec. 4301-Increase in Authorization of Appropriations

(a) Purpose of Program. Current Title V law sets out a number of purposes for which the States and the Secretary are authorized to expend appropriated MCH Block Grant funds. For the States, such purposes include (i) providing and assuring access to quality maternal and child health services for mothers and children with low incomes or with limited availability of health services; (ii) reducing infant mortality, the incidence of preventable and handicapping conditions, and the need for inpatient and long-term care services among children, and increasing the number of children immunized against preventable diseases and the number of low-income children receiving health assessments and follow-up diagnostic and treatment services; (iii) providing rehabilitation services for blind and disabled children under the age of 16 receiving benefits under Title XVI of the Social Security Act; and (iv) providing various services for "children with special health care needs." For the Secretary, such purposes include providing for (i) special projects of regional and national significance ("SPRANS" Projects); (ii) research and training projects relating to maternal and child health; (iii) genetic disease testing, counseling and information projects; (iv) grants relating to hemophilia; and (v) newborn genetic screening projects.

The Title V statute does not, however, specify any national maternal and child health goals or objectives that should be attained, in part, through funds made available under the MCH Block Grant. Over the years, this lack of program direction, coupled with the law's De minimis reporting requirements, has made it difficult for Congress to determine the MCH Block Grant's effectiveness in meeting the Nation's maternal and child health needs.

The committee believes that the establishment of national goals and objectives for the MCH Block Grant program is in the best interests of both Title V and the individuals it is authorized to serve. Thus, the committee bill amends section 501(a) of the Title V statute to establish-through reference to the Department's soon-to-bepublished Year 2000 National Health Objectives ("Year 2000 Objectives")-health status goals and national health objectives for the MCH Block Grant.

The "Year 2000 Objectives" report represents a revision and update of the Department's 1980 release, Promoting Health/Preventing Disease: Objectives for the Nation. That volume set out specific and measurable objectives for a number of priority areas that have been identified by the Department as the cornerstones for the continued improvement in the health of the American people. Among those priority areas are (i) maternal and infant health; and (ii) immunization and control of infectious diseases. The new report will retain these two categories as priority areas and will establish within each, a number of objectives that should be met by public health authorities within the next decade, if the national goal of enhancing the health status of all mothers and children is ever to be reached.

It is primarily to these two priority areas (and to the objectives cited within each) that the committee is referring in amending section 501(a) to specify the "applicable" health status goals and national health objectives established by the "Year 2000 Objectives" report. In particular, within the area of maternal and infant health, the committee intends that the MCH Block Grant be designed to help meet, at a minimum, the "Year 2000 Objectives" established for (i) rates of infant mortality; (ii) rates of low-birth weight babies; (iii) rates of maternal mortality; (iv) rates of neonatal death; (v) rates of perinatal death; and (vi) the proportion of women who deliver who do not receive prenatal care during their first trimester of pregnancy. Within the area of immunization and the control of infectious diseases, the committee intends that the MCH Block Grant be designed to help meet, at a minimum, the "Year 2000 Objectives" established for immunization levels for children under 2 years of age. The committee further intends that the objectives specified within each priority area form the basis for individual programs and projects funded by both the Secretary and by the States.

The committee notes that there are other applicable "Year 2000 Objectives" that the committee expects to be incorporated into the design and operation of the MCH Block Grant. Among these are the objectives relating to (i) the health status of adolescents; (ii) health education and access to preventive health services; and (iii) surveillance data systems. Again, the committee intends that the objectives specified within each of these priority areas be applied to programs and projects funded by either the Secretary or by the individual States.

(b) Purposes for Which States are Authorized to Expend Funds. As noted above, under current law, Title V targets specified individuals and services for which States are authorized to expend appropriated MCH Block Grant funds. The committee bill makes no changes in the classes or groups of individuals that may be eligible

for services under an individual State Title V program. It does, however, include some clarifications with respect to the services that a State may provide to such individuals.

With regard to blind and disabled children under the age of 16 who are receiving benefits under Title XVI of the Social Security Act, the committee bill makes clear that State Title V programs can provide rehabilitation services only to the extent that such services are not covered under a State's Medicaid program. Because MCH Block Grant dollars are in such short supply, the committee believes it is inappropriate for Title V to pay for rehabilitation services for this population if such services are already provided under a State's Medicaid plan. If, however, a State's Medicaid plan does not provide coverage for these services, the Title V program may be the most appropriate source for assistance. Under the committee's bill, States are authorized to provide such assistance only in these limited circumstances.

With regard to "children with special health care needs", the committee bill makes clear that State Title V programs can provide case management or "care coordination" services to assist this population and their families in obtaining the various types of services such children may require. While the term "care coordination" services is a new one for the Title V statute, the committee bill defines it to include those services now specified by the Secretary under section 502(c)(D)(iii) of the current law.

(c) Purposes for Which the Secretary is Authorized to Expend Funds. Again, as noted above, current Title V law specifies a number of programs and projects for which the Secretary is authorized to expend appropriated MCH Block Grant funds directly. Such programs and projects are funded through two different Federal "set-asides" which are made up of moneys that are obligated directly by the Secretary.

The first set-aside, for special projects of regional and national significance ("SPRANS"), was established in 1981 and is designed to fund "SPRANS" projects and other programs relating to maternal and child health training and research, genetic diseases, and hemophilia. Under current law, the Secretary is required to retain between 10 and 15 percent of appropriated MCH Block Grant funds to support these programs.

The second set-aside was established in 1986 and is designed to fund projects for the screening of newborns with sickle-cell anemia and other genetic disorders. Under current law, the Secretary is required to retain 9 percent of appropriated MCH Block Grant funds over and above a certain level to support these projects. Current law also provides that the authority for this set-aside expires at the end of fiscal year 1989.

The committee bill retains the current structure of the Title V statute by providing for two different Federal set-asides. It amends current law, however, by making modifications in the statute's requirements relating both to the amount of appropriated funds that must be retained by the Secretary for each set-aside, and to the purposes for which the set-aside moneys are to be used.

(1) "SPRANS" Set-Aside. Under the committee bill, the Secretary is required to retain a full 15 percent of the amounts appropriated to the MCH Block Grant for programs and projects of the type cur