(a) Limitation on total payments to each territory

(1) In general

Notwithstanding any other provision of this chapter (except for paragraph (2) of this subsection), the total amount certified by the Secretary of Health and Human Services under subchapters I, X, XIV, and XVI, under parts A and E of subchapter IV, and under subsection (b) of this section, for payment to any territory for a fiscal year shall not exceed the ceiling amount for the territory for the fiscal year.

(2) Certain payments disregarded

Paragraph (1) of this subsection shall be applied without regard to any payment made under section 603(a)(2), 603(a)(4), 603(a)(5), 606, 613(f), or 674(a)(6) of this title.

(b) Entitlement to matching grant

(1) In general

Each territory shall be entitled to receive from the Secretary for each fiscal year a grant in an amount equal to 75 percent of the amount (if any) by which—

(A) the total expenditures of the territory during the fiscal year under the territory programs funded under parts A and E of subchapter IV, including any amount paid to the State under part A of subchapter IV that is transferred in accordance with section 604(d) of this title and expended under the program to which transferred; exceeds

(B) the sum of—

(i) the amount of the family assistance grant payable to the territory without regard to section 609 of this title; and

(ii) the total amount expended by the territory during fiscal year 1995 pursuant to parts A and F of subchapter IV (as so in effect), other than for child care.

(2) Appropriation

Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for each of fiscal years 2017 and 2018, such sums as are necessary for grants under this paragraph.

(c) Definitions

As used in this section:

(1) Territory

The term “territory” means Puerto Rico, the Virgin Islands, Guam, and American Samoa.

(2) Ceiling amount

The term “ceiling amount” means, with respect to a territory and a fiscal year, the mandatory ceiling amount with respect to the territory, reduced for the fiscal year in accordance with subsection (e),¹ and reduced by the amount of any penalty imposed on the territory under any provision of law specified in subsection (a) during the fiscal year.

(3) Family assistance grant

The term “family assistance grant” has the meaning given such term by section 603(a)(1)(B) of this title.

(4) Mandatory ceiling amount

The term “mandatory ceiling amount” means—

(A) $107,255,000 with respect to Puerto Rico;

(B) $4,686,000 with respect to Guam;

(C) $3,554,000 with respect to the Virgin Islands; and

(D) $1,000,000 with respect to American Samoa.

(5) Total amount expended by the territory

The term “total amount expended by the territory”—

(A) does not include expenditures during the fiscal year from amounts made available by the Federal Government; and

(B) when used with respect to fiscal year 1995, also does not include—

(i) expenditures during fiscal year 1995 under subsection (g) or (i) of section 602 of this title (as in effect on September 30, 1995); or

(ii) any expenditures during fiscal year 1995 for which the territory (but for this section, as in effect on September 30, 1995) would have received reimbursement from the Federal Government.

(d) Authority to transfer funds to certain programs

A territory to which an amount is paid under subsection (b) of this section may use the amount in accordance with section 604(d) of this title.

(e) Repealed. Pub. L. 105-33, title V, §5512(c), Aug. 5, 1997, 111 Stat. 619

(f) Total amount certified under subchapter XIX

Subject to subsections (g) and (h) and section 1396u-5(e)(1)(B) of this title, the total amount certified by the Secretary under subchapter XIX with respect to a fiscal year for payment to—

(1) Puerto Rico shall not exceed (A) $116,500,000 for fiscal year 1994 and (B) for each succeeding fiscal year the amount provided in this paragraph for the preceding fiscal year increased by the percentage increase in the medical care component of the consumer price index for all urban consumers (as published by the Bureau of Labor Statistics) for the twelve-month period ending in March preceding the beginning of the fiscal year, rounded to the nearest $100,000;

(2) the Virgin Islands shall not exceed (A) $3,837,500 for fiscal year 1994, and (B) for each succeeding fiscal year the amount provided in this paragraph for the preceding fiscal year increased by the percentage increase referred to in paragraph (1)(B), rounded to the nearest $10,000;

(3) Guam shall not exceed (A) $3,685,000 for fiscal year 1994, and (B) for each succeeding fiscal year the amount provided in this paragraph for the preceding fiscal year increased by the percentage increase referred to in paragraph (1)(B), rounded to the nearest $10,000;

(4) Northern Mariana Islands shall not exceed (A) $1,110,000 for fiscal year 1994, and (B) for each succeeding fiscal year the amount provided in this paragraph for the preceding fiscal year increased by the percentage increase referred to in paragraph (1)(B), rounded to the nearest $10,000; and

(5) American Samoa shall not exceed (A) $2,140,000 for fiscal year 1994, and (B) for each succeeding fiscal year the amount provided in this paragraph for the preceding fiscal year increased by the percentage increase referred to in paragraph (1)(B), rounded to the nearest $10,000.

(g) Medicaid payments to territories for fiscal year 1998 and thereafter

(1) Fiscal year 1998

With respect to fiscal year 1998, the amounts otherwise determined for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa under subsection (f) for such fiscal year shall be increased by the following amounts:

(A) For Puerto Rico, $30,000,000.

(B) For the Virgin Islands, $750,000.

(C) For Guam, $750,000.

(D) For the Northern Mariana Islands, $500,000.

(E) For American Samoa, $500,000.

(2) Fiscal year 1999 and thereafter

Notwithstanding subsection (f) and subject to section 18043(a)(2) of this title and paragraphs (3) and (5), with respect to fiscal year 1999 and any fiscal year thereafter, the total amount certified by the Secretary under subchapter XIX for payment to—

(A) Puerto Rico shall not exceed—

(i) except as provided in clause (ii) or (iii), the sum of the amount provided in this subsection for the preceding fiscal year increased by the percentage increase in the medical care component of the Consumer Price Index for all urban consumers (as published by the Bureau of Labor Statistics) for the 12-month period ending in March preceding the beginning of the fiscal year, rounded to the nearest $100,000;

(ii) for each of fiscal years 2020 through 2021, the amount specified in paragraph (6) for each such fiscal year; and

(iii) for fiscal year 2023 and each subsequent fiscal year, the amount specified in paragraph (11) for such fiscal year;

(B) the Virgin Islands shall not exceed—

(i) except as provided in clause (ii), the sum of the amount provided in this subsection for the preceding fiscal year increased by the percentage increase referred to in subparagraph (A), rounded to the nearest $10,000;

(ii) for fiscal year 2020, $128,712,500; and

(iii) for fiscal year 2021, $127,937,500;

(C) Guam shall not exceed—

(i) except as provided in clause (ii), the sum of the amount provided in this subsection for the preceding fiscal year increased by the percentage increase referred to in subparagraph (A), rounded to the nearest $10,000;

(ii) for fiscal year 2020, $130,875,000; and

(iii) for fiscal year 2021, $129,712,500;

(D) the Northern Mariana Islands shall not exceed—

(i) except as provided in clause (ii), the sum of the amount provided in this subsection for the preceding fiscal year increased by the percentage increase referred to in subparagraph (A), rounded to the nearest $10,000;

(ii) for fiscal year 2020, $63,100,000; and

(iii) for fiscal year 2021, $62,325,000; and

(E) American Samoa shall not exceed—

(i) except as provided in clause (ii), the sum of the amount provided in this subsection for the preceding fiscal year increased by the percentage increase referred to in subparagraph (A), rounded to the nearest $10,000;

(ii) for fiscal year 2020, $86,325,000; and

(iii) for fiscal year 2021, $85,550,000.

For fiscal year 2022 (and, in the case of a territory other than Puerto Rico, for each subsequent fiscal year), the total amount certified for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa under subsection (f) and this subsection for the fiscal year shall be determined as if the preceding subparagraphs were applied to each of fiscal years 2020 through 2021 without regard to clause (ii) of each such subparagraph.

(3) Fiscal years 2006 and 2007 for certain insular areas

The amounts otherwise determined under this subsection for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa for fiscal year 2006 and fiscal year 2007 shall be increased by the following amounts:

(A) For Puerto Rico, $12,000,000 for fiscal year 2006 and $12,000,000 for fiscal year 2007.

(B) For the Virgin Islands, $2,500,000 for fiscal year 2006 and $5,000,000 for fiscal year 2007.

(C) For Guam, $2,500,000 for fiscal year 2006 and $5,000,000 for fiscal year 2007.

(D) For the Northern Mariana Islands, $1,000,000 for fiscal year 2006 and $2,000,000 for fiscal year 2007.

(E) For American Samoa, $2,000,000 for fiscal year 2006 and $4,000,000 for fiscal year 2007.

Such amounts shall not be taken into account in applying paragraph (2) for fiscal year 2007 but shall be taken into account in applying such paragraph for fiscal year 2008 and subsequent fiscal years.

(4) Exclusion of certain expenditures from payment limits

(A) In general

With respect to fiscal years beginning with fiscal year 2009, if Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, or American Samoa qualify for a payment under subparagraph (A)(i), (B), or (F) of section 1396b(a)(3) of this title for a calendar quarter of such fiscal year, and with respect to fiscal years beginning with fiscal year 2017, if Puerto Rico qualifies for a payment under section 1396b(a)(6) of this title for a calendar quarter (beginning on or after July 1, 2017) of such fiscal year, and with respect to fiscal years beginning with fiscal year 2018, if the Virgin Islands qualifies for a payment under section 1396b(a)(6) of this title for a calendar quarter (beginning on or after January 1, 2018) of such fiscal year, the payment shall not be taken into account in applying subsection (f) (as increased in accordance with paragraphs (1), (2), (3), and (4) of this subsection) to such commonwealth or territory for such fiscal year.

(B) Additional exemption

Payments under section 1396b of this title for medical assistance consisting of routine patient costs (as defined in section 1396d(gg)(1) of this title) shall not be taken into account in applying subsection (f).

(5) Additional increase

(A) Subject to subparagraphs (B), (C), (D), (E), and (F), the Secretary shall increase the amounts otherwise determined under this subsection for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa (after the application of subsection (f) and the preceding paragraphs of this subsection) for the period beginning July 1, 2011, and ending on September 30, 2019, by such amounts that the total additional payments under subchapter XIX to such territories equals $6,300,000,000 for such period. The Secretary shall increase such amounts in proportion to the amounts applicable to such territories under this subsection and subsection (f) on March 30, 2010.

(B) The amount of the increase otherwise provided under subparagraph (A) for Puerto Rico shall be further increased by $295,900,000.

(C) Subject to subparagraphs (D) and (F), for the period beginning January 1, 2018, and ending September 30, 2019—

(i) the amount of the increase otherwise provided under subparagraphs (A) and (B) for Puerto Rico shall be further increased by $3,600,000,000; and

(ii) the amount of the increase otherwise provided under subparagraph (A) for the Virgin Islands shall be further increased by $106,931,000.

(D) For the period described in subparagraph (C), the amount of the increase otherwise provided under subparagraph (A)—

(i) for Puerto Rico shall be further increased by $1,200,000,000 if the Secretary certifies that Puerto Rico has taken reasonable and appropriate steps during such period, in accordance with a timeline established by the Secretary, to—

(I) implement methods, satisfactory to the Secretary, for the collection and reporting of reliable data to the Transformed Medicaid Statistical Information System (T-MSIS) (or a successor system); and

(II) demonstrate progress in establishing a State medicaid fraud control unit described in section 1396b(q) of this title; and

(ii) for the Virgin Islands shall be further increased by $35,644,000 if the Secretary certifies that the Virgin Islands has taken reasonable and appropriate steps during such period, in accordance with a timeline established by the Secretary, to meet the conditions for certification specified in subclauses (I) and (II) of clause (i).

(E) Subject to subparagraph (F), for the period beginning January 1, 2019, and ending September 30, 2019, the amount of the increase otherwise provided under subparagraph (A) for the Northern Mariana Islands shall be further increased by $36,000,000.

(F) Notwithstanding any other provision of subchapter XIX—

(i) during the period in which the additional funds provided under subparagraphs (C), (D), and (E) are available for Puerto Rico, the Virgin Islands, and the Northern Mariana Islands, respectively, with respect to payments from such additional funds for amounts expended by Puerto Rico, the Virgin Islands, and the Northern Mariana Islands under such subchapter, the Secretary shall increase the Federal medical assistance percentage or other rate that would otherwise apply to such payments to 100 percent; and

(ii) for the period beginning January 1, 2019, and ending September 30, 2019, with respect to payments to Guam and American Samoa from the additional funds provided under subparagraph (A), the Secretary shall increase the Federal medical assistance percentage or other rate that would otherwise apply to such payments to 100 percent.

(G) Not later than September 30, 2019, Guam and American Samoa shall each submit a plan to the Secretary outlining the steps each such territory shall take to collect and report reliable data to the Transformed Medicaid Statistical Information System (T-MSIS) (or a successor system).

(6) Application to Puerto Rico for fiscal years 2020 through 2021

(A) In general

Subject to subparagraph (B), the amount specified in this paragraph is—

(i) for fiscal year 2020, $2,716,188,000; and

(ii) for fiscal year 2021, $2,809,063,000.

(B) Additional increase for Puerto Rico

(i) In general

For each of fiscal years 2020 through 2021, the amount specified in this paragraph for the fiscal year shall be equal to the amount specified for such fiscal year under subparagraph (A) increased by $200,000,000 if the Secretary certifies that, with respect to such fiscal year, Puerto Rico’s State plan under subchapter XIX (or a waiver of such plan) establishes a reimbursement floor, implemented through a directed payment arrangement plan, for physician services that are covered under the Medicare part B fee schedule in the Puerto Rico locality established under section 1395w-4(b) of this title that is not less than 70 percent of the payment that would apply to such services if they were furnished under part B of subchapter XVIII during such fiscal year.

(ii) Application to managed care

In certifying whether Puerto Rico has established a reimbursement floor under a directed payment arrangement plan that satisfies the requirements of clause (i)—

(I) for fiscal year 2020, the Secretary shall apply such requirements to payments for physician services under a managed care contract entered into or renewed after December 20, 2019, and disregard payments for physician services under any managed care contract that was entered into prior to such date; and

(II) for each of fiscal years 2020 through 2021—

(aa) the Secretary shall disregard payments made under sub-capitated arrangements for services such as primary care case management; and

(bb) if the reimbursement floor for physician services applicable under a managed care contract satisfies the requirements of clause (i) for the fiscal year in which the contract is entered into or renewed, such reimbursement floor shall be deemed to satisfy such requirements for the subsequent fiscal year.

(7) Puerto Rico program integrity requirements

(A) In general

(i) Program Integrity Lead

Not later than 6 months after December 20, 2019, the agency responsible for the administration of Puerto Rico’s Medicaid program under subchapter XIX shall designate an officer (other than the director of such agency) to serve as the Program Integrity Lead for such program.

(ii) PERM requirement

Not later than 18 months after December 20, 2019, Puerto Rico shall publish a plan, developed by Puerto Rico in coordination with the Administrator of the Centers for Medicare & Medicaid Services and approved by the Administrator, for how Puerto Rico will develop measures to satisfy the payment error rate measurement (PERM) requirements under subpart Q of Part 431 of Title 42, Code of Federal Regulations (or any successor regulation).

(iii) Contracting reform reporting

Not later than 12 months after December 20, 2019, Puerto Rico shall publish a contracting reform plan to combat fraudulent, wasteful, or abusive contracts under Puerto Rico’s Medicaid program under subchapter XIX that includes—

(I) metrics for evaluating the success of the plan; and

(II) a schedule for publicly releasing status reports on the plan.

(iv) MEQC

Not later than 18 months after December 20, 2019, Puerto Rico shall publish a plan, developed by Puerto Rico in coordination with the Administrator of the Centers for Medicare & Medicaid Services and approved by the Administrator, for how Puerto Rico will comply with the Medicaid eligibility quality control (MEQC) requirements of subpart P of Part 431 of Title 42, Code of Federal Regulations (or any successor regulation).

(v) Contracting and procurement oversight lead requirement

(I) In general

Not later than 6 months after December 29, 2022, the agency responsible for the administration of Puerto Rico’s Medicaid program under subchapter XIX shall designate an officer (other than the director of such agency) to serve as the Contracting and Procurement Oversight Lead to carry out the duties specified in subclause (II).

(II) Duties

Not later than 60 days after the end of each fiscal quarter (beginning with the first fiscal quarter beginning on or after the date that is 1 year after December 29, 2022), the officer designated pursuant to subclause (I) shall, with respect to each contract described in clause (iii) with an annual value exceeding $150,000 entered into during such quarter, certify to the Secretary either—

(aa) that such contract has met the procurement standards identified under any of sections 75.327, 75.328, and 75.329 of title 45, Code of Federal Regulations (or successor regulations); or

(bb) that extenuating circumstances (including a lack of multiple entities competing for such contract) prevented the compliance of such contract with such standards.

(III) Publication

The officer designated pursuant to subclause (I) shall make public each certification containing extenuating circumstances described in subclause (II)(bb) not later than 30 days after such certification is made, including a description of, and justification of, such extenuating circumstances.

(IV) Review of compliance

Not later than 2 years after December 29, 2022, the Inspector General of the Department of Health and Human Services shall submit to Congress a report on the compliance of Puerto Rico with the provisions of this clause.

(B) FMAP reduction for failure to meet additional requirements

(i) In general

For each fiscal quarter during the period beginning on January 1, 2020, and ending on September 30, 2021:

(I) For every clause under subparagraph (A) with respect to which Puerto Rico does not fully satisfy the requirements described in the clause (including requirements imposed under the terms of a plan described in the clause) in the fiscal quarter, the Federal medical assistance percentage applicable to Puerto Rico under section 1396d(ff) of this title shall be reduced by the number of percentage points determined for the clause and fiscal quarter under subclause (II).

(II) The number of percentage points determined under this subclause with respect to a clause under subparagraph (A) and a fiscal quarter shall be the number of percentage points (not to exceed 2.5 percentage points) equal to—

(aa) 0.25 percentage points; multiplied by

(bb) the total number of consecutive fiscal quarters for which Puerto Rico has not fully satisfied the requirements described in such clause.

(ii) Exception for extenuating circumstances or reasonable progress

For purposes of clause (i), Puerto Rico shall be deemed to have fully satisfied the requirements of a clause under subparagraph (A) (including requirements imposed under the terms of a plan described in the clause) for a fiscal quarter if—

(I) the Secretary approves an application from Puerto Rico describing extenuating circumstances that prevented Puerto Rico from fully satisfying the requirements of the clause; or

(II) in the case of a requirement imposed under the terms of a plan described in a clause under subparagraph (A), Puerto Rico has made objectively reasonable progress towards satisfying such terms and has submitted a timely request for an exception to the imposition of a penalty to the Secretary.

(8) Program Integrity Lead requirement for the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa

(A) Program Integrity Lead requirement

Not later than October 1, 2020, the agency responsible for the administration of the Medicaid program under subchapter XIX of each territory specified in subparagraph (C) shall designate an officer (other than the director of such agency) to serve as the Program Integrity Lead for such program.

(B) FMAP reduction

For each fiscal quarter during fiscal year 2021, if the territory fails to satisfy the requirement of subparagraph (A) for the fiscal quarter, the Federal medical assistance percentage applicable to the territory under section 1396d(ff) of this title for such fiscal quarter shall be reduced by the number of percentage points (not to exceed 5 percentage points) equal to—

(i) 0.25 percentage points; multiplied by

(ii) the total number of fiscal quarters during the fiscal year in which the territory failed to satisfy such requirement.

(C) Scope

This paragraph shall apply to the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa.

(9) Annual report

(A) In general

Not later than the date that is 30 days after the end of each fiscal year (beginning with fiscal year 2020 and ending with fiscal year 2021) and for fiscal year 2023 and each subsequent fiscal year (or, in the case of Puerto Rico, and for fiscal year 2023 and each subsequent fiscal year before fiscal year 2028), in the case that a specified territory receives a Medicaid cap increase, or an increase in the Federal medical assistance percentage for such territory under section 1396d(ff) of this title, for such fiscal year, such territory shall submit to the Chair and Ranking Member of the Committee on Energy and Commerce of the House of Representatives and the Chair and Ranking Member of the Committee on Finance of the Senate a report, employing the most up-to-date information available, that describes how such territory has used such Medicaid cap increase, or such increase in the Federal medical assistance percentage, as applicable, to increase access to health care under the State Medicaid plan of such territory under subchapter XIX (or a waiver of such plan). Such report may include—

(i) the extent to which such territory has, with respect to such plan (or waiver)—

(I) increased payments to health care providers;

(II) increased covered benefits;

(III) expanded health care provider networks; or

(IV) improved in any other manner the carrying out of such plan (or waiver); and

(ii) any other information as determined necessary by such territory.

(B) Definitions

In this paragraph:

(i) Medicaid cap increase

The term “Medicaid cap increase” means, with respect to a specified territory and fiscal year, any increase in the amounts otherwise determined under this subsection for such territory for such fiscal year by reason of the amendments made by section 202 of division N of the Further Consolidated Appropriations Act, 2020 or by reason of the amendments made by section 5101 of the Health Extenders, Improving Access to Medicare, Medicaid, and CHIP, and Strengthening Public Health Act of 2022.

(ii) Specified territory

The term “specified territory” means Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa.

(10) Additional increase for Puerto Rico for fiscal year 2022

(A) In general

Notwithstanding the preceding provisions of this subsection, the total amount certified for Puerto Rico for fiscal year 2022 under this subsection shall be increased by $200,000,000 if the Secretary certifies that, with respect to such fiscal year, Puerto Rico’s State plan under subchapter XIX (or a waiver of such plan) establishes a reimbursement floor, implemented through a directed payment arrangement plan, for physician services that are covered under the Medicare part B fee schedule in the Puerto Rico locality established under section 1395w-4(b) of this title that is not less than 70 percent of the payment that would apply to such services if they were furnished under part B of subchapter XVIII during such fiscal year.

(B) Application to managed care

In certifying whether Puerto Rico has established a reimbursement floor under a directed payment arrangement plan that satisfies the requirements of subparagraph (A) for fiscal year 2022, the Secretary shall—

(i) disregard payments made under sub-capitated arrangements for services such as primary care case management; and

(ii) if the reimbursement floor for physician services applicable under a managed care contract satisfies the requirements of subparagraph (A) for the fiscal year in which the contract is entered into or renewed, such reimbursement floor shall be deemed to satisfy such requirements for the subsequent fiscal year.

(11) Allotment amounts for Puerto Rico for fiscal year 2023 and subsequent fiscal years

For purposes of paragraph (2)(A)(iii), subject to paragraphs (12) and (13), the amounts specified in this paragraph are the following:

(A) For fiscal year 2023, $3,275,000,000.

(B) For fiscal year 2024, $3,325,000,000.

(C) For fiscal year 2025, $3,475,000,000.

(D) For fiscal year 2026, $3,645,000,000.

(E) For fiscal year 2027, $3,825,000,000.

(F) For fiscal year 2028, the sum of the amount that would have been provided under this subsection for Puerto Rico for such fiscal year in accordance with clause (i) of paragraph (2)(A) (without regard to clause (iii) of such paragraph) had the amount provided under this subsection for Puerto Rico for each of fiscal years 2020 through 2027 been equal to the following:

(i) For fiscal year 2020, the sum of the amount provided under this subsection for Puerto Rico for fiscal year 2019, increased by the percentage increase in the medical care component of the Consumer Price Index for all urban consumers (as published by the Bureau of Labor Statistics) for the 12-month period ending in March preceding the beginning of the fiscal year, rounded to the nearest $100,000.

(ii) For each of fiscal years 2021 through 2027, the sum of the amount provided under this subparagraph for the preceding fiscal year, increased in accordance with the percentage increase described in clause (i), rounded to the nearest $100,000.

(G) For fiscal year 2029 and each subsequent fiscal year, the sum of the amount specified in this paragraph for the preceding fiscal year, increased by the percentage increase in the medical care component of the Consumer Price Index for all urban consumers (as published by the Bureau of Labor Statistics) for the 12-month period ending in March preceding the beginning of the fiscal year, rounded to the nearest $100,000.

In determining the amount specified under subparagraph (F) for fiscal year 2028 or under subparagraph (G) for fiscal year 2029 or a subsequent fiscal year, the Secretary may in no way take into account the amount that was provided under this subsection for Puerto Rico for fiscal year 2022 that was based on the Centers for Medicare & Medicaid Services’ interpretation of the flush language following paragraph (2)(E) (as described in the letters sent by the Centers for Medicare & Medicaid Services to the Director of the Medicaid Program for Puerto Rico dated September 24, 2021, and November 18, 2021, respectively).

(12) Additional increase for Puerto Rico

(A) In general

For fiscal year 2023 and each subsequent fiscal year through fiscal year 2027, the amount specified in paragraph (11) for the fiscal year shall be equal to the amount specified for such fiscal year under such paragraph increased by $300,000,000 if the Secretary certifies that, with respect to such fiscal year, Puerto Rico’s State plan under subchapter XIX (or waiver of such plan) establishes a reimbursement floor, implemented through a directed payment arrangement plan, for physician services that are covered under the Medicare part B fee schedule in the Puerto Rico locality established under section 1395w-4(b) of this title that is not less than 75 percent of the payment that would apply to such services if they were furnished under part B of subchapter XVIII during such fiscal year.

(B) Application to managed care

In certifying whether Puerto Rico has established a reimbursement floor under a directed payment arrangement plan that satisfies the requirements of subparagraph (A)—

(i) for fiscal year 2023, the Secretary shall apply such requirements to payments for physician services under a managed care contract entered into or renewed after December 29, 2022, and disregard payments for physician services under any managed care contract that was entered into prior to such date; and

(ii) for each subsequent fiscal year through fiscal year 2027—

(I) the Secretary shall disregard payments made under subcapitated arrangements for services such as primary care case management; and

(II) if the reimbursement floor for physician services applicable under a managed care contract satisfies the requirements of subparagraph (A) for the fiscal year in which the contract is entered into or renewed, such reimbursement floor shall be deemed to satisfy such requirements for the subsequent fiscal year.

(C) Nonapplication of increase in determining allotments for subsequent fiscal years

An increase under this paragraph for a fiscal year may not be taken into account in calculating the amount specified under paragraph (11) for the succeeding fiscal year.

(13) Further increase for Puerto Rico

(A) In general

For each of fiscal years 2023 through 2027, the amount specified in paragraph (11) for the fiscal year shall be equal to the amount specified for such fiscal year under such paragraph (increased, if applicable, in accordance with paragraph (12)) and further increased—

(i) in the case of each of fiscal years 2023 through 2025, by $75,000,000 if the Secretary determines that Puerto Rico fully satisfies the requirements described in paragraph (7)(A)(i) for such fiscal year; and

(ii) in the case of each of fiscal years 2026 and 2027, by $75,000,000 if the Secretary determines that Puerto Rico fully satisfies the requirements described in—

(I) paragraph (7)(A)(i) for such fiscal year; and

(II) paragraph (7)(A)(v) for such fiscal year.

(B) Nonapplication of increase in determining allotments for subsequent fiscal years

An increase under this paragraph for a fiscal year may not be taken into account in calculating the amount specified under paragraph (11) for the succeeding fiscal year.

(h) Exclusion of medical assistance expenditures for citizens of freely associated states

Expenditures for medical assistance provided to an individual described in section 1641(b)(8) of title 8 shall not be taken into account for purposes of applying payment limits under subsections (f) and (g).

(i) Data systems improvement payments

(1) In general

Subject to paragraphs (2) and (3), the Secretary shall pay to each eligible territory an amount equal to 100 percent of the qualifying data system improvement expenditures incurred by such territory on or after October 1, 2023.

(2) Treatment as Medicaid payments

(A) In general

Payments to eligible territories made under this paragraph shall be considered to have been made under, and are subject to the requirements of, section 1396b of this title.

(B) Nonduplication

No payment shall be made under subchapter XIX (other than as provided under paragraph (1)), subchapter XXI, or any other provision of law with respect to an expenditure for which payment is made under such paragraph.

(3) Allotments

The Secretary shall specify an allotment for each eligible territory for payments made under paragraph (1) in a manner such that—

(A) the total amount of payments made under such paragraph for all eligible territories does not exceed $20,000,000; and

(B) each eligible territory receives an equitable allotment of such payments.

(4) No effect on territorial caps

A payment to an eligible territory under this subsection shall not be taken into account for purposes of applying the payment limits under subsections (f) and (g).

(5) Definitions

In this subsection:

(A) Eligible territory

The term “eligible territory” means American Samoa, Guam, the Northern Mariana Islands, and the Virgin Islands.

(B) Qualifying data system improvement expenditure

The term “qualifying data system improvement expenditure” means an expenditure by an eligible territory to improve, update, or enhance a data system that is used by the territory to carry out an administrative activity for which Federal financial participation is available under section 1396b(a) of this title.