HF 2716 (LSB 5348HV (9) 91)

HOUSE FILE 2716

BY  COMMITTEE ON HEALTH AND HUMAN SERVICES

(SUCCESSOR TO HSB 696)

(As Amended and Passed by the House 2026-03-10)

A BILL FOR

An Act relating to the supplemental nutrition assistance program; the medical assistance program; the special supplemental nutrition program for women, infants, and children; and other public assistance programs under the purview of the department of health and human services.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM

    Section 1.  NEW SECTION.  135.16E  Supplemental nutrition assistance program error rate —— report.
   Beginning with the fiscal quarter that starts on October 1, 2026, and every fiscal quarter thereafter, within thirty calendar days of transmission of data to the food and nutrition services of the United States department of agriculture, the department shall submit a report to the general assembly detailing payment error rates associated with the supplemental nutrition assistance program for the immediately preceding fiscal quarter. For the purposes of this section, “supplemental nutrition assistance program” has the same meaning as defined in section 239.1.
    Sec. 2.  FEDERAL SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM —— WAIVER OF EARNED INCOME RULES.
   1.  The department of health and human services shall request a waiver from the food and nutrition services of the United States department of agriculture to provide that, for purposes of state administration of the supplemental nutrition assistance program, the earned income under 
7 C.F.R. §273.9(c)(7) of household members that meet all of the following criteria shall be excluded from household income:
   a.  Less than twenty-two years of age.
   b.  Enrolled in an elementary or secondary school.
   c.  Resides with a natural parent, adoptive parent, stepparent, or other household member who exercises parental control over the household member described in paragraphs “a” and “b”.
   2.  The department of health and human services shall implement the waiver upon receipt of approval of the waiver from the United States department of agriculture.
    Sec. 3.  FEDERAL SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM —— WAIVER OF ELIGIBILITY VERIFICATION RULES.
   1.  The department of health and human services shall request a waiver from the food and nutrition services of the United States department of agriculture to provide that, for purposes of state administration of the supplemental nutrition assistance program, information from the following automated sources be considered verified upon receipt for purposes 
of 7 C.F.R. §272.12(c):
   a.  The national directory of new hires maintained by the office of child support services of the United States office for the administration of children and families.
   b.  The unemployment insurance benefits data released by the Iowa department of workforce development.
   c.  The United States social security administration benefits, death, social security number, and citizenship records.
   d.  The residency and identity data released by the United States department of transportation.
   e.  The state incarceration data released by the Iowa department of corrections.
   f.  The automated employment verification service known as work number, or equivalent third-party income verification platforms.
   2.  The department of health and human services shall implement the waiver upon receipt of approval of the waiver from the United States department of agriculture.
    Sec. 4.  FEDERAL SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM —— WAIVER OF EXPUNGEMENT RULES.
   1.  The department of health and human services shall request a waiver from the food and nutrition services of the United States department of agriculture to provide that, for purposes of state administration of the supplemental nutrition assistance program, expungement of benefits on a household’s electronic benefit account under 7 C.F.R. §274.2(i) be permitted after three months or ninety-one days of inactivity, or of benefits remaining, on the electronic benefit account.
   2.  The department of health and human services shall implement the waiver upon receipt of approval of the waiver from the United States department of agriculture.
    Sec. 5.  FEDERAL SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM —— WAIVER OF PAYMENT QUALITY CONTROL SAMPLING PROCEDURES.
   1.  The department of health and human services shall request a waiver from the food and nutrition services of the United States department of agriculture to provide that, for purposes of state administration of the supplemental nutrition assistance program, when reporting the state’s payment error rate as outlined by 7 C.F.R. §275.14, and food and nutrition services handbooks 310 and 311, the department of health and human services be permitted to report the payment error rate based only on errors directly attributable to the department.
   2.  The department of health and human services shall implement the waiver upon receipt of approval of the waiver from the United States department of agriculture.
DIVISION II
MEDICAL ASSISTANCE PROGRAM

    Sec. 6.  Section 249A.3, subsection 2, paragraph a, subparagraph (1), Code 2026, is amended to read as follows:
   (1)  (a)  As allowed under 42 U.S.C. §1396a(a)(10)(A)(ii)(XIII), individuals with disabilities, who are less than sixty-five years of age, who are members of families whose income is less than two hundred fifty three hundred percent of the most recently revised official poverty guidelines published by the United States department of health and human services for the family, who have earned income and who are eligible for mandatory medical assistance or optional medical assistance under this section if earnings are disregarded. 
   (b)  As allowed by 42 U.S.C. §1396a(r)(2), unearned income shall also be disregarded in determining whether an individual is eligible for assistance under this subparagraph.
   (c)  For the purposes of determining the amount of an individual’s resources under this subparagraph and as allowed by 42 U.S.C. §1396a(r)(2), a maximum of ten thousand dollars of available resources for an individual, and twenty-one thousand dollars of available resources for a couple as defined in 20 C.F.R. §416.1101, shall be disregarded. The earned income of an individual’s spouse as defined in 20 C.F.R. §416.1101, one motor vehicle per household, and any additional resources held in a retirement account, in a pension account, in a medical savings account, or in any other account approved under rules adopted by the department shall also be disregarded.
   (b)(d)  Individuals eligible for assistance under this subparagraph, whose individual income exceeds one hundred fifty percent of the official poverty guidelines published by the United States department of health and human services for an individual, shall pay a premium. The amount of the premium shall be based on a sliding fee schedule adopted by rule of the department and shall be based on a percentage of the individual’s income. The maximum premium payable by an individual whose income exceeds one hundred fifty percent of the official poverty guidelines shall be commensurate with the cost of state employees’ group health insurance in this state. The payment to and acceptance by an automated case management system or the department of the premium required under this subparagraph shall not automatically confer initial or continuing program eligibility on an individual.  The department shall maintain a page on the department’s internet site where individuals can electronically pay any premium owed by an individual to the department. A premium paid to and accepted by the department’s premium payment process that is subsequently determined to be untimely or to have been paid on behalf of an individual ineligible for the program shall be refunded to the remitter in accordance with rules adopted by the department. Any unpaid premium shall be a debt owed to the department.
    Sec. 7.  Section 249A.4, Code 2026, is amended by adding the following new subsections:
   NEW SUBSECTION.  15.  Submit a report to the general assembly, including the official payment error rate and a summary of the data submitted in the payment error rate measurement report, within thirty calendar days of receipt by the department of the annual official payment error rate from the centers for Medicare and Medicaid services of the United States department of health and human services.
   NEW SUBSECTION.  16.  Submit an annual report to the general assembly on or before October 1 on petitions for a waiver, also referred to by the department as exceptions to policy, of rules governing the Medicaid program filed pursuant to the rules of the department. The report must include all the following for the immediately preceding fiscal year:
   a.  The total number of exceptions to policy granted.
   b.  The cumulative cost of the exceptions to policy that were granted.
   c.  The types of exceptions to policy that were granted.
   d.  Identifiable trends noted by the department including any of the following:
   (1)  The number of exceptions to policy granted in a particular geographic location.
   (2)  The types of Medicaid services that were the basis for exceptions to policy.
   (3)  The Medicaid program eligibility classification of individuals granted Medicaid program exceptions to policy.
    Sec. 8.  NEW SECTION.  249A.32C  Home and community-based service waivers —— rural provider rate increase.
   1.  For the purposes of this section, unless context otherwise requires:
   a.  “Consumer” means the same as defined in section 249A.29.
   b.  “Rural area” means a geographical area that is not part of a metropolitan statistical area as designated by the United States office of management and budget.
   c.  “Waiver” means the same as defined in section 249A.29.
   2.  The base reimbursement rate for a provider of services under a medical assistance program home and community-based services waiver shall be increased to cover the travel time and expenses incurred by the provider to provide services to a consumer who resides in a rural area.
    Sec. 9.  NEW SECTION.  249A.32D  Waivers —— cost neutrality.
   1.  As used in this section, “cost neutral” means federal approval of a waiver related to the medical assistance program submitted by the department to the federal government will not result in a net increase in spending for state administration of the medical assistance program.
   2.  Prior to submitting a request for a waiver to the United States department of health and human services related to the medical assistance program, the department shall conduct an analysis to determine if the waiver is cost neutral. For any waiver that is determined to be not cost neutral, the department shall not submit the request for a waiver unless the waiver has been presented to the general assembly and approved by a majority vote of both houses of the general assembly.
    Sec. 10.  MEDICAID EXCEPTIONS TO POLICY REVIEW —— REPORT TO GENERAL ASSEMBLY.  The department of health and human services shall conduct a review of petitions for a waiver, also referred to by the department as exceptions to policy, of rules governing the Medicaid program granted by the department between January 1, 2020, and January 1, 2026, and shall submit a report on or before December 15, 2026, of the findings of the review. The report shall include all of the following:
   1.  The total number of exceptions to policy granted.
   2.  The cumulative cost of the exceptions to policy that were granted.
   3.  The types of exceptions to policy that were granted.
   4.  Identifiable trends noted by the department including any of the following:
   a.  The number of exceptions to policy granted in a particular geographic location.
   b.  The types of Medicaid services that were the basis for the waiver.
   c.  The Medicaid program classification of individuals granted exception to policy.
    Sec. 11.  CONTINGENT EFFECTIVE DATE.  The following takes effect contingent upon receipt of federal approval by the department of health and human services from the centers for Medicare and Medicaid services of the United States department of health and human services:
   The section of this division of this Act amending section 249A.3, subsection 2, paragraph “a”, subparagraph (1), Code 2026, relating to Medicaid eligibility for employed individuals with disabilities.
DIVISION III
ELIGIBILITY FOR CERTAIN PROGRAMS

    Sec. 12.  NEW SECTION.  234.6A  Program eligibility —— residency.
   1.  As used in this section, “public assistance program” means any of the following:
   a.  The state child care assistance program under section 237A.13.
   b.  The family investment program under chapter 239B.
   c.  The medical assistance program under chapter 249A.
   d.  The supplemental nutrition assistance program administered by the state pursuant to 7 C.F.R. pts. 270 – 283, as amended.
   e.  The special supplemental nutrition program for women, infants, and children as provided in 42 U.S.C. §1786 et seq.
   2.  a.  Unless prohibited under federal law, the department may require from an applicant to a public assistance program proof of at least twelve months of continuous residency within the state including any of the following:
   (1)  A statement from the applicant attesting to the applicant’s reasons for being in the state and length of residency within the state.
   (2)  A statement from the applicant’s employer confirming the applicant’s employment in the state.
   (3)  Any other statement from other persons with knowledge who can attest to the applicant’s reasons for being in the state and length of residency within the state.
   (4)  A copy of the applicant’s most recently filed Iowa state income tax return.
   b.  Paragraph “a” shall not apply to applicants who receive benefits under the federal Social Security Act, 42 U.S.C. §423 et seq.
    Sec. 13.  Section 239.6, subsection 1, paragraph a, subparagraph (4), Code 2026, is amended to read as follows:
   (4)  Information maintained by the United States citizenship and immigration services of the United States department of homeland security, including but not limited to information accessible through the systematic alien verification for entitlements online service.
    Sec. 14.  Section 239.6, subsection 2, Code 2026, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  g.  The systematic alien verification for entitlements online service maintained by the United States citizenship and immigration services of the United States department of homeland security or other accessible sources to verify immigration and United States citizenship information.
DIVISION IV
MISCELLANEOUS PUBLIC ASSISTANCE PROGRAMS

    Sec. 15.  NEW SECTION.  135.16E  Special supplemental nutrition program for women, infants, and children —— citizens and qualified aliens.
   1.   The department shall restrict participation in the special supplemental nutrition program for women, infants, and children to citizens and qualified aliens pursuant to section 742 of the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Pub. L. No. 104-193.
   2.  An infant or child who is a citizen or qualified alien and who is otherwise eligible for the special supplemental nutrition program for women, infants, and children shall be eligible regardless of whether the infant’s or child’s parent is a citizen or qualified alien.
    Sec. 16.  Section 249N.6, subsection 5, Code 2026, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  Notwithstanding any other provision of law to the contrary, an Iowa health and wellness plan provider may impose a fee of no more than five dollars on a member based on the member’s failure to attend a scheduled appointment with the provider.
    Sec. 17.  Section 249N.7, subsection 1, Code 2026, is amended to read as follows:
   1.  Membership in the Iowa health and wellness plan shall require payment of monthly contributions for members whose household income is at or above fifty one hundred percent of the federal poverty level. Members shall be subject to an eight dollar copayment amounts applicable only to for nonemergency use of a hospital emergency department. Total member cost-sharing, annually, shall align with the cost-sharing limitations requirements for the American health benefits exchanges under the Affordable Care Act, as amended by Pub. L. No. 119-21, commonly referred to as the One Big Beautiful Bill Act. Contributions Monthly contributions and copayment amounts for members shall be established by rule of the department.
    Sec. 18.  Section 249N.7, Code 2026, is amended by adding the following new subsections:
   NEW SUBSECTION.  3.  Notwithstanding subsection 1, a member who fails to complete all required preventative care services and wellness activities specified during the prior annual membership period shall be subject to a monthly five dollar fee during the subsequent year of membership.
   NEW SUBSECTION.  4.  Notwithstanding subsection 1, a member whose household income is at or above one hundred percent of the federal poverty level shall be subject to the following copay amounts:
   a.  A five dollar copay for a diagnostic dental procedure. As used in this paragraph, “diagnostic dental procedure” means a dental procedure that is not performed for preventative purposes.
   b.  A one dollar copay for a prescription drug when a suitable generic equivalent drug approved by the United States food and drug administration is available to the member.
    Sec. 19.  2023 Iowa Acts, chapter 104, section 12, subsection 3, is amended to read as follows:
   3.  Unless otherwise provided in this Act, the department of health and human services shall implement the provisions of this Act in an incremental fashion, beginning July 1, 2023, with a goal of full implementation no later than July 1, 2025 completed by January 1, 2027, to minimize duplication of efforts and to maximize coordination with the implementation time frames of other departmental resource enhancements.
    Sec. 20.  IOWA HEALTH AND WELLNESS PLAN —— MEMBER REENROLLMENT FOLLOWING TERMINATION FOR NONPAYMENT OF MONTHLY CONTRIBUTIONS.  The department of human services shall seek approval of an amendment to the section 1115 demonstration waiver for the Iowa health and wellness plan from the centers for Medicare and Medicaid services of the United States department of health and human services to provide the following:
   1.  An Iowa health and wellness plan member who is subject to payment of a monthly contribution as the result of failure to complete required preventative care services and wellness activities, and whose eligibility for the program is terminated due to nonpayment of monthly contributions, shall be allowed to subsequently reenroll in the program without first paying any outstanding monthly contributions, if the member has not been terminated from the program previously for nonpayment of monthly contributions. 
   2.  If an Iowa health and wellness plan member has been terminated from the program previously for nonpayment of monthly contributions, and is subsequently terminated from the program for nonpayment of monthly contributions owed as a result of failure to complete required preventative care services and wellness activities, the member shall be subject to payment of any outstanding monthly contributions prior to reenrollment in the program.
DIVISION V
PUBLIC ASSISTANCE FRAUD —— REPORT

    Sec. 21.  NEW SECTION.  10A.404  Fraud in public assistance —— report.
   On or before October 1, 2026, and every fiscal year thereafter, the department shall submit a report to the general assembly concerning the department’s activities relative to fraud in public assistance programs for the immediately preceding fiscal year. The report shall include but is not limited to a summary of the number of cases investigated, case outcomes, overpayment dollars identified, amount of cost avoidance, and actual dollars recovered.
    Sec. 22.  NEW SECTION.  10A.404A  Fraud in special supplemental nutrition program for women, infants, and children —— report.
   On or before November 1, 2026, and by November 1 every fiscal year thereafter, the department shall submit a report to the general assembly concerning the department’s activities relative to fraud in the special supplemental nutrition program for women, infants, and children. The report shall include but is not limited to a summary of the number of cases investigated, case outcomes, violation points issued, and actual dollars recovered.
DIVISION VI
HIGH-ACUITY PEDIATRIC WORK GROUP —— REPORT

    Sec. 23.  HIGH-ACUITY PEDIATRIC WORK GROUP —— REPORT TO GENERAL ASSEMBLY.
   1.  The department of health and human services shall convene a work group to examine the unique service needs of high-acuity pediatric recipients of medical assistance under chapter 249A, and high-acuity pediatric members of the healthy and well kids in Iowa program under chapter 514I. The work group shall do all of the following:
   a.  Identify the barriers that prevent the high-acuity pediatric recipients and members from remaining in the least restrictive environment possible.
   b.  Develop a proposal for a tiered reimbursement methodology to provide high-acuity home health services tailored to meet the allowable medical and nonmedical support needs of high-acuity pediatric recipients and members.
   2.  The work group shall be comprised of at least one representative of a provider of high-acuity home health services, one representative of the Iowa chapter of the American academy of pediatrics, one representative of the Iowa association of community providers, one representative of the Iowa health care association, and other individuals or organizations deemed appropriate by the department.
   3.  On or before December 1, 2026, the department shall submit a report to the general assembly that includes all of the following:
   a.  The barriers identified by the work group that prevent high-acuity pediatric recipients and members from remaining in the least restrictive environment possible.
   b.  The working group’s proposed tiered reimbursement methodology and the estimated fiscal impact on affected providers and health care facilities.
   4.  The department of health and human services shall provide administrative support, including scheduling meetings of the work group as necessary to complete the work of the work group.
DIVISION VII
MEDICAID REIMBURSEMENT RATE —— SPECIAL POPULATION NURSING FACILITIES

    Sec. 24.  Section 249A.2, Code 2026, is amended by adding the following new subsection:
   NEW SUBSECTION.  15.  “Special population nursing facility” refers to a nursing facility that serves one of the following populations and has been designated as a special population nursing facility by the department:
   a.  One hundred percent of the residents served are aged thirty and under and require a skilled level of care.
   b.  Seventy percent of the residents served require a skilled level of care for neurological disorders.
   c.  One hundred percent of the residents require care from a facility licensed by the department of inspections, appeals, and licensing as an intermediate care facility for persons with mental illness.
   d.  One hundred percent of the residents require care from a facility licensed by the department of inspections, appeals, and licensing as an intermediate care facility for persons with medical complexity.
    Sec. 25.  NEW SECTION.  249A.38C  Medicaid reimbursement rate —— special population nursing facilities.
   The provider reimbursement rate for each special population nursing facility enrolled in Medicaid before July 1, 2025, must be the special population nursing facility’s average allowable per diem costs as adjusted for inflation. The inflation factor is based on the most recent centers for Medicare and Medicaid services total skilled nursing facility market basket index. If a special population nursing facility subject to this section increases the special population nursing facility’s number of beds or expands to provide additional services on or after July 1, 2025, the reimbursement rate in this section shall apply to such additional beds or services.