; (B) for calendar quarters in 2023, by 0.25 percentage points; (C) for calendar quarters in 2024, by 0.35 percentage points; and (D) for calendar quarters in 2025 and each year thereafter, by 0.5 percentage points. (2) Non-compliant State defined For purposes of this subsection, the term non-compliant State means a State— (A) that is one of the 50 States or the District of Columbia; (B) with respect to which the Secretary has not approved a State plan amendment submitted under subsection (a)(2); and (C) that is not operating, on an ongoing basis, an asset verification program in accordance with this section. . 204. Denial of FFP for certain expenditures relating to vacuum erection systems and penile prosthetic implants (a) In general Section 1903(i) of the Social Security Act ( 42 U.S.C. 1396b(i) ) is amended by inserting after paragraph (11) the following: (12) with respect to any amounts expended for— (A) a vacuum erection system that is not medically necessary; or (B) the insertion, repair, or removal and replacement of a penile prosthetic implant (unless such insertion, repair, or removal and replacement is medically necessary); or . (b) Effective date The amendment made by subsection (a) shall apply with respect to items and services furnished on or after January 1, 2019. 205. Medicaid Improvement Fund Section 1941(b)(1) of the Social Security Act ( 42 U.S.C. 1396w–1(b)(1) ) is amended by striking $31,000,000 and inserting $9,000,000 . 206. Preventing the misclassification of drugs under the Medicaid drug rebate program (a) Application of civil money penalty for misclassification of covered outpatient drugs (1) In general Section 1927(b)(3) of the Social Security Act ( 42 U.S.C. 1396r–8(b)(3) ) is amended— (A) in the paragraph heading, by inserting and drug product after price ; (B) in subparagraph (A)— (i) in clause (ii), by striking ; and at the end and inserting a semicolon; (ii) in clause (iii), by striking the period at the end and inserting a semicolon