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1 ficiencies, must be formally approved by the Comptroller 2 General of the United States;

3 "(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;


"(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 13 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 otherwise 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 (A), (B), (C), or (D) of paragraph (1) and that it has



1 not made the corrections as determined under paragraph

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

3 sections (a) (2), (a) (3), and (a) (6).


"(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.


"(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 beginning on the first day of the calendar quarter in which 12 the corrections were made.


"(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).


"(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


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 personS nel to any State which requests assistance in meeting the 9 requirements of paragraph (1).



"(9) If the Secretary notifies a State of deficiencies, or

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.".

17 (d) Title XIX of the Social Security Act is amended by

18 adding at the end the following new sections:

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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 following enactment of this title. The Secretary shall

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exclude those cases for which the most recent determination or redetermination of eligibility was correctly made, but where eligibility status subsequently changed, if the State meets the time requirements specified in section 1902 (a) (37);

"(b) establish a State classification system, with States classified according to: (1) whether the State provides medical assistance for persons specified in section 1902 (a) (10) (C); and (2) population, with those States with greater populations in one grouping and those States with lesser populations in another;

"(c) establish an error rate defined as the rate which equals the 75th percentile of the rates reported by the States under paragraph (a) for each class of States under (b).


"SEC. 1912. The Secretary shall prepare a biannual 18 report (beginning with fiscal year 1978) on the character19 istics of the State programs of medical assistance financed 20 under this title, including, at least (1) a description of the 21 scope and duration of benefits available in each State, (2) a 22 description of eligibility criteria for all groups eligible for 23 medical assistance, (3) specification of the reimbursement. 24 methodology for payments under the State program for the 25 major types of services, and (4) a listing of all fiscal agents,


1 insurers and health maintenance organizations contracted 2 with for administration of the program. Such report shall be 3 submitted to the Committee on Finance of the Senate and 4 the Committee on Interstate and Foreign Commerce of the 5 House of Representatives no later than six months following 6 the close of the fiscal year."




SEC. 32. (a) (1) Section 1102 of the Social Security

9 Act is amended





(A) by inserting "(a)" immediately after “SEC. 1102.", and

(B) by adding at the end the following subsection:

13 "(b) Whenever the Secretary, in compliance with 14 requirements imposed by law, has published in the Federal 15 Register general notice of any proposed rule or regulation 16 to be promulgated by him, that notice shall indicate whether 17 prompt promulgation is urgent. Where the notice indicates. 18 that prompt promulgation is urgent, the rule or regulation 19 shall become effective within sixty days after publication of 20 the notice; in any other case, the rule or regulation shall 21 become effective without regard to the provisions of this 22 subsection in the manner prescribed by applicable provisions 23 of law.".


(2) Amendments made by paragraph (1) shall be 25 effective for proposed rules published in the Federal Register


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