Catastrophic Health Care Expenses Assistance Act of 1985

Catastrophic Health Care Expenses Assistance Act of 1985 - Adds a new title to the Social Security Act, "Title XXI: Grants to States for Assistance to Individuals Incurring Catastrophic Expenses for Health Care." Authorizes appropriations to enable States to furnish medical assistance for catastrophic illness under such title.

Requires a State plan to: (1) be in effect in all State political subdivisions; and (2) provide for financial participation by the State equal to not less than 40 percent of the non-Federal share of expenditures under the plan with respect to which payments are authorized, and provide for financial participation by the State equal to all of such non-Federal share or provide for distribution of funds from Federal or State sources, for carrying out the State plan, on an equalization basis which will assure that the lack of adequate funds from local sources will not result in lowering the assistance available under the Act. Requires a State plan to provide for paying: (1) at least 90 percent of all qualified expenses of an eligible individual and the eligible individual's dependents in excess of the greater of $2,500 or the sum of 30 percent of household income under $15,000, plus 40 percent of household income between $15,000 and $25,000, plus 50 percent of household income in excess of $25,000 (or such lower respective percentages of such incomes, or of such higher incomes, as the State may establish); and (2) 100 percent of all qualified nursing home expenses in excess of 20 percent (or such lower percentage as the State may establish of household income). Prohibits a State plan from charging any premium, copayments, or deductibles, except as provided in the previous sentence. Requires a plan to provide such methods and procedures relating to the use of, and the payment for, services for which assistance is available under the plan as may be necessary to safeguard against unnecessary use of such services and to assure that payments are not in excess of reasonable charges consistent with efficiency, economy, and quality of care.

Directs the Secretary of Health and Human Services to pay to a State with an approved plan 75 percent of such sums as are attributable either to payments made to eligible individuals or expenses found by the Secretary to be necessary for the administration of the plan. Prohibits amounts paid to a State from exceeding the product of two dollars and the State's population. Prohibits payments to a State for expenses if: (1) the charges on which the expenses are based are not reasonable; (2) the expenses exceed the hospital's customary charges; (3) incurred for services not medically necessary; (4) the expenses are for services provided by a provider excluded from Medicare or Medicaid participation (titles XVIII and XIX of the Social Security Act); (5) the expenses are for services provided by a hospital or skilled nursing facility not having a utilization review plan meeting the requirements of title XVIII; or (6) the expenses are for services for which a private insurer would have been obligated but for a provision in its contract excluding payment because an individual is eligible under this Act.

Prohibits payments to a State not in compliance with the provisions of this Act.

Defines an "eligible individual" as any resident of a State who has incurred in any consecutive twelve month period: (1) qualified expenses exceeding the greater of $2,500 or 30 percent of household income up to $15,000, plus 40 percent of household income between $15,000 and $25,000, plus 50 percent of household income in excess of $25,000 (or such lower respective percentages of such incomes, or of such higher incomes, as the State may establish); or (2) qualified nursing home expenses exceeding 20 percent (or such lower percentage as the State may establish) of household income. Defines a "qualified expense" as a charge which is a covered expense and for which no third party is liable. Lists 19 "covered services" which include: hospital services, physicians' services (including routine check-ups and an annual physical), chiropractic services, prescription drugs, physical therapy, ambulance service, well baby care, certain dental care, and certain diagnostic tests. Excludes from coverage: (1) cosmetic surgery; (2) custodial care not qualifying under title XVIII; and (3) private hospital rooms. Defines "dependents," "household income," and "qualified nursing home expense."

Sets forth penalties for misrepresentations, fraud, false statements, and concealments made in connection with the provision of services under this Act.