[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1932 Enrolled Bill (ENR)]
S.1932
One Hundred Ninth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the third day of January, two thousand and six
An Act
To provide for reconciliation pursuant to section 202(a) of the
concurrent resolution on the budget for fiscal year 2006 (H. Con. Res.
95).
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Deficit Reduction Act of 2005''.
SEC. 2. TABLE OF TITLES.
The table of titles is as follows:
TITLE I--AGRICULTURE PROVISIONS
TITLE II--HOUSING AND DEPOSIT INSURANCE PROVISIONS
TITLE III--DIGITAL TELEVISION TRANSITION AND PUBLIC SAFETY
TITLE IV--TRANSPORTATION PROVISIONS
TITLE V--MEDICARE
TITLE VI--MEDICAID AND SCHIP
TITLE VII--HUMAN RESOURCES AND OTHER PROVISIONS
TITLE VIII--EDUCATION AND PENSION BENEFIT PROVISIONS
TITLE IX--LIHEAP PROVISIONS
TITLE X--JUDICIARY RELATED PROVISIONS
TITLE I--AGRICULTURE PROVISIONS
SECTION 1001. SHORT TITLE.
This title may be cited as the ``Agricultural Reconciliation Act of
2005''.
Subtitle A--Commodity Programs
SEC. 1101. NATIONAL DAIRY MARKET LOSS PAYMENTS.
(a) Amount.--Section 1502(c) of the Farm Security and Rural
Investment Act of 2002 (7 U.S.C. 7982(c)) is amended by striking
paragraph (3) and inserting the following new paragraph:
``(3)(A) during the period beginning on the first day of the
month the producers on a dairy farm enter into a contract under
this section and ending on September 30, 2005, 45 percent;
``(B) during the period beginning on October 1, 2005, and
ending on August 31, 2007, 34 percent; and
``(C) during the period beginning on September 1, 2007, 0
percent.''.
(b) Duration.--Section 1502 of the Farm Security and Rural
Investment Act of 2002 (7 U.S.C. 7982) is amended by striking ``2005''
each place it appears in subsections (f) and (g)(1) and inserting
``2007''.
(c) Conforming Amendments.--Section 1502 of the Farm Security and
Rural Investment Act of 2002 (7 U.S.C. 7982) is amended--
(1) in subsection (g)(1), by striking ``and subsection (h)'';
and
(2) by striking subsection (h).
SEC. 1102. ADVANCE DIRECT PAYMENTS.
(a) Covered Commodities.--Section 1103(d)(2) of the Farm Security
and Rural Investment Act of 2002 (7 U.S.C. 7913(d)(2)) is amended in
the first sentence by striking ``2007 crop years'' and inserting ``2005
crop years, up to 40 percent of the direct payment for a covered
commodity for the 2006 crop year, and up to 22 percent of the direct
payment for a covered commodity for the 2007 crop year,''.
(b) Peanuts.--Section 1303(e)(2) of the Farm Security and Rural
Investment Act of 2002 (7 U.S.C. 7953(e)(2)) is amended in the first
sentence by striking ``2007 crop years'' and inserting ``2005 crop
years, up to 40 percent of the direct payment for the 2006 crop year,
and up to 22 percent of the direct payment for the 2007 crop year,''.
SEC. 1103. COTTON COMPETITIVENESS PROVISIONS.
(a) Repeal of Authority To Issue Cotton User Marketing
Certificates.--Section 1207 of the Farm Security and Rural Investment
Act of 2002 (7 U.S.C. 7937) is amended--
(1) by striking subsection (a); and
(2) in subsection (b)(1)--
(A) in subparagraph (B), by striking ``, adjusted for the
value of any certificate issued under subsection (a),''; and
(B) in subparagraph (C), by striking ``, for the value of
any certificates issued under subsection (a)''.
(b) Effective Date.--The amendments made by this section take
effect on August 1, 2006.
Subtitle B--Conservation
SEC. 1201. WATERSHED REHABILITATION PROGRAM.
The authority to obligate funds previously made available under
section 14(h)(1) of the Watershed Protection and Flood Prevention Act
(16 U.S.C. 1012(h)(1)) for a fiscal year and unobligated as of October
1, 2006, is hereby cancelled effective on that date.
SEC. 1202. CONSERVATION SECURITY PROGRAM.
(a) Extension.--Section 1238A(a) of the Food Security Act of 1985
(16 U.S.C. 3838a(a)) is amended by striking ``2007'' and inserting
``2011''.
(b) Funding.--Section 1241(a)(3) of the Food Security Act of 1985
(16 U.S.C. 3841(a)(3)) is amended by striking ``not more than
$6,037,000,000'' and all that follows through ``2014.'' and inserting
the following: ``not more than--
``(A) $1,954,000,000 for the period of fiscal years 2006
through 2010; and
``(B) $5,650,000,000 for the period of fiscal years 2006
through 2015.''.
SEC. 1203. ENVIRONMENTAL QUALITY INCENTIVES PROGRAM.
(a) Extension.--Section 1240B(a)(1) of the Food Security Act of
1985 (16 U.S.C. 3839aa-2(a)(1)) is amended by striking ``2007'' and
inserting ``2010''.
(b) Limitation on Payments.--Section 1240G of the Food Security Act
of 1985 (16 U.S.C. 3839aa-7) is amended by striking ``the period of
fiscal years 2002 through 2007'' and inserting ``any six-year period''.
(c) Funding.--Section 1241(a)(6) of the Food Security Act of 1985
(16 U.S.C. 3841(a)(6)) is amended--
(1) by striking ``and'' at the end of subparagraph (D); and
(2) by striking subparagraph (E) and inserting the following
new subparagraphs:
``(E) $1,270,000,000 in each of fiscal years 2007 through
2009; and
``(F) $1,300,000,000 in fiscal year 2010.''.
Subtitle C--Energy
SEC. 1301. RENEWABLE ENERGY SYSTEMS AND ENERGY EFFICIENCY IMPROVEMENTS
PROGRAM.
Section 9006(f) of the Farm Security and Rural Investment Act of
2002 (7 U.S.C. 8106(f)) is amended by striking ``2007'' and inserting
``2006 and $3,000,000 for fiscal year 2007''.
Subtitle D--Rural Development
SEC. 1401. ENHANCED ACCESS TO BROADBAND TELECOMMUNICATIONS SERVICES IN
RURAL AREAS.
The authority to obligate funds previously made available under
section 601(j)(1) of the Rural Electrification Act of 1936 for a fiscal
year and unobligated as of October 1, 2006, is hereby cancelled
effective on that date.
SEC. 1402. VALUE-ADDED AGRICULTURAL PRODUCT MARKET DEVELOPMENT GRANTS.
The authority to obligate funds previously made available under
section 231(b)(4) of the Agricultural Risk Protection Act of 2000
(Public Law 106-224; 7 U.S.C. 1621 note) for a fiscal year and
unobligated as of October 1, 2006, is hereby cancelled effective on
that date.
SEC. 1403. RURAL BUSINESS INVESTMENT PROGRAM.
(a) Termination of Fiscal Year 2007 and Subsequent Funding.--
Subsection (a)(1) of section 384S of the Consolidated Farm and Rural
Development Act (7 U.S.C. 2009cc-18) is amended by inserting after
``necessary'' the following: ``through fiscal year 2006''.
(b) Cancellation of Unobligated Prior-Year Funds.--The authority to
obligate funds previously made available under such section and
unobligated as of October 1, 2006, is hereby cancelled effective on
that date.
SEC. 1404. RURAL BUSINESS STRATEGIC INVESTMENT GRANTS.
The authority to obligate funds previously made available under
section 385E of the Consolidated Farm and Rural Development Act and
unobligated as of October 1, 2006, is hereby cancelled effective on
that date.
SEC. 1405. RURAL FIREFIGHTERS AND EMERGENCY PERSONNEL GRANTS.
(a) Termination of Fiscal Year 2007 Funding.--Subsection (c) of
section 6405 of the Farm Security and Rural Investment Act of 2002 (7
U.S.C. 2655) is amended by striking ``2007'' and inserting ``2006''.
(b) Cancellation of Unobligated Prior-Year Funds.--The authority to
obligate funds previously made available under such section for a
fiscal year and unobligated as of October 1, 2006, is hereby cancelled
effective on that date.
Subtitle E--Research
SEC. 1501. INITIATIVE FOR FUTURE FOOD AND AGRICULTURE SYSTEMS.
(a) Termination of Fiscal Year 2007, 2008, and 2009 Transfers.--
Subsection (b)(3)(D) of section 401 of the Agricultural Research,
Extension, and Education Reform Act of 1998 (7 U.S.C. 7621) is amended
by striking ``2006'' and inserting ``2009''.
(b) Termination of Multi-Year Availability of Fiscal Year 2006
Funds.--Paragraph (6) of subsection (f) of such section is amended to
read as follows:
``(6) Availability of funds.--
``(A) Two-year availability.--Except as provided in
subparagraph (B), funds for grants under this section shall be
available to the Secretary for obligation for a 2-year period
beginning on the date of the transfer of the funds under
subsection (b).
``(B) Exception for fiscal year 2006 transfer.--In the case
of the funds required to be transferred by subsection
(b)(3)(C), the funds shall be available to the Secretary for
obligation for the 1-year period beginning on October 1,
2005.''
TITLE II--HOUSING AND DEPOSIT INSURANCE PROVISIONS
Subtitle A--FHA Asset Disposition
SEC. 2001. DEFINITIONS.
For purposes of this subtitle, the following definitions shall
apply:
(1) The term ``affordability requirements'' means any
requirements or restrictions imposed by the Secretary, at the time
of sale, on a multifamily real property or a multifamily loan, such
as use restrictions, rent restrictions, and rehabilitation
requirements.
(2) The term ``discount sale'' means the sale of a multifamily
real property in a transaction, such as a negotiated sale, in which
the sale price is lower than the property market value and is set
outside of a competitive bidding process that has no affordability
requirements.
(3) The term ``discount loan sale'' means the sale of a
multifamily loan in a transaction, such as a negotiated sale, in
which the sale price is lower than the loan market value and is set
outside of a competitive bidding process that has no affordability
requirements.
(4) The term ``loan market value'' means the value of a
multifamily loan, without taking into account any affordability
requirements.
(5) The term ``multifamily real property'' means any rental or
cooperative housing project of 5 or more units owned by the
Secretary that prior to acquisition by the Secretary was security
for a loan or loans insured under title II of the National Housing
Act.
(6) The term ``multifamily loan'' means a loan held by the
Secretary and secured by a multifamily rental or cooperative
housing project of 5 or more units that was formerly insured under
title II of the National Housing Act.
(7) The term ``property market value'' means the value of a
multifamily real property for its current use, without taking into
account any affordability requirements.
(8) The term ``Secretary'' means the Secretary of Housing and
Urban Development.
SEC. 2002. APPROPRIATED FUNDS REQUIREMENT FOR BELOW-MARKET SALES.
(a) Discount Sales.--Notwithstanding any other provision of law,
except for affordability requirements for the elderly and disabled
required by statute, disposition by the Secretary of a multifamily real
property during fiscal years 2006 through 2010 through a discount sale
under sections 207(l) or 246 of the National Housing Act (12 U.S.C.
1713(l), 1715z-11), section 203 of the Housing and Community
Development Amendments of 1978 (12 U.S.C. 1701z-11), or section 204 of
the Departments of Veterans Affairs and Housing and Urban Development,
and Independent Agencies Appropriations Act, 1997 (12 U.S.C. 1715z-
11a), shall be subject to the availability of appropriations to the
extent that the property market value exceeds the sale proceeds. If the
multifamily real property is sold, during such fiscal years, for an
amount equal to or greater than the property market value then the
transaction is not subject to the availability of appropriations.
(b) Discount Loan Sales.--Notwithstanding any other provision of
law and in accordance with the Federal Credit Reform Act of 1990 (2
U.S.C. 661 et seq.), a discount loan sale during fiscal years 2006
through 2010 under section 207(k) of the National Housing Act (12
U.S.C. 1713(k)), section 203(k) of the Housing and Community
Development Amendments of 1978 (12 U.S.C. 1701z-11(k)), or section
204(a) of the Departments of Veterans Affairs and Housing and Urban
Development, and Independent Agencies Appropriations Act, 1997 (12
U.S.C. 1715z-11a(a)), shall be subject to the availability of
appropriations to the extent that the loan market value exceeds the
sale proceeds. If the multifamily loan is sold, during such fiscal
years, for an amount equal to or greater than the loan market value
then the transaction is not subject to the availability of
appropriations.
(c) Applicability.--This section shall not apply to any transaction
that formally commences within one year prior to the enactment of this
section.
SEC. 2003. UP-FRONT GRANTS.
(a) 1997 Act.--Section 204(a) of the Departments of Veterans
Affairs and Housing and Urban Development, and Independent Agencies
Appropriations Act, 1997 (12 U.S.C. 1715z-11a(a)) is amended by adding
at the end the following new sentence: ``A grant provided under this
subsection during fiscal years 2006 through 2010 shall be available
only to the extent that appropriations are made in advance for such
purposes and shall not be derived from the General Insurance Fund.''.
(b) 1978 Act.--Section 203(f)(4) of the Housing and Community
Development Amendments of 1978 (12 U.S.C. 1701z-11(f)(4)) is amended by
adding at the end the following new sentence: ``This paragraph shall be
effective during fiscal years 2006 through 2010 only to the extent that
such budget authority is made available for use under this paragraph in
advance in appropriation Acts.''.
(c) Applicability.--The amendments made by this section shall not
apply to any transaction that formally commences within one year prior
to the enactment of this section.
Subtitle B--Deposit Insurance
SEC. 2101. SHORT TITLE.
This subtitle may be cited as the ``Federal Deposit Insurance
Reform Act of 2005''.
SEC. 2102. MERGING THE BIF AND SAIF.
(a) In General.--
(1) Merger.--The Bank Insurance Fund and the Savings
Association Insurance Fund shall be merged into the Deposit
Insurance Fund.
(2) Disposition of assets and liabilities.--All assets and
liabilities of the Bank Insurance Fund and the Savings Association
Insurance Fund shall be transferred to the Deposit Insurance Fund.
(3) No separate existence.--The separate existence of the Bank
Insurance Fund and the Savings Association Insurance Fund shall
cease on the effective date of the merger thereof under this
section.
(b) Repeal of Outdated Merger Provision.--Section 2704 of the
Deposit Insurance Funds Act of 1996 (12 U.S.C. 1821 note) is repealed.
(c) Effective Date.--This section shall take effect no later than
the first day of the first calendar quarter that begins after the end
of the 90-day period beginning on the date of the enactment of this
Act.
SEC. 2103. INCREASE IN DEPOSIT INSURANCE COVERAGE.
(a) In General.--Section 11(a)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(a)(1)) is amended--
(1) by striking subparagraph (B) and inserting the following
new subparagraph:
``(B) Net amount of insured deposit.--The net amount due to
any depositor at an insured depository institution shall not
exceed the standard maximum deposit insurance amount as
determined in accordance with subparagraphs (C), (D), (E) and
(F) and paragraph (3).''; and
(2) by adding at the end the following new subparagraphs:
``(E) Standard maximum deposit insurance amount defined.--
For purposes of this Act, the term `standard maximum deposit
insurance amount' means $100,000, adjusted as provided under
subparagraph (F) after March 31, 2010.
``(F) Inflation adjustment.--
``(i) In general.--By April 1 of 2010, and the 1st day
of each subsequent 5-year period, the Board of Directors
and the National Credit Union Administration Board shall
jointly consider the factors set forth under clause (v),
and, upon determining that an inflation adjustment is
appropriate, shall jointly prescribe the amount by which
the standard maximum deposit insurance amount and the
standard maximum share insurance amount (as defined in
section 207(k) of the Federal Credit Union Act) applicable
to any depositor at an insured depository institution shall
be increased by calculating the product of--
``(I) $100,000; and
``(II) the ratio of the published annual value of
the Personal Consumption Expenditures Chain-Type Price
Index (or any successor index thereto), published by
the Department of Commerce, for the calendar year
preceding the year in which the adjustment is
calculated under this clause, to the published annual
value of such index for the calendar year preceding the
date this subparagraph takes effect under the Federal
Deposit Insurance Reform Act of 2005.
The values used in the calculation under subclause (II)
shall be, as of the date of the calculation, the values
most recently published by the Department of Commerce.
``(ii) Rounding.--If the amount determined under clause
(ii) for any period is not a multiple of $10,000, the
amount so determined shall be rounded down to the nearest
$10,000.
``(iii) Publication and report to the congress.--Not
later than April 5 of any calendar year in which an
adjustment is required to be calculated under clause (i) to
the standard maximum deposit insurance amount and the
standard maximum share insurance amount under such clause,
the Board of Directors and the National Credit Union
Administration Board shall--
``(I) publish in the Federal Register the standard
maximum deposit insurance amount, the standard maximum
share insurance amount, and the amount of coverage
under paragraph (3)(A) and section 207(k)(3) of the
Federal Credit Union Act, as so calculated; and
``(II) jointly submit a report to the Congress
containing the amounts described in subclause (I).
``(iv) 6-month implementation period.--Unless an Act of
Congress enacted before July 1 of the calendar year in
which an adjustment is required to be calculated under
clause (i) provides otherwise, the increase in the standard
maximum deposit insurance amount and the standard maximum
share insurance amount shall take effect on January 1 of
the year immediately succeeding such calendar year.
``(v) Inflation adjustment consideration.--In making
any determination under clause (i) to increase the standard
maximum deposit insurance amount and the standard maximum
share insurance amount, the Board of Directors and the
National Credit Union Administration Board shall jointly
consider--
``(I) the overall state of the Deposit Insurance
Fund and the economic conditions affecting insured
depository institutions;
``(II) potential problems affecting insured
depository institutions; or
``(III) whether the increase will cause the reserve
ratio of the fund to fall below 1.15 percent of
estimated insured deposits.''.
(b) Coverage for Certain Employee Benefit Plan Deposits.--Section
11(a)(1)(D) of the Federal Deposit Insurance Act (12 U.S.C.
1821(a)(1)(D)) is amended to read as follows:
``(D) Coverage for certain employee benefit plan
deposits.--
``(i) Pass-through insurance.--The Corporation shall
provide pass-through deposit insurance for the deposits of
any employee benefit plan.
``(ii) Prohibition on acceptance of benefit plan
deposits.--An insured depository institution that is not
well capitalized or adequately capitalized may not accept
employee benefit plan deposits.
``(iii) Definitions.--For purposes of this
subparagraph, the following definitions shall apply:
``(I) Capital standards.--The terms `well
capitalized' and `adequately capitalized' have the same
meanings as in section 38.
``(II) Employee benefit plan.--The term `employee
benefit plan' has the same meaning as in paragraph
(5)(B)(ii), and includes any eligible deferred
compensation plan described in section 457 of the
Internal Revenue Code of 1986.
``(III) Pass-through deposit insurance.--The term
`pass-through deposit insurance' means, with respect to
an employee benefit plan, deposit insurance coverage
based on the interest of each participant, in
accordance with regulations issued by the
Corporation.''.
(c) Increased Amount of Deposit Insurance for Certain Retirement
Accounts.--Section 11(a)(3)(A) of the Federal Deposit Insurance Act (12
U.S.C. 1821(a)(3)(A)) is amended by striking ``$100,000'' and inserting
``$250,000 (which amount shall be subject to inflation adjustments as
provided in paragraph (1)(F), except that $250,000 shall be substituted
for $100,000 wherever such term appears in such paragraph)''.
(d) Effective Date.--This section and the amendments made by this
section shall take effect on the date the final regulations required
under section 9(a)(2) take effect.
SEC. 2104. SETTING ASSESSMENTS AND REPEAL OF SPECIAL RULES RELATING TO
MINIMUM ASSESSMENTS AND FREE DEPOSIT INSURANCE.
(a) Setting Assessments.--Section 7(b)(2) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(2)) is amended--
(1) by striking subparagraphs (A) and (B) and inserting the
following new subparagraphs:
``(A) In general.--The Board of Directors shall set
assessments for insured depository institutions in such amounts
as the Board of Directors may determine to be necessary or
appropriate, subject to subparagraph (D).
``(B) Factors to be considered.--In setting assessments
under subparagraph (A), the Board of Directors shall consider
the following factors:
``(i) The estimated operating expenses of the Deposit
Insurance Fund.
``(ii) The estimated case resolution expenses and
income of the Deposit Insurance Fund.
``(iii) The projected effects of the payment of
assessments on the capital and earnings of insured
depository institutions.
``(iv) The risk factors and other factors taken into
account pursuant to paragraph (1) under the risk-based
assessment system, including the requirement under such
paragraph to maintain a risk-based system.
``(v) Any other factors the Board of Directors may
determine to be appropriate.''; and
(2) by inserting after subparagraph (C) the following new
subparagraph:
``(D) No discrimination based on size.--No insured
depository institution shall be barred from the lowest-risk
category solely because of size.''.
(b) Assessment Recordkeeping Period Shortened.--Paragraph (5) of
section 7(b) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b))
is amended to read as follows:
``(5) Depository institution required to maintain assessment-
related records.--Each insured depository institution shall
maintain all records that the Corporation may require for verifying
the correctness of any assessment on the insured depository
institution under this subsection until the later of--
``(A) the end of the 3-year period beginning on the due
date of the assessment; or
``(B) in the case of a dispute between the insured
depository institution and the Corporation with respect to such
assessment, the date of a final determination of any such
dispute.''.
(c) Increase in Fees for Late Assessment Payments.--Subsection (h)
of section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828(h))
is amended to read as follows:
``(h) Penalty for Failure to Timely Pay Assessments.--
``(1) In general.--Subject to paragraph (3), any insured
depository institution which fails or refuses to pay any assessment
shall be subject to a penalty in an amount of not more than 1
percent of the amount of the assessment due for each day that such
violation continues.
``(2) Exception in case of dispute.--Paragraph (1) shall not
apply if--
``(A) the failure to pay an assessment is due to a dispute
between the insured depository institution and the Corporation
over the amount of such assessment; and
``(B) the insured depository institution deposits security
satisfactory to the Corporation for payment upon final
determination of the issue.
``(3) Special rule for small assessment amounts.--If the amount
of the assessment which an insured depository institution fails or
refuses to pay is less than $10,000 at the time of such failure or
refusal, the amount of any penalty to which such institution is
subject under paragraph (1) shall not exceed $100 for each day that
such violation continues.
``(4) Authority to modify or remit penalty.--The Corporation,
in the sole discretion of the Corporation, may compromise, modify
or remit any penalty which the Corporation may assess or has
already assessed under paragraph (1) upon a finding that good cause
prevented the timely payment of an assessment.''.
(d) Statute of Limitations for Assessment Actions.--Subsection (g)
of section 7 of the Federal Deposit Insurance Act (12 U.S.C. 1817(g))
is amended to read as follows:
``(g) Assessment Actions.--
``(1) In general.--The Corporation, in any court of competent
jurisdiction, shall be entitled to recover from any insured
depository institution the amount of any unpaid assessment lawfully
payable by such insured depository institution.
``(2) Statute of limitations.--The following provisions shall
apply to actions relating to assessments, notwithstanding any other
provision in Federal law, or the law of any State:
``(A) Any action by an insured depository institution to
recover from the Corporation the overpaid amount of any
assessment shall be brought within 3 years after the date the
assessment payment was due, subject to the exception in
subparagraph (E).
``(B) Any action by the Corporation to recover from an
insured depository institution the underpaid amount of any
assessment shall be brought within 3 years after the date the
assessment payment was due, subject to the exceptions in
subparagraphs (C) and (E).
``(C) If an insured depository institution has made a false
or fraudulent statement with intent to evade any or all of its
assessment, the Corporation shall have until 3 years after the
date of discovery of the false or fraudulent statement in which
to bring an action to recover the underpaid amount.
``(D) Except as provided in subparagraph (C), assessment
deposit information contained in records no longer required to
be maintained pursuant to subsection (b)(4) shall be considered
conclusive and not subject to change.
``(E) Any action for the underpaid or overpaid amount of
any assessment that became due before the amendment to this
subsection under the Federal Deposit Insurance Reform Act of
2005 took effect shall be subject to the statute of limitations
for assessments in effect at the time the assessment became
due.''.
(e) Effective Date.--This section and the amendments made by this
section shall take effect on the date that the final regulations
required under section 9(a)(5) take effect.
SEC. 2105. REPLACEMENT OF FIXED DESIGNATED RESERVE RATIO WITH RESERVE
RANGE.
(a) In General.--Section 7(b)(3) of the Federal Deposit Insurance
Act (12 U.S.C. 1817(b)(3)) is amended to read as follows:
``(3) Designated reserve ratio.--
``(A) Establishment.--
``(i) In general.--Before the beginning of each
calendar year, the Board of Directors shall designate the
reserve ratio applicable with respect to the Deposit
Insurance Fund and publish the reserve ratio so designated.
``(ii) Rulemaking requirement.--Any change to the
designated reserve ratio shall be made by the Board of
Directors by regulation after notice and opportunity for
comment.
``(B) Range.--The reserve ratio designated by the Board of
Directors for any year--
``(i) may not exceed 1.5 percent of estimated insured
deposits; and
``(ii) may not be less than 1.15 percent of estimated
insured deposits.
``(C) Factors.--In designating a reserve ratio for any
year, the Board of Directors shall--
``(i) take into account the risk of losses to the
Deposit Insurance Fund in such year and future years,
including historic experience and potential and estimated
losses from insured depository institutions;
``(ii) take into account economic conditions generally
affecting insured depository institutions so as to allow
the designated reserve ratio to increase during more
favorable economic conditions and to decrease during less
favorable economic conditions, notwithstanding the
increased risks of loss that may exist during such less
favorable conditions, as determined to be appropriate by
the Board of Directors;
``(iii) seek to prevent sharp swings in the assessment
rates for insured depository institutions; and
``(iv) take into account such other factors as the
Board of Directors may determine to be appropriate,
consistent with the requirements of this subparagraph.
``(D) Publication of proposed change in ratio.--In
soliciting comment on any proposed change in the designated
reserve ratio in accordance with subparagraph (A), the Board of
Directors shall include in the published proposal a thorough
analysis of the data and projections on which the proposal is
based.''.
(b) Effective Date.--This section and the amendments made by this
section shall take effect on the date that the final regulations
required under section 9(a)(1) take effect.
SEC. 2106. REQUIREMENTS APPLICABLE TO THE RISK-BASED ASSESSMENT SYSTEM.
Section 7(b)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1817(b)(1)) is amended by adding at the end the following new
subparagraphs:
``(E) Information concerning risk of loss and economic
conditions.--
``(i) Sources of information.--For purposes of
determining risk of losses at insured depository
institutions and economic conditions generally affecting
depository institutions, the Corporation shall collect
information, as appropriate, from all sources the Board of
Directors considers appropriate, such as reports of
condition, inspection reports, and other information from
all Federal banking agencies, any information available
from State bank supervisors, State insurance and securities
regulators, the Securities and Exchange Commission
(including information described in section 35), the
Secretary of the Treasury, the Commodity Futures Trading
Commission, the Farm Credit Administration, the Federal
Trade Commission, any Federal reserve bank or Federal home
loan bank, and other regulators of financial institutions,
and any information available from credit rating entities,
and other private economic or business analysts.
``(ii) Consultation with federal banking agencies.--
``(I) In general.--Except as provided in subclause
(II), in assessing the risk of loss to the Deposit
Insurance Fund with respect to any insured depository
institution, the Corporation shall consult with the
appropriate Federal banking agency of such institution.
``(II) Treatment on aggregate basis.--In the case
of insured depository institutions that are well
capitalized (as defined in section 38) and, in the most
recent examination, were found to be well managed, the
consultation under subclause (I) concerning the
assessment of the risk of loss posed by such
institutions may be made on an aggregate basis.
``(iii) Rule of construction.--No provision of this
paragraph shall be construed as providing any new authority
for the Corporation to require submission of information by
insured depository institutions to the Corporation.
``(F) Modifications to the risk-based assessment system
allowed only after notice and comment.--In revising or
modifying the risk-based assessment system at any time after
the date of the enactment of the Federal Deposit Insurance
Reform Act of 2005, the Board of Directors may implement such
revisions or modification in final form only after notice and
opportunity for comment.''.
SEC. 2107. REFUNDS, DIVIDENDS, AND CREDITS FROM DEPOSIT INSURANCE FUND.
(a) In General.--Subsection (e) of section 7 of the Federal Deposit
Insurance Act (12 U.S.C. 1817(e)) is amended to read as follows:
``(e) Refunds, Dividends, and Credits.--
``(1) Refunds of overpayments.--In the case of any payment of
an assessment by an insured depository institution in excess of the
amount due to the Corporation, the Corporation may--
``(A) refund the amount of the excess payment to the
insured depository institution; or
``(B) credit such excess amount toward the payment of
subsequent assessments until such credit is exhausted.
``(2) Dividends from excess amounts in deposit insurance
fund.--
``(A) Reserve ratio in excess of 1.5 percent of estimated
insured deposits.--If, at the end of a calendar year, the
reserve ratio of the Deposit Insurance Fund exceeds 1.5 percent
of estimated insured deposits, the Corporation shall declare
the amount in the Fund in excess of the amount required to
maintain the reserve ratio at 1.5 percent of estimated insured
deposits, as dividends to be paid to insured depository
institutions.
``(B) Reserve ratio equal to or in excess of 1.35 percent
of estimated insured deposits and not more than 1.5 percent.--
If, at the end of a calendar year, the reserve ratio of the
Deposit Insurance Fund equals or exceeds 1.35 percent of
estimated insured deposits and is not more than 1.5 percent of
such deposits, the Corporation shall declare the amount in the
Fund that is equal to 50 percent of the amount in excess of the
amount required to maintain the reserve ratio at 1.35 percent
of the estimated insured deposits as dividends to be paid to
insured depository institutions.
``(C) Basis for distribution of dividends.--
``(i) In general.--Solely for the purposes of dividend
distribution under this paragraph, the Corporation shall
determine each insured depository institution's relative
contribution to the Deposit Insurance Fund (or any
predecessor deposit insurance fund) for calculating such
institution's share of any dividend declared under this
paragraph, taking into account the factors described in
clause (ii).
``(ii) Factors for distribution.--In implementing this
paragraph in accordance with regulations, the Corporation
shall take into account the following factors:
``(I) The ratio of the assessment base of an
insured depository institution (including any
predecessor) on December 31, 1996, to the assessment
base of all eligible insured depository institutions on
that date.
``(II) The total amount of assessments paid on or
after January 1, 1997, by an insured depository
institution (including any predecessor) to the Deposit
Insurance Fund (and any predecessor deposit insurance
fund).
``(III) That portion of assessments paid by an
insured depository institution (including any
predecessor) that reflects higher levels of risk
assumed by such institution.
``(IV) Such other factors as the Corporation may
determine to be appropriate.
``(D) Notice and opportunity for comment.--The Corporation
shall prescribe by regulation, after notice and opportunity for
comment, the method for the calculation, declaration, and
payment of dividends under this paragraph.
``(E) Limitation.--The Board of Directors may suspend or
limit dividends paid under subparagraph (B), if the Board
determines in writing that--
``(i) a significant risk of losses to the Deposit
Insurance Fund exists over the next 1-year period; and
``(ii) it is likely that such losses will be
sufficiently high as to justify a finding by the Board that
the reserve ratio should temporarily be allowed--
``(I) to grow without requiring dividends under
subparagraph (B); or
``(II) to exceed the maximum amount established
under subsection (b)(3)(B)(i).
``(F) Considerations.--In making a determination under
subparagraph (E), the Board shall consider--
``(i) national and regional conditions and their impact
on insured depository institutions;
``(ii) potential problems affecting insured depository
institutions or a specific group or type of depository
institution;
``(iii) the degree to which the contingent liability of
the Corporation for anticipated failures of insured
institutions adequately addresses concerns over funding
levels in the Deposit Insurance Fund; and
``(iv) any other factors that the Board determines are
appropriate.
``(G) Review of determination.--
``(i) Annual review.--A determination to suspend or
limit dividends under subparagraph (E) shall be reviewed by
the Board of Directors annually.
``(ii) Action by board.--Based on each annual review
under clause (i), the Board of Directors shall either renew
or remove a determination to suspend or limit dividends
under subparagraph (E), or shall make a new determination
in accordance with this paragraph. Unless justified under
the terms of the renewal or new determination, the
Corporation shall be required to provide cash dividends
under subparagraph (A) or (B), as appropriate.
``(3) One-time credit based on total assessment base at year-
end 1996.--
``(A) In general.--Before the end of the 270-day period
beginning on the date of the enactment of the Federal Deposit
Insurance Reform Act of 2005, the Board of Directors shall, by
regulation after notice and opportunity for comment, provide
for a credit to each eligible insured depository institution
(or a successor insured depository institution), based on the
assessment base of the institution on December 31, 1996, as
compared to the combined aggregate assessment base of all
eligible insured depository institutions, taking into account
such factors as the Board of Directors may determine to be
appropriate.
``(B) Credit limit.--The aggregate amount of credits
available under subparagraph (A) to all eligible insured
depository institutions shall equal the amount that the
Corporation could collect if the Corporation imposed an
assessment of 10.5 basis points on the combined assessment base
of the Bank Insurance Fund and the Savings Association
Insurance Fund as of December 31, 2001.
``(C) Eligible insured depository institution defined.--For
purposes of this paragraph, the term `eligible insured
depository institution' means any insured depository
institution that--
``(i) was in existence on December 31, 1996, and paid a
deposit insurance assessment prior to that date; or
``(ii) is a successor to any insured depository
institution described in clause (i).
``(D) Application of credits.--
``(i) In general.--Subject to clause (ii), the amount
of a credit to any eligible insured depository institution
under this paragraph shall be applied by the Corporation,
subject to subsection (b)(3)(E), to the assessments imposed
on such institution under subsection (b) that become due
for assessment periods beginning after the effective date
of regulations prescribed under subparagraph (A).
``(ii) Temporary restriction on use of credits.--The
amount of a credit to any eligible insured depository
institution under this paragraph may not be applied to more
than 90 percent of the assessments imposed on such
institution under subsection (b) that become due for
assessment periods beginning in fiscal years 2008, 2009,
and 2010.
``(iii) Regulations.--The regulations prescribed under
subparagraph (A) shall establish the qualifications and
procedures governing the application of assessment credits
pursuant to clause (i).
``(E) Limitation on amount of credit for certain depository
institutions.--In the case of an insured depository institution
that exhibits financial, operational, or compliance weaknesses
ranging from moderately severe to unsatisfactory, or is not
adequately capitalized (as defined in section 38) at the
beginning of an assessment period, the amount of any credit
allowed under this paragraph against the assessment on that
depository institution for such period may not exceed the
amount calculated by applying to that depository institution
the average assessment rate on all insured depository
institutions for such assessment period.
``(F) Successor defined.--The Corporation shall define the
term `successor' for purposes of this paragraph, by regulation,
and may consider any factors as the Board may deem appropriate.
``(4) Administrative review.--
``(A) In general.--The regulations prescribed under
paragraphs (2)(D) and (3) shall include provisions allowing an
insured depository institution a reasonable opportunity to
challenge administratively the amount of the credit or dividend
determined under paragraph (2) or (3) for such institution.
``(B) Administrative review.--Any review under subparagraph
(A) of any determination of the Corporation under paragraph (2)
or (3) shall be final and not subject to judicial review.''.
(b) Definition of Reserve Ratio.--Section 3(y) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(y)) (as amended by section
2105(b) of this subtitle) is amended by adding at the end the following
new paragraph:
``(3) Reserve ratio.--The term `reserve ratio', when used with
regard to the Deposit Insurance Fund other than in connection with
a reference to the designated reserve ratio, means the ratio of the
net worth of the Deposit Insurance Fund to the value of the
aggregate estimated insured deposits.''.
SEC. 2108. DEPOSIT INSURANCE FUND RESTORATION PLANS.
Section 7(b)(3) of the Federal Deposit Insurance Act (12 U.S.C.
1817(b)(3)) (as amended by section 2105(a) of this subtitle) is amended
by adding at the end the following new subparagraph:
``(E) DIF restoration plans.--
``(i) In general.--Whenever--
``(I) the Corporation projects that the reserve
ratio of the Deposit Insurance Fund will, within 6
months of such determination, fall below the minimum
amount specified in subparagraph (B)(ii) for the
designated reserve ratio; or
``(II) the reserve ratio of the Deposit Insurance
Fund actually falls below the minimum amount specified
in subparagraph (B)(ii) for the designated reserve
ratio without any determination under subclause (I)
having been made,
the Corporation shall establish and implement a Deposit
Insurance Fund restoration plan within 90 days that meets
the requirements of clause (ii) and such other conditions
as the Corporation determines to be appropriate.
``(ii) Requirements of restoration plan.--A Deposit
Insurance Fund restoration plan meets the requirements of
this clause if the plan provides that the reserve ratio of
the Fund will meet or exceed the minimum amount specified
in subparagraph (B)(ii) for the designated reserve ratio
before the end of the 5-year period beginning upon the
implementation of the plan (or such longer period as the
Corporation may determine to be necessary due to
extraordinary circumstances).
``(iii) Restriction on assessment credits.--As part of
any restoration plan under this subparagraph, the
Corporation may elect to restrict the application of
assessment credits provided under subsection (e)(3) for any
period that the plan is in effect.
``(iv) Limitation on restriction.--Notwithstanding
clause (iii), while any restoration plan under this
subparagraph is in effect, the Corporation shall apply
credits provided to an insured depository institution under
subsection (e)(3) against any assessment imposed on the
institution for any assessment period in an amount equal to
the lesser of--
``(I) the amount of the assessment; or
``(II) the amount equal to 3 basis points of the
institution's assessment base.
``(v) Transparency.--Not more than 30 days after the
Corporation establishes and implements a restoration plan
under clause (i), the Corporation shall publish in the
Federal Register a detailed analysis of the factors
considered and the basis for the actions taken with regard
to the plan.''.
SEC. 2109. REGULATIONS REQUIRED.
(a) In General.--Not later than 270 days after the date of the
enactment of this Act, the Board of Directors of the Federal Deposit
Insurance Corporation shall prescribe final regulations, after notice
and opportunity for comment--
(1) designating the reserve ratio for the Deposit Insurance
Fund in accordance with section 7(b)(3) of the Federal Deposit
Insurance Act (as amended by section 2105 of this subtitle);
(2) implementing increases in deposit insurance coverage in
accordance with the amendments made by section 2103 of this
subtitle;
(3) implementing the dividend requirement under section 7(e)(2)
of the Federal Deposit Insurance Act (as amended by section 2107 of
this subtitle);
(4) implementing the 1-time assessment credit to certain
insured depository institutions in accordance with section 7(e)(3)
of the Federal Deposit Insurance Act, as amended by section 2107 of
this subtitle, including the qualifications and procedures under
which the Corporation would apply assessment credits; and
(5) providing for assessments under section 7(b) of the Federal
Deposit Insurance Act, as amended by this subtitle.
(b) Transition Provisions.--
(1) Continuation of existing assessment regulations.--No
provision of this subtitle or any amendment made by this subtitle
shall be construed as affecting the authority of the Corporation to
set or collect deposit insurance assessments pursuant to any
regulations in effect before the effective date of the final
regulations prescribed under subsection (a).
(2) Treatment of dif members under existing regulations.--As of
the date of the merger of the Bank Insurance Fund and the Savings
Association Insurance Fund pursuant to section 2102, the assessment
regulations in effect immediately before the date of the enactment
of this Act shall continue to apply to all members of the Deposit
Insurance Fund, until such regulations are modified by the
Corporation, notwithstanding that such regulations may refer to
``Bank Insurance Fund members'' or ``Savings Association Insurance
Fund members''.
TITLE III--DIGITAL TELEVISION TRANSITION AND PUBLIC SAFETY
SEC. 3001. SHORT TITLE; DEFINITION.
(a) Short Title.--This title may be cited as the ``Digital
Television Transition and Public Safety Act of 2005''.
(b) Definition.--As used in this Act, the term ``Assistant
Secretary'' means the Assistant Secretary for Communications and
Information of the Department of Commerce.
SEC. 3002. ANALOG SPECTRUM RECOVERY: FIRM DEADLINE.
(a) Amendments.--Section 309(j)(14) of the Communications Act of
1934 (47 U.S.C. 309(j)(14)) is amended--
(1) in subparagraph (A)--
(A) by inserting ``full-power'' before ``television
broadcast license''; and
(B) by striking ``December 31, 2006'' and inserting
``February 17, 2009'';
(2) by striking subparagraph (B);
(3) in subparagraph (C)(i)(I), by striking ``or (B)'';
(4) in subparagraph (D), by striking ``subparagraph (C)(i)''
and inserting ``subparagraph (B)(i)''; and
(5) by redesignating subparagraphs (C) and (D) as subparagraphs
(B) and (C), respectively.
(b) Terminations of Analog Licenses and Broadcasting.--The Federal
Communications Commission shall take such actions as are necessary--
(1) to terminate all licenses for full-power television
stations in the analog television service, and to require the
cessation of broadcasting by full-power stations in the analog
television service, by February 18, 2009; and
(2) to require by February 18, 2009, that all broadcasting by
Class A stations, whether in the analog television service or
digital television service, and all broadcasting by full-power
stations in the digital television service, occur only on channels
between channels 2 and 36, inclusive, or 38 and 51, inclusive
(between frequencies 54 and 698 megahertz, inclusive).
(c) Conforming Amendments.--
(1) Section 337(e) of the Communications Act of 1934 (47 U.S.C.
337(e)) is amended--
(A) in paragraph (1)--
(i) by striking ``channels 60 to 69'' and inserting
``channels 52 to 69'';
(ii) by striking ``person who'' and inserting ``full-
power television station licensee that'';
(iii) by striking ``746 and 806 megahertz'' and
inserting ``698 and 806 megahertz''; and
(iv) by striking ``the date on which the digital
television service transition period terminates, as
determined by the Commission'' and inserting ``February 17,
2009'';
(B) in paragraph (2), by striking ``746 megahertz'' and
inserting ``698 megahertz''.
SEC. 3003. AUCTION OF RECOVERED SPECTRUM.
(a) Deadline for Auction.--Section 309(j) of the Communications Act
of 1934 (47 U.S.C. 309(j)) is amended--
(1) by redesignating the second paragraph (15) of such section
(as added by section 203(b) of the Commercial Spectrum Enhancement
Act (Public Law 108-494; 118 Stat. 3993)), as paragraph (16) of
such section; and
(2) in the first paragraph (15) of such section (as added by
section 3(a) of the Auction Reform Act of 2002 (Public Law 107-195;
116 Stat. 716)), by adding at the end of subparagraph (C) the
following new clauses:
``(v) Additional deadlines for recovered analog
spectrum.--Notwithstanding subparagraph (B), the Commission
shall conduct the auction of the licenses for recovered
analog spectrum by commencing the bidding not later than
January 28, 2008, and shall deposit the proceeds of such
auction in accordance with paragraph (8)(E)(ii) not later
than June 30, 2008.
``(vi) Recovered analog spectrum.--For purposes of
clause (v), the term `recovered analog spectrum' means the
spectrum between channels 52 and 69, inclusive (between
frequencies 698 and 806 megahertz, inclusive) reclaimed
from analog television service broadcasting under paragraph
(14), other than--
``(I) the spectrum required by section 337 to be
made available for public safety services; and
``(II) the spectrum auctioned prior to the date of
enactment of the Digital Television Transition and
Public Safety Act of 2005.''.
(b) Extension of Auction Authority.--Section 309(j)(11) of such Act
(47 U.S.C. 309(j)(11)) is amended by striking ``2007'' and inserting
``2011''.
SEC. 3004. RESERVATION OF AUCTION PROCEEDS.
Section 309(j)(8) of the Communications Act of 1934 (47 U.S.C.
309(j)(8)) is amended--
(1) in subparagraph (A), by striking ``subparagraph (B) or
subparagraph (D)'' and inserting ``subparagraphs (B), (D), and
(E)'';
(2) in subparagraph (C)(i), by inserting before the semicolon
at the end the following: ``, except as otherwise provided in
subparagraph (E)(ii)''; and
(3) by adding at the end the following new subparagraph:
``(E) Transfer of receipts.--
``(i) Establishment of fund.--There is established in
the Treasury of the United States a fund to be known as the
Digital Television Transition and Public Safety Fund.
``(ii) Proceeds for funds.--Notwithstanding
subparagraph (A), the proceeds (including deposits and
upfront payments from successful bidders) from the use of a
competitive bidding system under this subsection with
respect to recovered analog spectrum shall be deposited in
the Digital Television Transition and Public Safety Fund.
``(iii) Transfer of amount to treasury.--On September
30, 2009, the Secretary shall transfer $7,363,000,000 from
the Digital Television Transition and Public Safety Fund to
the general fund of the Treasury.
``(iv) Recovered analog spectrum.--For purposes of
clause (i), the term `recovered analog spectrum' has the
meaning provided in paragraph (15)(C)(vi).''.
SEC. 3005. DIGITAL-TO-ANALOG CONVERTER BOX PROGRAM.
(a) Creation of Program.--The Assistant Secretary shall--
(1) implement and administer a program through which households
in the United States may obtain coupons that can be applied toward
the purchase of digital-to-analog converter boxes; and
(2) make payments of not to exceed $990,000,000, in the
aggregate, through fiscal year 2009 to carry out that program from
the Digital Television Transition and Public Safety Fund
established under section 309(j)(8)(E) of the Communications Act of
1934 (47 U.S.C. 309(j)(8)(E)).
(b) Credit.--The Assistant Secretary may borrow from the Treasury
beginning on October 1, 2006, such sums as may be necessary, but not to
exceed $1,500,000,000, to implement this section. The Assistant
Secretary shall reimburse the Treasury, without interest, as funds are
deposited into the Digital Television Transition and Public Safety
Fund.
(c) Program Specifications.--
(1) Limitations.--
(A) Two-per-household maximum.--A household may obtain
coupons by making a request as required by the regulations
under this section between January 1, 2008, and March 31, 2009,
inclusive. The Assistant Secretary shall ensure that each
requesting household receives, via the United States Postal
Service, no more than two coupons.
(B) No combinations of coupons.--Two coupons may not be
used in combination toward the purchase of a single digital-to-
analog converter box.
(C) Duration.--All coupons shall expire 3 months after
issuance.
(2) Distribution of coupons.--The Assistant Secretary shall
expend not more than $100,000,000 on administrative expenses and
shall ensure that the sum of--
(A) all administrative expenses for the program, including
not more than $5,000,000 for consumer education concerning the
digital television transition and the availability of the
digital-to-analog converter box program; and
(B) the total maximum value of all the coupons redeemed,
and issued but not expired, does not exceed $990,000,000.
(3) Use of additional amount.--If the Assistant Secretary
transmits to the Committee on Energy and Commerce of the House of
Representatives and Committee on Commerce, Science, and
Transportation of the Senate a statement certifying that the sum
permitted to be expended under paragraph (2) will be insufficient
to fulfill the requests for coupons from eligible households--
(A) paragraph (2) shall be applied--
(i) by substituting ``$160,000,000'' for
``$100,000,000''; and
(ii) by substituting ``$1,500,000,000'' for
``$990,000,000'';
(B) subsection (a)(2) shall be applied by substituting
``$1,500,000,000'' for ``$990,000,000''; and
(C) the additional amount permitted to be expended shall be
available 60 days after the Assistant Secretary sends such
statement.
(4) Coupon value.--The value of each coupon shall be $40.
(d) Definition of Digital-to-Analog Converter Box.--For purposes of
this section, the term ``digital-to-analog converter box'' means a
stand-alone device that does not contain features or functions except
those necessary to enable a consumer to convert any channel broadcast
in the digital television service into a format that the consumer can
display on television receivers designed to receive and display signals
only in the analog television service, but may also include a remote
control device.
SEC. 3006. PUBLIC SAFETY INTEROPERABLE COMMUNICATIONS.
(a) Creation of Program.--The Assistant Secretary, in consultation
with the Secretary of the Department of Homeland Security--
(1) may take such administrative action as is necessary to
establish and implement a grant program to assist public safety
agencies in the acquisition of, deployment of, or training for the
use of interoperable communications systems that utilize, or enable
interoperability with communications systems that can utilize,
reallocated public safety spectrum for radio communication; and
(2) shall make payments of not to exceed $1,000,000,000, in the
aggregate, through fiscal year 2010 to carry out that program from
the Digital Television Transition and Public Safety Fund
established under section 309(j)(8)(E) of the Communications Act of
1934 (47 U.S.C. 309(j)(8)(E)).
(b) Credit.--The Assistant Secretary may borrow from the Treasury
beginning on October 1, 2006, such sums as may be necessary, but not to
exceed $1,000,000,000, to implement this section. The Assistant
Secretary shall reimburse the Treasury, without interest, as funds are
deposited into the Digital Television Transition and Public Safety
Fund.
(c) Condition of Grants.--In order to obtain a grant under the
grant program, a public safety agency shall agree to provide, from non-
Federal sources, not less than 20 percent of the costs of acquiring and
deploying the interoperable communications systems funded under the
grant program.
(d) Definitions.--For purposes of this section:
(1) Public safety agency.--The term ``public safety agency''
means any State, local, or tribal government entity, or
nongovernmental organization authorized by such entity, whose sole
or principal purpose is to protect the safety of life, health, or
property.
(2) Interoperable communications systems.--The term
``interoperable communications systems'' means communications
systems which enable public safety agencies to share information
amongst local, State, Federal, and tribal public safety agencies in
the same area via voice or data signals.
(3) Reallocated public safety spectrum.--The term ``reallocated
public safety spectrum'' means the bands of spectrum located at
764-776 megahertz and 794-806 megahertz, inclusive.
SEC. 3007. NYC 9/11 DIGITAL TRANSITION.
(a) Funds Available.--From the Digital Television Transition and
Public Safety Fund established under section 309(j)(8)(E) of the
Communications Act of 1934 (47 U.S.C. 309(j)(8)(E)) the Assistant
Secretary shall make payments of not to exceed $30,000,000, in the
aggregate, which shall be available to carry out this section for
fiscal years 2007 through 2008. The Assistant Secretary may borrow from
the Treasury beginning October 1, 2006, such sums as may be necessary
not to exceed $30,000,000 to implement and administer the program in
accordance with this section. The Assistant Secretary shall reimburse
the Treasury, without interest, as funds are deposited into the Digital
Television Transition and Public Safety Fund.
(b) Use of Funds.--The sums available under subsection (a) shall be
made available by the Assistant Secretary by grant to be used to
reimburse the Metropolitan Television Alliance for costs incurred in
the design and deployment of a temporary digital television broadcast
system to ensure that, until a permanent facility atop the Freedom
Tower is constructed, the members of the Metropolitan Television
Alliance can provide the New York City area with an adequate digital
television signal as determined by the Federal Communications
Commission.
(c) Definitions.--For purposes of this section:
(1) Metropolitan television alliance.--The term ``Metropolitan
Television Alliance'' means the organization formed by New York
City television broadcast station licensees to locate new shared
facilities as a result of the attacks on September 11, 2001 and the
loss of use of shared facilities that housed broadcast equipment.
(2) New york city area.--The term ``New York City area'' means
the five counties comprising New York City and counties of northern
New Jersey in immediate proximity to New York City (Bergen, Essex,
Union, and Hudson Counties).
SEC. 3008. LOW-POWER TELEVISION AND TRANSLATOR DIGITAL-TO-ANALOG
CONVERSION.
(a) Creation of Program.--The Assistant Secretary shall make
payments of not to exceed $10,000,000, in the aggregate, during the
fiscal year 2008 and 2009 period from the Digital Television Transition
and Public Safety Fund established under section 309(j)(8)(E) of the
Communications Act of 1934 (47 U.S.C. 309(j)(8)(E)) to implement and
administer a program through which each eligible low-power television
station may receive compensation toward the cost of the purchase of a
digital-to-analog conversion device that enables it to convert the
incoming digital signal of its corresponding full-power television
station to analog format for transmission on the low-power television
station's analog channel. An eligible low-power television station may
receive such compensation only if it submits a request for such
compensation on or before February 17, 2009. Priority compensation
shall be given to eligible low-power television stations in which the
license is held by a non-profit corporation and eligible low-power
television stations that serve rural areas of fewer than 10,000
viewers.
(b) Credit.--The Assistant Secretary may borrow from the Treasury
beginning October 1, 2006, such sums as may be necessary, but not to
exceed $10,000,000, to implement this section. The Assistant Secretary
shall reimburse the Treasury, without interest, as funds are deposited
into the Digital Television Transition and Public Safety Fund.
(c) Eligible Stations.--For purposes of this section, the term
``eligible low-power television station'' means a low-power television
broadcast station, Class A television station, television translator
station, or television booster station--
(1) that is itself broadcasting exclusively in analog format;
and
(2) that has not purchased a digital-to-analog conversion
device prior to the date of enactment of the Digital Television
Transition and Public Safety Act of 2005.
SEC. 3009. LOW-POWER TELEVISION AND TRANSLATOR UPGRADE PROGRAM.
(a) Establishment.--The Assistant Secretary shall make payments of
not to exceed $65,000,000, in the aggregate, during fiscal year 2009
from the Digital Television Transition and Public Safety Fund
established under section 309(j)(8)(E) of the Communications Act of
1934 (47 U.S.C. 309(j)(8)(E)) to implement and administer a program
through which each licensee of an eligible low-power television station
may receive reimbursement for equipment to upgrade low-power television
stations from analog to digital in eligible rural communities, as that
term is defined in section 610(b)(2) of the Rural Electrification Act
of 1937 (7 U.S.C. 950bb(b)(2)). Such reimbursements shall be issued to
eligible stations no earlier than October 1, 2010. Priority
reimbursements shall be given to eligible low-power television stations
in which the license is held by a non-profit corporation and eligible
low-power television stations that serve rural areas of fewer than
10,000 viewers.
(b) Eligible Stations.--For purposes of this section, the term
``eligible low-power television station'' means a low-power television
broadcast station, Class A television station, television translator
station, or television booster station--
(1) that is itself broadcasting exclusively in analog format;
and
(2) that has not converted from analog to digital operations
prior to the date of enactment of the Digital Television Transition
and Public Safety Act of 2005.
SEC. 3010. NATIONAL ALERT AND TSUNAMI WARNING PROGRAM.
The Assistant Secretary shall make payments of not to exceed
$156,000,000, in the aggregate, during the fiscal year 2007 through
2012 period from the Digital Television Transition and Public Safety
Fund established under section 309(j)(8)(E) of the Communications Act
of 1934 (47 U.S.C. 309(j)(8)(E)) to implement a unified national alert
system capable of alerting the public, on a national, regional, or
local basis to emergency situations by using a variety of
communications technologies. The Assistant Secretary shall use
$50,000,000 of such amounts to implement a tsunami warning and coastal
vulnerability program.
SEC. 3011. ENHANCE 911.
The Assistant Secretary shall make payments of not to exceed
$43,500,000, in the aggregate, from the Digital Television Transition
and Public Safety Fund established under section 309(j)(8)(E) of the
Communications Act of 1934 (47 U.S.C. 309(j)(8)(E)) to implement the
ENHANCE 911 Act of 2004.
SEC. 3012. ESSENTIAL AIR SERVICE PROGRAM.
(a) In General.--If the amount appropriated to carry out the
essential air service program under subchapter II of chapter 417 of
title 49, United States Code, equals or exceeds $110,000,000 for fiscal
year 2007 or 2008, then the Secretary of Commerce shall make
$15,000,000 available, from the Digital Television Transition and
Public Safety Fund established by section 309(j)(8)(E) of the
Communications Act of 1934 (47 U.S.C. 309(j)(8)(E)), to the Secretary
of Transportation for use in carrying out the essential air service
program for that fiscal year.
(b) Application With Other Funds.--Amounts made available under
subsection (a) for any fiscal year shall be in addition to any
amounts--
(1) appropriated for that fiscal year; or
(2) derived from fees collected pursuant to section 45301(a)(1)
of title 49, United States Code, that are made available for
obligation and expenditure to carry out the essential air service
program for that fiscal year.
(c) Advances.--The Secretary of Transportation may borrow from the
Treasury such sums as may be necessary, but not to exceed $30,000,000
on a temporary and reimbursable basis to implement subsection (a). The
Secretary of Transportation shall reimburse the Treasury, without
interest, as funds are deposited into the Digital Television Transition
and Public Safety Fund under section 309(j)(8)(E) of the Communications
Act of 1934 (47 U.S.C. 309(j)(8)(E)) and made available to the
Secretary under subsection (a).
SEC. 3013. SUPPLEMENTAL LICENSE FEES.
In addition to any fees assessed under the Communications Act of
1934 (47 U.S.C. 151 et seq.), the Federal Communications Commission
shall assess extraordinary fees for licenses in the aggregate amount of
$10,000,000, which shall be deposited in the Treasury during fiscal
year 2006 as offsetting receipts.
TITLE IV--TRANSPORTATION PROVISIONS
SEC. 4001. EXTENSION OF VESSEL TONNAGE DUTIES.
(a) Extension of Duties.--Section 36 of the Act entitled ``An Act
to provide revenue, equalize duties and encourage the industries of the
United States, and for other purposes'', approved August 5, 1909 (36
Stat. 111; 46 U.S.C. App. 121), is amended--
(1) by striking ``9 cents per ton'' and all that follows
through ``2002,'' the first place it appears and inserting ``4.5
cents per ton, not to exceed in the aggregate 22.5 cents per ton in
any one year, for fiscal years 2006 through 2010,''; and
(2) by striking ``27 cents per ton'' and all that follows
through ``2002,'' and inserting ``13.5 cents per ton, not to exceed
67.5 cents per ton per annum, for fiscal years 2006 through
2010,''.
(b) Conforming Amendment.--The Act entitled ``An Act concerning
tonnage duties on vessels entering otherwise than by sea'', approved
March 8, 1910 (36 Stat. 234; 46 U.S.C. App. 132), is amended by
striking ``9 cents per ton'' and all that follows through ``and 2
cents'' and inserting ``4.5 cents per ton, not to exceed in the
aggregate 22.5 cents per ton in any one year, for fiscal years 2006
through 2010, and 2 cents''.
TITLE V--MEDICARE
Subtitle A--Provisions Relating to Part A
SEC. 5001. HOSPITAL QUALITY IMPROVEMENT.
(a) Submission of Hospital Data.--Section 1886(b)(3)(B) of the
Social Security Act (42 U.S.C. 1395ww(b)(3)(B)) is amended--
(1) in clause (i)--
(A) in subclause (XIX), by striking ``2007'' and inserting
``2006''; and
(B) in subclause (XX), by striking ``for fiscal year 2008
and each subsequent fiscal year,'' and inserting ``for each
subsequent fiscal year, subject to clause (viii),'';
(2) in clause (vii)--
(A) in subclause (I), by striking ``for each of fiscal
years 2005 through 2007'' and inserting ``for fiscal years 2005
and 2006''; and
(B) in subclause (II), by striking ``Each'' and inserting
``For fiscal years 2005 and 2006, each''; and
(3) by adding at the end the following new clauses:
``(viii)(I) For purposes of clause (i) for fiscal year
2007 and each subsequent fiscal year, in the case of a
subsection (d) hospital that does not submit, to the
Secretary in accordance with this clause, data required to
be submitted on measures selected under this clause with
respect to such a fiscal year, the applicable percentage
increase under clause (i) for such fiscal year shall be
reduced by 2.0 percentage points. Such reduction shall
apply only with respect to the fiscal year involved and the
Secretary shall not take into account such reduction in
computing the applicable percentage increase under clause
(i) for a subsequent fiscal year, and the Secretary and the
Medicare Payment Advisory Commission shall carry out the
requirements under section 5001(b) of the Deficit Reduction
Act of 2005.
``(II) Each subsection (d) hospital shall submit data
on measures selected under this clause to the Secretary in
a form and manner, and at a time, specified by the
Secretary for purposes of this clause.
``(III) The Secretary shall expand, beyond the measures
specified under clause (vii)(II) and consistent with the
succeeding subclauses, the set of measures that the
Secretary determines to be appropriate for the measurement
of the quality of care furnished by hospitals in inpatient
settings.
``(IV) Effective for payments beginning with fiscal
year 2007, in expanding the number of measures under
subclause (III), the Secretary shall begin to adopt the
baseline set of performance measures as set forth in the
November 2005 report by the Institute of Medicine of the
National Academy of Sciences under section 238(b) of the
Medicare Prescription Drug, Improvement, and Modernization
Act of 2003.
``(V) Effective for payments beginning with fiscal year
2008, the Secretary shall add other measures that reflect
consensus among affected parties and, to the extent
feasible and practicable, shall include measures set forth
by one or more national consensus building entities.
``(VI) For purposes of this clause and clause (vii),
the Secretary may replace any measures or indicators in
appropriate cases, such as where all hospitals are
effectively in compliance or the measures or indicators
have been subsequently shown not to represent the best
clinical practice.
``(VII) The Secretary shall establish procedures for
making data submitted under this clause available to the
public. Such procedures shall ensure that a hospital has
the opportunity to review the data that are to be made
public with respect to the hospital prior to such data
being made public. The Secretary shall report quality
measures of process, structure, outcome, patients'
perspectives on care, efficiency, and costs of care that
relate to services furnished in inpatient settings in
hospitals on the Internet website of the Centers for
Medicare & Medicaid Services.''.
(b) Plan for Hospital Value Based Purchasing Program.--
(1) In general.--The Secretary of Health and Human Services
shall develop a plan to implement a value based purchasing program
for payments under the Medicare program for subsection (d)
hospitals beginning with fiscal year 2009.
(2) Details.--Such a plan shall include consideration of the
following issues:
(A) The on-going development, selection, and modification
process for measures of quality and efficiency in hospital
inpatient settings.
(B) The reporting, collection, and validation of quality
data.
(C) The structure of value based payment adjustments,
including the determination of thresholds or improvements in
quality that would substantiate a payment adjustment, the size
of such payments, and the sources of funding for the value
based payments.
(D) The disclosure of information on hospital performance.
In developing such a plan, the Secretary shall consult with
relevant affected parties and shall consider experience with such
demonstrations that are relevant to the value based purchasing
program under this subsection.
(c) Quality Adjustment in DRG Payments for Certain Hospital
Acquired Infections.--
(1) In general.--Section 1886(d)(4) of the Social Security Act
(42 U.S.C. 1395ww(d)(4)) is amended by adding at the end the
following new subparagraph:
``(D)(i) For discharges occurring on or after October 1, 2008, the
diagnosis-related group to be assigned under this paragraph for a
discharge described in clause (ii) shall be a diagnosis-related group
that does not result in higher payment based on the presence of a
secondary diagnosis code described in clause (iv).
``(ii) A discharge described in this clause is a discharge which
meets the following requirements:
``(I) The discharge includes a condition identified by a
diagnosis code selected under clause (iv) as a secondary diagnosis.
``(II) But for clause (i), the discharge would have been
classified to a diagnosis-related group that results in a higher
payment based on the presence of a secondary diagnosis code
selected under clause (iv).
``(III) At the time of admission, no code selected under clause
(iv) was present.
``(iii) As part of the information required to be reported by a
hospital with respect to a discharge of an individual in order for
payment to be made under this subsection, for discharges occurring on
or after October 1, 2007, the information shall include the secondary
diagnosis of the individual at admission.
``(iv) By not later than October 1, 2007, the Secretary shall
select diagnosis codes associated with at least two conditions, each of
which codes meets all of the following requirements (as determined by
the Secretary):
``(I) Cases described by such code have a high cost or high
volume, or both, under this title.
``(II) The code results in the assignment of a case to a
diagnosis-related group that has a higher payment when the code is
present as a secondary diagnosis.
``(III) The code describes such conditions that could
reasonably have been prevented through the application of evidence-
based guidelines.
The Secretary may from time to time revise (through addition or
deletion of codes) the diagnosis codes selected under this clause so
long as there are diagnosis codes associated with at least two
conditions selected for discharges occurring during any fiscal year.
``(v) In selecting and revising diagnosis codes under clause (iv),
the Secretary shall consult with the Centers for Disease Control and
Prevention and other appropriate entities.
``(vi) Any change resulting from the application of this
subparagraph shall not be taken into account in adjusting the weighting
factors under subparagraph (C)(i) or in applying budget neutrality
under subparagraph (C)(iii).''.
(2) No judicial review.--Section 1886(d)(7)(B) of such Act (42
U.S.C. 1395ww(d)(7)(B)) is amended by inserting before the period
the following: ``, including the selection and revision of codes
under paragraph (4)(D)''.
SEC. 5002. CLARIFICATION OF DETERMINATION OF MEDICAID PATIENT DAYS FOR
DSH COMPUTATION.
(a) In General.--Section 1886(d)(5)(F)(vi) of the Social Security
Act (42 U.S.C. 1395ww(d)(5)(F)(vi)) is amended by adding after and
below subclause (II) the following:
``In determining under subclause (II) the number of the hospital's
patient days for such period which consist of patients who (for such
days) were eligible for medical assistance under a State plan approved
under title XIX, the Secretary may, to the extent and for the period
the Secretary determines appropriate, include patient days of patients
not so eligible but who are regarded as such because they receive
benefits under a demonstration project approved under title XI.''.
(b) Ratification and Prospective Application of Previous
Regulations.--
(1) In general.--Subject to paragraph (2), regulations
described in paragraph (3), insofar as such regulations provide for
the treatment of individuals eligible for medical assistance under
a demonstration project approved under title XI of the Social
Security Act under section 1886(d)(5)(F)(vi) of such Act, are
hereby ratified, effective as of the date of their respective
promulgations.
(2) No application to closed cost reports.--Paragraph (1) shall
not be applied in a manner that requires the reopening of any cost
reports which are closed as of the date of the enactment of this
Act.
(3) Regulations described.--For purposes of paragraph (1), the
regulations described in this paragraph are as follows:
(A) 2000 regulation.--Regulations promulgated on January
20, 2000, at 65 Federal Register 3136 et seq., including the
policy in such regulations regarding discharges occurring prior
to January 20, 2000.
(B) 2003 regulation.--Regulations promulgated on August 1,
2003, at 68 Federal Register 45345 et seq.
SEC. 5003. IMPROVEMENTS TO THE MEDICARE-DEPENDENT HOSPITAL (MDH)
PROGRAM.
(a) 5-Year Extension.--
(1) Extension of Payment Methodology.--Section 1886(d)(5)(G) of
the Social Security Act (42 U.S.C. 1395ww(d)(5)(G)) is amended--
(A) in clause (i), by striking ``October 1, 2006'' and
inserting ``October 1, 2011''; and
(B) in clause (ii)(II)--
(i) by striking ``October 1, 2006'' and inserting
``October 1, 2011''; and
(ii) by inserting ``or for discharges in the fiscal
year'' after ``for the cost reporting period''.
(2) Conforming amendments.--
(A) Extension of target amount.--Section 1886(b)(3)(D) of
such Act (42 U.S.C. 1395ww(b)(3)(D)) is amended--
(i) in the matter preceding clause (i)--
(I) by striking ``beginning'' and inserting
``occurring''; and
(II) by striking ``October 1, 2006'' and inserting
``October 1, 2011''; and
(ii) in clause (iv), by striking ``through fiscal year
2005'' and inserting ``through fiscal year 2011''.
(B) Permitting hospitals to decline reclassification.--
Section 13501(e)(2) of the Omnibus Budget Reconciliation Act of
1993 (42 U.S.C. 1395ww note) is amended by striking ``through
fiscal year 2005'' and inserting ``through fiscal year 2011''.
(b) Option To Use 2002 as Base Year.--Section 1886(b)(3) of such
Act (42 U.S.C. 1395ww(b)(3)) is amended--
(1) in subparagraph (D), by inserting ``subject to subparagraph
(K),'' after ``(d)(5)(G)),''; and
(2) by adding at the end the following new subparagraph:
``(K)(i) With respect to discharges occurring on or after October
1, 2006, in the case of a medicare-dependent, small rural hospital, for
purposes of applying subparagraph (D)--
``(I) there shall be substituted for the base cost reporting
period described in subparagraph (D)(i) the 12-month cost reporting
period beginning during fiscal year 2002; and
``(II) any reference in such subparagraph to the `first cost
reporting period' described in such subparagraph is deemed a
reference to the first cost reporting period beginning on or after
October 1, 2006.
``(ii) This subparagraph shall only apply to a hospital if the
substitution described in clause (i)(I) results in an increase in the
target amount under subparagraph (D) for the hospital.''.
(c) Enhanced Payment for Amount by Which the Target Exceeds the PPS
Rate.--Section 1886(d)(5)(G)(ii)(II) of such Act (42 U.S.C.
1395ww(d)(5)(G)(iv)(II)) is amended by inserting ``(or 75 percent in
the case of discharges occurring on or after October 1, 2006)'' after
``50 percent''.
(d) Enhanced Disproportionate Share Hospital (DSH) Treatment for
Medicare-Dependent Hospitals.--Section 1886(d)(5)(F)(xiv)(II) of such
Act (42 U.S.C. 1395ww(d)(5)(F)(xiv)(II)) is amended by inserting ``or,
in the case of discharges occurring on or after October 1, 2006, as a
medicare-dependent, small rural hospital under subparagraph (G)(iv)''
before the period at the end.
SEC. 5004. REDUCTION IN PAYMENTS TO SKILLED NURSING FACILITIES FOR BAD
DEBT.
(a) In General.--Section 1861(v)(1) of the Social Security Act (42
U.S.C. 1395x(v)(1)) is amended by adding at the end the following new
subparagraph:
``(V) In determining such reasonable costs for skilled nursing
facilities with respect to cost reporting periods beginning on or after
October 1, 2005, the amount of bad debts otherwise treated as allowed
costs which are attributable to the coinsurance amounts under this
title for individuals who are entitled to benefits under part A and--
``(i) are not described in section 1935(c)(6)(A)(ii) shall be
reduced by 30 percent of such amount otherwise allowable; and
``(ii) are described in such section shall not be reduced.''.
(b) Technical Amendment.--Section 1861(v)(1)(T) of such Act (42
U.S.C. 1395x(v)(1)(T)) is amended by striking ``section 1833(t)(5)(B)''
and inserting ``section 1833(t)(8)(B)''.
SEC. 5005. EXTENDED PHASE-IN OF THE INPATIENT REHABILITATION FACILITY
CLASSIFICATION CRITERIA.
(a) In General.--Notwithstanding section 412.23(b)(2) of title 42,
Code of Federal Regulations, the Secretary of Health and Human Services
shall apply the applicable percent specified in subsection (b) in the
classification criterion used under the IRF regulation (as defined in
subsection (c)) to determine whether a hospital or unit of a hospital
is an inpatient rehabilitation facility under the Medicare program
under title XVIII of the Social Security Act.
(b) Applicable Percent.--For purposes of subsection (a), the
applicable percent specified in this subsection for cost reporting
periods--
(1) beginning during the 12-month period beginning on July 1,
2006, is 60 percent;
(2) beginning during the 12-month period beginning on July 1,
2007, is 65 percent; and
(3) beginning on or after July 1, 2008, is 75 percent.
(c) IRF Regulation.--For purposes of subsection (a), the term ``IRF
regulation'' means the rule published in the Federal Register on May 7,
2004, entitled ``Medicare Program; Final Rule; Changes to the Criteria
for Being Classified as an Inpatient Rehabilitation Facility'' (69 Fed.
Reg. 25752).
SEC. 5006. DEVELOPMENT OF A STRATEGIC PLAN REGARDING PHYSICIAN
INVESTMENT IN SPECIALTY HOSPITALS.
(a) Development.--
(1) In general.--The Secretary of Health and Human Services (in
this section referred to as the ``Secretary'') shall develop a
strategic and implementing plan to address issues described in
paragraph (2) regarding physician investment in specialty hospitals
(as defined in section 1877(h)(7)(A) of the Social Security Act (42
U.S.C. 1395nn(h)(7)(A)).
(2) Issues described.--The issues described in this paragraph
are the following:
(A) Proportionality of investment return.
(B) Bona fide investment.
(C) Annual disclosure of investment information.
(D) The provision by specialty hospitals of--
(i) care to patients who are eligible for medical
assistance under a State plan approved under title XIX of
the Social Security Act, including patients not so eligible
but who are regarded as such because they receive benefits
under a demonstration project approved under title XI of
such Act; and
(ii) charity care.
(E) Appropriate enforcement.
(b) Reports.--
(1) Interim report.--Not later than 3 months after the date of
the enactment of this Act, the Secretary shall submit an interim
report to the appropriate committees of jurisdiction of Congress on
the status of the development of the plan under subsection (a).
(2) Final report.--Not later than six months after the date of
the enactment of this Act, the Secretary shall submit a final
report to the appropriate committees of jurisdiction of Congress on
the plan developed under subsection (a) together with
recommendations for such legislation and administrative actions as
the Secretary considers appropriate.
(c) Continuation of Suspension on Enrollment.--
(1) In general.--Subject to paragraph (2), the Secretary shall
continue the suspension on enrollment of new specialty hospitals
(as so defined) under title XVIII of the Social Security Act until
the earlier of--
(A) the date that the Secretary submits the final report
under subsection (b)(2); or
(B) the date that is six months after the date of the
enactment of this Act.
(2) Extension of suspension.--If the Secretary fails to submit
the final report described in subsection (b)(2) by the date
required under such subsection, the Secretary shall--
(A) extend the suspension on enrollment under paragraph (1)
for an additional two months; and
(B) provide a certification to the appropriate committees
of jurisdiction of Congress of such failure.
(d) Waiver.--In developing the plan and report required under this
section, the Secretary may waive such requirements of section 553 of
title 5, United States Code, as the Secretary determines necessary.
(e) Funding.--Out of any funds in the Treasury not otherwise
appropriated, there are appropriated to the Secretary for fiscal year
2006, $2,000,000 to carry out this section.
SEC. 5007. MEDICARE DEMONSTRATION PROJECTS TO PERMIT GAINSHARING
ARRANGEMENTS.
(a) Establishment.--The Secretary shall establish under this
section a qualified gainsharing demonstration program under which the
Secretary shall approve demonstration projects by not later than
November 1, 2006, to test and evaluate methodologies and arrangements
between hospitals and physicians designed to govern the utilization of
inpatient hospital resources and physician work to improve the quality
and efficiency of care provided to Medicare beneficiaries and to
develop improved operational and financial hospital performance with
sharing of remuneration as specified in the project. Such projects
shall be operational by not later than January 1, 2007.
(b) Requirements Described.--A demonstration project under this
section shall meet the following requirements for purposes of
maintaining or improving quality while achieving cost savings:
(1) Arrangement for remuneration as share of savings.--The
demonstration project shall involve an arrangement between a
hospital and a physician under which the hospital provides
remuneration to the physician that represents solely a share of the
savings incurred directly as a result of collaborative efforts
between the hospital and the physician.
(2) Written plan agreement.--The demonstration project shall be
conducted pursuant to a written agreement that--
(A) is submitted to the Secretary prior to implementation
of the project; and
(B) includes a plan outlining how the project will achieve
improvements in quality and efficiency.
(3) Patient notification.--The demonstration project shall
include a notification process to inform patients who are treated
in a hospital participating in the project of the participation of
the hospital in such project.
(4) Monitoring quality and efficiency of care.--The
demonstration project shall provide measures to ensure that the
quality and efficiency of care provided to patients who are treated
in a hospital participating in the demonstration project is
continuously monitored to ensure that such quality and efficiency
is maintained or improved.
(5) Independent review.--The demonstration project shall
certify, prior to implementation, that the elements of the
demonstration project are reviewed by an organization that is not
affiliated with the hospital or the physician participating in the
project.
(6) Referral limitations.--The demonstration project shall not
be structured in such a manner as to reward any physician
participating in the project on the basis of the volume or value of
referrals to the hospital by the physician.
(c) Waiver of Certain Restrictions.--
(1) In general.--An incentive payment made by a hospital to a
physician under and in accordance with a demonstration project
shall not constitute--
(A) remuneration for purposes of section 1128B of the
Social Security Act (42 U.S.C. 1320a-7b);
(B) a payment intended to induce a physician to reduce or
limit services to a patient entitled to benefits under Medicare
or a State plan approved under title XIX of such Act in
violation of section 1128A of such Act (42 U.S.C. 1320a-7a); or
(C) a financial relationship for purposes of section 1877
of such Act (42 U.S.C. 1395nn).
(2) Protection for existing arrangements.--In no case shall the
failure to comply with the requirements described in paragraph (1)
affect a finding made by the Inspector General of the Department of
Health and Human Services prior to the date of the enactment of
this Act that an arrangement between a hospital and a physician
does not violate paragraph (1) or (2) of section 1128A(a) of the
Social Security Act (42 U.S.C. 1320a-7(a)).
(d) Program Administration.--
(1) Solicitation of applications.--By not later than 90 days
after the date of the enactment of this Act, the Secretary shall
solicit applications for approval of a demonstration project, in
such form and manner, and at such time specified by the Secretary.
(2) Number of projects approved.--The Secretary shall approve
not more than 6 demonstration projects, at least 2 of which shall
be located in a rural area.
(3) Duration.--The qualified gainsharing demonstration program
under this section shall be conducted for the period beginning on
January 1, 2007, and ending on December 31, 2009.
(e) Reports.--
(1) Initial report.--By not later than December 1, 2006, the
Secretary shall submit to Congress a report on the number of
demonstration projects that will be conducted under this section.
(2) Project update.--By not later than December 1, 2007, the
Secretary shall submit to Congress a report on the details of such
projects (including the project improvements towards quality and
efficiency described in subsection (b)(2)(B)).
(3) Quality improvement and savings.--By not later than
December 1, 2008, the Secretary shall submit to Congress a report
on quality improvement and savings achieved as a result of the
qualified gainsharing demonstration program established under
subsection (a).
(4) Final report.--By not later than May 1, 2010, the Secretary
shall submit to Congress a final report on the information
described in paragraph (3).
(f) Funding.--
(1) In general.--Out of any funds in the Treasury not otherwise
appropriated, there are appropriated to the Secretary for fiscal
year 2006 $6,000,000, to carry out this section.
(2) Availability.--Funds appropriated under paragraph (1) shall
remain available for expenditure through fiscal year 2010.
(g) Definitions.--For purposes of this section:
(1) Demonstration project.--The term ``demonstration project''
means a project implemented under the qualified gainsharing
demonstration program established under subsection (a).
(2) Hospital.--The term ``hospital'' means a hospital that
receives payment under section 1886(d) of the Social Security Act
(42 U.S.C. 1395ww(d)), and does not include a critical access
hospital (as defined in section 1861(mm) of such Act (42 U.S.C.
1395x(mm))).
(3) Medicare.--The term ``Medicare'' means the programs under
title XVIII of the Social Security Act.
(4) Physician.--The term ``physician'' means, with respect to a
demonstration project, a physician described in paragraph (1) or
(3) of section 1861(r) of the Social Security Act (42 U.S.C.
1395x(r)) who is licensed as such a physician in the area in which
the project is located and meets requirements to provide services
for which benefits are provided under Medicare. Such term shall be
deemed to include a practitioner described in section
1842(e)(18)(C) of such Act (42 U.S.C. 1395u(e)(18)(C)).
(5) Secretary.--The term ``Secretary'' means the Secretary of
Health and Human Services.
SEC. 5008. POST-ACUTE CARE PAYMENT REFORM DEMONSTRATION PROGRAM.
(a) Establishment.--
(1) In general.--By not later than January 1, 2008, the
Secretary of Health and Human Services (in this section referred to
as the ``Secretary'') shall establish a demonstration program for
purposes of understanding costs and outcomes across different post-
acute care sites. Under such program, with respect to diagnoses
specified by the Secretary, an individual who receives treatment
from a provider for such a diagnosis shall receive a single
comprehensive assessment on the date of discharge from a subsection
(d) hospital (as defined in section 1886(d)(1)(B) of the Social
Security Act (42 U.S.C. 1395ww(d)(1)(B))) of the needs of the
patient and the clinical characteristics of the diagnosis to
determine the appropriate placement of such patient in a post-acute
care site. The Secretary shall use a standardized patient
assessment instrument across all post-acute care sites to measure
functional status and other factors during the treatment and at
discharge from each provider. Participants in the program shall
provide information on the fixed and variable costs for each
individual. An additional comprehensive assessment shall be
provided at the end of the episode of care.
(2) Number of sites.--The Secretary shall conduct the
demonstration program under this section with sufficient numbers to
determine statistically reliable results.
(3) Duration.--The Secretary shall conduct the demonstration
program under this section for a 3-year period.
(b) Waiver Authority.--The Secretary may waive such requirements of
titles XI and XVIII of the Social Security Act (42 U.S.C. 1301 et seq.;
42 U.S.C. 1395 et seq.) as may be necessary for the purpose of carrying
out the demonstration program under this section.
(c) Report.--Not later than 6 months after the completion of the
demonstration program under this section, the Secretary shall submit to
Congress a report on such program, that includes the results of the
program and recommendations for such legislation and administrative
action as the Secretary determines to be appropriate.
(d) Funding.--The Secretary shall provide for the transfer from the
Federal Hospital Insurance Trust Fund established under section 1817 of
the Social Security Act (42 U.S.C. 1395i), $6,000,000 for the costs of
carrying out the demonstration program under this section.
Subtitle B--Provisions Relating to Part B
CHAPTER 1--PAYMENT PROVISIONS
SEC. 5101. BENEFICIARY OWNERSHIP OF CERTAIN DURABLE MEDICAL EQUIPMENT
(DME).
(a) DME.--
(1) In general.--Section 1834(a)(7)(A) of the Social Security
Act (42 U.S.C. 1395m(a)(7)(A)) is amended to read as follows:
``(A) Payment.--In the case of an item of durable medical
equipment not described in paragraphs (2) through (6), the
following rules shall apply:
``(i) Rental.--
``(I) In general.--Except as provided in clause
(iii), payment for the item shall be made on a monthly
basis for the rental of the item during the period of
medical need (but payments under this clause may not
extend over a period of continuous use (as determined
by the Secretary) of longer than 13 months).
``(II) Payment amount.--Subject to subparagraph
(B), the amount recognized for the item, for each of
the first 3 months of such period, is 10 percent of the
purchase price recognized under paragraph (8) with
respect to the item, and, for each of the remaining
months of such period, is 7.5 percent of such purchase
price.
``(ii) Ownership after rental.--On the first day that
begins after the 13th continuous month during which payment
is made for the rental of an item under clause (i), the
supplier of the item shall transfer title to the item to
the individual.
``(iii) Purchase agreement option for power-driven
wheelchairs.--In the case of a power-driven wheelchair, at
the time the supplier furnishes the item, the supplier
shall offer the individual the option to purchase the item,
and payment for such item shall be made on a lump-sum basis
if the individual exercises such option.
``(iv) Maintenance and servicing.--After the supplier
transfers title to the item under clause (ii) or in the
case of a power-driven wheelchair for which a purchase
agreement has been entered into under clause (iii),
maintenance and servicing payments shall, if the Secretary
determines such payments are reasonable and necessary, be
made (for parts and labor not covered by the supplier's or
manufacturer's warranty, as determined by the Secretary to
be appropriate for the particular type of durable medical
equipment), and such payments shall be in an amount
determined to be appropriate by the Secretary.''.
(2) Effective date.--The amendment made by paragraph (1) shall
apply to items furnished for which the first rental month occurs on
or after January 1, 2006.
(b) Oxygen Equipment.--
(1) In general.--Section 1834(a)(5) of such Act (42 U.S.C.
1395m(a)(5)) is amended--
(A) in subparagraph (A), by striking ``and (E)'' and
inserting ``(E), and (F)''; and
(B) by adding at the end the following new subparagraph:
``(F) Ownership of Equipment.--
``(i) In general.--Payment for oxygen equipment
(including portable oxygen equipment) under this paragraph
may not extend over a period of continuous use (as
determined by the Secretary) of longer than 36 months.
``(ii) Ownership.--
``(I) Transfer of title.--On the first day that
begins after the 36th continuous month during which
payment is made for the equipment under this paragraph,
the supplier of the equipment shall transfer title to
the equipment to the individual.
``(II) Payments for oxygen and maintenance and
servicing.--After the supplier transfers title to the
equipment under subclause (I)--
``(aa) payments for oxygen shall continue to be
made in the amount recognized for oxygen under
paragraph (9) for the period of medical need; and
``(bb) maintenance and servicing payments
shall, if the Secretary determines such payments
are reasonable and necessary, be made (for parts
and labor not covered by the supplier's or
manufacturer's warranty, as determined by the
Secretary to be appropriate for the equipment), and
such payments shall be in an amount determined to
be appropriate by the Secretary.''.
(2) Effective date.--
(A) In general.--The amendments made by paragraph (1) shall
take effect on January 1, 2006.
(B) Application to certain individuals.--In the case of an
individual receiving oxygen equipment on December 31, 2005, for
which payment is made under section 1834(a) of the Social
Security Act (42 U.S.C. 1395m(a)), the 36-month period
described in paragraph (5)(F)(i) of such section, as added by
paragraph (1), shall begin on January 1, 2006.
SEC. 5102. ADJUSTMENTS IN PAYMENT FOR IMAGING SERVICES.
(a) Multiple Procedure Payment Reduction for Imaging Exempted From
Budget Neutrality.--Section 1848(c)(2)(B) of the Social Security Act
(42 U.S.C. 1395w-4(c)(2)(B)) is amended--
(1) in clause (ii)(II), by striking ``clause (iv)'' and
inserting ``clauses (iv) and (v)'';
(2) in clause (iv) in the heading, by inserting ``of certain
additional expenditures'' after ``Exemption''; and
(3) by adding at the end the following new clause:
``(v) Exemption of certain reduced expenditures from
budget-neutrality calculation.--The following reduced
expenditures, as estimated by the Secretary, shall not be
taken into account in applying clause (ii)(II):
``(I) Reduced payment for multiple imaging
procedures.--Effective for fee schedules established
beginning with 2007, reduced expenditures attributable
to the multiple procedure payment reduction for imaging
under the final rule published by the Secretary in the
Federal Register on November 21, 2005 (42 CFR 405, et
al.) insofar as it relates to the physician fee
schedules for 2006 and 2007.''.
(b) Reduction in Physician Fee Schedule to OPD Payment Amount for
Imaging Services.--Section 1848 of such Act (42 U.S.C. 1395w-4) is
amended--
(1) in subsection (b), by adding at the end the following new
paragraph:
``(4) Special rule for imaging services.--
``(A) In general.--In the case of imaging services
described in subparagraph (B) furnished on or after January 1,
2007, if--
``(i) the technical component (including the technical
component portion of a global fee) of the service
established for a year under the fee schedule described in
paragraph (1) without application of the geographic
adjustment factor described in paragraph (1)(C), exceeds
``(ii) the Medicare OPD fee schedule amount established
under the prospective payment system for hospital
outpatient department services under paragraph (3)(D) of
section 1833(t) for such service for such year, determined
without regard to geographic adjustment under paragraph
(2)(D) of such section,
the Secretary shall substitute the amount described in clause
(ii), adjusted by the geographic adjustment factor described in
paragraph (1)(C), for the fee schedule amount for such
technical component for such year.
``(B) Imaging services described.--For purposes of
subparagraph (A), imaging services described in this
subparagraph are imaging and computer-assisted imaging
services, including X-ray, ultrasound (including
echocardiography), nuclear medicine (including positron
emission tomography), magnetic resonance imaging, computed
tomography, and fluoroscopy, but excluding diagnostic and
screening mammography.''; and
(2) in subsection (c)(2)(B)(v), as added by subsection (a)(3),
by adding at the end the following new subclause:
``(II) OPD payment cap for imaging services.--
Effective for fee schedules established beginning with
2007, reduced expenditures attributable to subsection
(b)(4).''.
SEC. 5103. LIMITATION ON PAYMENTS FOR PROCEDURES IN AMBULATORY SURGICAL
CENTERS.
Section 1833(i)(2) of the Social Security Act (42 U.S.C.
1395l(i)(2)) is amended--
(1) in subparagraph (A), by inserting ``subject to subparagraph
(E),'' after ``subparagraph (D),'';
(2) in subparagraph (D)(ii), by inserting before the period at
the end the following: ``and taking into account reduced
expenditures that would apply if subparagraph (E) were to continue
to apply, as estimated by the Secretary''; and
(3) by adding at the end the following new subparagraph:
``(E) With respect to surgical procedures furnished on or after
January 1, 2007, and before the effective date of the implementation of
a revised payment system under subparagraph (D), if--
``(i) the standard overhead amount under subparagraph (A) for a
facility service for such procedure, without the application of any
geographic adjustment, exceeds
``(ii) the Medicare OPD fee schedule amount established under
the prospective payment system for hospital outpatient department
services under paragraph (3)(D) of section 1833(t) for such service
for such year, determined without regard to geographic adjustment
under paragraph (2)(D) of such section,
the Secretary shall substitute under subparagraph (A) the amount
described in clause (ii) for the standard overhead amount for such
service referred to in clause (i).''.
SEC. 5104. UPDATE FOR PHYSICIANS' SERVICES FOR 2006.
(a) Update for 2006.--Section 1848(d) of the Social Security Act
(42 U.S.C. 1395w-4(d)) is amended--
(1) in paragraph (4)(B), in the matter preceding clause (i), by
striking ``paragraph (5)'' and inserting ``paragraphs (5) and
(6)''; and
(2) by adding at the end the following new paragraph:
``(6) Update for 2006.--The update to the single conversion
factor established in paragraph (1)(C) for 2006 shall be 0
percent.''.
(b) Not Treated as Change in Law and Regulation in Sustainable
Growth Rate Determination.--The amendments made by subsection (a) shall
not be treated as a change in law for purposes of applying section
1848(f)(2)(D) of the Social Security Act (42 U.S.C. 1395w-4(f)(2)(D)).
(c) MedPAC Report.--
(1) In general.--By not later than March 1, 2007, the Medicare
Payment Advisory Commission shall submit a report to Congress on
mechanisms that could be used to replace the sustainable growth
rate system under section 1848(f) of the Social Security Act (42
U.S.C. 1395w-4(f)).
(2) Requirements.--The report required under paragraph (1)
shall--
(A) identify and examine alternative methods for assessing
volume growth;
(B) review options to control the volume of physicians'
services under the Medicare program while maintaining access to
such services by Medicare beneficiaries;
(C) examine the application of volume controls under the
Medicare physician fee schedule under section 1848 of the
Social Security Act (42 U.S.C. 1395w-4);
(D) identify levels of application of volume controls, such
as group practice, hospital medical staff, type of service,
geographic area, and outliers;
(E) examine the administrative feasibility of implementing
the options reviewed under subparagraph (B), including the
availability of data and time lags;
(F) examine the extent to which the alternative methods
identified and examined under subparagraph (A) should be
specified in such section 1848; and
(G) identify the appropriate level of discretion for the
Secretary of Health and Human Services to change payment rates
under the Medicare physician fee schedule or otherwise take
steps that affect physician behavior.
Such report shall include such recommendations on alternative
mechanisms to replace the sustainable growth rate system as the
Medicare Payment Advisory Commission determines appropriate.
(3) Funding.--Out of any funds in the Treasury not otherwise
appropriated, there are appropriated to the Medicare Payment
Advisory Commission $550,000, to carry out this subsection.
SEC. 5105. THREE-YEAR TRANSITION OF HOLD HARMLESS PAYMENTS FOR SMALL
RURAL HOSPITALS UNDER THE PROSPECTIVE PAYMENT SYSTEM FOR
HOSPITAL OUTPATIENT DEPARTMENT SERVICES.
Section 1833(t)(7)(D)(i) of the Social Security Act (42 U.S.C.
1395l(t)(7)(D)(i)) is amended--
(1) by inserting ``(I)'' before ``In the case''; and
(2) by adding at the end the following new subclause:
``(II) In the case of a hospital located in a rural
area and that has not more than 100 beds and that is not a
sole community hospital (as defined in section
1886(d)(5)(D)(iii)), for covered OPD services furnished on
or after January 1, 2006, and before January 1, 2009, for
which the PPS amount is less than the pre-BBA amount, the
amount of payment under this subsection shall be increased
by the applicable percentage of the amount of such
difference. For purposes of the previous sentence, with
respect to covered OPD services furnished during 2006,
2007, or 2008, the applicable percentage shall be 95
percent, 90 percent, and 85 percent, respectively.''.
SEC. 5106. UPDATE TO THE COMPOSITE RATE COMPONENT OF THE BASIC CASE-MIX
ADJUSTED PROSPECTIVE PAYMENT SYSTEM FOR DIALYSIS
SERVICES.
Section 1881(b)(12) of the Social Security Act (42 U.S.C.
1395rr(b)(12)) is amended--
(1) in subparagraph (F), in the flush matter at the end, by
striking ``Nothing'' and inserting ``Except as provided in
subparagraph (G), nothing'';
(2) by redesignating subparagraph (G) as subparagraph (H); and
(3) by inserting after subparagraph (F) the following new
subparagraph:
``(G) The Secretary shall increase the amount of the composite rate
component of the basic case-mix adjusted system under subparagraph (B)
for dialysis services furnished on or after January 1, 2006, by 1.6
percent above the amount of such composite rate component for such
services furnished on December 31, 2005.''.
SEC. 5107. REVISIONS TO PAYMENTS FOR THERAPY SERVICES.
(a) Exception to Caps for 2006.--
(1) In general.--Section 1833(g) of the Social Security Act (42
U.S.C. 1395l(g)) is amended--
(A) in each of paragraphs (1) and (3), by striking
``paragraph (4)'' and inserting ``paragraphs (4) and (5)''; and
(B) by adding at the end the following new paragraph:
``(5) With respect to expenses incurred during 2006 for services,
the Secretary shall implement a process under which an individual
enrolled under this part may, upon request of the individual or a
person on behalf of the individual, obtain an exception from the
uniform dollar limitation specified in paragraph (2), for services
described in paragraphs (1) and (3) if the provision of such services
is determined to be medically necessary. Under such process, if the
Secretary does not make a decision on such a request for an exception
within 10 business days of the date of the Secretary's receipt of the
request, the Secretary shall be deemed to have found the services to be
medically necessary.''.
(2) Timely implementation.--The Secretary of Health and Human
Services shall waive such provisions of law and regulation
(including those described in section 110(c) of Public Law 108-173)
as are necessary to implement the amendments made by paragraph (1)
on a timely basis and, notwithstanding any other provision of law,
may implement such amendments by program instruction or otherwise.
There shall be no administrative or judicial review under section
1869 or section 1878 of the Social Security Act (42 U.S.C. 1395ff
and 1395oo), or otherwise of the process (including the
establishment of the process) under section 1833(g)(5) of such Act,
as added by paragraph (1).
(b) Implementation of Clinically Appropriate Code Edits In Order To
Identify and Eliminate Improper Payments for Therapy Services.--By not
later than July 1, 2006, the Secretary of Health and Human Services
shall implement clinically appropriate code edits with respect to
payments under part B of title XVIII of the Social Security Act for
physical therapy services, occupational therapy services, and speech-
language pathology services in order to identify and eliminate improper
payments for such services, including edits of clinically illogical
combinations of procedure codes and other edits to control
inappropriate billings.
CHAPTER 2--MISCELLANEOUS
SEC. 5111. ACCELERATED IMPLEMENTATION OF INCOME-RELATED REDUCTION IN
PART B PREMIUM SUBSIDY.
Section 1839(i)(3)(B) of the Social Security Act (42 U.S.C.
1395r(i)(3)(B)) is amended--
(1) in the heading, by striking ``5-year'' and inserting ``3-
year'';
(2) in the matter preceding clause (i), by striking ``2011''
and inserting ``2009'';
(3) in clause (i), by striking ``20 percent'' and inserting
``33 percent'';
(4) in clause (ii), by striking ``40 percent'' and inserting
``67 percent''; and
(5) by striking clauses (iii) and (iv).
SEC. 5112. MEDICARE COVERAGE OF ULTRASOUND SCREENING FOR ABDOMINAL
AORTIC ANEURYSMS.
(a) In General.--Section 1861 of the Social Security Act (42 U.S.C.
1395x) is amended--
(1) in subsection (s)(2)--
(A) by striking ``and'' at the end of subparagraph (Y);
(B) by adding ``and'' at the end of subparagraph (Z) and
moving such subparagraph 2 ems to the left; and
(C) by adding at the end the following new subparagraph:
``(AA) ultrasound screening for abdominal aortic aneurysm (as
defined in subsection (bbb)) for an individual--
``(i) who receives a referral for such an ultrasound
screening as a result of an initial preventive physical
examination (as defined in section 1861(ww)(1));
``(ii) who has not been previously furnished such an
ultrasound screening under this title; and
``(iii) who--
``(I) has a family history of abdominal aortic
aneurysm; or
``(II) manifests risk factors included in a beneficiary
category recommended for screening by the United States
Preventive Services Task Force regarding abdominal aortic
aneurysms;''; and
(2) by adding at the end the following new subsection:
``Ultrasound Screening for Abdominal Aortic Aneurysm
``(bbb) The term `ultrasound screening for abdominal aortic
aneurysm' means--
``(1) a procedure using sound waves (or such other procedures
using alternative technologies, of commensurate accuracy and cost,
that the Secretary may specify) provided for the early detection of
abdominal aortic aneurysm; and
``(2) includes a physician's interpretation of the results of
the procedure.''.
(b) Inclusion of Ultrasound Screening for Abdominal Aortic Aneurysm
in Initial Preventive Physical Examination.--Section 1861(ww)(2) of
such Act (42 U.S.C. 1395x(ww)(2)) is amended by adding at the end the
following new subparagraph:
``(L) Ultrasound screening for abdominal aortic aneurysm as
defined in section 1861(bbb).''.
(c) Payment for Ultrasound Screening for Abdominal Aortic
Aneurysm.--Section 1848(j)(3) of such Act (42 U.S.C. 1395w-4(j)(3)) is
amended by inserting ``(2)(AA),'' after ``(2)(W),''.
(d) Frequency.--Section 1862(a)(1) of such Act (42 U.S.C.
1395y(a)(1)) is amended--
(1) by striking ``and'' at the end of subparagraph (L);
(2) by striking the semicolon at the end of subparagraph (M)
and inserting ``, and''; and
(3) by adding at the end the following new subparagraph:
``(N) in the case of ultrasound screening for abdominal aortic
aneurysm which is performed more frequently than is provided for
under section 1861(s)(2)(AA);''.
(e) Non-Application of Part B Deductible.--Section 1833(b) of such
Act (42 U.S.C. 1395l(b)) is amended in the first sentence--
(1) by striking ``and'' before ``(6)''; and
(2) by inserting ``, and (7) such deductible shall not apply
with respect to ultrasound screening for abdominal aortic aneurysm
(as defined in section 1861(bbb))'' before the period at the end.
(f) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 2007.
SEC. 5113. IMPROVING PATIENT ACCESS TO, AND UTILIZATION OF, COLORECTAL
CANCER SCREENING.
(a) Non-Application of Deductible for Colorectal Cancer Screening
Tests.--Section 1833(b) of the Social Security Act (42 U.S.C.
1395l(b)), as amended by section 5112(e), is amended in the first
sentence--
(1) by striking ``and'' before ``(7)''; and
(2) by inserting ``, and (8) such deductible shall not apply
with respect to colorectal cancer screening tests (as described in
section 1861(pp)(1))'' before the period at the end.
(b) Conforming Amendments.--Paragraphs (2)(C)(ii) and (3)(C)(ii) of
section 1834(d) of such Act (42 U.S.C. 1395m(d)) are each amended--
(1) by striking ``deductible and'' in the heading; and
(2) in subclause (I), by striking ``deductible or'' each place
it appears.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 2007.
SEC. 5114. DELIVERY OF SERVICES AT FEDERALLY QUALIFIED HEALTH CENTERS.
(a) Coverage.--
(1) In general.--Section 1861(aa)(3) of the Social Security Act
(42 U.S.C. 1395x(aa)(3)) is amended--
(A) in subparagraph (A), by striking ``, and'' and
inserting ``and services described in subsections (qq) and
(vv); and'';
(B) in subparagraph (B), by striking ``sections 329, 330,
and 340'' and inserting ``section 330''; and
(C) in the flush matter at the end, by inserting ``by the
center or by a health care professional under contract with the
center'' after ``outpatient of a Federally qualified health
center''.
(2) Consolidated billing.--The first sentence of section
1842(b)(6)(F) of such Act (42 U.S.C. 1395u(b)(6)(F)) is amended--
(A) by striking ``and (G)'' and inserting ``(G)''; and
(B) by inserting before the period at the end the
following: ``, and (H) in the case of services described in
section 1861(aa)(3) that are furnished by a health care
professional under contract with a Federally qualified health
center, payment shall be made to the center''.
(b) Technical Corrections.--Clauses (i) and (ii)(II) of section
1861(aa)(4)(A) of such Act (42 U.S.C. 1395x(aa)(4)(A)) are each amended
by striking ``(other than subsection (h))''.
(c) Effective Dates.--The amendments made by this section shall
apply to services furnished on or after January 1, 2006.
SEC. 5115. WAIVER OF PART B LATE ENROLLMENT PENALTY FOR CERTAIN
INTERNATIONAL VOLUNTEERS.
(a) In General.--
(1) Waiver of penalty.--Section 1839(b) of the Social Security
Act (42 U.S.C. 1395r(b)) is amended in the second sentence by
inserting the following before the period at the end: ``or months
for which the individual can demonstrate that the individual was an
individual described in section 1837(k)(3)''.
(2) Special enrollment period.--
(A) In general.--Section 1837 of such Act (42 U.S.C. 1395p)
is amended by adding at the end the following new subsection:
``(k)(1) In the case of an individual who--
``(A) at the time the individual first satisfies paragraph (1)
or (2) of section 1836, is described in paragraph (3), and has
elected not to enroll (or to be deemed enrolled) under this section
during the individual's initial enrollment period; or
``(B) has terminated enrollment under this section during a
month in which the individual is described in paragraph (3),
there shall be a special enrollment period described in paragraph (2).
``(2) The special enrollment period described in this paragraph is
the 6-month period beginning on the first day of the month which
includes the date that the individual is no longer described in
paragraph (3).
``(3) For purposes of paragraph (1), an individual described in
this paragraph is an individual who--
``(A) is serving as a volunteer outside of the United States
through a program--
``(i) that covers at least a 12-month period; and
``(ii) that is sponsored by an organization described in
section 501(c)(3) of the Internal Revenue Code of 1986 and
exempt from taxation under section 501(a) of such Code; and
``(B) demonstrates health insurance coverage while serving in
the program.''.
(B) Coverage period.--Section 1838 of such Act (42 U.S.C.
1395q) is amended by adding at the end the following new
subsection:
``(f) Notwithstanding subsection (a), in the case of an individual
who enrolls during a special enrollment period pursuant to section
1837(k), the coverage period shall begin on the first day of the month
following the month in which the individual so enrolls.''.
(b) Effective Date.--The amendment made by subsection (a)(1) shall
apply to months beginning with January 2007 and the amendments made by
subsection (a)(2) shall take effect on January 1, 2007.
Subtitle C--Provisions Relating to Parts A and B
SEC. 5201. HOME HEALTH PAYMENTS.
(a) 2006 Update.--Section 1895(b)(3)(B)(ii) of the Social Security
Act (42 U.S.C. 1395fff(b)(3)(B)(ii)) is amended--
(1) in subclause (III), by striking ``each of 2005 and 2006''
and inserting ``all of 2005'';
(2) by striking ``or'' at the end of subclause (III);
(3) in subclause (IV), by striking ``2007 and'' and by
redesignating such subclause as subclause (V); and
(4) by inserting after subclause (III) the following new
subclause:
``(IV) 2006, 0 percent; and''.
(b) Applying Rural Add-On Policy for 2006.--Section 421(a) of
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(Public Law 108-173; 117 Stat. 2283) is amended by inserting ``and
episodes and visits beginning on or after January 1, 2006, and before
January 1, 2007,'' after ``April 1, 2005,''.
(c) Home Health Care Quality Improvement.--Section 1895(b)(3)(B) of
the Social Security Act (42 U.S.C. 1395fff(b)(3)(B)) is amended--
(1) in clause (ii)(V), as redesignated by subsection (a)(3), by
inserting ``subject to clause (v),'' after ``subsequent year,'';
and
(2) by adding at the end the following new clause:
``(v) Adjustment if quality data not submitted.--
``(I) Adjustment.--For purposes of clause (ii)(V),
for 2007 and each subsequent year, in the case of a
home health agency that does not submit data to the
Secretary in accordance with subclause (II) with
respect to such a year, the home health market basket
percentage increase applicable under such clause for
such year shall be reduced by 2 percentage points. Such
reduction shall apply only with respect to the year
involved, and the Secretary shall not take into account
such reduction in computing the prospective payment
amount under this section for a subsequent year, and
the Medicare Payment Advisory Commission shall carry
out the requirements under section 5201(d) of the
Deficit Reduction Act of 2005.
``(II) Submission of quality data.--For 2007 and
each subsequent year, each home health agency shall
submit to the Secretary such data that the Secretary
determines are appropriate for the measurement of
health care quality. Such data shall be submitted in a
form and manner, and at a time, specified by the
Secretary for purposes of this clause.
``(III) Public availability of data submitted.--The
Secretary shall establish procedures for making data
submitted under subclause (II) available to the public.
Such procedures shall ensure that a home health agency
has the opportunity to review the data that is to be
made public with respect to the agency prior to such
data being made public.''.
(d) MedPAC Report on Value Based Purchasing.--
(1) In general.--Not later than June 1, 2007, the Medicare
Payment Advisory Commission shall submit to Congress a report that
includes recommendations on a detailed structure of value based
payment adjustments for home health services under the Medicare
program under title XVIII of the Social Security Act. Such report
shall include recommendations concerning the determination of
thresholds, the size of such payments, sources of funds, and the
relationship of payments for improvement and attainment of quality.
(2) Funding.--Out of any funds in the Treasury not otherwise
appropriated, there are appropriated to the Medicare Payment
Advisory Commission $550,000, to carry out this subsection.
SEC. 5202. REVISION OF PERIOD FOR PROVIDING PAYMENT FOR CLAIMS THAT ARE
NOT SUBMITTED ELECTRONICALLY.
(a) Revision.--
(1) Part a.--Section 1816(c)(3)(B)(ii) of the Social Security
Act (42 U.S.C. 1395h(c)(3)(B)(ii)) is amended by striking ``26
days'' and inserting ``28 days''.
(2) Part b.--Section 1842(c)(3)(B)(ii) of such Act (42 U.S.C.
1395u(c)(3)(B)(ii)) is amended by striking ``26 days'' and
inserting ``28 days''.
(b) Effective Date.--The amendments made by this section shall
apply to claims submitted on or after January 1, 2006.
SEC. 5203. TIMEFRAME FOR PART A AND B PAYMENTS.
Notwithstanding sections 1816(c) and 1842(c)(2) of the Social
Security Act or any other provision of law--
(1) any payment from the Federal Hospital Insurance Trust Fund
under section 1817 of the Social Security Act (42 U.S.C. 1395i) or
from the Federal Supplementary Medical Insurance Trust Fund under
section 1841 of such Act (42 U.S.C. 1395t) for claims submitted
under part A or B of title XVIII of such Act for items and services
furnished under such part A or B, respectively, that would
otherwise be payable during the period beginning on September 22,
2006, and ending on September 30, 2006, shall be paid on the first
business day of October 2006; and
(2) no interest or late penalty shall be paid to an entity or
individual for any delay in a payment by reason of the application
of paragraph (1).
SEC. 5204. MEDICARE INTEGRITY PROGRAM FUNDING.
Section 1817(k)(4) of the Social Security Act (42 U.S.C.
1395i(k)(4)) is amended--
(1) in subparagraph (B), by striking ``The amount'' and
inserting ``Subject to subparagraph (C), the amount''; and
(2) by adding at the end the following new subparagraph:
``(C) Adjustments.--The amount appropriated under
subparagraph (A) for a fiscal year is increased as follows:
``(i) For fiscal year 2006, $100,000,000.''.
Subtitle D--Provisions Relating to Part C
SEC. 5301. PHASE-OUT OF RISK ADJUSTMENT BUDGET NEUTRALITY IN
DETERMINING THE AMOUNT OF PAYMENTS TO MEDICARE ADVANTAGE
ORGANIZATIONS.
(a) In General.--Section 1853 of the Social Security Act (42 U.S.C.
1395w-23) is amended--
(1) in subsection (j)(1)--
(A) in subparagraph (A)--
(i) by inserting ``(or, beginning with 2007, \1/12\ of
the applicable amount determined under subsection (k)(1))''
after ``1853(c)(1)''; and
(ii) by inserting ``(for years before 2007)'' after
``adjusted as appropriate'';
(B) in subparagraph (B), by inserting ``(for years before
2007)'' after ``adjusted as appropriate''; and
(2) by adding at the end the following new subsection:
``(k) Determination of Applicable Amount for Purposes of
Calculating the Benchmark Amounts.--
``(1) Applicable amount defined.--For purposes of subsection
(j), subject to paragraph (2), the term `applicable amount' means
for an area--
``(A) for 2007--
``(i) if such year is not specified under subsection
(c)(1)(D)(ii), an amount equal to the amount specified in
subsection (c)(1)(C) for the area for 2006--
``(I) first adjusted by the rescaling factor for
2006 for the area (as made available by the Secretary
in the announcement of the rates on April 4, 2005,
under subsection (b)(1), but excluding any national
adjustment factors for coding intensity and risk
adjustment budget neutrality that were included in such
factor); and
``(II) then increased by the national per capita MA
growth percentage, described in subsection (c)(6) for
2007, but not taking into account any adjustment under
subparagraph (C) of such subsection for a year before
2004;
``(ii) if such year is specified under subsection
(c)(1)(D)(ii), an amount equal to the greater of--
``(I) the amount determined under clause (i) for
the area for the year; or
``(II) the amount specified in subsection (c)(1)(D)
for the area for the year; and
``(B) for a subsequent year--
``(i) if such year is not specified under subsection
(c)(1)(D)(ii), an amount equal to the amount determined
under this paragraph for the area for the previous year
(determined without regard to paragraph (2)), increased by
the national per capita MA growth percentage, described in
subsection (c)(6) for that succeeding year, but not taking
into account any adjustment under subparagraph (C) of such
subsection for a year before 2004; and
``(ii) if such year is specified under subsection
(c)(1)(D)(ii), an amount equal to the greater of--
``(I) the amount determined under clause (i) for
the area for the year; or
``(II) the amount specified in subsection (c)(1)(D)
for the area for the year.
``(2) Phase-out of budget neutrality factor.--
``(A) In general.--Except as provided in subparagraph (D),
in the case of 2007 through 2010, the applicable amount
determined under paragraph (1) shall be multiplied by a factor
equal to 1 plus the product of--
``(i) the percent determined under subparagraph (B) for
the year; and
``(ii) the applicable phase-out factor for the year
under subparagraph (C).
``(B) Percent determined.--
``(i) In general.--For purposes of subparagraph (A)(i),
subject to clause (iv), the percent determined under this
subparagraph for a year is a percent equal to a fraction
the numerator of which is described in clause (ii) and the
denominator of which is described in clause (iii).
``(ii) Numerator based on difference between
demographic rate and risk rate.--
``(I) In general.--The numerator described in this
clause is an amount equal to the amount by which the
demographic rate described in subclause (II) exceeds
the risk rate described in subclause (III).
``(II) Demographic rate.--The demographic rate
described in this subclause is the Secretary's estimate
of the total payments that would have been made under
this part in the year if all the monthly payment
amounts for all MA plans were equal to \1/12\ of the
annual MA capitation rate under subsection (c)(1) for
the area and year, adjusted pursuant to subsection
(a)(1)(C).
``(III) Risk rate.--The risk rate described in this
subclause is the Secretary's estimate of the total
payments that would have been made under this part in
the year if all the monthly payment amounts for all MA
plans were equal to the amount described in subsection
(j)(1)(A) (determined as if this paragraph had not
applied) under subsection (j) for the area and year,
adjusted pursuant to subsection (a)(1)(C).
``(iii) Denominator based on risk rate.--The
denominator described in this clause is equal to the total
amount estimated for the year under clause (ii)(III).
``(iv) Requirements.--In estimating the amounts under
the previous clauses, the Secretary shall--
``(I) use a complete set of the most recent and
representative Medicare Advantage risk scores under
subsection (a)(3) that are available from the risk
adjustment model announced for the year;
``(II) adjust the risk scores to reflect changes in
treatment and coding practices in the fee-for-service
sector;
``(III) adjust the risk scores for differences in
coding patterns between Medicare Advantage plans and
providers under the original Medicare fee-for-service
program under parts A and B to the extent that the
Secretary has identified such differences, as required
in subsection (a)(1)(C);
``(IV) as necessary, adjust the risk scores for
late data submitted by Medicare Advantage
organizations;
``(V) as necessary, adjust the risk scores for
lagged cohorts; and
``(VI) as necessary, adjust the risk scores for
changes in enrollment in Medicare Advantage plans
during the year.
``(v) Authority.--In computing such amounts the
Secretary may take into account the estimated health risk
of enrollees in preferred provider organization plans
(including MA regional plans) for the year.
``(C) Applicable phase-out factor.--For purposes of
subparagraph (A)(ii), the term `applicable phase-out factor'
means--
``(i) for 2007, 0.55;
``(ii) for 2008, 0.40;
``(iii) for 2009, 0.25; and
``(iv) for 2010, 0.05.
``(D) Termination of application.--Subparagraph (A) shall
not apply in a year if the amount estimated under subparagraph
(B)(ii)(III) for the year is equal to or greater than the
amount estimated under subparagraph (B)(ii)(II) for the year.
``(3) No revision in percent.--
``(A) In general.--The Secretary may not make any
adjustment to the percent determined under paragraph (2)(B) for
any year.
``(B) Rule of construction.--Nothing in this subsection
shall be construed to limit the authority of the Secretary to
make adjustments to the applicable amounts determined under
paragraph (1) as appropriate for purposes of updating data or
for purposes of adopting an improved risk adjustment
methodology.''.
(b) Refinements to Health Status Adjustment.--Section 1853(a)(1)(C)
of such Act (42 U.S.C. 1395w-23) is amended--
(1) by designating the matter after the heading as a clause (i)
with the following heading: ``In general.--'' and indenting
appropriately; and
(2) by adding at the end the following:
``(ii) Application during phase-out of budget
neutrality factor.--For 2006 through 2010:
``(I) In applying the adjustment under clause (i)
for health status to payment amounts, the Secretary
shall ensure that such adjustment reflects changes in
treatment and coding practices in the fee-for-service
sector and reflects differences in coding patterns
between Medicare Advantage plans and providers under
part A and B to the extent that the Secretary has
identified such differences.
``(II) In order to ensure payment accuracy, the
Secretary shall conduct an analysis of the differences
described in subclause (I). The Secretary shall
complete such analysis by a date necessary to ensure
that the results of such analysis are incorporated into
the risk scores only for 2008, 2009, and 2010. In
conducting such analysis, the Secretary shall use data
submitted with respect to 2004 and subsequent years, as
available.''.
SEC. 5302. RURAL PACE PROVIDER GRANT PROGRAM.
(a) Definitions.--In this section:
(1) CMS.--The term ``CMS'' means the Centers for Medicare &
Medicaid Services.
(2) PACE program.--The term ``PACE program'' has the meaning
given that term in sections 1894(a)(2) and 1934(a)(2) of the Social
Security Act (42 U.S.C. 1395eee(a)(2); 1396u-4(a)(2)).
(3) PACE provider.--The term ``PACE provider'' has the meaning
given that term in section 1894(a)(3) or 1934(a)(3) of the Social
Security Act (42 U.S.C. 1395eee(a)(3); 1396u-4(a)(3)).
(4) Rural area.--The term ``rural area'' has the meaning given
that term in section 1886(d)(2)(D) of the Social Security Act (42
U.S.C. 1395ww(d)(2)(D)).
(5) Rural pace pilot site.--The term ``rural PACE pilot site''
means a PACE provider that has been approved to provide services in
a geographic service area that is, in whole or in part, a rural
area, and that has received a site development grant under this
section.
(6) Secretary.--The term ``Secretary'' means the Secretary of
Health and Human Services.
(b) Site Development Grants and Technical Assistance Program.--
(1) Site development grants.--
(A) In general.--The Secretary shall establish a process
and criteria to award site development grants to qualified PACE
providers that have been approved to serve a rural area.
(B) Amount per award.--A site development grant awarded
under subparagraph (A) to any individual rural PACE pilot site
shall not exceed $750,000.
(C) Number of awards.--Not more than 15 rural PACE pilot
sites shall be awarded a site development grant under
subparagraph (A).
(D) Use of funds.--Funds made available under a site
development grant awarded under subparagraph (A) may be used
for the following expenses only to the extent such expenses are
incurred in relation to establishing or delivering PACE program
services in a rural area:
(i) Feasibility analysis and planning.
(ii) Interdisciplinary team development.
(iii) Development of a provider network, including
contract development.
(iv) Development or adaptation of claims processing
systems.
(v) Preparation of special education and outreach
efforts required for the PACE program.
(vi) Development of expense reporting required for
calculation of outlier payments or reconciliation
processes.
(vii) Development of any special quality of care or
patient satisfaction data collection efforts.
(viii) Establishment of a working capital fund to
sustain fixed administrative, facility, or other fixed
costs until the provider reaches sufficient enrollment
size.
(ix) Startup and development costs incurred prior to
the approval of the rural PACE pilot site's PACE provider
application by CMS.
(x) Any other efforts determined by the rural PACE
pilot site to be critical to its successful startup, as
approved by the Secretary.
(E) Appropriation.--
(i) In general.--Out of funds in the Treasury not
otherwise appropriated, there are appropriated to the
Secretary to carry out this subsection for fiscal year
2006, $7,500,000.
(ii) Availability.--Funds appropriated under clause (i)
shall remain available for expenditure through fiscal year
2008.
(2) Technical assistance program.--The Secretary shall
establish a technical assistance program to provide--
(A) outreach and education to State agencies and provider
organizations interested in establishing PACE programs in rural
areas; and
(B) technical assistance necessary to support rural PACE
pilot sites.
(c) Cost Outlier Protection for Rural PACE Pilot Sites.--
(1) Establishment of fund for reimbursement of outlier costs.--
Notwithstanding any other provision of law, the Secretary shall
establish an outlier fund to reimburse rural PACE pilot sites for
recognized outlier costs (as defined in paragraph (3)) incurred for
eligible outlier participants (as defined in paragraph (2)) in an
amount, subject to paragraph (4), equal to 80 percent of the amount
by which the recognized outlier costs exceeds $50,000.
(2) Eligible outlier participant.--For purposes of this
subsection, the term ``eligible outlier participant'' means a PACE
program eligible individual (as defined in sections 1894(a)(5) and
1934(a)(5) of the Social Security Act (42 U.S.C. 1395eee(a)(5);
1396u-4(a)(5))) who resides in a rural area and with respect to
whom the rural PACE pilot site incurs more than $50,000 in
recognized costs in a 12-month period.
(3) Recognized outlier costs defined.--
(A) In general.--For purposes of this subsection, the term
``recognized outlier costs'' means, with respect to services
furnished to an eligible outlier participant by a rural PACE
pilot site, the least of the following (as documented by the
site to the satisfaction of the Secretary) for the provision of
inpatient and related physician and ancillary services for the
eligible outlier participant in a given 12-month period:
(i) If the services are provided under a contract
between the pilot site and the provider, the payment rate
specified under the contract.
(ii) The payment rate established under the original
Medicare fee-for-service program for such service.
(iii) The amount actually paid for the services by the
pilot site.
(B) Inclusion in only one period.--Recognized outlier costs
may not be included in more than one 12-month period.
(3) Outlier expense payment.--
(A) Payment for outlier costs.--Subject to subparagraph
(B), in the case of a rural PACE pilot site that has incurred
outlier costs for an eligible outlier participant, the rural
PACE pilot site shall receive an outlier expense payment equal
to 80 percent of such costs that exceed $50,000.
(4) Limitations.--
(A) Costs incurred per eligible outlier participant.--The
total amount of outlier expense payments made under this
subsection to a rural PACE pilot site with respect to an
eligible outlier participant for any 12-month period shall not
exceed $100,000 for the 12-month period used to calculate the
payment.
(B) Costs incurred per provider.--No rural PACE pilot site
may receive more than $500,000 in total outlier expense
payments in a 12-month period.
(C) Limitation of outlier cost reimbursement period.--A
rural PACE pilot site shall only receive outlier expense
payments under this subsection with respect to costs incurred
during the first 3 years of the site's operation.
(5) Requirement to access risk reserves prior to payment.--A
rural PACE pilot site shall access and exhaust any risk reserves
held or arranged for the provider (other than revenue or reserves
maintained to satisfy the requirements of section 460.80(c) of
title 42, Code of Federal Regulations) and any working capital
established through a site development grant awarded under
subsection (b)(1), prior to receiving any payment from the outlier
fund.
(6) Application.--In order to receive an outlier expense
payment under this subsection with respect to an eligible outlier
participant, a rural PACE pilot site shall submit an application
containing--
(A) documentation of the costs incurred with respect to the
participant;
(B) a certification that the site has complied with the
requirements under paragraph (4); and
(C) such additional information as the Secretary may
require.
(7) Appropriation.--
(A) In general.--Out of funds in the Treasury not otherwise
appropriated, there are appropriated to the Secretary to carry
out this subsection for fiscal year 2006, $10,000,000.
(B) Availability.--Funds appropriated under subparagraph
(A) shall remain available for expenditure through fiscal year
2010.
(d) Evaluation of PACE Providers Serving Rural Service Areas.--Not
later than 60 months after the date of enactment of this Act, the
Secretary shall submit a report to Congress containing an evaluation of
the experience of rural PACE pilot sites.
(e) Amounts in Addition to Payments Under Social Security Act.--Any
amounts paid under the authority of this section to a PACE provider
shall be in addition to payments made to the provider under section
1894 or 1934 of the Social Security Act (42 U.S.C. 1395eee; 1396u-4).
TITLE VI--MEDICAID AND SCHIP
Subtitle A--Medicaid
CHAPTER 1--PAYMENT FOR PRESCRIPTION DRUGS
SEC. 6001. FEDERAL UPPER PAYMENT LIMIT FOR MULTIPLE SOURCE DRUGS AND
OTHER DRUG PAYMENT PROVISIONS.
(a) Modification of Federal Upper Payment Limit for Multiple Source
Drugs; Definition of Multiple Source Drugs.--Section 1927 of the Social
Security Act (42 U.S.C. 1396r-8) is amended--
(1) in subsection (e)(4)--
(A) by striking ``The Secretary'' and inserting ``Subject
to paragraph (5), the Secretary''; and
(B) by inserting ``(or, effective January 1, 2007, two or
more)'' after ``three or more'';
(2) by adding at the end of subsection (e) the following new
paragraph:
``(5) Use of amp in upper payment limits.--Effective January 1,
2007, in applying the Federal upper reimbursement limit under
paragraph (4) and section 447.332(b) of title 42 of the Code of
Federal Regulations, the Secretary shall substitute 250 percent of
the average manufacturer price (as computed without regard to
customary prompt pay discounts extended to wholesalers) for 150
percent of the published price.'';
(3) in subsection (k)(7)(A)(i), in the matter preceding
subclause (I), by striking ``are 2 or more drug products'' and
inserting ``at least 1 other drug product''; and
(4) in subclauses (I), (II), and (III) of subsection
(k)(7)(A)(i), by striking ``are'' and inserting ``is'' each place
it appears.
(b) Disclosure of Price Information to States and the Public.--
Subsection (b)(3) of such section is amended--
(1) in subparagraph (A)--
(A) in clause (i), by inserting ``month of a'' after ``last
day of each''; and
(B) by adding at the end the following: ``Beginning July 1,
2006, the Secretary shall provide on a monthly basis to States
under subparagraph (D)(iv) the most recently reported average
manufacturer prices for single source drugs and for multiple
source drugs and shall, on at least a quarterly basis, update
the information posted on the website under subparagraph
(D)(v).''; and
(2) in subparagraph (D)--
(A) by striking ``and'' at the end of clause (ii);
(B) by striking the period at the end of clause (iii) and
inserting a comma; and
(C) by inserting after clause (iii) the following new
clauses:
``(iv) to States to carry out this title, and
``(v) to the Secretary to disclose (through a website
accessible to the public) average manufacturer prices.''.
(c) Definition of Average Manufacturer Price.--
(1) Exclusion of customary prompt pay discounts extended to
wholesalers.--Subsection (k)(1) of such section is amended--
(A) by striking ``The term'' and inserting the following:
``(A) In general.--Subject to subparagraph (B), the term'';
(B) by striking ``, after deducting customary prompt pay
discounts''; and
(C) by adding at the end the following:
``(B) Exclusion of customary prompt pay discounts extended
to wholesalers.--The average manufacturer price for a covered
outpatient drug shall be determined without regard to customary
prompt pay discounts extended to wholesalers.''.
(2) Manufacturer reporting of prompt pay discounts.--Subsection
(b)(3)(A)(i) of such section is amended by inserting ``, customary
prompt pay discounts extended to wholesalers,'' after ``(k)(1))''.
(3) Requirement to promulgate regulation.--
(A) Inspector general recommendations.--Not later than June
1, 2006, the Inspector General of the Department of Health and
Human Services shall--
(i) review the requirements for, and manner in which,
average manufacturer prices are determined under section
1927 of the Social Security Act, as amended by this
section; and
(ii) shall submit to the Secretary of Health and Human
Services and Congress such recommendations for changes in
such requirements or manner as the Inspector General
determines to be appropriate.
(B) Deadline for promulgation.--Not later than July 1,
2007, the Secretary of Health and Human Services shall
promulgate a regulation that clarifies the requirements for,
and manner in which, average manufacturer prices are determined
under section 1927 of the Social Security Act, taking into
consideration the recommendations submitted to the Secretary in
accordance with subparagraph (A)(ii).
(d) Exclusion of Sales at a Nominal Price From Determination of
Best Price.--
(1) Manufacturer reporting of sales.--Subsection (b)(3)(A)(iii)
of such section is amended by inserting before the period at the
end the following: ``, and, for calendar quarters beginning on or
after January 1, 2007 and only with respect to the information
described in subclause (III), for covered outpatient drugs''.
(2) Limitation on sales at a nominal price.--Subsection (c)(1)
of such section is amended by adding at the end the following new
subparagraph:
``(D) Limitation on sales at a nominal price.--
``(i) In general.--For purposes of subparagraph
(C)(ii)(III) and subsection (b)(3)(A)(iii)(III), only sales
by a manufacturer of covered outpatient drugs at nominal
prices to the following shall be considered to be sales at
a nominal price or merely nominal in amount:
``(I) A covered entity described in section
340B(a)(4) of the Public Health Service Act.
``(II) An intermediate care facility for the
mentally retarded.
``(III) A State-owned or operated nursing facility.
``(IV) Any other facility or entity that the
Secretary determines is a safety net provider to which
sales of such drugs at a nominal price would be
appropriate based on the factors described in clause
(ii).
``(ii) Factors.--The factors described in this clause
with respect to a facility or entity are the following:
``(I) The type of facility or entity.
``(II) The services provided by the facility or
entity.
``(III) The patient population served by the
facility or entity.
``(IV) The number of other facilities or entities
eligible to purchase at nominal prices in the same
service area.
``(iii) Nonapplication.--Clause (i) shall not apply
with respect to sales by a manufacturer at a nominal price
of covered outpatient drugs pursuant to a master agreement
under section 8126 of title 38, United States Code.''.
(e) Retail Survey Prices; State Payment and Utilization Rates; and
Performance Rankings.--Such section is further amended by inserting
after subsection (e) the following new subsection:
``(f) Survey of Retail Prices; State Payment and Utilization Rates;
and Performance Rankings.--
``(1) Survey of retail prices.--
``(A) Use of vendor.--The Secretary may contract services
for--
``(i) the determination on a monthly basis of retail
survey prices for covered outpatient drugs that represent a
nationwide average of consumer purchase prices for such
drugs, net of all discounts and rebates (to the extent any
information with respect to such discounts and rebates is
available); and
``(ii) the notification of the Secretary when a drug
product that is therapeutically and pharmaceutically
equivalent and bioequivalent becomes generally available.
``(B) Secretary response to notification of availability of
multiple source products.--If contractor notifies the Secretary
under subparagraph (A)(ii) that a drug product described in
such subparagraph has become generally available, the Secretary
shall make a determination, within 7 days after receiving such
notification, as to whether the product is now described in
subsection (e)(4).
``(C) Use of competitive bidding.--In contracting for such
services, the Secretary shall competitively bid for an outside
vendor that has a demonstrated history in--
``(i) surveying and determining, on a representative
nationwide basis, retail prices for ingredient costs of
prescription drugs;
``(ii) working with retail pharmacies, commercial
payers, and States in obtaining and disseminating such
price information; and
``(iii) collecting and reporting such price information
on at least a monthly basis.
In contracting for such services, the Secretary may waive such
provisions of the Federal Acquisition Regulation as are
necessary for the efficient implementation of this subsection,
other than provisions relating to confidentiality of
information and such other provisions as the Secretary
determines appropriate.
``(D) Additional provisions.--A contract with a vendor
under this paragraph shall include such terms and conditions as
the Secretary shall specify, including the following:
``(i) The vendor must monitor the marketplace and
report to the Secretary each time there is a new covered
outpatient drug generally available.
``(ii) The vendor must update the Secretary no less
often than monthly on the retail survey prices for covered
outpatient drugs.
``(iii) The contract shall be effective for a term of 2
years.
``(E) Availability of information to states.--Information
on retail survey prices obtained under this paragraph,
including applicable information on single source drugs, shall
be provided to States on at least a monthly basis. The
Secretary shall devise and implement a means for providing
access to each State agency designated under section 1902(a)(5)
with responsibility for the administration or supervision of
the administration of the State plan under this title of the
retail survey price determined under this paragraph.
``(2) Annual state report.--Each State shall annually report to
the Secretary information on--
``(A) the payment rates under the State plan under this
title for covered outpatient drugs;
``(B) the dispensing fees paid under such plan for such
drugs; and
``(C) utilization rates for noninnovator multiple source
drugs under such plan.
``(3) Annual state performance rankings.--
``(A) Comparative analysis.--The Secretary annually shall
compare, for the 50 most widely prescribed drugs identified by
the Secretary, the national retail sales price data (collected
under paragraph (1)) for such drugs with data on prices under
this title for each such drug for each State.
``(B) Availability of information.--The Secretary shall
submit to Congress and the States full information regarding
the annual rankings made under subparagraph (A).
``(4) Appropriation.--Out of any funds in the Treasury not
otherwise appropriated, there is appropriated to the Secretary of
Health and Human Services $5,000,000 for each of fiscal years 2006
through 2010 to carry out this subsection.''.
(f) Miscellaneous Amendments.--
(1) In general.--Sections 1927(g)(1)(B)(i)(II) and
1861(t)(2)(B)(ii)(I) of such Act are each amended by inserting
``(or its successor publications)'' after ``United States
Pharmacopoeia-Drug Information''.
(2) Paperwork reduction.--The last sentence of section
1927(g)(2)(A)(ii) of such Act (42 U.S.C. 1396r-8(g)(2)(A)(ii)) is
amended by inserting before the period at the end the following:
``, or to require verification of the offer to provide consultation
or a refusal of such offer''.
(3) Effective date.--The amendments made by this subsection
shall take effect on the date of the enactment of this Act.
(g) Effective Date.--Except as otherwise provided, the amendments
made by this section shall take effect on January 1, 2007, without
regard to whether or not final regulations to carry out such amendments
have been promulgated by such date.
SEC. 6002. COLLECTION AND SUBMISSION OF UTILIZATION DATA FOR CERTAIN
PHYSICIAN ADMINISTERED DRUGS.
(a) In General.--Section 1927(a) of the Social Security Act (42
U.S.C. 1396r-8(a)) is amended by adding at the end the following new
paragraph:
``(7) Requirement for submission of utilization data for
certain physician administered drugs.--
``(A) Single source drugs.--In order for payment to be
available under section 1903(a) for a covered outpatient drug
that is a single source drug that is physician administered
under this title (as determined by the Secretary), and that is
administered on or after January 1, 2006, the State shall
provide for the collection and submission of such utilization
data and coding (such as J-codes and National Drug Code
numbers) for each such drug as the Secretary may specify as
necessary to identify the manufacturer of the drug in order to
secure rebates under this section for drugs administered for
which payment is made under this title.
``(B) Multiple source drugs.--
``(i) Identification of most frequently physician
administered multiple source drugs.--Not later than January
1, 2007, the Secretary shall publish a list of the 20
physician administered multiple source drugs that the
Secretary determines have the highest dollar volume of
physician administered drugs dispensed under this title.
The Secretary may modify such list from year to year to
reflect changes in such volume.
``(ii) Requirement.--In order for payment to be
available under section 1903(a) for a covered outpatient
drug that is a multiple source drug that is physician
administered (as determined by the Secretary), that is on
the list published under clause (i), and that is
administered on or after January 1, 2008, the State shall
provide for the submission of such utilization data and
coding (such as J-codes and National Drug Code numbers) for
each such drug as the Secretary may specify as necessary to
identify the manufacturer of the drug in order to secure
rebates under this section.
``(C) Use of ndc codes.--Not later than January 1, 2007,
the information shall be submitted under subparagraphs (A) and
(B)(ii) using National Drug Code codes unless the Secretary
specifies that an alternative coding system should be used.
``(D) Hardship waiver.--The Secretary may delay the
application of subparagraph (A) or (B)(ii), or both, in the
case of a State to prevent hardship to States which require
additional time to implement the reporting system required
under the respective subparagraph.''.
(b) Limitation on Payment.--Section 1903(i)(10) of such Act (42
U.S.C. 1396b(i)(10)), is amended--
(1) by striking ``and'' at the end of subparagraph (A);
(2) by striking ``or'' at the end of subparagraph (B) and
inserting ``and''; and
(3) by adding at the end the following new subparagraph:
``(C) with respect to covered outpatient drugs described in
section 1927(a)(7), unless information respecting utilization
data and coding on such drugs that is required to be submitted
under such section is submitted in accordance with such
section; or''.
SEC. 6003. IMPROVED REGULATION OF DRUGS SOLD UNDER A NEW DRUG
APPLICATION APPROVED UNDER SECTION 505(C) OF THE FEDERAL
FOOD, DRUG, AND COSMETIC ACT.
(a) Inclusion With Other Reported Average Manufacturer and Best
Prices.--Section 1927(b)(3)(A) of the Social Security Act (42 U.S.C.
1396r-8(b)(3)(A)) is amended--
(1) by striking clause (i) and inserting the following:
``(i) not later than 30 days after the last day of each
rebate period under the agreement--
``(I) on the average manufacturer price (as defined
in subsection (k)(1)) for covered outpatient drugs for
the rebate period under the agreement (including for
all such drugs that are sold under a new drug
application approved under section 505(c) of the
Federal Food, Drug, and Cosmetic Act); and
``(II) for single source drugs and innovator
multiple source drugs (including all such drugs that
are sold under a new drug application approved under
section 505(c) of the Federal Food, Drug, and Cosmetic
Act), on the manufacturer's best price (as defined in
subsection (c)(1)(C)) for such drugs for the rebate
period under the agreement;''; and
(2) in clause (ii), by inserting ``(including for such drugs
that are sold under a new drug application approved under section
505(c) of the Federal Food, Drug, and Cosmetic Act)'' after
``drugs''.
(b) Conforming Amendments.--Section 1927 of such Act (42 U.S.C.
1396r-8) is amended--
(1) in subsection (c)(1)(C)--
(A) in clause (i), in the matter preceding subclause (I),
by inserting after ``or innovator multiple source drug of a
manufacturer'' the following: ``(including the lowest price
available to any entity for any such drug of a manufacturer
that is sold under a new drug application approved under
section 505(c) of the Federal Food, Drug, and Cosmetic Act)'';
and
(B) in clause (ii)--
(i) in subclause (II), by striking ``and'' at the end;
(ii) in subclause (III), by striking the period at the
end and inserting ``; and''; and
(iii) by adding at the end the following:
``(IV) in the case of a manufacturer that approves,
allows, or otherwise permits any other drug of the
manufacturer to be sold under a new drug application
approved under section 505(c) of the Federal Food,
Drug, and Cosmetic Act, shall be inclusive of the
lowest price for such authorized drug available from
the manufacturer during the rebate period to any
manufacturer, wholesaler, retailer, provider, health
maintenance organization, nonprofit entity, or
governmental entity within the United States, excluding
those prices described in subclauses (I) through (IV)
of clause (i).''; and
(2) in subsection (k), as amended by section 6001(c)(1), by
adding at the end the following:
``(C) Inclusion of section 505(c) drugs.--In the case of a
manufacturer that approves, allows, or otherwise permits any
drug of the manufacturer to be sold under a new drug
application approved under section 505(c) of the Federal Food,
Drug, and Cosmetic Act, such term shall be inclusive of the
average price paid for such drug by wholesalers for drugs
distributed to the retail pharmacy class of trade.''.
(c) Effective Date.--The amendments made by this section take
effect on January 1, 2007.
SEC. 6004. CHILDREN'S HOSPITAL PARTICIPATION IN SECTION 340B DRUG
DISCOUNT PROGRAM.
(a) In General.--Section 1927(a)(5)(B) of the Social Security Act
(42 U.S.C. 1396r-8(a)(5)(B)) is amended by inserting before the period
at the end the following: ``and a children's hospital described in
section 1886(d)(1)(B)(iii) which meets the requirements of clauses (i)
and (iii) of section 340B(b)(4)(L) of the Public Health Service Act and
which would meet the requirements of clause (ii) of such section if
that clause were applied by taking into account the percentage of care
provided by the hospital to patients eligible for medical assistance
under a State plan under this title''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to drugs purchased on or after the date of the enactment of this
Act.
CHAPTER 2--LONG-TERM CARE UNDER MEDICAID
Subchapter A--Reform of Asset Transfer Rules
SEC. 6011. LENGTHENING LOOK-BACK PERIOD; CHANGE IN BEGINNING DATE FOR
PERIOD OF INELIGIBILITY.
(a) Lengthening Look-Back Period for All Disposals to 5 Years.--
Section 1917(c)(1)(B)(i) of the Social Security Act (42 U.S.C.
1396p(c)(1)(B)(i)) is amended by inserting ``or in the case of any
other disposal of assets made on or after the date of the enactment of
the Deficit Reduction Act of 2005'' before ``, 60 months''.
(b) Change in Beginning Date for Period of Ineligibility.--Section
1917(c)(1)(D) of such Act (42 U.S.C. 1396p(c)(1)(D)) is amended--
(1) by striking ``(D) The date'' and inserting ``(D)(i) In the
case of a transfer of asset made before the date of the enactment
of the Deficit Reduction Act of 2005, the date''; and
(2) by adding at the end the following new clause:
``(ii) In the case of a transfer of asset made on or after the date
of the enactment of the Deficit Reduction Act of 2005, the date
specified in this subparagraph is the first day of a month during or
after which assets have been transferred for less than fair market
value, or the date on which the individual is eligible for medical
assistance under the State plan and would otherwise be receiving
institutional level care described in subparagraph (C) based on an
approved application for such care but for the application of the
penalty period, whichever is later, and which does not occur during any
other period of ineligibility under this subsection.''.
(c) Effective Date.--The amendments made by this section shall
apply to transfers made on or after the date of the enactment of this
Act.
(d) Availability of Hardship Waivers.--Each State shall provide for
a hardship waiver process in accordance with section 1917(c)(2)(D) of
the Social Security Act (42 U.S.C. 1396p(c)(2)(D))--
(1) under which an undue hardship exists when application of
the transfer of assets provision would deprive the individual--
(A) of medical care such that the individual's health or
life would be endangered; or
(B) of food, clothing, shelter, or other necessities of
life; and
(2) which provides for--
(A) notice to recipients that an undue hardship exception
exists;
(B) a timely process for determining whether an undue
hardship waiver will be granted; and
(C) a process under which an adverse determination can be
appealed.
(e) Additional Provisions on Hardship Waivers.--
(1) Application by facility.--Section 1917(c)(2) of the Social
Security Act (42 U.S.C. 1396p(c)(2)) is amended--
(A) by striking the semicolon at the end of subparagraph
(D) and inserting a period; and
(B) by adding after and below such subparagraph the
following:
``The procedures established under subparagraph (D) shall permit
the facility in which the institutionalized individual is residing
to file an undue hardship waiver application on behalf of the
individual with the consent of the individual or the personal
representative of the individual.''.
(2) Authority to make bed hold payments for hardship
applicants.--Such section is further amended by adding at the end
the following: ``While an application for an undue hardship waiver
is pending under subparagraph (D) in the case of an individual who
is a resident of a nursing facility, if the application meets such
criteria as the Secretary specifies, the State may provide for
payments for nursing facility services in order to hold the bed for
the individual at the facility, but not in excess of payments for
30 days.''.
SEC. 6012. DISCLOSURE AND TREATMENT OF ANNUITIES.
(a) In General.--Section 1917 of the Social Security Act (42 U.S.C.
1396p) is amended by redesignating subsection (e) as subsection (f) and
by inserting after subsection (d) the following new subsection:
``(e)(1) In order to meet the requirements of this section for
purposes of section 1902(a)(18), a State shall require, as a condition
for the provision of medical assistance for services described in
subsection (c)(1)(C)(i) (relating to long-term care services) for an
individual, the application of the individual for such assistance
(including any recertification of eligibility for such assistance)
shall disclose a description of any interest the individual or
community spouse has in an annuity (or similar financial instrument, as
may be specified by the Secretary), regardless of whether the annuity
is irrevocable or is treated as an asset. Such application or
recertification form shall include a statement that under paragraph (2)
the State becomes a remainder beneficiary under such an annuity or
similar financial instrument by virtue of the provision of such medical
assistance.
``(2)(A) In the case of disclosure concerning an annuity under
subsection (c)(1)(F), the State shall notify the issuer of the annuity
of the right of the State under such subsection as a preferred
remainder beneficiary in the annuity for medical assistance furnished
to the individual. Nothing in this paragraph shall be construed as
preventing such an issuer from notifying persons with any other
remainder interest of the State's remainder interest under such
subsection.
``(B) In the case of such an issuer receiving notice under
subparagraph (A), the State may require the issuer to notify the State
when there is a change in the amount of income or principal being
withdrawn from the amount that was being withdrawn at the time of the
most recent disclosure described in paragraph (1). A State shall take
such information into account in determining the amount of the State's
obligations for medical assistance or in the individual's eligibility
for such assistance.
``(3) The Secretary may provide guidance to States on categories of
transactions that may be treated as a transfer of asset for less than
fair market value.
``(4) Nothing in this subsection shall be construed as preventing a
State from denying eligibility for medical assistance for an individual
based on the income or resources derived from an annuity described in
paragraph (1).''.
(b) Requirement for State To Be Named as a Remainder Beneficiary.--
Section 1917(c)(1) of such Act (42 U.S.C. 1396p(c)(1)), is amended by
adding at the end the following:
``(F) For purposes of this paragraph, the purchase of an annuity
shall be treated as the disposal of an asset for less than fair market
value unless--
``(i) the State is named as the remainder beneficiary in the
first position for at least the total amount of medical assistance
paid on behalf of the annuitant under this title; or
``(ii) the State is named as such a beneficiary in the second
position after the community spouse or minor or disabled child and
is named in the first position if such spouse or a representative
of such child disposes of any such remainder for less than fair
market value.''.
(c) Inclusion of Transfers To Purchase Balloon Annuities.--Section
1917(c)(1) of such Act (42 U.S.C. 1396p(c)(1)), as amended by
subsection (b), is amended by adding at the end the following:
``(G) For purposes of this paragraph with respect to a transfer of
assets, the term `assets' includes an annuity purchased by or on behalf
of an annuitant who has applied for medical assistance with respect to
nursing facility services or other long-term care services under this
title unless--
``(i) the annuity is--
``(I) an annuity described in subsection (b) or (q) of
section 408 of the Internal Revenue Code of 1986; or
``(II) purchased with proceeds from--
``(aa) an account or trust described in subsection (a),
(c), or (p) of section 408 of such Code;
``(bb) a simplified employee pension (within the
meaning of section 408(k) of such Code); or
``(cc) a Roth IRA described in section 408A of such
Code; or
``(ii) the annuity--
``(I) is irrevocable and nonassignable;
``(II) is actuarially sound (as determined in accordance
with actuarial publications of the Office of the Chief Actuary
of the Social Security Administration); and
``(III) provides for payments in equal amounts during the
term of the annuity, with no deferral and no balloon payments
made.''.
(d) Effective Date.--The amendments made by this section shall
apply to transactions (including the purchase of an annuity) occurring
on or after the date of the enactment of this Act.
SEC. 6013. APPLICATION OF ``INCOME-FIRST'' RULE IN APPLYING COMMUNITY
SPOUSE'S INCOME BEFORE ASSETS IN PROVIDING SUPPORT OF
COMMUNITY SPOUSE.
(a) In General.--Section 1924(d) of the Social Security Act (42
U.S.C. 1396r-5(d)) is amended by adding at the end the following new
subparagraph:
``(6) Application of `income first' rule to revision of
community spouse resource allowance.--For purposes of this
subsection and subsections (c) and (e), a State must consider that
all income of the institutionalized spouse that could be made
available to a community spouse, in accordance with the calculation
of the community spouse monthly income allowance under this
subsection, has been made available before the State allocates to
the community spouse an amount of resources adequate to provide the
difference between the minimum monthly maintenance needs allowance
and all income available to the community spouse.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to transfers and allocations made on or after the date of the
enactment of this Act by individuals who become institutionalized
spouses on or after such date.
SEC. 6014. DISQUALIFICATION FOR LONG-TERM CARE ASSISTANCE FOR
INDIVIDUALS WITH SUBSTANTIAL HOME EQUITY.
(a) In General.--Section 1917 of the Social Security Act, as
amended by section 6012(a), is further amended by redesignating
subsection (f) as subsection (g) and by inserting after subsection (e)
the following new subsection:
``(f)(1)(A) Notwithstanding any other provision of this title,
subject to subparagraphs (B) and (C) of this paragraph and paragraph
(2), in determining eligibility of an individual for medical assistance
with respect to nursing facility services or other long-term care
services, the individual shall not be eligible for such assistance if
the individual's equity interest in the individual's home exceeds
$500,000.
``(B) A State may elect, without regard to the requirements of
section 1902(a)(1) (relating to statewideness) and section
1902(a)(10)(B) (relating to comparability), to apply subparagraph (A)
by substituting for `$500,000', an amount that exceeds such amount, but
does not exceed $750,000.
``(C) The dollar amounts specified in this paragraph shall be
increased, beginning with 2011, from year to year based on the
percentage increase in the consumer price index for all urban consumers
(all items; United States city average), rounded to the nearest $1,000.
``(2) Paragraph (1) shall not apply with respect to an individual
if--
``(A) the spouse of such individual, or
``(B) such individual's child who is under age 21, or (with
respect to States eligible to participate in the State program
established under title XVI) is blind or permanently and totally
disabled, or (with respect to States which are not eligible to
participate in such program) is blind or disabled as defined in
section 1614,
is lawfully residing in the individual's home.
``(3) Nothing in this subsection shall be construed as preventing
an individual from using a reverse mortgage or home equity loan to
reduce the individual's total equity interest in the home.
``(4) The Secretary shall establish a process whereby paragraph (1)
is waived in the case of a demonstrated hardship.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to individuals who are determined eligible for medical assistance
with respect to nursing facility services or other long-term care
services based on an application filed on or after January 1, 2006.
SEC. 6015. ENFORCEABILITY OF CONTINUING CARE RETIREMENT COMMUNITIES
(CCRC) AND LIFE CARE COMMUNITY ADMISSION CONTRACTS.
(a) Admission Policies of Nursing Facilities.--Section 1919(c)(5)
of the Social Security Act (42 U.S.C. 1396r(c)(5)) is amended--
(1) in subparagraph (A)(i)(II), by inserting ``subject to
clause (v),'' after ``(II)''; and
(2) by adding at the end of subparagraph (B) the following new
clause:
``(v) Treatment of continuing care retirement
communities admission contracts.--Notwithstanding subclause
(II) of subparagraph (A)(i), subject to subsections (c) and
(d) of section 1924, contracts for admission to a State
licensed, registered, certified, or equivalent continuing
care retirement community or life care community, including
services in a nursing facility that is part of such
community, may require residents to spend on their care
resources declared for the purposes of admission before
applying for medical assistance.''.
(b) Treatment of Entrance Fees.--Section 1917 of such Act (42
U.S.C. 1396p), as amended by sections 6012(a) and 6014(a), is amended
by redesignating subsection (g) as subsection (h) and by inserting
after subsection (f) the following new subsection:
``(g) Treatment of Entrance Fees of Individuals Residing in
Continuing Care Retirement Communities.--
``(1) In general.--For purposes of determining an individual's
eligibility for, or amount of, benefits under a State plan under
this title, the rules specified in paragraph (2) shall apply to
individuals residing in continuing care retirement communities or
life care communities that collect an entrance fee on admission
from such individuals.
``(2) Treatment of entrance fee.--For purposes of this
subsection, an individual's entrance fee in a continuing care
retirement community or life care community shall be considered a
resource available to the individual to the extent that--
``(A) the individual has the ability to use the entrance
fee, or the contract provides that the entrance fee may be
used, to pay for care should other resources or income of the
individual be insufficient to pay for such care;
``(B) the individual is eligible for a refund of any
remaining entrance fee when the individual dies or terminates
the continuing care retirement community or life care community
contract and leaves the community; and
``(C) the entrance fee does not confer an ownership
interest in the continuing care retirement community or life
care community.''.
SEC. 6016. ADDITIONAL REFORMS OF MEDICAID ASSET TRANSFER RULES.
(a) Requirement To Impose Partial Months of Ineligibility.--Section
1917(c)(1)(E) of the Social Security Act (42 U.S.C. 1396p(c)(1)(E)) is
amended by adding at the end the following:
``(iv) A State shall not round down, or otherwise disregard any
fractional period of ineligibility determined under clause (i) or (ii)
with respect to the disposal of assets.''.
(b) Authority for States To Accumulate Multiple Transfers Into One
Penalty Period.--Section 1917(c)(1) of such Act (42 U.S.C.
1396p(c)(1)), as amended by subsections (b) and (c) of section 6012, is
amended by adding at the end the following:
``(H) Notwithstanding the preceding provisions of this paragraph,
in the case of an individual (or individual's spouse) who makes
multiple fractional transfers of assets in more than 1 month for less
than fair market value on or after the applicable look-back date
specified in subparagraph (B), a State may determine the period of
ineligibility applicable to such individual under this paragraph by--
``(i) treating the total, cumulative uncompensated value of all
assets transferred by the individual (or individual's spouse)
during all months on or after the look-back date specified in
subparagraph (B) as 1 transfer for purposes of clause (i) or (ii)
(as the case may be) of subparagraph (E); and
``(ii) beginning such period on the earliest date which would
apply under subparagraph (D) to any of such transfers.''.
(c) Inclusion of Transfer of Certain Notes and Loans Assets.--
Section 1917(c)(1) of such Act (42 U.S.C. 1396p(c)(1)), as amended by
subsection (b), is amended by adding at the end the following:
``(I) For purposes of this paragraph with respect to a transfer of
assets, the term `assets' includes funds used to purchase a promissory
note, loan, or mortgage unless such note, loan, or mortgage--
``(i) has a repayment term that is actuarially sound (as
determined in accordance with actuarial publications of the Office
of the Chief Actuary of the Social Security Administration);
``(ii) provides for payments to be made in equal amounts during
the term of the loan, with no deferral and no balloon payments
made; and
``(iii) prohibits the cancellation of the balance upon the
death of the lender.
In the case of a promissory note, loan, or mortgage that does not
satisfy the requirements of clauses (i) through (iii), the value of
such note, loan, or mortgage shall be the outstanding balance due as of
the date of the individual's application for medical assistance for
services described in subparagraph (C).''.
(d) Inclusion of Transfers To Purchase Life Estates.--Section
1917(c)(1) of such Act (42 U.S.C. 1396p(c)(1)), as amended by
subsection (c), is amended by adding at the end the following:
``(J) For purposes of this paragraph with respect to a transfer of
assets, the term `assets' includes the purchase of a life estate
interest in another individual's home unless the purchaser resides in
the home for a period of at least 1 year after the date of the
purchase.''.
(e) Effective Dates.--
(1) In general.--Except as provided in paragraphs (2) and (3),
the amendments made by this section shall apply to payments under
title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) for
calendar quarters beginning on or after the date of enactment of
this Act, without regard to whether or not final regulations to
carry out such amendments have been promulgated by such date.
(2) Exceptions.--The amendments made by this section shall not
apply--
(A) to medical assistance provided for services furnished
before the date of enactment;
(B) with respect to assets disposed of on or before the
date of enactment of this Act; or
(C) with respect to trusts established on or before the
date of enactment of this Act.
(3) Extension of effective date for state law amendment.--In
the case of a State plan under title XIX of the Social Security Act
(42 U.S.C. 1396 et seq.) which the Secretary of Health and Human
Services determines requires State legislation in order for the
plan to meet the additional requirements imposed by the amendments
made by a provision of this section, the State plan shall not be
regarded as failing to comply with the requirements of such title
solely on the basis of its failure to meet these additional
requirements before the first day of the first calendar quarter
beginning after the close of the first regular session of the State
legislature that begins after the date of the enactment of this
Act. For purposes of the previous sentence, in the case of a State
that has a 2-year legislative session, each year of the session is
considered to be a separate regular session of the State
legislature.
Subchapter B--Expanded Access to Certain Benefits
SEC. 6021. EXPANSION OF STATE LONG-TERM CARE PARTNERSHIP PROGRAM.
(a) Expansion Authority.--
(1) In general.--Section 1917(b) of the Social Security Act (42
U.S.C. 1396p(b)) is amended--
(A) in paragraph (1)(C)--
(i) in clause (ii), by inserting ``and which satisfies
clause (iv), or which has a State plan amendment that
provides for a qualified State long-term care insurance
partnership (as defined in clause (iii))'' after ``1993,'';
and
(ii) by adding at the end the following new clauses:
``(iii) For purposes of this paragraph, the term `qualified
State long-term care insurance partnership' means an approved State
plan amendment under this title that provides for the disregard of
any assets or resources in an amount equal to the insurance benefit
payments that are made to or on behalf of an individual who is a
beneficiary under a long-term care insurance policy if the
following requirements are met:
``(I) The policy covers an insured who was a resident of
such State when coverage first became effective under the
policy.
``(II) The policy is a qualified long-term care insurance
policy (as defined in section 7702B(b) of the Internal Revenue
Code of 1986) issued not earlier than the effective date of the
State plan amendment.
``(III) The policy meets the model regulations and the
requirements of the model Act specified in paragraph (5).
``(IV) If the policy is sold to an individual who--
``(aa) has not attained age 61 as of the date of
purchase, the policy provides compound annual inflation
protection;
``(bb) has attained age 61 but has not attained age 76
as of such date, the policy provides some level of
inflation protection; and
``(cc) has attained age 76 as of such date, the policy
may (but is not required to) provide some level of
inflation protection.
``(V) The State Medicaid agency under section 1902(a)(5)
provides information and technical assistance to the State
insurance department on the insurance department's role of
assuring that any individual who sells a long-term care
insurance policy under the partnership receives training and
demonstrates evidence of an understanding of such policies and
how they relate to other public and private coverage of long-
term care.
``(VI) The issuer of the policy provides regular reports to
the Secretary, in accordance with regulations of the Secretary,
that include notification regarding when benefits provided
under the policy have been paid and the amount of such benefits
paid, notification regarding when the policy otherwise
terminates, and such other information as the Secretary
determines may be appropriate to the administration of such
partnerships.
``(VII) The State does not impose any requirement affecting
the terms or benefits of such a policy unless the State imposes
such requirement on long-term care insurance policies without
regard to whether the policy is covered under the partnership
or is offered in connection with such a partnership.
In the case of a long-term care insurance policy which is exchanged
for another such policy, subclause (I) shall be applied based on
the coverage of the first such policy that was exchanged. For
purposes of this clause and paragraph (5), the term `long-term care
insurance policy' includes a certificate issued under a group
insurance contract.
``(iv) With respect to a State which had a State plan amendment
approved as of May 14, 1993, such a State satisfies this clause for
purposes of clause (ii) if the Secretary determines that the State
plan amendment provides for consumer protection standards which are
no less stringent than the consumer protection standards which
applied under such State plan amendment as of December 31, 2005.
``(v) The regulations of the Secretary required under clause
(iii)(VI) shall be promulgated after consultation with the National
Association of Insurance Commissioners, issuers of long-term care
insurance policies, States with experience with long-term care
insurance partnership plans, other States, and representatives of
consumers of long-term care insurance policies, and shall specify
the type and format of the data and information to be reported and
the frequency with which such reports are to be made. The
Secretary, as appropriate, shall provide copies of the reports
provided in accordance with that clause to the State involved.
``(vi) The Secretary, in consultation with other appropriate
Federal agencies, issuers of long-term care insurance, the National
Association of Insurance Commissioners, State insurance
commissioners, States with experience with long-term care insurance
partnership plans, other States, and representatives of consumers
of long-term care insurance policies, shall develop recommendations
for Congress to authorize and fund a uniform minimum data set to be
reported electronically by all issuers of long-term care insurance
policies under qualified State long-term care insurance
partnerships to a secure, centralized electronic query and report-
generating mechanism that the State, the Secretary, and other
Federal agencies can access.''; and
(B) by adding at the end the following:
``(5)(A) For purposes of clause (iii)(III), the model regulations
and the requirements of the model Act specified in this paragraph are:
``(i) In the case of the model regulation, the following
requirements:
``(I) Section 6A (relating to guaranteed renewal or
noncancellability), other than paragraph (5) thereof, and the
requirements of section 6B of the model Act relating to such
section 6A.
``(II) Section 6B (relating to prohibitions on limitations
and exclusions) other than paragraph (7) thereof.
``(III) Section 6C (relating to extension of benefits).
``(IV) Section 6D (relating to continuation or conversion
of coverage).
``(V) Section 6E (relating to discontinuance and
replacement of policies).
``(VI) Section 7 (relating to unintentional lapse).
``(VII) Section 8 (relating to disclosure), other than
sections 8F, 8G, 8H, and 8I thereof.
``(VIII) Section 9 (relating to required disclosure of
rating practices to consumer).
``(IX) Section 11 (relating to prohibitions against post-
claims underwriting).
``(X) Section 12 (relating to minimum standards).
``(XI) Section 14 (relating to application forms and
replacement coverage).
``(XII) Section 15 (relating to reporting requirements).
``(XIII) Section 22 (relating to filing requirements for
marketing).
``(XIV) Section 23 (relating to standards for marketing),
including inaccurate completion of medical histories, other
than paragraphs (1), (6), and (9) of section 23C.
``(XV) Section 24 (relating to suitability).
``(XVI) Section 25 (relating to prohibition against
preexisting conditions and probationary periods in replacement
policies or certificates).
``(XVII) The provisions of section 26 relating to
contingent nonforfeiture benefits, if the policyholder declines
the offer of a nonforfeiture provision described in paragraph
(4).
``(XVIII) Section 29 (relating to standard format outline
of coverage).
``(XIX) Section 30 (relating to requirement to deliver
shopper's guide).
``(ii) In the case of the model Act, the following:
``(I) Section 6C (relating to preexisting conditions).
``(II) Section 6D (relating to prior hospitalization).
``(III) The provisions of section 8 relating to contingent
nonforfeiture benefits.
``(IV) Section 6F (relating to right to return).
``(V) Section 6G (relating to outline of coverage).
``(VI) Section 6H (relating to requirements for
certificates under group plans).
``(VII) Section 6J (relating to policy summary).
``(VIII) Section 6K (relating to monthly reports on
accelerated death benefits).
``(IX) Section 7 (relating to incontestability period).
``(B) For purposes of this paragraph and paragraph (1)(C)--
``(i) the terms `model regulation' and `model Act' mean the
long-term care insurance model regulation, and the long-term care
insurance model Act, respectively, promulgated by the National
Association of Insurance Commissioners (as adopted as of October
2000);
``(ii) any provision of the model regulation or model Act
listed under subparagraph (A) shall be treated as including any
other provision of such regulation or Act necessary to implement
the provision; and
``(iii) with respect to a long-term care insurance policy
issued in a State, the policy shall be deemed to meet applicable
requirements of the model regulation or the model Act if the State
plan amendment under paragraph (1)(C)(iii) provides that the State
insurance commissioner for the State certifies (in a manner
satisfactory to the Secretary) that the policy meets such
requirements.
``(C) Not later than 12 months after the National Association of
Insurance Commissioners issues a revision, update, or other
modification of a model regulation or model Act provision specified in
subparagraph (A), or of any provision of such regulation or Act that is
substantively related to a provision specified in such subparagraph,
the Secretary shall review the changes made to the provision, determine
whether incorporating such changes into the corresponding provision
specified in such subparagraph would improve qualified State long-term
care insurance partnerships, and if so, shall incorporate the changes
into such provision.''.
(2) State reporting requirements.--Nothing in clauses (iii)(VI)
and (v) of section 1917(b)(1)(C) of the Social Security Act (as
added by paragraph (1)) shall be construed as prohibiting a State
from requiring an issuer of a long-term care insurance policy sold
in the State (regardless of whether the policy is issued under a
qualified State long-term care insurance partnership under section
1917(b)(1)(C)(iii) of such Act) to require the issuer to report
information or data to the State that is in addition to the
information or data required under such clauses.
(3) Effective date.--A State plan amendment that provides for a
qualified State long-term care insurance partnership under the
amendments made by paragraph (1) may provide that such amendment is
effective for long-term care insurance policies issued on or after
a date, specified in the amendment, that is not earlier than the
first day of the first calendar quarter in which the plan amendment
was submitted to the Secretary of Health and Human Services.
(b) Standards for Reciprocal Recognition Among Partnership
States.--In order to permit portability in long-term care insurance
policies purchased under State long-term care insurance partnerships,
the Secretary of Health and Human Services shall develop, not later
than January 1, 2007, and in consultation with the National Association
of Insurance Commissioners, issuers of long-term care insurance
policies, States with experience with long-term care insurance
partnership plans, other States, and representatives of consumers of
long-term care insurance policies, standards for uniform reciprocal
recognition of such policies among States with qualified State long-
term care insurance partnerships under which--
(1) benefits paid under such policies will be treated the same
by all such States; and
(2) States with such partnerships shall be subject to such
standards unless the State notifies the Secretary in writing of the
State's election to be exempt from such standards.
(c) Annual Reports to Congress.--
(1) In general.--The Secretary of Health and Human Services
shall annually report to Congress on the long-term care insurance
partnerships established in accordance with section
1917(b)(1)(C)(ii) of the Social Security Act (42 U.S.C.
1396p(b)(1)(C)(ii)) (as amended by subsection (a)(1)). Such reports
shall include analyses of the extent to which such partnerships
expand or limit access of individuals to long-term care and the
impact of such partnerships on Federal and State expenditures under
the Medicare and Medicaid programs. Nothing in this section shall
be construed as requiring the Secretary to conduct an independent
review of each long-term care insurance policy offered under or in
connection with such a partnership.
(2) Appropriation.--Out of any funds in the Treasury not
otherwise appropriated, there is appropriated to the Secretary of
Health and Human Services, $1,000,000 for the period of fiscal
years 2006 through 2010 to carry out paragraph (1).
(d) National Clearinghouse for Long-Term Care Information.--
(1) Establishment.--The Secretary of Health and Human Services
shall establish a National Clearinghouse for Long-Term Care
Information. The Clearinghouse may be established through a
contract or interagency agreement.
(2) Duties.--
(A) In general.--The National Clearinghouse for Long-Term
Care Information shall--
(i) educate consumers with respect to the availability
and limitations of coverage for long-term care under the
Medicaid program and provide contact information for
obtaining State-specific information on long-term care
coverage, including eligibility and estate recovery
requirements under State Medicaid programs;
(ii) provide objective information to assist consumers
with the decisionmaking process for determining whether to
purchase long-term care insurance or to pursue other
private market alternatives for purchasing long-term care
and provide contact information for additional objective
resources on planning for long-term care needs; and
(iii) maintain a list of States with State long-term
care insurance partnerships under the Medicaid program that
provide reciprocal recognition of long-term care insurance
policies issued under such partnerships.
(B) Requirement.--In providing information to consumers on
long-term care in accordance with this subsection, the National
Clearinghouse for Long-Term Care Information shall not advocate
in favor of a specific long-term care insurance provider or a
specific long-term care insurance policy.
(3) Appropriation.--Out of any funds in the Treasury not
otherwise appropriated, there is appropriated to carry out this
subsection, $3,000,000 for each of fiscal years 2006 through 2010.
CHAPTER 3--ELIMINATING FRAUD, WASTE, AND ABUSE IN MEDICAID
SEC. 6031. ENCOURAGING THE ENACTMENT OF STATE FALSE CLAIMS ACTS.
(a) In General.--Title XIX of the Social Security Act (42 U.S.C.
1396 et seq.) is amended by inserting after section 1908A the
following:
``STATE FALSE CLAIMS ACT REQUIREMENTS FOR INCREASED STATE SHARE OF
RECOVERIES
``Sec. 1909. (a) In General.--Notwithstanding section 1905(b), if a
State has in effect a law relating to false or fraudulent claims that
meets the requirements of subsection (b), the Federal medical
assistance percentage with respect to any amounts recovered under a
State action brought under such law, shall be decreased by 10
percentage points.
``(b) Requirements.--For purposes of subsection (a), the
requirements of this subsection are that the Inspector General of the
Department of Health and Human Services, in consultation with the
Attorney General, determines that the State has in effect a law that
meets the following requirements:
``(1) The law establishes liability to the State for false or
fraudulent claims described in section 3729 of title 31, United
States Code, with respect to any expenditure described in section
1903(a).
``(2) The law contains provisions that are at least as
effective in rewarding and facilitating qui tam actions for false
or fraudulent claims as those described in sections 3730 through
3732 of title 31, United States Code.
``(3) The law contains a requirement for filing an action under
seal for 60 days with review by the State Attorney General.
``(4) The law contains a civil penalty that is not less than
the amount of the civil penalty authorized under section 3729 of
title 31, United States Code.
``(c) Deemed Compliance.--A State that, as of January 1, 2007, has
a law in effect that meets the requirements of subsection (b) shall be
deemed to be in compliance with such requirements for so long as the
law continues to meet such requirements.
``(d) No Preclusion of Broader Laws.--Nothing in this section shall
be construed as prohibiting a State that has in effect a law that
establishes liability to the State for false or fraudulent claims
described in section 3729 of title 31, United States Code, with respect
to programs in addition to the State program under this title, or with
respect to expenditures in addition to expenditures described in
section 1903(a), from being considered to be in compliance with the
requirements of subsection (a) so long as the law meets such
requirements.''.
(b) Effective Date.--Except as provided in section 6035(e), the
amendments made by this section take effect on January 1, 2007.
SEC. 6032. EMPLOYEE EDUCATION ABOUT FALSE CLAIMS RECOVERY.
(a) In General.--Section 1902(a) of the Social Security Act (42
U.S.C. 1396a(a)) is amended--
(1) in paragraph (66), by striking ``and'' at the end;
(2) in paragraph (67) by striking the period at the end and
inserting ``; and''; and
(3) by inserting after paragraph (67) the following:
``(68) provide that any entity that receives or makes annual
payments under the State plan of at least $5,000,000, as a
condition of receiving such payments, shall--
``(A) establish written policies for all employees of the
entity (including management), and of any contractor or agent
of the entity, that provide detailed information about the
False Claims Act established under sections 3729 through 3733
of title 31, United States Code, administrative remedies for
false claims and statements established under chapter 38 of
title 31, United States Code, any State laws pertaining to
civil or criminal penalties for false claims and statements,
and whistleblower protections under such laws, with respect to
the role of such laws in preventing and detecting fraud, waste,
and abuse in Federal health care programs (as defined in
section 1128B(f));
``(B) include as part of such written policies, detailed
provisions regarding the entity's policies and procedures for
detecting and preventing fraud, waste, and abuse; and
``(C) include in any employee handbook for the entity, a
specific discussion of the laws described in subparagraph (A),
the rights of employees to be protected as whistleblowers, and
the entity's policies and procedures for detecting and
preventing fraud, waste, and abuse.''.
(b) Effective Date.--Except as provided in section 6035(e), the
amendments made by subsection (a) take effect on January 1, 2007.
SEC. 6033. PROHIBITION ON RESTOCKING AND DOUBLE BILLING OF PRESCRIPTION
DRUGS.
(a) In General.--Section 1903(i)(10) of the Social Security Act (42
U.S.C. 1396b(i)), as amended by section 6002(b), is amended--
(1) in subparagraph (B), by striking ``and'' at the end;
(2) in subparagraph (C), by striking ``; or'' at the end and
inserting ``, and''; and
(3) by adding at the end the following:
``(D) with respect to any amount expended for reimbursement to
a pharmacy under this title for the ingredient cost of a covered
outpatient drug for which the pharmacy has already received payment
under this title (other than with respect to a reasonable
restocking fee for such drug); or''.
(b) Effective Date.--The amendments made by subsection (a) take
effect on the first day of the first fiscal year quarter that begins
after the date of enactment of this Act.
SEC. 6034. MEDICAID INTEGRITY PROGRAM.
(a) Establishment of Medicaid Integrity Program.--Title XIX of the
Social Security Act (42 U.S.C. 1396 et seq.) is amended--
(1) by redesignating section 1936 as section 1937; and
(2) by inserting after section 1935 the following:
``MEDICAID INTEGRITY PROGRAM
``Sec. 1936. (a) In General.--There is hereby established the
Medicaid Integrity Program (in this section referred to as the
`Program') under which the Secretary shall promote the integrity of the
program under this title by entering into contracts in accordance with
this section with eligible entities to carry out the activities
described in subsection (b).
``(b) Activities Described.--Activities described in this
subsection are as follows:
``(1) Review of the actions of individuals or entities
furnishing items or services (whether on a fee-for-service, risk,
or other basis) for which payment may be made under a State plan
approved under this title (or under any waiver of such plan
approved under section 1115) to determine whether fraud, waste, or
abuse has occurred, is likely to occur, or whether such actions
have any potential for resulting in an expenditure of funds under
this title in a manner which is not intended under the provisions
of this title.
``(2) Audit of claims for payment for items or services
furnished, or administrative services rendered, under a State plan
under this title, including--
``(A) cost reports;
``(B) consulting contracts; and
``(C) risk contracts under section 1903(m).
``(3) Identification of overpayments to individuals or entities
receiving Federal funds under this title.
``(4) Education of providers of services, managed care
entities, beneficiaries, and other individuals with respect to
payment integrity and quality of care.
``(c) Eligible Entity and Contracting Requirements.--
``(1) In general.--An entity is eligible to enter into a
contract under the Program to carry out any of the activities
described in subsection (b) if the entity satisfies the
requirements of paragraphs (2) and (3).
``(2) Eligibility requirements.--The requirements of this
paragraph are the following:
``(A) The entity has demonstrated capability to carry out
the activities described in subsection (b).
``(B) In carrying out such activities, the entity agrees to
cooperate with the Inspector General of the Department of
Health and Human Services, the Attorney General, and other law
enforcement agencies, as appropriate, in the investigation and
deterrence of fraud and abuse in relation to this title and in
other cases arising out of such activities.
``(C) The entity complies with such conflict of interest
standards as are generally applicable to Federal acquisition
and procurement.
``(D) The entity meets such other requirements as the
Secretary may impose.
``(3) Contracting requirements.--The entity has contracted with
the Secretary in accordance with such procedures as the Secretary
shall by regulation establish, except that such procedures shall
include the following:
``(A) Procedures for identifying, evaluating, and resolving
organizational conflicts of interest that are generally
applicable to Federal acquisition and procurement.
``(B) Competitive procedures to be used--
``(i) when entering into new contracts under this
section;
``(ii) when entering into contracts that may result in
the elimination of responsibilities under section 202(b) of
the Health Insurance Portability and Accountability Act of
1996; and
``(iii) at any other time considered appropriate by the
Secretary.
``(C) Procedures under which a contract under this section
may be renewed without regard to any provision of law requiring
competition if the contractor has met or exceeded the
performance requirements established in the current contract.
The Secretary may enter into such contracts without regard to final
rules having been promulgated.
``(4) Limitation on contractor liability.--The Secretary shall
by regulation provide for the limitation of a contractor's
liability for actions taken to carry out a contract under the
Program, and such regulation shall, to the extent the Secretary
finds appropriate, employ the same or comparable standards and
other substantive and procedural provisions as are contained in
section 1157.
``(d) Comprehensive Plan for Program Integrity.--
``(1) 5-year plan.--With respect to the 5-fiscal year period
beginning with fiscal year 2006, and each such 5-fiscal year period
that begins thereafter, the Secretary shall establish a
comprehensive plan for ensuring the integrity of the program
established under this title by combatting fraud, waste, and abuse.
``(2) Consultation.--Each 5-fiscal year plan established under
paragraph (1) shall be developed by the Secretary in consultation
with the Attorney General, the Director of the Federal Bureau of
Investigation, the Comptroller General of the United States, the
Inspector General of the Department of Health and Human Services,
and State officials with responsibility for controlling provider
fraud and abuse under State plans under this title.
``(e) Appropriation.--
``(1) In general.--Out of any money in the Treasury of the
United States not otherwise appropriated, there are appropriated to
carry out the Medicaid Integrity Program under this section,
without further appropriation--
``(A) for fiscal year 2006, $5,000,000;
``(B) for each of fiscal years 2007 and 2008, $50,000,000;
and
``(C) for each fiscal year thereafter, $75,000,000.
``(2) Availability.--Amounts appropriated pursuant to paragraph
(1) shall remain available until expended.
``(3) Increase in cms staffing devoted to protecting medicaid
program integrity.--From the amounts appropriated under paragraph
(1), the Secretary shall increase by 100 the number of full-time
equivalent employees whose duties consist solely of protecting the
integrity of the Medicaid program established under this section by
providing effective support and assistance to States to combat
provider fraud and abuse.
``(4) Annual report.--Not later than 180 days after the end of
each fiscal year (beginning with fiscal year 2006), the Secretary
shall submit a report to Congress which identifies--
``(A) the use of funds appropriated pursuant to paragraph
(1); and
``(B) the effectiveness of the use of such funds.''.
(b) State Requirement To Cooperate With Integrity Program
Efforts.--Section 1902(a) of such Act (42 U.S.C. 1396a(a)), as amended
by section 6033(a), is amended--
(1) in paragraph (67), by striking ``and'' at the end;
(2) in paragraph (68), by striking the period at the end and
inserting ``; and''; and
(3) by inserting after paragraph (68), the following:
``(69) provide that the State must comply with any requirements
determined by the Secretary to be necessary for carrying out the
Medicaid Integrity Program established under section 1936.''.
(c) Increased Funding for Medicaid Fraud and Abuse Control
Activities.--
(1) In general.--Out of any money in the Treasury of the United
States not otherwise appropriated, there are appropriated to the
Office of the Inspector General of the Department of Health and
Human Services, without further appropriation, $25,000,000 for each
of fiscal years 2006 through 2010, for activities of such Office
with respect to the Medicaid program under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.).
(2) Availability; amounts in addition to other amounts
appropriated for such activities.--Amounts appropriated pursuant to
paragraph (1) shall--
(A) remain available until expended; and
(B) be in addition to any other amounts appropriated or
made available to the Office of the Inspector General of the
Department of Health and Human Services for activities of such
Office with respect to the Medicaid program.
(3) Annual report.--Not later than 180 days after the end of
each fiscal year (beginning with fiscal year 2006), the Inspector
General of the Department of Health and Human Services shall submit
a report to Congress which identifies--
(A) the use of funds appropriated pursuant to paragraph
(1); and
(B) the effectiveness of the use of such funds.
(d) National Expansion of the Medicare-Medicaid (Medi-Medi) Data
Match Pilot Program.--
(1) Requirement of the medicare integrity program.--Section
1893 of the Social Security Act (42 U.S.C. 1395ddd) is amended--
(A) in subsection (b), by adding at the end the following:
``(6) The Medicare-Medicaid Data Match Program in accordance
with subsection (g).''; and
(B) by adding at the end the following:
``(g) Medicare-Medicaid Data Match Program.--
``(1) Expansion of program.--
``(A) In general.--The Secretary shall enter into contracts
with eligible entities for the purpose of ensuring that,
beginning with 2006, the Medicare-Medicaid Data Match Program
(commonly referred to as the `Medi-Medi Program') is conducted
with respect to the program established under this title and
State Medicaid programs under title XIX for the purpose of--
``(i) identifying program vulnerabilities in the
program established under this title and the Medicaid
program established under title XIX through the use of
computer algorithms to look for payment anomalies
(including billing or billing patterns identified with
respect to service, time, or patient that appear to be
suspect or otherwise implausible);
``(ii) working with States, the Attorney General, and
the Inspector General of the Department of Health and Human
Services to coordinate appropriate actions to protect the
Federal and State share of expenditures under the Medicaid
program under title XIX, as well as the program established
under this title; and
``(iii) increasing the effectiveness and efficiency of
both such programs through cost avoidance, savings, and
recoupments of fraudulent, wasteful, or abusive
expenditures.
``(B) Reporting requirements.--The Secretary shall make
available in a timely manner any data and statistical
information collected by the Medi-Medi Program to the Attorney
General, the Director of the Federal Bureau of Investigation,
the Inspector General of the Department of Health and Human
Services, and the States (including a Medicaid fraud and abuse
control unit described in section 1903(q)). Such information
shall be disseminated no less frequently than quarterly.
``(2) Limited waiver authority.--The Secretary shall waive only
such requirements of this section and of titles XI and XIX as are
necessary to carry out paragraph (1).''.
(2) Funding.--Section 1817(k)(4) of such Act (42 U.S.C.
1395i(k)(4)), as amended by section 5204 of this Act, is amended--
(A) in subparagraph (A), by striking ``subparagraph (B)''
and inserting ``subparagraphs (B), (C), and (D)''; and
(B) by adding at the end the following:
``(D) Expansion of the medicare-medicaid data match
program.--The amount appropriated under subparagraph (A) for a
fiscal year is further increased as follows for purposes of
carrying out section 1893(b)(6) for the respective fiscal year:
``(i) $12,000,000 for fiscal year 2006.
``(ii) $24,000,000 for fiscal year 2007.
``(iii) $36,000,000 for fiscal year 2008.
``(iv) $48,000,000 for fiscal year 2009.
``(v) $60,000,000 for fiscal year 2010 and each fiscal
year thereafter.''.
(e) Delayed Effective Date for Chapter.--Except as otherwise
provided in this chapter, in the case of a State plan under title XIX
of the Social Security Act which the Secretary determines requires
State legislation in order for the plan to meet the additional
requirements imposed by the amendments made by a provision of this
chapter, the State plan shall not be regarded as failing to comply with
the requirements of such Act solely on the basis of its failure to meet
these additional requirements before the first day of the first
calendar quarter beginning after the close of the first regular session
of the State legislature that begins after the date of enactment of
this Act. For purposes of the previous sentence, in the case of a State
that has a 2-year legislative session, each year of the session shall
be considered to be a separate regular session of the State
legislature.
SEC. 6035. ENHANCING THIRD PARTY IDENTIFICATION AND PAYMENT.
(a) Clarification of Third Parties Legally Responsible for Payment
of a Claim for a Health Care Item or Service.--Section 1902(a)(25) of
the Social Security Act (42 U.S.C. 1396a(a)(25)) is amended--
(1) in subparagraph (A), in the matter preceding clause (i)--
(A) by inserting ``, self-insured plans'' after ``health
insurers''; and
(B) by striking ``and health maintenance organizations''
and inserting ``managed care organizations, pharmacy benefit
managers, or other parties that are, by statute, contract, or
agreement, legally responsible for payment of a claim for a
health care item or service''; and
(2) in subparagraph (G)--
(A) by inserting ``a self-insured plan,'' after ``1974,'';
and
(B) by striking ``and a health maintenance organization''
and inserting ``a managed care organization, a pharmacy benefit
manager, or other party that is, by statute, contract, or
agreement, legally responsible for payment of a claim for a
health care item or service''.
(b) Requirement for Third Parties To Provide the State With
Coverage Eligibility and Claims Data.--Section 1902(a)(25) of such Act
(42 U.S.C. 1396a(a)(25)) is amended--
(1) in subparagraph (G), by striking ``and'' at the end;
(2) in subparagraph (H), by adding ``and'' after the semicolon
at the end; and
(3) by inserting after subparagraph (H), the following:
``(I) that the State shall provide assurances satisfactory
to the Secretary that the State has in effect laws requiring
health insurers, including self-insured plans, group health
plans (as defined in section 607(1) of the Employee Retirement
Income Security Act of 1974), service benefit plans, managed
care organizations, pharmacy benefit managers, or other parties
that are, by statute, contract, or agreement, legally
responsible for payment of a claim for a health care item or
service, as a condition of doing business in the State, to--
``(i) provide, with respect to individuals who are
eligible for, or are provided, medical assistance under the
State plan, upon the request of the State, information to
determine during what period the individual or their
spouses or their dependents may be (or may have been)
covered by a health insurer and the nature of the coverage
that is or was provided by the health insurer (including
the name, address, and identifying number of the plan) in a
manner prescribed by the Secretary;
``(ii) accept the State's right of recovery and the
assignment to the State of any right of an individual or
other entity to payment from the party for an item or
service for which payment has been made under the State
plan;
``(iii) respond to any inquiry by the State regarding a
claim for payment for any health care item or service that
is submitted not later than 3 years after the date of the
provision of such health care item or service; and
``(iv) agree not to deny a claim submitted by the State
solely on the basis of the date of submission of the claim,
the type or format of the claim form, or a failure to
present proper documentation at the point-of-sale that is
the basis of the claim, if--
``(I) the claim is submitted by the State within
the 3-year period beginning on the date on which the
item or service was furnished; and
``(II) any action by the State to enforce its
rights with respect to such claim is commenced within 6
years of the State's submission of such claim;''.
(c) Effective Date.--Except as provided in section 6035(e), the
amendments made by this section take effect on January 1, 2006.
SEC. 6036. IMPROVED ENFORCEMENT OF DOCUMENTATION REQUIREMENTS.
(a) In General.--Section 1903 of the Social Security Act (42 U.S.C.
1396b) is amended--
(1) in subsection (i), as amended by section 104 of Public Law
109-91--
(A) by striking ``or'' at the end of paragraph (20);
(B) by striking the period at the end of paragraph (21) and
inserting ``; or''; and
(C) by inserting after paragraph (21) the following new
paragraph:
``(22) with respect to amounts expended for medical assistance
for an individual who declares under section 1137(d)(1)(A) to be a
citizen or national of the United States for purposes of
establishing eligibility for benefits under this title, unless the
requirement of subsection (x) is met.''; and
(2) by adding at the end the following new subsection:
``(x)(1) For purposes of subsection (i)(23), the requirement of
this subsection is, with respect to an individual declaring to be a
citizen or national of the United States, that, subject to paragraph
(2), there is presented satisfactory documentary evidence of
citizenship or nationality (as defined in paragraph (3)) of the
individual.
``(2) The requirement of paragraph (1) shall not apply to an alien
who is eligible for medical assistance under this title--
``(A) and is entitled to or enrolled for benefits under any
part of title XVIII;
``(B) on the basis of receiving supplemental security income
benefits under title XVI; or
``(C) on such other basis as the Secretary may specify under
which satisfactory documentary evidence of citizenship or
nationality had been previously presented.
``(3)(A) For purposes of this subsection, the term `satisfactory
documentary evidence of citizenship or nationality' means--
``(i) any document described in subparagraph (B); or
``(ii) a document described in subparagraph (C) and a document
described in subparagraph (D).
``(B) The following are documents described in this subparagraph:
``(i) A United States passport.
``(ii) Form N-550 or N-570 (Certificate of Naturalization).
``(iii) Form N-560 or N-561 (Certificate of United States
Citizenship).
``(iv) A valid State-issued driver's license or other identity
document described in section 274A(b)(1)(D) of the Immigration and
Nationality Act, but only if the State issuing the license or such
document requires proof of United States citizenship before
issuance of such license or document or obtains a social security
number from the applicant and verifies before certification that
such number is valid and assigned to the applicant who is a
citizen.
``(v) Such other document as the Secretary may specify, by
regulation, that provides proof of United States citizenship or
nationality and that provides a reliable means of documentation of
personal identity.
``(C) The following are documents described in this subparagraph:
``(i) A certificate of birth in the United States.
``(ii) Form FS-545 or Form DS-1350 (Certification of Birth
Abroad).
``(iii) Form I-97 (United States Citizen Identification Card).
``(iv) Form FS-240 (Report of Birth Abroad of a Citizen of the
United States).
``(v) Such other document (not described in subparagraph
(B)(iv)) as the Secretary may specify that provides proof of United
States citizenship or nationality.
``(D) The following are documents described in this subparagraph:
``(i) Any identity document described in section 274A(b)(1)(D)
of the Immigration and Nationality Act.
``(ii) Any other documentation of personal identity of such
other type as the Secretary finds, by regulation, provides a
reliable means of identification.
``(E) A reference in this paragraph to a form includes a reference
to any successor form.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to determinations of initial eligibility for medical assistance
made on or after July 1, 2006, and to redeterminations of eligibility
made on or after such date in the case of individuals for whom the
requirement of section 1903(z) of the Social Security Act, as added by
such amendments, was not previously met.
(c) Implementation Requirement.--As soon as practicable after the
date of enactment of this Act, the Secretary of Health and Human
Services shall establish an outreach program that is designed to
educate individuals who are likely to be affected by the requirements
of subsections (i)(23) and (x) of section 1903 of the Social Security
Act (as added by subsection (a)) about such requirements and how they
may be satisfied.
CHAPTER 4--FLEXIBILITY IN COST SHARING AND BENEFITS
SEC. 6041. STATE OPTION FOR ALTERNATIVE MEDICAID PREMIUMS AND COST
SHARING.
(a) In General.--Title XIX of the Social Security Act is amended by
inserting after section 1916 the following new section:
``State option for alternative premiums and cost sharing
``Sec. 1916A. (a) State Flexibility.--
``(1) In general.--Notwithstanding sections 1916 and
1902(a)(10)(B), a State, at its option and through a State plan
amendment, may impose premiums and cost sharing for any group of
individuals (as specified by the State) and for any type of
services (other than drugs for which cost sharing may be imposed
under subsection (c)), and may vary such premiums and cost sharing
among such groups or types, consistent with the limitations
established under this section. Nothing in this section shall be
construed as superseding (or preventing the application of) section
1916(g).
``(2) Definitions.--In this section:
``(A) Premium.--The term `premium' includes any enrollment
fee or similar charge.
``(B) Cost sharing.--The term `cost sharing' includes any
deduction, copayment, or similar charge.
``(b) Limitations on Exercise of Authority.--
``(1) Individuals with family income between 100 and 150
percent of the poverty line.--In the case of an individual whose
family income exceeds 100 percent, but does not exceed 150 percent,
of the poverty line applicable to a family of the size involved,
subject to subsections (c)(2) and (e)(2)(A)--
``(A) no premium may be imposed under the plan; and
``(B) with respect to cost sharing--
``(i) the cost sharing imposed under subsection (a)
with respect to any item or service may not exceed 10
percent of the cost of such item or service; and
``(ii) the total aggregate amount of cost sharing
imposed under this section (including any cost sharing
imposed under subsection (c) or (e)) for all individuals in
the family may not exceed 5 percent of the family income of
the family involved, as applied on a quarterly or monthly
basis (as specified by the State).
``(2) Individuals with family income above 150 percent of the
poverty line.--In the case of an individual whose family income
exceeds 150 percent of the poverty line applicable to a family of
the size involved, subject to subsections (c)(2) and (e)(2)(A)--
``(A) the total aggregate amount of premiums and cost
sharing imposed under this section (including any cost sharing
imposed under subsection (c) or (e)) for all individuals in the
family may not exceed 5 percent of the family income of the
family involved, as applied on a quarterly or monthly basis (as
specified by the State); and
``(B) with respect to cost sharing, the cost sharing
imposed with respect to any item or service under subsection
(a) may not exceed 20 percent of the cost of such item or
service.
``(3) Additional limitations.--
``(A) Premiums.--No premiums shall be imposed under this
section with respect to the following:
``(i) Individuals under 18 years of age that are
required to be provided medical assistance under section
1902(a)(10)(A)(i), and including individuals with respect
to whom aid or assistance is made available under part B of
title IV to children in foster care and individuals with
respect to whom adoption or foster care assistance is made
available under part E of such title, without regard to
age.
``(ii) Pregnant women.
``(iii) Any terminally ill individual who is receiving
hospice care (as defined in section 1905(o)).
``(iv) Any individual who is an inpatient in a
hospital, nursing facility, intermediate care facility for
the mentally retarded, or other medical institution, if
such individual is required, as a condition of receiving
services in such institution under the State plan, to spend
for costs of medical care all but a minimal amount of the
individual's income required for personal needs.
``(v) Women who are receiving medical assistance by
virtue of the application of sections
1902(a)(10)(A)(ii)(XVIII) and 1902(aa).
``(B) Cost sharing.--Subject to the succeeding provisions
of this section, no cost sharing shall be imposed under
subsection (a) with respect to the following:
``(i) Services furnished to individuals under 18 years
of age that are required to be provided medical assistance
under section 1902(a)(10)(A)(i), and including services
furnished to individuals with respect to whom aid or
assistance is made available under part B of title IV to
children in foster care and individuals with respect to
whom adoption or foster care assistance is made available
under part E of such title, without regard to age.
``(ii) Preventive services (such as well baby and well
child care and immunizations) provided to children under 18
years of age regardless of family income.
``(iii) Services furnished to pregnant women, if such
services relate to the pregnancy or to any other medical
condition which may complicate the pregnancy.
``(iv) Services furnished to a terminally ill
individual who is receiving hospice care (as defined in
section 1905(o)).
``(v) Services furnished to any individual who is an
inpatient in a hospital, nursing facility, intermediate
care facility for the mentally retarded, or other medical
institution, if such individual is required, as a condition
of receiving services in such institution under the State
plan, to spend for costs of medical care all but a minimal
amount of the individual's income required for personal
needs.
``(vi) Emergency services (as defined by the Secretary
for purposes of section 1916(a)(2)(D)).
``(vii) Family planning services and supplies described
in section 1905(a)(4)(C).
``(viii) Services furnished to women who are receiving
medical assistance by virtue of the application of sections
1902(a)(10)(A)(ii)(XVIII) and 1902(aa).
``(C) Construction.--Nothing in this paragraph shall be
construed as preventing a State from exempting additional
classes of individuals from premiums under this section or from
exempting additional individuals or services from cost sharing
under subsection (a).
``(4) Determinations of family income.--In applying this
subsection, family income shall be determined in a manner specified
by the State for purposes of this subsection, including the use of
such disregards as the State may provide. Family income shall be
determined for such period and at such periodicity as the State may
provide under this title.
``(5) Poverty line defined.--For purposes of this section, the
term `poverty line' has the meaning given such term in section
673(2) of the Community Services Block Grant Act (42 U.S.C.
9902(2)), including any revision required by such section.
``(6) Construction.--Nothing in this section shall be
construed--
``(A) as preventing a State from further limiting the
premiums and cost sharing imposed under this section beyond the
limitations provided under this section;
``(B) as affecting the authority of the Secretary through
waiver to modify limitations on premiums and cost sharing under
this section; or
``(C) as affecting any such waiver of requirements in
effect under this title before the date of the enactment of
this section with regard to the imposition of premiums and cost
sharing.
``(d) Enforceability of Premiums and Other Cost Sharing.--
``(1) Premiums.--Notwithstanding section 1916(c)(3) and section
1902(a)(10)(B), a State may, at its option, condition the provision
of medical assistance for an individual upon prepayment of a
premium authorized to be imposed under this section, or may
terminate eligibility for such medical assistance on the basis of
failure to pay such a premium but shall not terminate eligibility
of an individual for medical assistance under this title on the
basis of failure to pay any such premium until such failure
continues for a period of not less than 60 days. A State may apply
the previous sentence for some or all groups of beneficiaries as
specified by the State and may waive payment of any such premium in
any case where the State determines that requiring such payment
would create an undue hardship.
``(2) Cost sharing.--Notwithstanding section 1916(e) or any
other provision of law, a State may permit a provider participating
under the State plan to require, as a condition for the provision
of care, items, or services to an individual entitled to medical
assistance under this title for such care, items, or services, the
payment of any cost sharing authorized to be imposed under this
section with respect to such care, items, or services. Nothing in
this paragraph shall be construed as preventing a provider from
reducing or waiving the application of such cost sharing on a case-
by-case basis.''.
(b) Indexing Nominal Cost Sharing and Conforming Amendment.--
Section 1916 of such Act (42 U.S.C. 1396o) is amended--
(1) in subsection (f), by inserting ``and section 1916A'' after
``(b)(3)''; and
(2) by adding at the end the following new subsection:
``(h) In applying this section and subsections (c) and (e) of
section 1916A, with respect to cost sharing that is `nominal' in
amount, the Secretary shall increase such `nominal' amounts for each
year (beginning with 2006) by the annual percentage increase in the
medical care component of the consumer price index for all urban
consumers (U.S. city average) as rounded up in an appropriate
manner.''.
(c) Effective Date.--The amendments made by this section shall
apply to cost sharing imposed for items and services furnished on or
after March 31, 2006.
SEC. 6042. SPECIAL RULES FOR COST SHARING FOR PRESCRIPTION DRUGS.
(a) In General.--Section 1916A of the Social Security Act, as
inserted by section 6041(a), is amended by inserting after subsection
(b) the following new subsection:
``(c) Special Rules for Cost Sharing for Prescription Drugs.--
``(1) In general.--In order to encourage beneficiaries to use
drugs (in this subsection referred to as `preferred drugs')
identified by the State as the least (or less) costly effective
prescription drugs within a class of drugs (as defined by the
State), with respect to one or more groups of beneficiaries
specified by the State, subject to paragraph (2), the State may--
``(A) provide cost sharing (instead of the level of cost
sharing otherwise permitted under section 1916, but subject to
paragraphs (2) and (3)) with respect to drugs that are not
preferred drugs within a class; and
``(B) waive or reduce the cost sharing otherwise applicable
for preferred drugs within such class and shall not apply any
such cost sharing for such preferred drugs for individuals for
whom cost sharing may not otherwise be imposed under subsection
(b)(3)(B).
``(2) Limitations.--
``(A) By income group.--In no case may the cost sharing
under paragraph (1)(A) with respect to a non-preferred drug
exceed--
``(i) in the case of an individual whose family income
does not exceed 150 percent of the poverty line applicable
to a family of the size involved, the amount of nominal
cost sharing (as otherwise determined under section 1916);
or
``(ii) in the case of an individual whose family income
exceeds 150 percent of the poverty line applicable to a
family of the size involved, 20 percent of the cost of the
drug.
``(B) Limitation to nominal for exempt populations.--In the
case of an individual who is otherwise not subject to cost
sharing due to the application of subsection (b)(3)(B), any
cost sharing under paragraph (1)(A) with respect to a non-
preferred drug may not exceed a nominal amount (as otherwise
determined under section 1916).
``(C) Continued application of aggregate cap.--In addition
to the limitations imposed under subparagraphs (A) and (B), any
cost sharing under paragraph (1)(A) continues to be subject to
the aggregate cap on cost sharing applied under paragraph (1)
or (2) of subsection (b), as the case may be.
``(3) Waiver.--In carrying out paragraph (1), a State shall
provide for the application of cost sharing levels applicable to a
preferred drug in the case of a drug that is not a preferred drug
if the prescribing physician determines that the preferred drug for
treatment of the same condition either would not be as effective
for the individual or would have adverse effects for the individual
or both.
``(4) Exclusion authority.--Nothing in this subsection shall be
construed as preventing a State from excluding specified drugs or
classes of drugs from the application of paragraph (1).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to cost sharing imposed for items and services furnished on or
after March 31, 2006.
SEC. 6043. EMERGENCY ROOM COPAYMENTS FOR NON-EMERGENCY CARE.
(a) In General.--Section 1916A of the Social Security Act, as
inserted by section 6041 and as amended by section 6042, is further
amended by adding at the end the following new subsection:
``(e) State Option for Permitting Hospitals To Impose Cost Sharing
for Non-Emergency Care Furnished in an Emergency Department.--
``(1) In general.--Notwithstanding section 1916 and section
1902(a)(1) or the previous provisions of this section, but subject
to the limitations of paragraph (2), a State may, by amendment to
its State plan under this title, permit a hospital to impose cost
sharing for non-emergency services furnished to an individual
(within one or more groups of individuals specified by the State)
in the hospital emergency department under this subsection if the
following conditions are met:
``(A) Access to non-emergency room provider.--The
individual has actually available and accessible (as such terms
are applied by the Secretary under section 1916(b)(3)) an
alternate non-emergency services provider with respect to such
services.
``(B) Notice.--The hospital must inform the beneficiary
after receiving an appropriate medical screening examination
under section 1867 and after a determination has been made that
the individual does not have an emergency medical condition,
but before providing the non-emergency services, of the
following:
``(i) The hospital may require the payment of the State
specified cost sharing before the service can be provided.
``(ii) The name and location of an alternate non-
emergency services provider (described in subparagraph (A))
that is actually available and accessible (as described in
such subparagraph).
``(iii) The fact that such alternate provider can
provide the services without the imposition of cost sharing
described in clause (i).
``(iv) The hospital provides a referral to coordinate
scheduling of this treatment.
Nothing in this subsection shall be construed as preventing a
State from applying (or waiving) cost sharing otherwise
permissible under this section to services described in clause
(iii).
``(2) Limitations.--
``(A) For poorest beneficiaries.--In the case of an
individual described in subsection (b)(1), the cost sharing
imposed under this subsection may not exceed twice the amount
determined to be nominal under section 1916, subject to the
percent of income limitation otherwise applicable under
subsection (b)(1).
``(B) Application to exempt populations.--In the case of an
individual who is otherwise not subject to cost sharing under
subsection (b)(3), a State may impose cost sharing under
paragraph (1) for care in an amount that does not exceed a
nominal amount (as otherwise determined under section 1916) so
long as no cost sharing is imposed to receive such care through
an outpatient department or other alternative health care
provider in the geographic area of the hospital emergency
department involved.
``(C) Continued application of aggregate cap; relation to
other cost sharing.--In addition to the limitations imposed
under subparagraphs (A) and (B), any cost sharing under
paragraph (1) is subject to the aggregate cap on cost sharing
applied under paragraph (1) or (2) of subsection (b), as the
case may be. Cost sharing imposed for services under this
subsection shall be instead of any cost sharing that may be
imposed for such services under subsection (a).
``(3) Construction.--Nothing in this section shall be
construed--
``(A) to limit a hospital's obligations with respect to
screening and stabilizing treatment of an emergency medical
condition under section 1867; or
``(B) to modify any obligations under either State or
Federal standards relating to the application of a prudent-
layperson standard with respect to payment or coverage of
emergency services by any managed care organization.
``(4) Definitions.--For purposes of this subsection:
``(A) Non-emergency services.--The term `non-emergency
services' means any care or services furnished in an emergency
department of a hospital that the physician determines do not
constitute an appropriate medical screening examination or
stabilizing examination and treatment required to be provided
by the hospital under section 1867.
``(B) Alternate non-emergency services provider.--The term
`alternative non-emergency services provider' means, with
respect to non-emergency services for the diagnosis or
treatment of a condition, a health care provider, such as a
physician's office, health care clinic, community health
center, hospital outpatient department, or similar health care
provider, that can provide clinically appropriate services for
the diagnosis or treatment of a condition contemporaneously
with the provision of the non-emergency services that would be
provided in an emergency department of a hospital for the
diagnosis or treatment of a condition, and that is
participating in the program under this title.''.
(b) Grant Funds for Establishment of Alternate Non-Emergency
Services Providers.--Section 1903 of the Social Security Act (42 U.S.C.
1396b), as amended by section 6037(a)(2), is amended by adding at the
end the following new subsection:
``(y) Payments for Establishment of Alternate Non-Emergency
Services Providers.--
``(1) Payments.--In addition to the payments otherwise provided
under subsection (a), subject to paragraph (2), the Secretary shall
provide for payments to States under such subsection for the
establishment of alternate non-emergency service providers (as
defined in section 1916A(e)(5)(B)), or networks of such providers.
``(2) Limitation.--The total amount of payments under this
subsection shall not exceed $50,000,000 during the 4-year period
beginning with 2006. This subsection constitutes budget authority
in advance of appropriations Acts and represents the obligation of
the Secretary to provide for the payment of amounts provided under
this subsection.
``(3) Preference.--In providing for payments to States under
this subsection, the Secretary shall provide preference to States
that establish, or provide for, alternate non-emergency services
providers or networks of such providers that--
``(A) serve rural or underserved areas where beneficiaries
under this title may not have regular access to providers of
primary care services; or
``(B) are in partnership with local community hospitals.
``(4) Form and manner of payment.--Payment to a State under
this subsection shall be made only upon the filing of such
application in such form and in such manner as the Secretary shall
specify. Payment to a State under this subsection shall be made in
the same manner as other payments under section 1903(a).''.
(c) Effective Date.--The amendments made by this section shall
apply to non-emergency services furnished on or after January 1, 2007.
SEC. 6044. USE OF BENCHMARK BENEFIT PACKAGES.
(a) In General.--Title XIX of the Social Security Act, as amended
by section 6035, is amended by redesignating section 1937 as section
1938 and by inserting after section 1936 the following new section:
``State flexibility in benefit packages
``Sec. 1937. (a) State Option of Providing Benchmark Benefits.--
``(1) Authority.--
``(A) In general.--Notwithstanding any other provision of
this title, a State, at its option as a State plan amendment,
may provide for medical assistance under this title to
individuals within one or more groups of individuals specified
by the State through enrollment in coverage that provides--
``(i) benchmark coverage described in subsection (b)(1)
or benchmark equivalent coverage described in subsection
(b)(2); and
``(ii) for any child under 19 years of age who is
covered under the State plan under section 1902(a)(10)(A),
wrap-around benefits to the benchmark coverage or benchmark
equivalent coverage consisting of early and periodic
screening, diagnostic, and treatment services defined in
section 1905(r).
``(B) Limitation.--The State may only exercise the option
under subparagraph (A) for an individual eligible under an
eligibility category that had been established under the State
plan on or before the date of the enactment of this section.
``(C) Option of wrap-around benefits.--In the case of
coverage described in subparagraph (A), a State, at its option,
may provide such wrap-around or additional benefits as the
State may specify.
``(D) Treatment as medical assistance.--Payment of premiums
for such coverage under this subsection shall be treated as
payment of other insurance premiums described in the third
sentence of section 1905(a).
``(2) Application.--
``(A) In general.--Except as provided in subparagraph (B),
a State may require that a full-benefit eligible individual (as
defined in subparagraph (C)) within a group obtain benefits
under this title through enrollment in coverage described in
paragraph (1)(A). A State may apply the previous sentence to
individuals within 1 or more groups of such individuals.
``(B) Limitation on application.--A State may not require
under subparagraph (A) an individual to obtain benefits through
enrollment described in paragraph (1)(A) if the individual is
within one of the following categories of individuals:
``(i) Mandatory pregnant women.--The individual is a
pregnant woman who is required to be covered under the
State plan under section 1902(a)(10)(A)(i).
``(ii) Blind or disabled individuals.--The individual
qualifies for medical assistance under the State plan on
the basis of being blind or disabled (or being treated as
being blind or disabled) without regard to whether the
individual is eligible for supplemental security income
benefits under title XVI on the basis of being blind or
disabled and including an individual who is eligible for
medical assistance on the basis of section 1902(e)(3).
``(iii) Dual eligibles.--The individual is entitled to
benefits under any part of title XVIII.
``(iv) Terminally ill hospice patients.--The individual
is terminally ill and is receiving benefits for hospice
care under this title.
``(v) Eligible on basis of institutionalization.--The
individual is an inpatient in a hospital, nursing facility,
intermediate care facility for the mentally retarded, or
other medical institution, and is required, as a condition
of receiving services in such institution under the State
plan, to spend for costs of medical care all but a minimal
amount of the individual's income required for personal
needs.
``(vi) Medically frail and special medical needs
individuals.--The individual is medically frail or
otherwise an individual with special medical needs (as
identified in accordance with regulations of the
Secretary).
``(vii) Beneficiaries qualifying for long-term care
services.--The individual qualifies based on medical
condition for medical assistance for long-term care
services described in section 1917(c)(1)(C).
``(viii) Children in foster care receiving child
welfare services and children receiving foster care or
adoption assistance.--The individual is an individual with
respect to whom aid or assistance is made available under
part B of title IV to children in foster care and
individuals with respect to whom adoption or foster care
assistance is made available under part E of such title,
without regard to age.
``(ix) TANF and section 1931 parents.--The individual
qualifies for medical assistance on the basis of
eligibility to receive assistance under a State plan funded
under part A of title IV (as in effect on or after the
welfare reform effective date defined in section 1931(i)).
``(x) Women in the breast or cervical cancer program.--
The individual is a woman who is receiving medical
assistance by virtue of the application of sections
1902(a)(10)(A)(ii)(XVIII) and 1902(aa).
``(xi) Limited services beneficiaries.--The
individual--
``(I) qualifies for medical assistance on the basis
of section 1902(a)(10)(A)(ii)(XII); or
``(II) is not a qualified alien (as defined in
section 431 of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996) and receives
care and services necessary for the treatment of an
emergency medical condition in accordance with section
1903(v).
``(C) Full-benefit eligible individuals.--
``(i) In general.--For purposes of this paragraph,
subject to clause (ii), the term `full-benefit eligible
individual' means for a State for a month an individual who
is determined eligible by the State for medical assistance
for all services defined in section 1905(a) which are
covered under the State plan under this title for such
month under section 1902(a)(10)(A) or under any other
category of eligibility for medical assistance for all such
services under this title, as determined by the Secretary.
``(ii) Exclusion of medically needy and spend-down
populations.--Such term shall not include an individual
determined to be eligible by the State for medical
assistance under section 1902(a)(10)(C) or by reason of
section 1902(f) or otherwise eligible based on a reduction
of income based on costs incurred for medical or other
remedial care.
``(b) Benchmark Benefit Packages.--
``(1) In general.--For purposes of subsection (a)(1), each of
the following coverages shall be considered to be benchmark
coverage:
``(A) FEHBP-equivalent health insurance coverage.--The
standard Blue Cross/Blue Shield preferred provider option
service benefit plan, described in and offered under section
8903(1) of title 5, United States Code.
``(B) State employee coverage.--A health benefits coverage
plan that is offered and generally available to State employees
in the State involved.
``(C) Coverage offered through hmo.--The health insurance
coverage plan that--
``(i) is offered by a health maintenance organization
(as defined in section 2791(b)(3) of the Public Health
Service Act), and
``(ii) has the largest insured commercial, non-medicaid
enrollment of covered lives of such coverage plans offered
by such a health maintenance organization in the State
involved.
``(D) Secretary-approved coverage.--Any other health
benefits coverage that the Secretary determines, upon
application by a State, provides appropriate coverage for the
population proposed to be provided such coverage.
``(2) Benchmark-equivalent coverage.--For purposes of
subsection (a)(1), coverage that meets the following requirement
shall be considered to be benchmark-equivalent coverage:
``(A) Inclusion of basic services.--The coverage includes
benefits for items and services within each of the following
categories of basic services:
``(i) Inpatient and outpatient hospital services.
``(ii) Physicians' surgical and medical services.
``(iii) Laboratory and x-ray services.
``(iv) Well-baby and well-child care, including age-
appropriate immunizations.
``(v) Other appropriate preventive services, as
designated by the Secretary.
``(B) Aggregate actuarial value equivalent to benchmark
package.--The coverage has an aggregate actuarial value that is
at least actuarially equivalent to one of the benchmark benefit
packages described in paragraph (1).
``(C) Substantial actuarial value for additional services
included in benchmark package.--With respect to each of the
following categories of additional services for which coverage
is provided under the benchmark benefit package used under
subparagraph (B), the coverage has an actuarial value that is
equal to at least 75 percent of the actuarial value of the
coverage of that category of services in such package:
``(i) Coverage of prescription drugs.
``(ii) Mental health services.
``(iii) Vision services.
``(iv) Hearing services.
``(3) Determination of actuarial value.--The actuarial value of
coverage of benchmark benefit packages shall be set forth in an
actuarial opinion in an actuarial report that has been prepared--
``(A) by an individual who is a member of the American
Academy of Actuaries;
``(B) using generally accepted actuarial principles and
methodologies;
``(C) using a standardized set of utilization and price
factors;
``(D) using a standardized population that is
representative of the population involved;
``(E) applying the same principles and factors in comparing
the value of different coverage (or categories of services);
``(F) without taking into account any differences in
coverage based on the method of delivery or means of cost
control or utilization used; and
``(G) taking into account the ability of a State to reduce
benefits by taking into account the increase in actuarial value
of benefits coverage offered under this title that results from
the limitations on cost sharing under such coverage.
The actuary preparing the opinion shall select and specify in the
memorandum the standardized set and population to be used under
subparagraphs (C) and (D).
``(4) Coverage of rural health clinic and fqhc services.--
Notwithstanding the previous provisions of this section, a State
may not provide for medical assistance through enrollment of an
individual with benchmark coverage or benchmark equivalent coverage
under this section unless--
``(A) the individual has access, through such coverage or
otherwise, to services described in subparagraphs (B) and (C)
of section 1905(a)(2); and
``(B) payment for such services is made in accordance with
the requirements of section 1902(bb).''.
(b) Effective Date.--The amendment made by subsection (a) takes
effect on March 31, 2006.
CHAPTER 5--STATE FINANCING UNDER MEDICAID
SEC. 6051. MANAGED CARE ORGANIZATION PROVIDER TAX REFORM.
(a) In General.--Section 1903(w)(7)(A)(viii) of the Social Security
Act (42 U.S.C. 1396b(w)(7)(A)(viii)) is amended to read as follows:
``(viii) Services of managed care organizations (including
health maintenance organizations, preferred provider
organizations, and such other similar organizations as the
Secretary may specify by regulation).''.
(b) Effective Date.--
(1) In general.--Subject to paragraph (2), the amendment made
by subsection (a) shall be effective as of the date of the
enactment of this Act.
(2) Delay in effective date.--
(A) In general.--Subject to subparagraph (B), in the case
of a State specified in subparagraph (B), the amendment made by
subsection (a) shall be effective as of October 1, 2009.
(B) Specified states.--For purposes of subparagraph (A),
the States specified in this subparagraph are States that have
enacted a law providing for a tax on the services of a Medicaid
managed care organization with a contract under section 1903(m)
of the Social Security Act as of December 8, 2005.
(c) Clarification Regarding Non-Regulation of Transfers.--
(1) In general.--Nothing in section 1903(w) of the Social
Security Act (42 U.S.C. 1396b(w)) shall be construed by the
Secretary of Health and Human Services as prohibiting a State's use
of funds as the non-Federal share of expenditures under title XIX
of such Act where such funds are transferred from or certified by a
publicly-owned regional medical center located in another State and
described in paragraph (2), so long as the Secretary determines
that such use of funds is proper and in the interest of the program
under title XIX.
(2) Center described.--A center described in this paragraph is
a publicly-owned regional medical center that--
(A) provides level 1 trauma and burn care services;
(B) provides level 3 neonatal care services;
(C) is obligated to serve all patients, regardless of State
of origin;
(D) is located within a Standard Metropolitan Statistical
Area (SMSA) that includes at least 3 States, including the
States described in paragraph (1);
(E) serves as a tertiary care provider for patients
residing within a 125-mile radius; and
(F) meets the criteria for a disproportionate share
hospital under section 1923 of such Act in at least one State
other than the one in which the center is located.
(3) Effective period.--This subsection shall apply through
December 31, 2006.
SEC. 6052. REFORMS OF CASE MANAGEMENT AND TARGETED CASE MANAGEMENT.
(a) In General.--Section 1915(g) of the Social Security Act (42
U.S.C. 1396n(g)(2)) is amended by striking paragraph (2) and inserting
the following:
``(2) For purposes of this subsection:
``(A)(i) The term `case management services' means services
which will assist individuals eligible under the plan in gaining
access to needed medical, social, educational, and other services.
``(ii) Such term includes the following:
``(I) Assessment of an eligible individual to determine
service needs, including activities that focus on needs
identification, to determine the need for any medical,
educational, social, or other services. Such assessment
activities include the following:
``(aa) Taking client history.
``(bb) Identifying the needs of the individual, and
completing related documentation.
``(cc) Gathering information from other sources such as
family members, medical providers, social workers, and
educators, if necessary, to form a complete assessment of
the eligible individual.
``(II) Development of a specific care plan based on the
information collected through an assessment, that specifies the
goals and actions to address the medical, social, educational,
and other services needed by the eligible individual, including
activities such as ensuring the active participation of the
eligible individual and working with the individual (or the
individual's authorized health care decision maker) and others
to develop such goals and identify a course of action to
respond to the assessed needs of the eligible individual.
``(III) Referral and related activities to help an
individual obtain needed services, including activities that
help link eligible individuals with medical, social,
educational providers or other programs and services that are
capable of providing needed services, such as making referrals
to providers for needed services and scheduling appointments
for the individual.
``(IV) Monitoring and followup activities, including
activities and contacts that are necessary to ensure the care
plan is effectively implemented and adequately addressing the
needs of the eligible individual, and which may be with the
individual, family members, providers, or other entities and
conducted as frequently as necessary to help determine such
matters as--
``(aa) whether services are being furnished in
accordance with an individual's care plan;
``(bb) whether the services in the care plan are
adequate; and
``(cc) whether there are changes in the needs or status
of the eligible individual, and if so, making necessary
adjustments in the care plan and service arrangements with
providers.
``(iii) Such term does not include the direct delivery of an
underlying medical, educational, social, or other service to which
an eligible individual has been referred, including, with respect
to the direct delivery of foster care services, services such as
(but not limited to) the following:
``(I) Research gathering and completion of documentation
required by the foster care program.
``(II) Assessing adoption placements.
``(III) Recruiting or interviewing potential foster care
parents.
``(IV) Serving legal papers.
``(V) Home investigations.
``(VI) Providing transportation.
``(VII) Administering foster care subsidies.
``(VIII) Making placement arrangements.
``(B) The term `targeted case management services' are case
management services that are furnished without regard to the
requirements of section 1902(a)(1) and section 1902(a)(10)(B) to
specific classes of individuals or to individuals who reside in
specified areas.
``(3) With respect to contacts with individuals who are not
eligible for medical assistance under the State plan or, in the case of
targeted case management services, individuals who are eligible for
such assistance but are not part of the target population specified in
the State plan, such contacts--
``(A) are considered an allowable case management activity,
when the purpose of the contact is directly related to the
management of the eligible individual's care; and
``(B) are not considered an allowable case management activity
if such contacts relate directly to the identification and
management of the noneligible or nontargeted individual's needs and
care.
``(4)(A) In accordance with section 1902(a)(25), Federal financial
participation only is available under this title for case management
services or targeted case management services if there are no other
third parties liable to pay for such services, including as
reimbursement under a medical, social, educational, or other program.
``(B) A State shall allocate the costs of any part of such services
which are reimbursable under another federally funded program in
accordance with OMB Circular A-87 (or any related or successor guidance
or regulations regarding allocation of costs among federally funded
programs) under an approved cost allocation program.
``(5) Nothing in this subsection shall be construed as affecting
the application of rules with respect to third party liability under
programs, or activities carried out under title XXVI of the Public
Health Service Act or by the Indian Health Service.''.
(b) Regulations.--The Secretary shall promulgate regulations to
carry out the amendment made by subsection (a) which may be effective
and final immediately on an interim basis as of the date of publication
of the interim final regulation. If the Secretary provides for an
interim final regulation, the Secretary shall provide for a period of
public comments on such regulation after the date of publication. The
Secretary may change or revise such regulation after completion of the
period of public comment.
(c) Effective Date.--The amendment made by subsection (a) shall
take effect on January 1, 2006.
SEC. 6053. ADDITIONAL FMAP ADJUSTMENTS.
(a) Hold Harmless for Certain Decrease.--Notwithstanding the first
sentence of section 1905(b) of the Social Security Act (42 U.S.C.
1396d(b)), if, for purposes of titles XIX and XXI of the Social
Security Act (42 U.S.C. 1396 et seq., 1397aa et seq.), the Federal
medical assistance percentage determined for the State specified in
section 4725(a) of Public Law 105-33 for fiscal year 2006 or fiscal
year 2007 is less than the Federal medical assistance percentage
determined for such State for fiscal year 2005, the Federal medical
assistance percentage determined for such State for fiscal year 2005
shall be substituted for the Federal medical assistance percentage
otherwise determined for such State for fiscal year 2006 or fiscal year
2007, as the case may be.
(b) Hold Harmless for Katrina Impact.--Notwithstanding any other
provision of law, for purposes of titles XIX and XXI of the Social
Security Act, the Secretary of Health and Human Services, in computing
the Federal medical assistance percentage under section 1905(b) of such
Act (42 U.S.C. 1396d(b)) for any year after 2006 for a State that the
Secretary determines has a significant number of evacuees who were
evacuated to, and live in, the State as a result of Hurricane Katrina
as of October 1, 2005, shall disregard such evacuees (and income
attributable to such evacuees) from such computation.
SEC. 6054. DSH ALLOTMENT FOR THE DISTRICT OF COLUMBIA.
(a) In General.--For purposes of determining the DSH allotment for
the District of Columbia under section 1923 of the Social Security Act
(42 U.S.C. 1396r-4) for fiscal year 2006 and each subsequent fiscal
year, the table in subsection (f)(2) of such section is amended under
each of the columns for fiscal year 2000, fiscal year 2001, and fiscal
year 2002, in the entry for the District of Columbia by striking ``32''
and inserting ``49''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect as if enacted on October 1, 2005, and shall only apply to
disproportionate share hospital adjustment expenditures applicable to
fiscal year 2006 and subsequent fiscal years made on or after that
date.
SEC. 6055. INCREASE IN MEDICAID PAYMENTS TO INSULAR AREAS.
Section 1108(g) of the Social Security Act (42 U.S.C. 1308(g)) is
amended--
(1) in paragraph (2), by inserting ``and subject to paragraph
(3)'' after ``subsection (f)''; and
(2) by adding at the end the following new paragraph:
``(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.''.
CHAPTER 6--OTHER PROVISIONS
Subchapter A--Family Opportunity Act
SEC. 6061. SHORT TITLE OF SUBCHAPTER.
This subchapter may be cited as the ``Family Opportunity Act of
2005'' or the ``Dylan Lee James Act''.
SEC. 6062. OPPORTUNITY FOR FAMILIES OF DISABLED CHILDREN TO PURCHASE
MEDICAID COVERAGE FOR SUCH CHILDREN.
(a) State Option To Allow Families of Disabled Children To Purchase
Medicaid Coverage for Such Children.--
(1) In general.--Section 1902 of the Social Security Act (42
U.S.C. 1396a) is amended--
(A) in subsection (a)(10)(A)(ii)--
(i) by striking ``or'' at the end of subclause (XVII);
(ii) by adding ``or'' at the end of subclause (XVIII);
and
(iii) by adding at the end the following new subclause:
``(XIX) who are disabled children described in
subsection (cc)(1);''; and
(B) by adding at the end the following new subsection:
``(cc)(1) Individuals described in this paragraph are individuals--
``(A) who are children who have not attained 19 years of age
and are born--
``(i) on or after January 1, 2001 (or, at the option of a
State, on or after an earlier date), in the case of the second,
third, and fourth quarters of fiscal year 2007;
``(ii) on or after October 1, 1995 (or, at the option of a
State, on or after an earlier date), in the case of each
quarter of fiscal year 2008; and
``(iii) after October 1, 1989, in the case of each quarter
of fiscal year 2009 and each quarter of any fiscal year
thereafter;
``(B) who would be considered disabled under section
1614(a)(3)(C) (as determined under title XVI for children but
without regard to any income or asset eligibility requirements that
apply under such title with respect to children); and
``(C) whose family income does not exceed such income level as
the State establishes and does not exceed--
``(i) 300 percent of the poverty line (as defined in
section 2110(c)(5)) applicable to a family of the size
involved; or
``(ii) such higher percent of such poverty line as a State
may establish, except that--
``(I) any medical assistance provided to an individual
whose family income exceeds 300 percent of such poverty
line may only be provided with State funds; and
``(II) no Federal financial participation shall be
provided under section 1903(a) for any medical assistance
provided to such an individual.''.
(2) Interaction with employer-sponsored family coverage.--
Section 1902(cc) of such Act (42 U.S.C. 1396a(cc)), as added by
paragraph (1)(B), is amended by adding at the end the following new
paragraph:
``(2)(A) If an employer of a parent of an individual described in
paragraph (1) offers family coverage under a group health plan (as
defined in section 2791(a) of the Public Health Service Act), the State
shall--
``(i) notwithstanding section 1906, require such parent to
apply for, enroll in, and pay premiums for such coverage as a
condition of such parent's child being or remaining eligible for
medical assistance under subsection (a)(10)(A)(ii)(XIX) if the
parent is determined eligible for such coverage and the employer
contributes at least 50 percent of the total cost of annual
premiums for such coverage; and
``(ii) if such coverage is obtained--
``(I) subject to paragraph (2) of section 1916(h), reduce
the premium imposed by the State under that section in an
amount that reasonably reflects the premium contribution made
by the parent for private coverage on behalf of a child with a
disability; and
``(II) treat such coverage as a third party liability under
subsection (a)(25).
``(B) In the case of a parent to which subparagraph (A) applies, a
State, notwithstanding section 1906 but subject to paragraph
(1)(C)(ii), may provide for payment of any portion of the annual
premium for such family coverage that the parent is required to pay.
Any payments made by the State under this subparagraph shall be
considered, for purposes of section 1903(a), to be payments for medical
assistance.''.
(b) State Option To Impose Income-Related Premiums.--Section 1916
of such Act (42 U.S.C. 1396o) is amended--
(1) in subsection (a), by striking ``subsection (g)'' and
inserting ``subsections (g) and (i)''; and
(2) by adding at the end, as amended by section 6041(b)(2), the
following new subsection:
``(i)(1) With respect to disabled children provided medical
assistance under section 1902(a)(10)(A)(ii)(XIX), subject to paragraph
(2), a State may (in a uniform manner for such children) require the
families of such children to pay monthly premiums set on a sliding
scale based on family income.
``(2) A premium requirement imposed under paragraph (1) may only
apply to the extent that--
``(A) in the case of a disabled child described in that
paragraph whose family income--
``(i) does not exceed 200 percent of the poverty line, the
aggregate amount of such premium and any premium that the
parent is required to pay for family coverage under section
1902(cc)(2)(A)(i) and other cost-sharing charges do not exceed
5 percent of the family's income; and
``(ii) exceeds 200, but does not exceed 300, percent of the
poverty line, the aggregate amount of such premium and any
premium that the parent is required to pay for family coverage
under section 1902(cc)(2)(A)(i) and other cost-sharing charges
do not exceed 7.5 percent of the family's income; and
``(B) the requirement is imposed consistent with section
1902(cc)(2)(A)(ii)(I).
``(3) A State shall not require prepayment of a premium imposed
pursuant to paragraph (1) and shall not terminate eligibility of a
child under section 1902(a)(10)(A)(ii)(XIX) for medical assistance
under this title on the basis of failure to pay any such premium until
such failure continues for a period of at least 60 days from the date
on which the premium became past due. The State may waive payment of
any such premium in any case where the State determines that requiring
such payment would create an undue hardship.''.
(c) Conforming Amendments.--(1) Section 1903(f)(4) of such Act (42
U.S.C. 1396b(f)(4)) is amended in the matter preceding subparagraph
(A), by inserting ``1902(a)(10)(A)(ii)(XIX),'' after
``1902(a)(10)(A)(ii)(XVIII),''.
(2) Section 1905(u)(2)(B) of such Act (42 U.S.C. 1396d(u)(2)(B)) is
amended by adding at the end the following sentence: ``Such term
excludes any child eligible for medical assistance only by reason of
section 1902(a)(10)(A)(ii)(XIX).''.
(d) Effective Date.--The amendments made by this section shall
apply to medical assistance for items and services furnished on or
after January 1, 2007.
SEC. 6063. DEMONSTRATION PROJECTS REGARDING HOME AND COMMUNITY-BASED
ALTERNATIVES TO PSYCHIATRIC RESIDENTIAL TREATMENT
FACILITIES FOR CHILDREN.
(a) In General.--The Secretary is authorized to conduct, during
each of fiscal years 2007 through 2011, demonstration projects (each in
the section referred to as a ``demonstration project'') in accordance
with this section under which up to 10 States (as defined for purposes
of title XIX of the Social Security Act) are awarded grants, on a
competitive basis, to test the effectiveness in improving or
maintaining a child's functional level and cost-effectiveness of
providing coverage of home and community-based alternatives to
psychiatric residential treatment for children enrolled in the Medicaid
program under title XIX of such Act.
(b) Application of Terms and Conditions.--
(1) In general.--Subject to the provisions of this section, for
the purposes of the demonstration projects, and only with respect
to children enrolled under such demonstration projects, a
psychiatric residential treatment facility (as defined in section
483.352 of title 42 of the Code of Federal Regulations) shall be
deemed to be a facility specified in section 1915(c) of the Social
Security Act (42 U.S.C. 1396n(c)), and to be included in each
reference in such section 1915(c) to hospitals, nursing facilities,
and intermediate care facilities for the mentally retarded.
(2) State option to assure continuity of medicaid coverage.--
Upon the termination of a demonstration project under this section,
the State that conducted the project may elect, only with respect
to a child who is enrolled in such project on the termination date,
to continue to provide medical assistance for coverage of home and
community-based alternatives to psychiatric residential treatment
for the child in accordance with section 1915(c) of the Social
Security Act (42 U.S.C. 1396n(c)), as modified through the
application of paragraph (1). Expenditures incurred for providing
such medical assistance shall be treated as a home and community-
based waiver program under section 1915(c) of the Social Security
Act (42 U.S.C. 1396n(c)) for purposes of payment under section 1903
of such Act (42 U.S.C. 1396b).
(c) Terms of Demonstration Projects.--
(1) In general.--Except as otherwise provided in this section,
a demonstration project shall be subject to the same terms and
conditions as apply to a waiver under section 1915(c) of the Social
Security Act (42 U.S.C. 1396n(c)), including the waiver of certain
requirements under the first sentence of paragraph (3) of such
section but not applying the second sentence of such paragraph.
(2) Budget neutrality.--In conducting the demonstration
projects under this section, the Secretary shall ensure that the
aggregate payments made by the Secretary under title XIX of the
Social Security Act (42 U.S.C. 1396 et seq.) do not exceed the
amount which the Secretary estimates would have been paid under
that title if the demonstration projects under this section had not
been implemented.
(3) Evaluation.--The application for a demonstration project
shall include an assurance to provide for such interim and final
evaluations of the demonstration project by independent third
parties, and for such interim and final reports to the Secretary,
as the Secretary may require.
(d) Payments to States; Limitations to Scope and Funding.--
(1) In general.--Subject to paragraph (2), a demonstration
project approved by the Secretary under this section shall be
treated as a home and community-based waiver program under section
1915(c) of the Social Security Act (42 U.S.C. 1396n(c)) for
purposes of payment under section 1903 of such Act (42 U.S.C.
1396b).
(2) Limitation.--In no case may the amount of payments made by
the Secretary under this section for State demonstration projects
for a fiscal year exceed the amount available under subsection
(f)(2)(A) for such fiscal year.
(e) Secretary's Evaluation and Report.--The Secretary shall conduct
an interim and final evaluation of State demonstration projects under
this section and shall report to the President and Congress the
conclusions of such evaluations within 12 months of completing such
evaluations.
(f) Funding.--
(1) In general.--For the purpose of carrying out this section,
there are appropriated, from amounts in the Treasury not otherwise
appropriated, for fiscal years 2007 through 2011, a total of
$218,000,000, of which--
(A) the amount specified in paragraph (2) shall be
available for each of fiscal years 2007 through 2011; and
(B) a total of $1,000,000 shall be available to the
Secretary for the evaluations and report under subsection (e).
(2) Fiscal year limit.--
(A) In general.--For purposes of paragraph (1), the amount
specified in this paragraph for a fiscal year is the amount
specified in subparagraph (B) for the fiscal year plus the
difference, if any, between the total amount available under
this paragraph for prior fiscal years and the total amount
previously expended under paragraph (1)(A) for such prior
fiscal years.
(B) Fiscal year amounts.--The amount specified in this
subparagraph for--
(i) fiscal year 2007 is $21,000,000;
(ii) fiscal year 2008 is $37,000,000;
(iii) fiscal year 2009 is $49,000,000;
(iv) fiscal year 2010 is $53,000,000; and
(v) fiscal year 2011 is $57,000,000.
SEC. 6064. DEVELOPMENT AND SUPPORT OF FAMILY-TO-FAMILY HEALTH
INFORMATION CENTERS.
Section 501 of the Social Security Act (42 U.S.C. 701) is amended
by adding at the end the following new subsection:
``(c)(1)(A) For the purpose of enabling the Secretary (through
grants, contracts, or otherwise) to provide for special projects of
regional and national significance for the development and support of
family-to-family health information centers described in paragraph (2),
there is appropriated to the Secretary, out of any money in the
Treasury not otherwise appropriated--
``(i) $3,000,000 for fiscal year 2007;
``(ii) $4,000,000 for fiscal year 2008; and
``(iii) $5,000,000 for fiscal year 2009.
``(B) Funds appropriated or authorized to be appropriated under
subparagraph (A) shall--
``(i) be in addition to amounts appropriated under subsection
(a) and retained under section 502(a)(1) for the purpose of
carrying out activities described in subsection (a)(2); and
``(ii) remain available until expended.
``(2) The family-to-family health information centers described in
this paragraph are centers that--
``(A) assist families of children with disabilities or special
health care needs to make informed choices about health care in
order to promote good treatment decisions, cost-effectiveness, and
improved health outcomes for such children;
``(B) provide information regarding the health care needs of,
and resources available for, such children;
``(C) identify successful health delivery models for such
children;
``(D) develop with representatives of health care providers,
managed care organizations, health care purchasers, and appropriate
State agencies, a model for collaboration between families of such
children and health professionals;
``(E) provide training and guidance regarding caring for such
children;
``(F) conduct outreach activities to the families of such
children, health professionals, schools, and other appropriate
entities and individuals; and
``(G) are staffed--
``(i) by such families who have expertise in Federal and
State public and private health care systems; and
``(ii) by health professionals.
``(3) The Secretary shall develop family-to-family health
information centers described in paragraph (2) in accordance with the
following:
``(A) With respect to fiscal year 2007, such centers shall be
developed in not less than 25 States.
``(B) With respect to fiscal year 2008, such centers shall be
developed in not less than 40 States.
``(C) With respect to fiscal year 2009 and each fiscal year
thereafter, such centers shall be developed in all States.
``(4) The provisions of this title that are applicable to the funds
made available to the Secretary under section 502(a)(1) apply in the
same manner to funds made available to the Secretary under paragraph
(1)(A).
``(5) For purposes of this subsection, the term `State' means each
of the 50 States and the District of Columbia.''.
SEC. 6065. RESTORATION OF MEDICAID ELIGIBILITY FOR CERTAIN SSI
BENEFICIARIES.
(a) In General.--Section 1902(a)(10)(A)(i)(II) of the Social
Security Act (42 U.S.C. 1396a(a)(10)(A)(i)(II)) is amended--
(1) by inserting ``(aa)'' after ``(II)'';
(2) by striking ``) and'' and inserting ``and'';
(3) by striking ``section or who are'' and inserting
``section), (bb) who are''; and
(4) by inserting before the comma at the end the following: ``,
or (cc) who are under 21 years of age and with respect to whom
supplemental security income benefits would be paid under title XVI
if subparagraphs (A) and (B) of section 1611(c)(7) were applied
without regard to the phrase `the first day of the month
following'''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to medical assistance for items and services furnished on or
after the date that is 1 year after the date of enactment of this Act.
Subchapter B--Money Follows the Person Rebalancing Demonstration
SEC. 6071. MONEY FOLLOWS THE PERSON REBALANCING DEMONSTRATION.
(a) Program Purpose and Authority.--The Secretary is authorized to
award, on a competitive basis, grants to States in accordance with this
section for demonstration projects (each in this section referred to as
an ``MFP demonstration project'') designed to achieve the following
objectives with respect to institutional and home and community-based
long-term care services under State Medicaid programs:
(1) Rebalancing.--Increase the use of home and community-based,
rather than institutional, long-term care services.
(2) Money follows the person.--Eliminate barriers or
mechanisms, whether in the State law, the State Medicaid plan, the
State budget, or otherwise, that prevent or restrict the flexible
use of Medicaid funds to enable Medicaid-eligible individuals to
receive support for appropriate and necessary long-term services in
the settings of their choice.
(3) Continuity of service.--Increase the ability of the State
Medicaid program to assure continued provision of home and
community-based long-term care services to eligible individuals who
choose to transition from an institutional to a community setting.
(4) Quality assurance and quality improvement.--Ensure that
procedures are in place (at least comparable to those required
under the qualified HCB program) to provide quality assurance for
eligible individuals receiving Medicaid home and community-based
long-term care services and to provide for continuous quality
improvement in such services.
(b) Definitions.--For purposes of this section:
(1) Home and community-based long-term care services.--The term
``home and community-based long-term care services'' means, with
respect to a State Medicaid program, home and community-based
services (including home health and personal care services) that
are provided under the State's qualified HCB program or that could
be provided under such a program but are otherwise provided under
the Medicaid program.
(2) Eligible individual.--The term ``eligible individual''
means, with respect to an MFP demonstration project of a State, an
individual in the State--
(A) who, immediately before beginning participation in the
MFP demonstration project--
(i) resides (and has resided, for a period of not less
than 6 months or for such longer minimum period, not to
exceed 2 years, as may be specified by the State) in an
inpatient facility;
(ii) is receiving Medicaid benefits for inpatient
services furnished by such inpatient facility; and
(iii) with respect to whom a determination has been
made that, but for the provision of home and community-
based long-term care services, the individual would
continue to require the level of care provided in an
inpatient facility and, in any case in which the State
applies a more stringent level of care standard as a result
of implementing the State plan option permitted under
section 1915(i) of the Social Security Act, the individual
must continue to require at least the level of care which
had resulted in admission to the institution; and
(B) who resides in a qualified residence beginning on the
initial date of participation in the demonstration project.
(3) Inpatient facility.--The term ``inpatient facility'' means
a hospital, nursing facility, or intermediate care facility for the
mentally retarded. Such term includes an institution for mental
diseases, but only, with respect to a State, to the extent medical
assistance is available under the State Medicaid plan for services
provided by such institution.
(4) Medicaid.--The term ``Medicaid'' means, with respect to a
State, the State program under title XIX of the Social Security Act
(including any waiver or demonstration under such title or under
section 1115 of such Act relating to such title).
(5) Qualified hcb program.--The term ``qualified HCB program''
means a program providing home and community-based long-term care
services operating under Medicaid, whether or not operating under
waiver authority.
(6) Qualified residence.--The term ``qualified residence''
means, with respect to an eligible individual--
(A) a home owned or leased by the individual or the
individual's family member;
(B) an apartment with an individual lease, with lockable
access and egress, and which includes living, sleeping,
bathing, and cooking areas over which the individual or the
individual's family has domain and control; and
(C) a residence, in a community-based residential setting,
in which no more than 4 unrelated individuals reside.
(7) Qualified expenditures.--The term ``qualified
expenditures'' means expenditures by the State under its MFP
demonstration project for home and community-based long-term care
services for an eligible individual participating in the MFP
demonstration project, but only with respect to services furnished
during the 12-month period beginning on the date the individual is
discharged from an inpatient facility referred to in paragraph
(2)(A)(i).
(8) Self-directed services.--The term ``self-directed'' means,
with respect to home and community-based long-term care services
for an eligible individual, such services for the individual which
are planned and purchased under the direction and control of such
individual or the individual's authorized representative (as
defined by the Secretary), including the amount, duration, scope,
provider, and location of such services, under the State Medicaid
program consistent with the following requirements:
(A) Assessment.--There is an assessment of the needs,
capabilities, and preferences of the individual with respect to
such services.
(B) Service plan.--Based on such assessment, there is
developed jointly with such individual or the individual's
authorized representative a plan for such services for such
individual that is approved by the State and that--
(i) specifies those services, if any, which the
individual or the individual's authorized representative
would be responsible for directing;
(ii) identifies the methods by which the individual or
the individual's authorized representative or an agency
designated by an individual or representative will select,
manage, and dismiss providers of such services;
(iii) specifies the role of family members and others
whose participation is sought by the individual or the
individual's authorized representative with respect to such
services;
(iv) is developed through a person-centered process
that--
(I) is directed by the individual or the
individual's authorized representative;
(II) builds upon the individual's capacity to
engage in activities that promote community life and
that respects the individual's preferences, choices,
and abilities; and
(III) involves families, friends, and professionals
as desired or required by the individual or the
individual's authorized representative;
(v) includes appropriate risk management techniques
that recognize the roles and sharing of responsibilities in
obtaining services in a self-directed manner and assure the
appropriateness of such plan based upon the resources and
capabilities of the individual or the individual's
authorized representative; and
(vi) may include an individualized budget which
identifies the dollar value of the services and supports
under the control and direction of the individual or the
individual's authorized representative.
(C) Budget process.--With respect to individualized budgets
described in subparagraph (B)(vi), the State application under
subsection (c)--
(i) describes the method for calculating the dollar
values in such budgets based on reliable costs and service
utilization;
(ii) defines a process for making adjustments in such
dollar values to reflect changes in individual assessments
and service plans; and
(iii) provides a procedure to evaluate expenditures
under such budgets.
(9) State.--The term ``State'' has the meaning given such term
for purposes of title XIX of the Social Security Act.
(c) State Application.--A State seeking approval of an MFP
demonstration project shall submit to the Secretary, at such time and
in such format as the Secretary requires, an application meeting the
following requirements and containing such additional information,
provisions, and assurances, as the Secretary may require:
(1) Assurance of a public development process.--The application
contains an assurance that the State has engaged, and will continue
to engage, in a public process for the design, development, and
evaluation of the MFP demonstration project that allows for input
from eligible individuals, the families of such individuals,
authorized representatives of such individuals, providers, and
other interested parties.
(2) Operation in connection with qualified hcb program to
assure continuity of services.--The State will conduct the MFP
demonstration project for eligible individuals in conjunction with
the operation of a qualified HCB program that is in operation (or
approved) in the State for such individuals in a manner that
assures continuity of Medicaid coverage for such individuals so
long as such individuals continue to be eligible for medical
assistance.
(3) Demonstration project period.--The application shall
specify the period of the MFP demonstration project, which shall
include at least 2 consecutive fiscal years in the 5-fiscal-year
period beginning with fiscal year 2007.
(4) Service area.--The application shall specify the service
area or areas of the MFP demonstration project, which may be a
statewide area or 1 or more geographic areas of the State.
(5) Targeted groups and numbers of individuals served.--The
application shall specify--
(A) the target groups of eligible individuals to be
assisted to transition from an inpatient facility to a
qualified residence during each fiscal year of the MFP
demonstration project;
(B) the projected numbers of eligible individuals in each
targeted group of eligible individuals to be so assisted during
each such year; and
(C) the estimated total annual qualified expenditures for
each fiscal year of the MFP demonstration project.
(6) Individual choice, continuity of care.--The application
shall contain assurances that--
(A) each eligible individual or the individual's authorized
representative will be provided the opportunity to make an
informed choice regarding whether to participate in the MFP
demonstration project;
(B) each eligible individual or the individual's authorized
representative will choose the qualified residence in which the
individual will reside and the setting in which the individual
will receive home and community-based long-term care services;
(C) the State will continue to make available, so long as
the State operates its qualified HCB program consistent with
applicable requirements, home and community-based long-term
care services to each individual who completes participation in
the MFP demonstration project for as long as the individual
remains eligible for medical assistance for such services under
such qualified HCB program (including meeting a requirement
relating to requiring a level of care provided in an inpatient
facility and continuing to require such services, and, if the
State applies a more stringent level of care standard as a
result of implementing the State plan option permitted under
section 1915(i) of the Social Security Act, meeting the
requirement for at least the level of care which had resulted
in the individual's admission to the institution).
(7) Rebalancing.--The application shall--
(A) provide such information as the Secretary may require
concerning the dollar amounts of State Medicaid expenditures
for the fiscal year, immediately preceding the first fiscal
year of the State's MFP demonstration project, for long-term
care services and the percentage of such expenditures that were
for institutional long-term care services or were for home and
community-based long-term care services;
(B)(i) specify the methods to be used by the State to
increase, for each fiscal year during the MFP demonstration
project, the dollar amount of such total expenditures for home
and community-based long-term care services and the percentage
of such total expenditures for long-term care services that are
for home and community-based long-term care services; and
(ii) describe the extent to which the MFP demonstration
project will contribute to accomplishment of objectives
described in subsection (a).
(8) Money follows the person.--The application shall describe
the methods to be used by the State to eliminate any legal,
budgetary, or other barriers to flexibility in the availability of
Medicaid funds to pay for long-term care services for eligible
individuals participating in the project in the appropriate
settings of their choice, including costs to transition from an
institutional setting to a qualified residence.
(9) Maintenance of effort and cost-effectiveness.--The
application shall contain or be accompanied by such information and
assurances as may be required to satisfy the Secretary that--
(A) total expenditures under the State Medicaid program for
home and community-based long-term care services will not be
less for any fiscal year during the MFP demonstration project
than for the greater of such expenditures for--
(i) fiscal year 2005; or
(ii) any succeeding fiscal year before the first year
of the MFP demonstration project; and
(B) in the case of a qualified HCB program operating under
a waiver under subsection (c) or (d) of section 1915 of the
Social Security Act (42 U.S.C. 1396n), but for the amount
awarded under a grant under this section, the State program
would continue to meet the cost-effectiveness requirements of
subsection (c)(2)(D) of such section or comparable requirements
under subsection (d)(5) of such section, respectively.
(10) Waiver requests.--The application shall contain or be
accompanied by requests for any modification or adjustment of
waivers of Medicaid requirements described in subsection (d)(3),
including adjustments to the maximum numbers of individuals
included and package of benefits, including one-time transitional
services, provided.
(11) Quality assurance and quality improvement.--The
application shall include--
(A) a plan satisfactory to the Secretary for quality
assurance and quality improvement for home and community-based
long-term care services under the State Medicaid program,
including a plan to assure the health and welfare of
individuals participating in the MFP demonstration project; and
(B) an assurance that the State will cooperate in carrying
out activities under subsection (f) to develop and implement
continuous quality assurance and quality improvement systems
for home and community-based long-term care services.
(12) Optional program for self-directed services.--If the State
elects to provide for any home and community-based long-term care
services as self-directed services (as defined in subsection
(b)(8)) under the MFP demonstration project, the application shall
provide the following:
(A) Meeting requirements.--A description of how the project
will meet the applicable requirements of such subsection for
the provision of self-directed services.
(B) Voluntary election.--A description of how eligible
individuals will be provided with the opportunity to make an
informed election to receive self-directed services under the
project and after the end of the project.
(C) State support in service plan development.--
Satisfactory assurances that the State will provide support to
eligible individuals who self-direct in developing and
implementing their service plans.
(D) Oversight of receipt of services.--Satisfactory
assurances that the State will provide oversight of eligible
individual's receipt of such self-directed services, including
steps to assure the quality of services provided and that the
provision of such services are consistent with the service plan
under such subsection.
Nothing in this section shall be construed as requiring a State to
make an election under the project to provide for home and
community-based long-term care services as self-directed services,
or as requiring an individual to elect to receive self-directed
services under the project.
(13) Reports and evaluation.--The application shall provide
that--
(A) the State will furnish to the Secretary such reports
concerning the MFP demonstration project, on such timetable, in
such uniform format, and containing such information as the
Secretary may require, as will allow for reliable comparisons
of MFP demonstration projects across States; and
(B) the State will participate in and cooperate with the
evaluation of the MFP demonstration project.
(d) Secretary's Award of Competitive Grants.--
(1) In general.--The Secretary shall award grants under this
section on a competitive basis to States selected from among those
with applications meeting the requirements of subsection (c), in
accordance with the provisions of this subsection.
(2) Selection and modification of state applications.--In
selecting State applications for the awarding of such a grant, the
Secretary--
(A) shall take into consideration the manner in which, and
extent to which, the State proposes to achieve the objectives
specified in subsection (a);
(B) shall seek to achieve an appropriate national balance
in the numbers of eligible individuals, within different target
groups of eligible individuals, who are assisted to transition
to qualified residences under MFP demonstration projects, and
in the geographic distribution of States operating MFP
demonstration projects;
(C) shall give preference to State applications proposing--
(i) to provide transition assistance to eligible
individuals within multiple target groups; and
(ii) to provide eligible individuals with the
opportunity to receive home and community-based long-term
care services as self-directed services, as defined in
subsection (b)(8); and
(D) shall take such objectives into consideration in
setting the annual amounts of State grant awards under this
section.
(3) Waiver authority.--The Secretary is authorized to waive the
following provisions of title XIX of the Social Security Act, to
the extent necessary to enable a State initiative to meet the
requirements and accomplish the purposes of this section:
(A) Statewideness.--Section 1902(a)(1), in order to permit
implementation of a State initiative in a selected area or
areas of the State.
(B) Comparability.--Section 1902(a)(10)(B), in order to
permit a State initiative to assist a selected category or
categories of individuals described in subsection (b)(2)(A).
(C) Income and resources eligibility.--Section
1902(a)(10)(C)(i)(III), in order to permit a State to apply
institutional eligibility rules to individuals transitioning to
community-based care.
(D) Provider agreements.--Section 1902(a)(27), in order to
permit a State to implement self-directed services in a cost-
effective manner.
(4) Conditional approval of outyear grant.--In awarding grants
under this section, the Secretary shall condition the grant for the
second and any subsequent fiscal years of the grant period on the
following:
(A) Numerical benchmarks.--The State must demonstrate to
the satisfaction of the Secretary that it is meeting numerical
benchmarks specified in the grant agreement for--
(i) increasing State Medicaid support for home and
community-based long-term care services under subsection
(c)(5); and
(ii) numbers of eligible individuals assisted to
transition to qualified residences.
(B) Quality of care.--The State must demonstrate to the
satisfaction of the Secretary that it is meeting the
requirements under subsection (c)(11) to assure the health and
welfare of MFP demonstration project participants.
(e) Payments to States; Carryover of Unused Grant Amounts.--
(1) Payments.--For each calendar quarter in a fiscal year
during the period a State is awarded a grant under subsection (d),
the Secretary shall pay to the State from its grant award for such
fiscal year an amount equal to the lesser of--
(A) the MFP-enhanced FMAP (as defined in paragraph (5)) of
the amount of qualified expenditures made during such quarter;
or
(B) the total amount remaining in such grant award for such
fiscal year (taking into account the application of paragraph
(2)).
(2) Carryover of unused amounts.--Any portion of a State grant
award for a fiscal year under this section remaining at the end of
such fiscal year shall remain available to the State for the next 4
fiscal years, subject to paragraph (3).
(3) Reawarding of certain unused amounts.--In the case of a
State that the Secretary determines pursuant to subsection (d)(4)
has failed to meet the conditions for continuation of a MFP
demonstration project under this section in a succeeding year or
years, the Secretary shall rescind the grant awards for such
succeeding year or years, together with any unspent portion of an
award for prior years, and shall add such amounts to the
appropriation for the immediately succeeding fiscal year for grants
under this section.
(4) Preventing duplication of payment.--The payment under a MFP
demonstration project with respect to qualified expenditures shall
be in lieu of any payment with respect to such expenditures that
could otherwise be paid under Medicaid, including under section
1903(a) of the Social Security Act. Nothing in the previous
sentence shall be construed as preventing the payment under
Medicaid for such expenditures in a grant year after amounts
available to pay for such expenditures under the MFP demonstration
project have been exhausted.
(5) MFP-enhanced fmap.--For purposes of paragraph (1)(A), the
``MFP-enhanced FMAP'', for a State for a fiscal year, is equal to
the Federal medical assistance percentage (as defined in the first
sentence of section 1905(b)) for the State increased by a number of
percentage points equal to 50 percent of the number of percentage
points by which (A) such Federal medical assistance percentage for
the State, is less than (B) 100 percent; but in no case shall the
MFP-enhanced FMAP for a State exceed 90 percent.
(f) Quality Assurance and Improvement; Technical Assistance;
Oversight.--
(1) In general.--The Secretary, either directly or by grant or
contract, shall provide for technical assistance to, and oversight
of, States for purposes of upgrading quality assurance and quality
improvement systems under Medicaid home and community-based
waivers, including--
(A) dissemination of information on promising practices;
(B) guidance on system design elements addressing the
unique needs of participating beneficiaries;
(C) ongoing consultation on quality, including assistance
in developing necessary tools, resources, and monitoring
systems; and
(D) guidance on remedying programmatic and systemic
problems.
(2) Funding.--From the amounts appropriated under subsection
(h)(1) for the portion of fiscal year 2007 that begins on January
1, 2007, and ends on September 30, 2007, and for fiscal year 2008,
not more than $2,400,000 shall be available to the Secretary to
carry out this subsection during the period that begins on January
1, 2007, and ends on September 30, 2011.
(g) Research and Evaluation.--
(1) In general.--The Secretary, directly or through grant or
contract, shall provide for research on, and a national evaluation
of, the program under this section, including assistance to the
Secretary in preparing the final report required under paragraph
(2). The evaluation shall include an analysis of projected and
actual savings related to the transition of individuals to
qualified residences in each State conducting an MFP demonstration
project.
(2) Final report.--The Secretary shall make a final report to
the President and Congress, not later than September 30, 2011,
reflecting the evaluation described in paragraph (1) and providing
findings and conclusions on the conduct and effectiveness of MFP
demonstration projects.
(3) Funding.--From the amounts appropriated under subsection
(h)(1) for each of fiscal years 2008 through 2011, not more than
$1,100,000 per year shall be available to the Secretary to carry
out this subsection.
(h) Appropriations.--
(1) In general.--There are appropriated, from any funds in the
Treasury not otherwise appropriated, for grants to carry out this
section--
(A) $250,000,000 for the portion of fiscal year 2007
beginning on January 1, 2007, and ending on September 30, 2007;
(B) $300,000,000 for fiscal year 2008;
(C) $350,000,000 for fiscal year 2009;
(D) $400,000,000 for fiscal year 2010; and
(E) $450,000,000 for fiscal year 2011.
(2) Availability.--Amounts made available under paragraph (1)
for a fiscal year shall remain available for the awarding of grants
to States by not later than September 30, 2011.
Subchapter C--Miscellaneous
SEC. 6081. MEDICAID TRANSFORMATION GRANTS.
(a) In General.--Section 1903 of the Social Security Act (42 U.S.C.
1396b), as amended by sections 6037(a)(2) and 6043(b), is amended by
adding at the end the following new subsection:
``(z) Medicaid Transformation Payments.--
``(1) In general.--In addition to the payments provided under
subsection (a), subject to paragraph (4), the Secretary shall
provide for payments to States for the adoption of innovative
methods to improve the effectiveness and efficiency in providing
medical assistance under this title.
``(2) Permissible uses of funds.--The following are examples of
innovative methods for which funds provided under this subsection
may be used:
``(A) Methods for reducing patient error rates through the
implementation and use of electronic health records, electronic
clinical decision support tools, or e-prescribing programs.
``(B) Methods for improving rates of collection from
estates of amounts owed under this title.
``(C) Methods for reducing waste, fraud, and abuse under
the program under this title, such as reducing improper payment
rates as measured by annual payment error rate measurement
(PERM) project rates.
``(D) Implementation of a medication risk management
program as part of a drug use review program under section
1927(g).
``(E) Methods in reducing, in clinically appropriate ways,
expenditures under this title for covered outpatient drugs,
particularly in the categories of greatest drug utilization, by
increasing the utilization of generic drugs through the use of
education programs and other incentives to promote greater use
of generic drugs.
``(F) Methods for improving access to primary and specialty
physician care for the uninsured using integrated university-
based hospital and clinic systems.
``(3) Application; terms and conditions.--
``(A) In general.--No payments shall be made to a State
under this subsection unless the State applies to the Secretary
for such payments in a form, manner, and time specified by the
Secretary.
``(B) Terms and conditions.--Such payments are made under
such terms and conditions consistent with this subsection as
the Secretary prescribes.
``(C) Annual report.--Payment to a State under this
subsection is conditioned on the State submitting to the
Secretary an annual report on the programs supported by such
payment. Such report shall include information on--
``(i) the specific uses of such payment;
``(ii) an assessment of quality improvements and
clinical outcomes under such programs; and
``(iii) estimates of cost savings resulting from such
programs.
``(4) Funding.--
``(A) Limitation on funds.--The total amount of payments
under this subsection shall be equal to, and shall not exceed--
``(i) $75,000,000 for fiscal year 2007; and
``(ii) $75,000,000 for fiscal year 2008.
This subsection constitutes budget authority in advance of
appropriations Acts and represents the obligation of the
Secretary to provide for the payment of amounts provided under
this subsection.
``(B) Allocation of funds.--The Secretary shall specify a
method for allocating the funds made available under this
subsection among States. Such method shall provide preference
for States that design programs that target health providers
that treat significant numbers of Medicaid beneficiaries. Such
method shall provide that not less than 25 percent of such
funds shall be allocated among States the population of which
(as determined according to data collected by the United States
Census Bureau) as of July 1, 2004, was more than 105 percent of
the population of the respective State (as so determined) as of
April 1, 2000.
``(C) Form and manner of payment.--Payment to a State under
this subsection shall be made in the same manner as other
payments under section 1903(a). There is no requirement for
State matching funds to receive payments under this subsection.
``(5) Medication risk management program.--
``(A) In general.--For purposes of this subsection, the
term `medication risk management program' means a program for
targeted beneficiaries that ensures that covered outpatient
drugs are appropriately used to optimize therapeutic outcomes
through improved medication use and to reduce the risk of
adverse events.
``(B) Elements.--Such program may include the following
elements:
``(i) The use of established principles and standards
for drug utilization review and best practices to analyze
prescription drug claims of targeted beneficiaries and
identify outlier physicians.
``(ii) On an ongoing basis provide outlier physicians--
``(I) a comprehensive pharmacy claims history for
each targeted beneficiary under their care;
``(II) information regarding the frequency and cost
of relapses and hospitalizations of targeted
beneficiaries under the physician's care; and
``(III) applicable best practice guidelines and
empirical references.
``(iii) Monitor outlier physician's prescribing, such
as failure to refill, dosage strengths, and provide
incentives and information to encourage the adoption of
best clinical practices.
``(C) Targeted beneficiaries.--For purposes of this
paragraph, the term `targeted beneficiaries' means Medicaid
eligible beneficiaries who are identified as having high
prescription drug costs and medical costs, such as individuals
with behavioral disorders or multiple chronic diseases who are
taking multiple medications.''.
SEC. 6082. HEALTH OPPORTUNITY ACCOUNTS.
Title XIX of the Social Security Act, as amended by sections 6035
and 6044, is amended--
(1) by redesignating section 1938 as section 1939; and
(2) by inserting after section 1937 the following new section:
``health opportunity accounts
``Sec. 1938. (a) Authority.--
``(1) In general.--Notwithstanding any other provision of this
title, the Secretary shall establish a demonstration program under
which States may provide under their State plans under this title
(including such a plan operating under a statewide waiver under
section 1115) in accordance with this section for the provision of
alternative benefits consistent with subsection (c) for eligible
population groups in one or more geographic areas of the State
specified by the State. An amendment under the previous sentence is
referred to in this section as a `State demonstration program'.
``(2) Initial demonstration.--
``(A) In general.--The demonstration program under this
section shall begin on January 1, 2007. During the first 5
years of such program, the Secretary shall not approve more
than 10 States to conduct demonstration programs under this
section, with each State demonstration program covering 1 or
more geographic areas specified by the State. After such 5-year
period--
``(i) unless the Secretary finds, taking into account
cost-effectiveness, quality of care, and other criteria
that the Secretary specifies, that a State demonstration
program previously implemented has been unsuccessful, such
a demonstration program may be extended or made permanent
in the State; and
``(ii) unless the Secretary finds, taking into account
cost-effectiveness, quality of care, and other criteria
that the Secretary specifies, that all State demonstration
programs previously implemented were unsuccessful, other
States may implement State demonstration programs.
``(B) GAO report.--
``(i) In general.--Not later than 3 months after the
end of the 5-year period described in subparagraph (A), the
Comptroller General of the United States shall submit a
report to Congress evaluating the demonstration programs
conducted under this section during such period.
``(ii) Appropriation.--Out of any funds in the Treasury
not otherwise appropriated, there is appropriated to the
Comptroller General of the United States, $550,000 for the
period of fiscal years 2007 through 2010 to carry out
clause (i).
``(3) Approval.--The Secretary shall not approve a State
demonstration program under paragraph (1) unless the program
includes the following:
``(A) Creating patient awareness of the high cost of
medical care.
``(B) Providing incentives to patients to seek preventive
care services.
``(C) Reducing inappropriate use of health care services.
``(D) Enabling patients to take responsibility for health
outcomes.
``(E) Providing enrollment counselors and ongoing education
activities.
``(F) Providing transactions involving health opportunity
accounts to be conducted electronically and without cash.
``(G) Providing access to negotiated provider payment rates
consistent with this section.
Nothing in this section shall be construed as preventing a State
demonstration program from providing incentives for patients
obtaining appropriate preventive care (as defined for purposes of
section 223(c)(2)(C) of the Internal Revenue Code of 1986), such as
additional account contributions for an individual demonstrating
healthy prevention practices.
``(4) No requirement for statewideness.--Nothing in this
section or any other provision of law shall be construed to require
that a State must provide for the implementation of a State
demonstration program on a Statewide basis.
``(b) Eligible Population Groups.--
``(1) In general.--A State demonstration program under this
section shall specify the eligible population groups consistent
with paragraphs (2) and (3).
``(2) Eligibility limitations during initial demonstration
period.--During the initial 5 years of the demonstration program
under this section, a State demonstration program shall not apply
to any of the following individuals:
``(A) Individuals who are 65 years of age or older.
``(B) Individuals who are disabled, regardless of whether
or not their eligibility for medical assistance under this
title is based on such disability.
``(C) Individuals who are eligible for medical assistance
under this title only because they are (or were within the
previous 60 days) pregnant.
``(D) Individuals who have been eligible for medical
assistance for a continuous period of less than 3 months.
``(3) Additional limitations.--A State demonstration program
shall not apply to any individual within a category of individuals
described in section 1937(a)(2)(B).
``(4) Limitations.--
``(A) State option.--This subsection shall not be construed
as preventing a State from further limiting eligibility.
``(B) On enrollees in medicaid managed care
organizations.--Insofar as the State provides for eligibility
of individuals who are enrolled in Medicaid managed care
organizations, such individuals may participate in the State
demonstration program only if the State provides assurances
satisfactory to the Secretary that the following conditions are
met with respect to any such organization:
``(i) In no case may the number of such individuals
enrolled in the organization who participate in the program
exceed 5 percent of the total number of individuals
enrolled in such organization.
``(ii) The proportion of enrollees in the organization
who so participate is not significantly disproportionate to
the proportion of such enrollees in other such
organizations who participate.
``(iii) The State has provided for an appropriate
adjustment in the per capita payments to the organization
to account for such participation, taking into account
differences in the likely use of health services between
enrollees who so participate and enrollees who do not so
participate.
``(5) Voluntary participation.--An eligible individual shall be
enrolled in a State demonstration program only if the individual
voluntarily enrolls. Except in such hardship cases as the Secretary
shall specify, such an enrollment shall be effective for a period
of 12 months, but may be extended for additional periods of 12
months each with the consent of the individual.
``(6) 1-year moratorium for reenrollment.--An eligible
individual who, for any reason, is disenrolled from a State
demonstration program conducted under this section shall not be
permitted to reenroll in such program before the end of the 1-year
period that begins on the effective date of such disenrollment.
``(c) Alternative Benefits.--
``(1) In general.--The alternative benefits provided under this
section shall consist, consistent with this subsection, of at
least--
``(A) coverage for medical expenses in a year for items and
services for which benefits are otherwise provided under this
title after an annual deductible described in paragraph (2) has
been met; and
``(B) contribution into a health opportunity account.
Nothing in subparagraph (A) shall be construed as preventing a
State from providing for coverage of preventive care (referred to
in subsection (a)(3)) within the alternative benefits without
regard to the annual deductible.
``(2) Annual deductible.--The amount of the annual deductible
described in paragraph (1)(A) shall be at least 100 percent, but no
more than 110 percent, of the annualized amount of contributions to
the health opportunity account under subsection (d)(2)(A)(i),
determined without regard to any limitation described in subsection
(d)(2)(C)(i)(II).
``(3) Access to negotiated provider payment rates.--
``(A) Fee-for-service enrollees.--In the case of an
individual who is participating in a State demonstration
program and who is not enrolled with a Medicaid managed care
organization, the State shall provide that the individual may
obtain demonstration program Medicaid services from--
``(i) any participating provider under this title at
the same payment rates that would be applicable to such
services if the deductible described in paragraph (1)(A)
was not applicable; or
``(ii) any other provider at payment rates that do not
exceed 125 percent of the payment rate that would be
applicable to such services furnished by a participating
provider under this title if the deductible described in
paragraph (1)(A) was not applicable.
``(B) Treatment under medicaid managed care plans.--In the
case of an individual who is participating in a State
demonstration program and is enrolled with a Medicaid managed
care organization, the State shall enter into an arrangement
with the organization under which the individual may obtain
demonstration program Medicaid services from any provider
described in clause (ii) of subparagraph (A) at payment rates
that do not exceed the payment rates that may be imposed under
that clause.
``(C) Computation.--The payment rates described in
subparagraphs (A) and (B) shall be computed without regard to
any cost sharing that would be otherwise applicable under
sections 1916 and 1916A.
``(D) Definitions.--For purposes of this paragraph:
``(i) The term `demonstration program Medicaid
services' means, with respect to an individual
participating in a State demonstration program, services
for which the individual would be provided medical
assistance under this title but for the application of the
deductible described in paragraph (1)(A).
``(ii) The term `participating provider' means--
``(I) with respect to an individual described in
subparagraph (A), a health care provider that has
entered into a participation agreement with the State
for the provision of services to individuals entitled
to benefits under the State plan; or
``(II) with respect to an individual described in
subparagraph (B) who is enrolled in a Medicaid managed
care organization, a health care provider that has
entered into an arrangement for the provision of
services to enrollees of the organization under this
title.
``(4) No effect on subsequent benefits.--Except as provided
under paragraphs (1) and (2), alternative benefits for an eligible
individual shall consist of the benefits otherwise provided to the
individual, including cost sharing relating to such benefits.
``(5) Overriding cost sharing and comparability requirements
for alternative benefits.--The provisions of this title relating to
cost sharing for benefits (including sections 1916 and 1916A) shall
not apply with respect to benefits to which the annual deductible
under paragraph (1)(A) applies. The provisions of section
1902(a)(10)(B) (relating to comparability) shall not apply with
respect to the provision of alternative benefits (as described in
this subsection).
``(6) Treatment as medical assistance.--Subject to
subparagraphs (D) and (E) of subsection (d)(2), payments for
alternative benefits under this section (including contributions
into a health opportunity account) shall be treated as medical
assistance for purposes of section 1903(a).
``(7) Use of tiered deductible and cost sharing.--
``(A) In general.--A State--
``(i) may vary the amount of the annual deductible
applied under paragraph (1)(A) based on the income of the
family involved so long as it does not favor families with
higher income over those with lower income; and
``(ii) may vary the amount of the maximum out-of-pocket
cost sharing (as defined in subparagraph (B)) based on the
income of the family involved so long as it does not favor
families with higher income over those with lower income.
``(B) Maximum out-of-pocket cost sharing.--For purposes of
subparagraph (A)(ii), the term `maximum out-of-pocket cost
sharing' means, for an individual or family, the amount by
which the annual deductible level applied under paragraph
(1)(A) to the individual or family exceeds the balance in the
health opportunity account for the individual or family.
``(8) Contributions by employers.--Nothing in this section
shall be construed as preventing an employer from providing health
benefits coverage consisting of the coverage described in paragraph
(1)(A) to individuals who are provided alternative benefits under
this section.
``(d) Health Opportunity Account.--
``(1) In general.--For purposes of this section, the term
`health opportunity account' means an account that meets the
requirements of this subsection.
``(2) Contributions.--
``(A) In general.--No contribution may be made into a
health opportunity account except--
``(i) contributions by the State under this title; and
``(ii) contributions by other persons and entities,
such as charitable organizations, as permitted under
section 1903(w).
``(B) State contribution.--A State shall specify the
contribution amount that shall be deposited under subparagraph
(A)(i) into a health opportunity account.
``(C) Limitation on annual state contribution provided and
permitting imposition of maximum account balance.--
``(i) In general.--A State--
``(I) may impose limitations on the maximum
contributions that may be deposited under subparagraph
(A)(i) into a health opportunity account in a year;
``(II) may limit contributions into such an account
once the balance in the account reaches a level
specified by the State; and
``(III) subject to clauses (ii) and (iii) and
subparagraph (D)(i), may not provide contributions
described in subparagraph (A)(i) to a health
opportunity account on behalf of an individual or
family to the extent the amount of such contributions
(including both State and Federal shares) exceeds, on
an annual basis, $2,500 for each individual (or family
member) who is an adult and $1,000 for each individual
(or family member) who is a child.
``(ii) Indexing of dollar limitations.--For each year
after 2006, the dollar amounts specified in clause (i)(III)
shall be annually increased by the Secretary by a
percentage that reflects the annual percentage increase in
the medical care component of the consumer price index for
all urban consumers.
``(iii) Budget neutral adjustment.--A State may provide
for dollar limitations in excess of those specified in
clause (i)(III) (as increased under clause (ii)) for
specified individuals if the State provides assurances
satisfactory to the Secretary that contributions otherwise
made to other individuals will be reduced in a manner so as
to provide for aggregate contributions that do not exceed
the aggregate contributions that would otherwise be
permitted under this subparagraph.
``(D) Limitations on federal matching.--
``(i) State contribution.--A State may contribute under
subparagraph (A)(i) amounts to a health opportunity account
in excess of the limitations provided under subparagraph
(C)(i)(III), but no Federal financial participation shall
be provided under section 1903(a) with respect to
contributions in excess of such limitations.
``(ii) No ffp for private contributions.--No Federal
financial participation shall be provided under section
1903(a) with respect to any contributions described in
subparagraph (A)(ii) to a health opportunity account.
``(E) Application of different matching rates.--The
Secretary shall provide a method under which, for expenditures
made from a health opportunity account for medical care for
which the Federal matching rate under section 1903(a) exceeds
the Federal medical assistance percentage, a State may obtain
payment under such section at such higher matching rate for
such expenditures.
``(3) Use.--
``(A) General uses.--
``(i) In general.--Subject to the succeeding provisions
of this paragraph, amounts in a health opportunity account
may be used for payment of such health care expenditures as
the State specifies.
``(ii) General limitation.--Subject to subparagraph
(B)(ii), in no case shall such account be used for payment
for health care expenditures that are not payment of
medical care (as defined by section 213(d) of the Internal
Revenue Code of 1986).
``(iii) State restrictions.--In applying clause (i), a
State may restrict payment for--
``(I) providers of items and services to providers
that are licensed or otherwise authorized under State
law to provide the item or service and may deny payment
for such a provider on the basis that the provider has
been found, whether with respect to this title or any
other health benefit program, to have failed to meet
quality standards or to have committed 1 or more acts
of fraud or abuse; and
``(II) items and services insofar as the State
finds they are not medically appropriate or necessary.
``(iv) Electronic withdrawals.--The State demonstration
program shall provide for a method whereby withdrawals may
be made from the account for such purposes using an
electronic system and shall not permit withdrawals from the
account in cash.
``(B) Maintenance of health opportunity account after
becoming ineligible for public benefit.--
``(i) In general.--Notwithstanding any other provision
of law, if an account holder of a health opportunity
account becomes ineligible for benefits under this title
because of an increase in income or assets--
``(I) no additional contribution shall be made into
the account under paragraph (2)(A)(i);
``(II) subject to clause (iii), the balance in the
account shall be reduced by 25 percent; and
``(III) subject to the succeeding provisions of
this subparagraph, the account shall remain available
to the account holder for 3 years after the date on
which the individual becomes ineligible for such
benefits for withdrawals under the same terms and
conditions as if the account holder remained eligible
for such benefits, and such withdrawals shall be
treated as medical assistance in accordance with
subsection (c)(6).
``(ii) Special rules.--Withdrawals under this
subparagraph from an account--
``(I) shall be available for the purchase of health
insurance coverage; and
``(II) may, subject to clause (iv), be made
available (at the option of the State) for such
additional expenditures (such as job training and
tuition expenses) specified by the State (and approved
by the Secretary) as the State may specify.
``(iii) Exception from 25 percent savings to government
for private contributions.--Clause (i)(II) shall not apply
to the portion of the account that is attributable to
contributions described in paragraph (2)(A)(ii). For
purposes of accounting for such contributions, withdrawals
from a health opportunity account shall first be attributed
to contributions described in paragraph (2)(A)(i).
``(iv) Condition for non-health withdrawals.--No
withdrawal may be made from an account under clause
(ii)(II) unless the account holder has participated in the
program under this section for at least 1 year.
``(v) No requirement for continuation of coverage.--An
account holder of a health opportunity account, after
becoming ineligible for medical assistance under this
title, is not required to purchase high-deductible or other
insurance as a condition of maintaining or using the
account.
``(4) Administration.--A State may coordinate administration of
health opportunity accounts through the use of a third party
administrator and reasonable expenditures for the use of such
administrator shall be reimbursable to the State in the same manner
as other administrative expenditures under section 1903(a)(7).
``(5) Treatment.--Amounts in, or contributed to, a health
opportunity account shall not be counted as income or assets for
purposes of determining eligibility for benefits under this title.
``(6) Unauthorized withdrawals.--A State may establish
procedures--
``(A) to penalize or remove an individual from the health
opportunity account based on nonqualified withdrawals by the
individual from such an account; and
``(B) to recoup costs that derive from such nonqualified
withdrawals.''.
SEC. 6083. STATE OPTION TO ESTABLISH NON-EMERGENCY MEDICAL
TRANSPORTATION PROGRAM.
(a) In General.--Section 1902(a) of the Social Security Act (42
U.S.C. 1396a(a)), as amended by sections 6033(a) and 6035(b), is
amended--
(1) in paragraph (68), by striking ``and'' at the end;
(2) in paragraph (69) by striking the period at the end and
inserting ``; and''; and
(3) by inserting after paragraph (69) the following:
``(70) at the option of the State and notwithstanding
paragraphs (1), (10)(B), and (23), provide for the establishment of
a non-emergency medical transportation brokerage program in order
to more cost-effectively provide transportation for individuals
eligible for medical assistance under the State plan who need
access to medical care or services and have no other means of
transportation which--
``(A) may include a wheelchair van, taxi, stretcher car,
bus passes and tickets, secured transportation, and such other
transportation as the Secretary determines appropriate; and
``(B) may be conducted under contract with a broker who--
``(i) is selected through a competitive bidding process
based on the State's evaluation of the broker's experience,
performance, references, resources, qualifications, and
costs;
``(ii) has oversight procedures to monitor beneficiary
access and complaints and ensure that transport personnel
are licensed, qualified, competent, and courteous;
``(iii) is subject to regular auditing and oversight by
the State in order to ensure the quality of the
transportation services provided and the adequacy of
beneficiary access to medical care and services; and
``(iv) complies with such requirements related to
prohibitions on referrals and conflict of interest as the
Secretary shall establish (based on the prohibitions on
physician referrals under section 1877 and such other
prohibitions and requirements as the Secretary determines
to be appropriate).''.
(b) Effective Date.--The amendments made by subsection (a) take
effect on the date of the enactment of this Act.
SEC. 6084. EXTENSION OF TRANSITIONAL MEDICAL ASSISTANCE (TMA) AND
ABSTINENCE EDUCATION PROGRAM.
Effective as if enacted on December 31, 2005, activities authorized
by sections 510 and 1925 of the Social Security Act shall continue
through December 31, 2006, in the manner authorized for fiscal year
2005, notwithstanding section 1902(e)(1)(A) of such Act, and out of any
money in the Treasury of the United States not otherwise appropriated,
there are hereby appropriated such sums as may be necessary for such
purpose. Grants and payments may be made pursuant to this authority
through the first quarter of fiscal year 2007 at the level provided for
such activities through the first quarter of fiscal year 2006.
SEC. 6085. EMERGENCY SERVICES FURNISHED BY NON-CONTRACT PROVIDERS FOR
MEDICAID MANAGED CARE ENROLLEES.
(a) In General.--Section 1932(b)(2) of the Social Security Act (42
U.S.C. 1396u-2(b)(2)) is amended by adding at the end the following new
subparagraph:
``(D) Emergency services furnished by non-contract
providers.--Any provider of emergency services that does not
have in effect a contract with a Medicaid managed care entity
that establishes payment amounts for services furnished to a
beneficiary enrolled in the entity's Medicaid managed care plan
must accept as payment in full no more than the amounts (less
any payments for indirect costs of medical education and direct
costs of graduate medical education) that it could collect if
the beneficiary received medical assistance under this title
other than through enrollment in such an entity. In a State
where rates paid to hospitals under the State plan are
negotiated by contract and not publicly released, the payment
amount applicable under this subparagraph shall be the average
contract rate that would apply under the State plan for general
acute care hospitals or the average contract rate that would
apply under such plan for tertiary hospitals.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on January 1, 2007.
SEC. 6086. EXPANDED ACCESS TO HOME AND COMMUNITY-BASED SERVICES FOR THE
ELDERLY AND DISABLED.
(a) Home and Community-Based Services as an Optional Benefit for
Elderly and Disabled Individuals.--Section 1915 of the Social Security
Act (42 U.S.C. 1396n) is amended by adding at the end the following new
subsection:
``(i) State Plan Amendment Option To Provide Home and Community-
Based Services for Elderly and Disabled Individuals.--
``(1) In general.--Subject to the succeeding provisions of this
subsection, a State may provide through a State plan amendment for
the provision of medical assistance for home and community-based
services (within the scope of services described in paragraph
(4)(B) of subsection (c) for which the Secretary has the authority
to approve a waiver and not including room and board or such other
services requested by the State as the Secretary may approve) for
individuals eligible for medical assistance under the State plan
whose income does not exceed 150 percent of the poverty line (as
defined in section 2110(c)(5)), without determining that but for
the provision of such services the individuals would require the
level of care provided in a hospital or a nursing facility or
intermediate care facility for the mentally retarded, but only if
the State meets the following requirements:
``(A) Needs-based criteria for eligibility for, and receipt
of, home and community-based services.--The State establishes
needs-based criteria for determining an individual's
eligibility under the State plan for medical assistance for
such home and community-based services, and if the individual
is eligible for such services, the specific home and community-
based services that the individual will receive.
``(B) Establishment of more stringent needs-based
eligibility criteria for institutionalized care.--The State
establishes needs-based criteria for determining whether an
individual requires the level of care provided in a hospital, a
nursing facility, or an intermediate care facility for the
mentally retarded under the State plan or under any waiver of
such plan that are more stringent than the needs-based criteria
established under subparagraph (A) for determining eligibility
for home and community-based services.
``(C) Projection of number of individuals to be provided
home and community-based services.--
``(i) In general.--The State submits to the Secretary,
in such form and manner, and upon such frequency as the
Secretary shall specify, the projected number of
individuals to be provided home and community-based
services.
``(ii) Authority to limit number of eligible
individuals.--A State may limit the number of individuals
who are eligible for such services and may establish
waiting lists for the receipt of such services.
``(D) Criteria based on individual assessment.--
``(i) In general.--The criteria established by the
State for purposes of subparagraphs (A) and (B) requires an
assessment of an individual's support needs and
capabilities, and may take into account the inability of
the individual to perform 2 or more activities of daily
living (as defined in section 7702B(c)(2)(B) of the
Internal Revenue Code of 1986) or the need for significant
assistance to perform such activities, and such other risk
factors as the State determines to be appropriate.
``(ii) Adjustment authority.--The State plan amendment
provides the State with the option to modify the criteria
established under subparagraph (A) (without having to
obtain prior approval from the Secretary) in the event that
the enrollment of individuals eligible for home and
community-based services exceeds the projected enrollment
submitted for purposes of subparagraph (C), but only if--
``(I) the State provides at least 60 days notice to
the Secretary and the public of the proposed
modification;
``(II) the State deems an individual receiving home
and community-based services on the basis of the most
recent version of the criteria in effect prior to the
effective date of the modification to be eligible for
such services for a period of at least 12 months
beginning on the date the individual first received
medical assistance for such services; and
``(III) after the effective date of such
modification, the State, at a minimum, applies the
criteria for determining whether an individual requires
the level of care provided in a hospital, a nursing
facility, or an intermediate care facility for the
mentally retarded under the State plan or under any
waiver of such plan which applied prior to the
application of the more stringent criteria developed
under subparagraph (B).
``(E) Independent evaluation and assessment.--
``(i) Eligibility determination.--The State uses an
independent evaluation for making the determinations
described in subparagraphs (A) and (B).
``(ii) Assessment.--In the case of an individual who is
determined to be eligible for home and community-based
services, the State uses an independent assessment, based
on the needs of the individual to--
``(I) determine a necessary level of services and
supports to be provided, consistent with an
individual's physical and mental capacity;
``(II) prevent the provision of unnecessary or
inappropriate care; and
``(III) establish an individualized care plan for
the individual in accordance with subparagraph (G).
``(F) Assessment.--The independent assessment required
under subparagraph (E)(ii) shall include the following:
``(i) An objective evaluation of an individual's
inability to perform 2 or more activities of daily living
(as defined in section 7702B(c)(2)(B) of the Internal
Revenue Code of 1986) or the need for significant
assistance to perform such activities.
``(ii) A face-to-face evaluation of the individual by
an individual trained in the assessment and evaluation of
individuals whose physical or mental conditions trigger a
potential need for home and community-based services.
``(iii) Where appropriate, consultation with the
individual's family, spouse, guardian, or other responsible
individual.
``(iv) Consultation with appropriate treating and
consulting health and support professionals caring for the
individual.
``(v) An examination of the individual's relevant
history, medical records, and care and support needs,
guided by best practices and research on effective
strategies that result in improved health and quality of
life outcomes.
``(vi) If the State offers individuals the option to
self-direct the purchase of, or control the receipt of,
home and community-based service, an evaluation of the
ability of the individual or the individual's
representative to self-direct the purchase of, or control
the receipt of, such services if the individual so elects.
``(G) Individualized care plan.--
``(i) In general.--In the case of an individual who is
determined to be eligible for home and community-based
services, the State uses the independent assessment
required under subparagraph (E)(ii) to establish a written
individualized care plan for the individual.
``(ii) Plan requirements.--The State ensures that the
individualized care plan for an individual--
``(I) is developed--
``(aa) in consultation with the individual, the
individual's treating physician, health care or
support professional, or other appropriate
individuals, as defined by the State, and, where
appropriate the individual's family, caregiver, or
representative; and
``(bb) taking into account the extent of, and
need for, any family or other supports for the
individual;
``(II) identifies the necessary home and community-
based services to be furnished to the individual (or,
if the individual elects to self-direct the purchase
of, or control the receipt of, such services, funded
for the individual); and
``(III) is reviewed at least annually and as needed
when there is a significant change in the individual's
circumstances.
``(iii) State option to offer election for self-
directed services.--
``(I) Individual choice.--At the option of the
State, the State may allow an individual or the
individual's representative to elect to receive self-
directed home and community-based services in a manner
which gives them the most control over such services
consistent with the individual's abilities and the
requirements of subclauses (II) and (III).
``(II) Self-directed services.--The term `self-
directed' means, with respect to the home and
community-based services offered under the State plan
amendment, such services for the individual which are
planned and purchased under the direction and control
of such individual or the individual's authorized
representative, including the amount, duration, scope,
provider, and location of such services, under the
State plan consistent with the following requirements:
``(aa) Assessment.--There is an assessment of
the needs, capabilities, and preferences of the
individual with respect to such services.
``(bb) Service plan.--Based on such assessment,
there is developed jointly with such individual or
the individual's authorized representative a plan
for such services for such individual that is
approved by the State and that satisfies the
requirements of subclause (III).
``(III) Plan requirements.--For purposes of
subclause (II)(bb), the requirements of this subclause
are that the plan--
``(aa) specifies those services which the
individual or the individual's authorized
representative would be responsible for directing;
``(bb) identifies the methods by which the
individual or the individual's authorized
representative will select, manage, and dismiss
providers of such services;
``(cc) specifies the role of family members and
others whose participation is sought by the
individual or the individual's authorized
representative with respect to such services;
``(dd) is developed through a person-centered
process that is directed by the individual or the
individual's authorized representative, builds upon
the individual's capacity to engage in activities
that promote community life and that respects the
individual's preferences, choices, and abilities,
and involves families, friends, and professionals
as desired or required by the individual or the
individual's authorized representative;
``(ee) includes appropriate risk management
techniques that recognize the roles and sharing of
responsibilities in obtaining services in a self-
directed manner and assure the appropriateness of
such plan based upon the resources and capabilities
of the individual or the individual's authorized
representative; and
``(ff) may include an individualized budget
which identifies the dollar value of the services
and supports under the control and direction of the
individual or the individual's authorized
representative.
``(IV) Budget process.--With respect to
individualized budgets described in subclause
(III)(ff), the State plan amendment--
``(aa) describes the method for calculating the
dollar values in such budgets based on reliable
costs and service utilization;
``(bb) defines a process for making adjustments
in such dollar values to reflect changes in
individual assessments and service plans; and
``(cc) provides a procedure to evaluate
expenditures under such budgets.
``(H) Quality assurance; conflict of interest standards.--
``(i) Quality assurance.--The State ensures that the
provision of home and community-based services meets
Federal and State guidelines for quality assurance.
``(ii) Conflict of interest standards.--The State
establishes standards for the conduct of the independent
evaluation and the independent assessment to safeguard
against conflicts of interest.
``(I) Redeterminations and appeals.--The State allows for
at least annual redeterminations of eligibility, and appeals in
accordance with the frequency of, and manner in which,
redeterminations and appeals of eligibility are made under the
State plan.
``(J) Presumptive eligibility for assessment.--The State,
at its option, elects to provide for a period of presumptive
eligibility (not to exceed a period of 60 days) only for those
individuals that the State has reason to believe may be
eligible for home and community-based services. Such
presumptive eligibility shall be limited to medical assistance
for carrying out the independent evaluation and assessment
under subparagraph (E) to determine an individual's eligibility
for such services and if the individual is so eligible, the
specific home and community-based services that the individual
will receive.
``(2) Definition of individual's representative.--In this
section, the term `individual's representative' means, with respect
to an individual, a parent, a family member, or a guardian of the
individual, an advocate for the individual, or any other individual
who is authorized to represent the individual.
``(3) Nonapplication.--A State may elect in the State plan
amendment approved under this section to not comply with the
requirements of section 1902(a)(1) (relating to statewideness) and
section 1902(a)(10)(C)(i)(III) (relating to income and resource
rules applicable in the community), but only for purposes of
provided home and community-based services in accordance with such
amendment. Any such election shall not be construed to apply to the
provision of services to an individual receiving medical assistance
in an institutionalized setting as a result of a determination that
the individual requires the level of care provided in a hospital or
a nursing facility or intermediate care facility for the mentally
retarded.
``(4) No effect on other waiver authority.--Nothing in this
subsection shall be construed as affecting the option of a State to
offer home and community-based services under a waiver under
subsections (c) or (d) of this section or under section 1115.
``(5) Continuation of federal financial participation for
medical assistance provided to individuals as of effective date of
state plan amendment.--Notwithstanding paragraph (1)(B), Federal
financial participation shall continue to be available for an
individual who is receiving medical assistance in an
institutionalized setting, or home and community-based services
provided under a waiver under this section or section 1115 that is
in effect as of the effective date of the State plan amendment
submitted under this subsection, as a result of a determination
that the individual requires the level of care provided in a
hospital or a nursing facility or intermediate care facility for
the mentally retarded, without regard to whether such individuals
satisfy the more stringent eligibility criteria established under
that paragraph, until such time as the individual is discharged
from the institution or waiver program or no longer requires such
level of care.''.
(b) Quality of Care Measures.--
(1) In general.--The Secretary, acting through the Director of
the Agency for Healthcare Research and Quality, shall consult with
consumers, health and social service providers and other
professionals knowledgeable about long-term care services and
supports to develop program performance indicators, client function
indicators, and measures of client satisfaction with respect to
home and community-based services offered under State Medicaid
programs.
(2) Best practices.--The Secretary shall--
(A) use the indicators and measures developed under
paragraph (1) to assess such home and community-based services,
the outcomes associated with the receipt of such services
(particularly with respect to the health and welfare of the
recipient of the services), and the overall system for
providing home and community-based services under the Medicaid
program under title XIX of the Social Security Act; and
(B) make publicly available the best practices identified
through such assessment and a comparative analyses of the
system features of each State.
(3) Appropriation.--Out of any funds in the Treasury not
otherwise appropriated, there is appropriated to the Secretary of
Health and Human Services, $1,000,000 for the period of fiscal
years 2006 through 2010 to carry out this subsection.
(c) Effective Date.--The amendments made by subsections (a) and (b)
take effect on January 1, 2007, and apply to expenditures for medical
assistance for home and community-based services provided in accordance
with section 1915(i) of the Social Security Act (as added by
subsections (a) and (b)) on or after that date.
SEC. 6087. OPTIONAL CHOICE OF SELF-DIRECTED PERSONAL ASSISTANCE
SERVICES (CASH AND COUNSELING).
(a) Exemption From Certain Requirements.--Section 1915 of the
Social Security Act (42 U.S.C. 1396n), as amended by section 6086(a),
is amended by adding at the end the following new subsection:
``(j)(1) A State may provide, as `medical assistance', payment for
part or all of the cost of self-directed personal assistance services
(other than room and board) under the plan which are provided pursuant
to a written plan of care to individuals with respect to whom there has
been a determination that, but for the provision of such services, the
individuals would require and receive personal care services under the
plan, or home and community-based services provided pursuant to a
waiver under subsection (c). Self-directed personal assistance services
may not be provided under this subsection to individuals who reside in
a home or property that is owned, operated, or controlled by a provider
of services, not related by blood or marriage.
``(2) The Secretary shall not grant approval for a State self-
directed personal assistance services program under this section unless
the State provides assurances satisfactory to the Secretary of the
following:
``(A) Necessary safeguards have been taken to protect the
health and welfare of individuals provided services under the
program, and to assure financial accountability for funds expended
with respect to such services.
``(B) The State will provide, with respect to individuals who--
``(i) are entitled to medical assistance for personal care
services under the plan, or receive home and community-based
services under a waiver granted under subsection (c);
``(ii) may require self-directed personal assistance
services; and
``(iii) may be eligible for self-directed personal
assistance services,
an evaluation of the need for personal care under the plan, or
personal services under a waiver granted under subsection (c).
``(C) Such individuals who are determined to be likely to
require personal care under the plan, or home and community-based
services under a waiver granted under subsection (c) are informed
of the feasible alternatives, if available under the State's self-
directed personal assistance services program, at the choice of
such individuals, to the provision of personal care services under
the plan, or personal assistance services under a waiver granted
under subsection (c).
``(D) The State will provide for a support system that ensures
participants in the self-directed personal assistance services
program are appropriately assessed and counseled prior to
enrollment and are able to manage their budgets. Additional
counseling and management support may be provided at the request of
the participant.
``(E) The State will provide to the Secretary an annual report
on the number of individuals served and total expenditures on their
behalf in the aggregate. The State shall also provide an evaluation
of overall impact on the health and welfare of participating
individuals compared to non-participants every three years.
``(3) A State may provide self-directed personal assistance
services under the State plan without regard to the requirements of
section 1902(a)(1) and may limit the population eligible to receive
these services and limit the number of persons served without regard to
section 1902(a)(10)(B).
``(4)(A) For purposes of this subsection, the term `self-directed
personal assistance services' means personal care and related services,
or home and community-based services otherwise available under the plan
under this title or subsection (c), that are provided to an eligible
participant under a self-directed personal assistance services program
under this section, under which individuals, within an approved self-
directed services plan and budget, purchase personal assistance and
related services, and permits participants to hire, fire, supervise,
and manage the individuals providing such services.
``(B) At the election of the State--
``(i) a participant may choose to use any individual capable of
providing the assigned tasks including legally liable relatives as
paid providers of the services; and
``(ii) the individual may use the individual's budget to
acquire items that increase independence or substitute (such as a
microwave oven or an accessibility ramp) for human assistance, to
the extent that expenditures would otherwise be made for the human
assistance.
``(5) For purpose of this section, the term `approved self-directed
services plan and budget' means, with respect to a participant, the
establishment of a plan and budget for the provision of self-directed
personal assistance services, consistent with the following
requirements:
``(A) Self-direction.--The participant (or in the case of a
participant who is a minor child, the participant's parent or
guardian, or in the case of an incapacitated adult, another
individual recognized by State law to act on behalf of the
participant) exercises choice and control over the budget,
planning, and purchase of self-directed personal assistance
services, including the amount, duration, scope, provider, and
location of service provision.
``(B) Assessment of needs.--There is an assessment of the
needs, strengths, and preferences of the participants for such
services.
``(C) Service plan.--A plan for such services (and supports for
such services) for the participant has been developed and approved
by the State based on such assessment through a person-centered
process that--
``(i) builds upon the participant's capacity to engage in
activities that promote community life and that respects the
participant's preferences, choices, and abilities; and
``(ii) involves families, friends, and professionals in the
planning or delivery of services or supports as desired or
required by the participant.
``(D) Service budget.--A budget for such services and supports
for the participant has been developed and approved by the State
based on such assessment and plan and on a methodology that uses
valid, reliable cost data, is open to public inspection, and
includes a calculation of the expected cost of such services if
those services were not self-directed. The budget may not restrict
access to other medically necessary care and services furnished
under the plan and approved by the State but not included in the
budget.
``(E) Application of quality assurance and risk management.--
There are appropriate quality assurance and risk management
techniques used in establishing and implementing such plan and
budget that recognize the roles and responsibilities in obtaining
services in a self-directed manner and assure the appropriateness
of such plan and budget based upon the participant's resources and
capabilities.
``(6) A State may employ a financial management entity to make
payments to providers, track costs, and make reports under the program.
Payment for the activities of the financial management entity shall be
at the administrative rate established in section 1903(a).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to services furnished on or after January 1, 2007.
Subtitle B--SCHIP
SEC. 6101. ADDITIONAL ALLOTMENTS TO ELIMINATE FISCAL YEAR 2006 FUNDING
SHORTFALLS.
(a) In General.--Section 2104 of the Social Security Act (42 U.S.C.
1397dd) is amended by inserting after subsection (c) the following:
``(d) Additional Allotments To Eliminate Funding Shortfalls.--
``(1) Appropriation; allotment authority.--For the purpose of
providing additional allotments to shortfall States described in
paragraph (2), there is appropriated, out of any money in the
Treasury not otherwise appropriated, $283,000,000 for fiscal year
2006.
``(2) Shortfall states described.--For purposes of paragraph
(1), a shortfall State described in this paragraph is a State with
a State child health plan approved under this title for which the
Secretary estimates, on the basis of the most recent data available
to the Secretary as of December 16, 2005, that the projected
expenditures under such plan for such State for fiscal year 2006
will exceed the sum of--
``(A) the amount of the State's allotments for each of
fiscal years 2004 and 2005 that will not be expended by the end
of fiscal year 2005;
``(B) the amount, if any, that is to be redistributed to
the State during fiscal year 2006 in accordance with subsection
(f); and
``(C) the amount of the State's allotment for fiscal year
2006.
``(3) Allotments.--In addition to the allotments provided under
subsections (b) and (c), subject to paragraph (4), of the amount
available for the additional allotments under paragraph (1) for
fiscal year 2006, the Secretary shall allot--
``(A) to each shortfall State described in paragraph (2)
such amount as the Secretary determines will eliminate the
estimated shortfall described in such paragraph for the State;
and
``(B) to each commonwealth or territory described in
subsection (c)(3), the same proportion as the proportion of the
commonwealth's or territory's allotment under subsection (c)
(determined without regard to subsection (f)) to 1.05 percent
of the amount appropriated under paragraph (1).
``(4) Use of additional allotment.--Additional allotments
provided under this subsection are only available for amounts
expended under a State plan approved under this title for child
health assistance for targeted low-income children.
``(5) 1-year availability; no redistribution of unexpended
additional allotments.--Notwithstanding subsections (e) and (f),
amounts allotted to a State pursuant to this subsection for fiscal
year 2006 shall only remain available for expenditure by the State
through September 30, 2006. Any amounts of such allotments that
remain unexpended as of such date shall not be subject to
redistribution under subsection (f) and shall revert to the
Treasury on October 1, 2006.''.
(b) Conforming Amendments.--Section 2104 of the Social Security Act
(42 U.S.C. 1397dd) is amended--
(1) in subsection (a), by inserting ``subject to subsection
(d),'' after ``under this section,'';
(2) in subsection (b)(1), by inserting ``and subsection (d)''
after ``Subject to paragraph (4)''; and
(3) in subsection (c)(1), by inserting ``subject to subsection
(d),'' after ``for a fiscal year,''.
(c) Effective Date.--The amendments made by this section apply to
items and services furnished on or after October 1, 2005, without
regard to whether or not regulations implementing such amendments have
been issued.
SEC. 6102. PROHIBITION AGAINST COVERING NONPREGNANT CHILDLESS ADULTS
WITH SCHIP FUNDS.
(a) Prohibition on Use of SCHIP Funds.--Section 2107 of the Social
Security Act (42 U.S.C. 1397gg) is amended by adding at the end the
following:
``(f) Limitation of Waiver Authority.--Notwithstanding subsection
(e)(2)(A) and section 1115(a), the Secretary may not approve a waiver,
experimental, pilot, or demonstration project that would allow funds
made available under this title to be used to provide child health
assistance or other health benefits coverage to a nonpregnant childless
adult. For purposes of the preceding sentence, a caretaker relative (as
such term is defined for purposes of carrying out section 1931) shall
not be considered a childless adult.''.
(b) Conforming Amendments.--Section 2105(c)(1) of such Act (42
U.S.C. 1397ee(c)(1)) is amended--
(1) by inserting ``and may not include coverage of a
nonpregnant childless adult'' after ``section 2101)''; and
(2) by adding at the end the following: ``For purposes of the
preceding sentence, a caretaker relative (as such term is defined
for purposes of carrying out section 1931) shall not be considered
a childless adult.''.
(c) Rule of Construction.--Nothing in this section or the
amendments made by this section shall be construed to--
(1) authorize the waiver of any provision of title XIX or XXI
of the Social Security Act (42 U.S.C. 1396 et seq., 1397aa et seq.)
that is not otherwise authorized to be waived under such titles or
under title XI of such Act (42 U.S.C. 1301 et seq.) as of the date
of enactment of this Act;
(2) imply congressional approval of any waiver, experimental,
pilot, or demonstration project affecting funds made available
under the State children's health insurance program under title XXI
of the Social Security Act (42 U.S.C. 1397aa et. seq.) or any
amendment to such a waiver or project that has been approved as of
such date of enactment; or
(3) apply to any waiver, experimental, pilot, or demonstration
project that would allow funds made available under title XXI of
the Social Security Act (42 U.S.C. 1397aa et seq.) to be used to
provide child health assistance or other health benefits coverage
to a nonpregnant childless adult that is approved before the date
of enactment of this Act or to any extension, renewal, or amendment
of such a waiver or project that is approved on or after such date
of enactment.
(d) Effective Date.--This section and the amendments made by this
section shall take effect as if enacted on October 1, 2005, and shall
apply to any waiver, experimental, pilot, or demonstration project that
is approved on or after that date.
SEC. 6103. CONTINUED AUTHORITY FOR QUALIFYING STATES TO USE CERTAIN
FUNDS FOR MEDICAID EXPENDITURES.
(a) In General.--Section 2105(g)(1)(A) of the Social Security Act
(42 U.S.C. 1397ee(g)(1)(A)) is amended by striking ``or 2001'' and
inserting ``2001, 2004, or 2005''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to expenditures made under title XIX of the Social Security Act
(42 U.S.C. 1396 et seq.) on or after October 1, 2005.
Subtitle C--Katrina Relief
SEC. 6201. ADDITIONAL FEDERAL PAYMENTS UNDER HURRICANE-RELATED MULTI-
STATE SECTION 1115 DEMONSTRATIONS.
(a) In General.--The Secretary of Health and Human Services shall
pay to each eligible State, from amounts appropriated pursuant to
subsection (e), amounts for the following purposes:
(1) Under the authority of an approved Multi-State Section 1115
Demonstration Project (in this section referred to as a ``section
1115 project'')--
(A) with respect to evacuees receiving health care under
such project, for the non-Federal share of expenditures:
(i) for medical assistance furnished under title XIX of
the Social Security Act, and
(ii) for child health assistance furnished under title
XXI of such Act;
(B) with respect to evacuees who do not have other coverage
for such assistance through insurance, including (but not
limited to) private insurance, under title XIX or title XXI of
the Social Security Act, or under State-funded health insurance
programs, for the total uncompensated care costs incurred for
medically necessary services and supplies or premium assistance
for such persons, and for those evacuees receiving medical
assistance under the project for the total uncompensated care
costs incurred for medically necessary services and supplies
beyond those included as medical assistance or child health
assistance under the State's approved plan under title XIX or
title XXI of the Social Security Act;
(C) with respect to affected individuals receiving health
care under such project for the non-Federal share of the
following expenditures:
(i) for medical assistance furnished under title XIX of
the Social Security Act, and
(ii) for child health assistance furnished under title
XXI of such Act; and
(D) with respect to affected individuals who do not have
other coverage for such assistance through insurance, including
(but not limited to) private insurance, under title XIX or
title XXI of the Social Security Act, or under State-funded
health insurance programs, for the total uncompensated care
costs incurred for medically necessary services and supplies or
premium assistance for such persons, and for those affected
individuals receiving medical assistance under the project for
the total uncompensated care costs incurred for medically
necessary services and supplies beyond those included as
medical assistance or child health assistance under the State's
approved plan under title XIX or title XXI of the Social
Security Act.
(2) For reimbursement of the reasonable administrative costs
related to subparagraphs (A) through (D) of paragraph (1) as
determined by the Secretary.
(3) Only with respect to affected counties or parishes, for
reimbursement with respect to individuals receiving medical
assistance under existing State plans approved by the Secretary of
Health and Human Services for the following non-Federal share of
expenditures:
(A) For medical assistance furnished under title XIX of the
Social Security Act.
(B) For child health assistance furnished under title XXI
of such Act.
(4) For other purposes, if approved by the Secretary under the
Secretary's authority, to restore access to health care in impacted
communities.
(b) Definitions.--For purposes of this section:
(1) The term ``affected individual'' means an individual who
resided in an individual assistance designation county or parish
pursuant to section 408 of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act, as declared by the President as a
result of Hurricane Katrina and continues to reside in the same
State that such county or parish is located in.
(2) The term ``affected counties or parishes'' means a county
or parish described in paragraph (1).
(3) The term ``evacuee'' means an affected individual who has
been displaced to another State.
(4) The term ``eligible State'' means a State that has provided
care to affected individuals or evacuees under a section 1115
project.
(c) Application to Matching Requirements.--The non-Federal share
paid under this section shall not be regarded as Federal funds for
purposes of Medicaid matching requirements, the effect of which is to
provide fiscal relief to the State in which the Medicaid eligible
individual originally resided.
(d) Time Limits on Payments.--
(1) No payments shall be made by the Secretary under subsection
(a)(1)(A) or (a)(1)(C), for costs of health care provided to an
eligible evacuee or affected individual for services for such
individual incurred after June 30, 2006.
(2) No payments shall be made by the Secretary under subsection
(a)(1)(B) or (a)(1)(D) for costs of health care incurred after
January 31, 2006.
(3) No payments may be made under subsection (a)(1)(B) or
(a)(1)(D) for an item or service that an evacuee or an affected
individual has received from an individual or organization as part
of a public or private hurricane relief effort.
(e) Appropriations.--For the purpose of providing funds for
payments under this section, in addition to any funds made available
for the National Disaster Medical System under the Department of
Homeland Security for health care costs related to Hurricane Katrina,
including under a section 1115 project, there is appropriated out of
any money in the Treasury not otherwise appropriated, $2,000,000,000,
to remain available to the Secretary until expended. The total amount
of payments made under subsection (a) may not exceed the total amount
appropriated under this subsection.
SEC. 6202. STATE HIGH RISK HEALTH INSURANCE POOL FUNDING.
(a) In General.--There are hereby authorized and appropriated for
fiscal year 2006--
(1) $75,000,000 for grants under subsection (b)(1) of section
2745 of the Public Health Service Act (42 U.S.C. 300gg-45); and
(2) $15,000,000 for grants under subsection (a) of such
section.
(b) Treatment.--The amount appropriated under--
(1) paragraph (1) shall be treated as if it had been
appropriated under subsection (c)(2) of such section; and
(2) paragraph (2) shall be treated as if it had been
appropriated under subsection (c)(1) of such section.
(c) References.--Effective upon the enactment of the State High
Risk Pool Funding Extension Act of 2005--
(1) subsection (a)(1) shall be applied by substituting
``subsections (b)(2) and (c)(3)'' for ``subsection ``(b)(1)'';
(2) subsection (b)(1) shall be applied by substituting
``(d)(1)(B)'' for ``(c)(2)''; and
(3) subsection (b)(2) shall be applied by substituting
``(d)(1)(A)'' for ``(c)(1)''.
SEC. 6203. IMPLEMENTATION FUNDING.
For purposes of implementing the provisions of, and amendments made
by, title V of this Act and this title--
(1) the Secretary of Health and Human Services shall provide
for the transfer, in appropriate part from the Federal Hospital
Insurance Trust Fund established under section 1817 of the Social
Security Act (42 U.S.C. 1395i) and the Federal Supplementary
Medical Insurance Trust Fund established under section 1841 of such
Act (42 U.S.C. 1395t), of $30,000,000 to the Centers for Medicare &
Medicaid Services Program Management Account for fiscal year 2006;
and
(2) out of any funds in the Treasury not otherwise
appropriated, there are appropriated to such Secretary for the
Centers for Medicare & Medicaid Services Program Management
Account, $30,000,000 for fiscal year 2006.
TITLE VII--HUMAN RESOURCES AND OTHER PROVISIONS
SEC. 7001. REFERENCES.
Except as otherwise expressly provided, wherever in this title an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the amendment or repeal shall be
considered to be made to a section or other provision of the Social
Security Act.
Subtitle A--TANF
SEC. 7101. TEMPORARY ASSISTANCE FOR NEEDY FAMILIES AND RELATED PROGRAMS
FUNDING THROUGH SEPTEMBER 30, 2010.
(a) In General.--Activities authorized by part A of title IV and
section 1108(b) of the Social Security Act (adjusted, as applicable, by
or under this subtitle, the amendments made by this subtitle, and the
TANF Emergency Response and Recovery Act of 2005) shall continue
through September 30, 2010, in the manner authorized for fiscal year
2004, and out of any money in the Treasury of the United States not
otherwise appropriated, there are hereby appropriated such sums as may
be necessary for such purpose. Grants and payments may be made pursuant
to this authority on a quarterly basis through fiscal year 2010 at the
level provided for such activities for the corresponding quarter of
fiscal year 2004 (or, as applicable, at such greater level as may
result from the application of this subtitle, the amendments made by
this subtitle, and the TANF Emergency Response and Recovery Act of
2005), except that in the case of section 403(a)(3) of the Social
Security Act, grants and payments may be made pursuant to this
authority only through fiscal year 2008 and in the case of section
403(a)(4) of the Social Security Act, no grants shall be made for any
fiscal year occurring after fiscal year 2005.
(b) Conforming Amendments.--Part A of title IV (42 U.S.C. 601 et
seq.) is amended--
(1) in section 403(a)(3)(H)(ii), by striking ``December, 31,
2005'' and inserting ``fiscal year 2008'';
(2) in section 403(b)(3)(C)(ii), by striking ``2006'' and
inserting ``2010''; and
(3) in section 409(a)(7)--
(A) in subparagraph (A), by striking ``or 2007'' and
inserting ``2007, 2008, 2009, 2010, or 2011''; and
(B) in subparagraph (B)(ii), by striking ``2006'' and
inserting ``2010''.
(c) Extension of the National Random Sample Study of Child Welfare
Through September 30, 2010.--Activities authorized by section 429A of
the Social Security Act shall continue through September 30, 2010, in
the manner authorized for fiscal year 2004, and out of any money in the
Treasury of the United States not otherwise appropriated, there are
hereby appropriated such sums as may be necessary for such purpose.
Grants and payments may be made pursuant to this authority on a
quarterly basis through fiscal year 2010 at the level provided for such
activities for the corresponding quarter of fiscal year 2004.
SEC. 7102. IMPROVED CALCULATION OF WORK PARTICIPATION RATES AND PROGRAM
INTEGRITY.
(a) Recalibration of Caseload Reduction Credit.--
(1) In general.--Section 407(b)(3)(A) (42 U.S.C. 607(b)(3)(A))
is amended--
(A) in clause (i), by inserting ``or any other State
program funded with qualified State expenditures (as defined in
section 409(a)(7)(B)(i))'' after ``this part''; and
(B) by striking clause (ii) and inserting the following:
``(ii) the average monthly number of families that
received assistance under any State program referred to in
clause (i) during fiscal year 2005.''.
(2) Conforming amendment.--Section 407(b)(3)(B) (42 U.S.C.
607(b)(3)(B)) is amended by striking ``and eligibility criteria''
and all that follows through the close parenthesis and inserting
``and the eligibility criteria in effect during fiscal year 2005''.
(b) Inclusion of Families Receiving Assistance Under Separate State
Programs in Calculation of Participation Rates.--
(1) Section 407 (42 U.S.C. 607) is amended in each of
subsections (a)(1), (a)(2), (b)(1)(B)(i), (c)(2)(A)(i), (e)(1), and
(e)(2), by inserting ``or any other State program funded with
qualified State expenditures (as defined in section
409(a)(7)(B)(i))'' after ``this part''.
(2) Section 411(a)(1) (42 U.S.C. 611(a)(1)) is amended--
(A) in subparagraph (A), by inserting ``or any other State
program funded with qualified State expenditures (as defined in
section 409(a)(7)(B)(i))'' before the colon; and
(B) in subparagraph (B)(ii), by inserting ``and any other
State programs funded with qualified State expenditures (as
defined in section 409(a)(7)(B)(i))'' after ``this part''.
(c) Improved Verification and Oversight of Work Participation.--
(1) In general.--Section 407(i) (42 U.S.C. 607(i)) is amended
to read as follows:
``(i) Verification of Work and Work-Eligible Individuals in Order
To Implement Reforms.--
``(1) Secretarial direction and oversight.--
``(A) Regulations for determining whether activities may be
counted as `work activities', how to count and verify reported
hours of work, and determining who is a work-eligible
individual.--
``(i) In general.--Not later than June 30, 2006, the
Secretary shall promulgate regulations to ensure consistent
measurement of work participation rates under State
programs funded under this part and State programs funded
with qualified State expenditures (as defined in section
409(a)(7)(B)(i)), which shall include information with
respect to--
``(I) determining whether an activity of a
recipient of assistance may be treated as a work
activity under subsection (d);
``(II) uniform methods for reporting hours of work
by a recipient of assistance;
``(III) the type of documentation needed to verify
reported hours of work by a recipient of assistance;
and
``(IV) the circumstances under which a parent who
resides with a child who is a recipient of assistance
should be included in the work participation rates.
``(ii) Issuance of regulations on an interim final
basis.--The regulations referred to in clause (i) may be
effective and final immediately on an interim basis as of
the date of publication of the regulations. If the
Secretary provides for an interim final regulation, the
Secretary shall provide for a period of public comment on
the regulation after the date of publication. The Secretary
may change or revise the regulation after the public
comment period.
``(B) Oversight of state procedures.--The Secretary shall
review the State procedures established in accordance with
paragraph (2) to ensure that such procedures are consistent
with the regulations promulgated under subparagraph (A) and are
adequate to ensure an accurate measurement of work
participation under the State programs funded under this part
and any other State programs funded with qualified State
expenditures (as so defined).
``(2) Requirement for states to establish and maintain work
participation verification procedures.--Not later than September
30, 2006, a State to which a grant is made under section 403 shall
establish procedures for determining, with respect to recipients of
assistance under the State program funded under this part or under
any State programs funded with qualified State expenditures (as so
defined), whether activities may be counted as work activities, how
to count and verify reported hours of work, and who is a work-
eligible individual, in accordance with the regulations promulgated
pursuant to paragraph (1)(A)(i) and shall establish internal
controls to ensure compliance with the procedures.''.
(2) State penalty for failure to establish or comply with work
participation verification procedures.--Section 409(a) (42 U.S.C.
609(a)) is amended by adding at the end the following:
``(15) Penalty for failure to establish or comply with work
participation verification procedures.--
``(A) In general.--If the Secretary determines that a State
to which a grant is made under section 403 in a fiscal year has
violated section 407(i)(2) during the fiscal year, the
Secretary shall reduce the grant payable to the State under
section 403(a)(1) for the immediately succeeding fiscal year by
an amount equal to not less than 1 percent and not more than 5
percent of the State family assistance grant.
``(B) Penalty based on severity of failure.--The Secretary
shall impose reductions under subparagraph (A) with respect to
a fiscal year based on the degree of noncompliance.''.
(d) Effective Date.--The amendments made by subsections (a) and (b)
shall take effect on October 1, 2006.
SEC. 7103. GRANTS FOR HEALTHY MARRIAGE PROMOTION AND RESPONSIBLE
FATHERHOOD.
(a) Healthy Marriage and Family Funds.--Section 403(a)(2) (42
U.S.C. 603(a)(2)) is amended to read as follows:
``(2) Healthy marriage promotion and responsible fatherhood
grants.--
``(A) In general.--
``(i) Use of funds.--Subject to subparagraphs (B) and
(C), the Secretary may use the funds made available under
subparagraph (D) for the purpose of conducting and
supporting research and demonstration projects by public or
private entities, and providing technical assistance to
States, Indian tribes and tribal organizations, and such
other entities as the Secretary may specify that are
receiving a grant under another provision of this part.
``(ii) Limitations.--The Secretary may not award funds
made available under this paragraph on a noncompetitive
basis, and may not provide any such funds to an entity for
the purpose of carrying out healthy marriage promotion
activities or for the purpose of carrying out activities
promoting responsible fatherhood unless the entity has
submitted to the Secretary an application which--
``(I) describes--
``(aa) how the programs or activities proposed
in the application will address, as appropriate,
issues of domestic violence; and
``(bb) what the applicant will do, to the
extent relevant, to ensure that participation in
the programs or activities is voluntary, and to
inform potential participants that their
participation is voluntary; and
``(II) contains a commitment by the entity--
``(aa) to not use the funds for any other
purpose; and
``(bb) to consult with experts in domestic
violence or relevant community domestic violence
coalitions in developing the programs and
activities.
``(iii) Healthy marriage promotion activities.--In
clause (ii), the term `healthy marriage promotion
activities' means the following:
``(I) Public advertising campaigns on the value of
marriage and the skills needed to increase marital
stability and health.
``(II) Education in high schools on the value of
marriage, relationship skills, and budgeting.
``(III) Marriage education, marriage skills, and
relationship skills programs, that may include
parenting skills, financial management, conflict
resolution, and job and career advancement, for non-
married pregnant women and non-married expectant
fathers.
``(IV) Pre-marital education and marriage skills
training for engaged couples and for couples or
individuals interested in marriage.
``(V) Marriage enhancement and marriage skills
training programs for married couples.
``(VI) Divorce reduction programs that teach
relationship skills.
``(VII) Marriage mentoring programs which use
married couples as role models and mentors in at-risk
communities.
``(VIII) Programs to reduce the disincentives to
marriage in means-tested aid programs, if offered in
conjunction with any activity described in this
subparagraph.
``(B) Limitation on use of funds for demonstration projects
for coordination of provision of child welfare and tanf
services to tribal families at risk of child abuse or
neglect.--
``(i) In general.--Of the amounts made available under
subparagraph (D) for a fiscal year, the Secretary may not
award more than $2,000,000 on a competitive basis to fund
demonstration projects designed to test the effectiveness
of tribal governments or tribal consortia in coordinating
the provision to tribal families at risk of child abuse or
neglect of child welfare services and services under tribal
programs funded under this part.
``(ii) Limitation on use of funds.--A grant made
pursuant to clause (i) to such a project shall not be used
for any purpose other than--
``(I) to improve case management for families
eligible for assistance from such a tribal program;
``(II) for supportive services and assistance to
tribal children in out-of-home placements and the
tribal families caring for such children, including
families who adopt such children; and
``(III) for prevention services and assistance to
tribal families at risk of child abuse and neglect.
``(iii) Reports.--The Secretary may require a recipient
of funds awarded under this subparagraph to provide the
Secretary with such information as the Secretary deems
relevant to enable the Secretary to facilitate and oversee
the administration of any project for which funds are
provided under this subparagraph.
``(C) Limitation on use of funds for activities promoting
responsible fatherhood.--
``(i) In general.--Of the amounts made available under
subparagraph (D) for a fiscal year, the Secretary may not
award more than $50,000,000 on a competitive basis to
States, territories, Indian tribes and tribal
organizations, and public and nonprofit community entities,
including religious organizations, for activities promoting
responsible fatherhood.
``(ii) Activities promoting responsible fatherhood.--In
this paragraph, the term `activities promoting responsible
fatherhood' means the following:
``(I) Activities to promote marriage or sustain
marriage through activities such as counseling,
mentoring, disseminating information about the benefits
of marriage and 2-parent involvement for children,
enhancing relationship skills, education regarding how
to control aggressive behavior, disseminating
information on the causes of domestic violence and
child abuse, marriage preparation programs, premarital
counseling, marital inventories, skills-based marriage
education, financial planning seminars, including
improving a family's ability to effectively manage
family business affairs by means such as education,
counseling, or mentoring on matters related to family
finances, including household management, budgeting,
banking, and handling of financial transactions and
home maintenance, and divorce education and reduction
programs, including mediation and counseling.
``(II) Activities to promote responsible parenting
through activities such as counseling, mentoring, and
mediation, disseminating information about good
parenting practices, skills-based parenting education,
encouraging child support payments, and other methods.
``(III) Activities to foster economic stability by
helping fathers improve their economic status by
providing activities such as work first services, job
search, job training, subsidized employment, job
retention, job enhancement, and encouraging education,
including career-advancing education, dissemination of
employment materials, coordination with existing
employment services such as welfare-to-work programs,
referrals to local employment training initiatives, and
other methods.
``(IV) Activities to promote responsible fatherhood
that are conducted through a contract with a nationally
recognized, nonprofit fatherhood promotion
organization, such as the development, promotion, and
distribution of a media campaign to encourage the
appropriate involvement of parents in the life of any
child and specifically the issue of responsible
fatherhood, and the development of a national
clearinghouse to assist States and communities in
efforts to promote and support marriage and responsible
fatherhood.
``(D) Appropriation.--Out of any money in the Treasury of
the United States not otherwise appropriated, there are
appropriated $150,000,000 for each of fiscal years 2006 through
2010, for expenditure in accordance with this paragraph.''.
(b) Counting of Spending on Certain Pro-Family Activities.--Section
409(a)(7)(B)(i) (42 U.S.C. 609(a)(7)(B)(i)) is amended by adding at the
end the following:
``(V) Counting of spending on certain pro-family
activities.--The term `qualified State expenditures'
includes the total expenditures by the State during the
fiscal year under all State programs for a purpose
described in paragraph (3) or (4) of section 401(a).''.
Subtitle B--Child Care
SEC. 7201. ENTITLEMENT FUNDING.
Section 418(a)(3) (42 U.S.C. 618(a)(3)) is amended--
(1) by striking ``and'' at the end of subparagraph (E);
(2) by striking the period at the end of subparagraph (F) and
inserting a semicolon; and
(3) by adding at the end the following:
``(G) $2,917,000,000 for each of fiscal years 2006 through
2010.''.
Subtitle C--Child Support
SEC. 7301. ASSIGNMENT AND DISTRIBUTION OF CHILD SUPPORT.
(a) Modification of Rule Requiring Assignment of Support Rights as
a Condition of Receiving TANF.--Section 408(a)(3) (42 U.S.C. 608(a)(3))
is amended to read as follows:
``(3) No assistance for families not assigning certain support
rights to the state.--A State to which a grant is made under
section 403 shall require, as a condition of paying assistance to a
family under the State program funded under this part, that a
member of the family assign to the State any right the family
member may have (on behalf of the family member or of any other
person for whom the family member has applied for or is receiving
such assistance) to support from any other person, not exceeding
the total amount of assistance so paid to the family, which accrues
during the period that the family receives assistance under the
program.''.
(b) Increasing Child Support Payments to Families and Simplifying
Child Support Distribution Rules.--
(1) Distribution rules.--
(A) In general.--Section 457(a) (42 U.S.C. 657(a)) is
amended to read as follows:
``(a) In General.--Subject to subsections (d) and (e), the amounts
collected on behalf of a family as support by a State pursuant to a
plan approved under this part shall be distributed as follows:
``(1) Families receiving assistance.--In the case of a family
receiving assistance from the State, the State shall--
``(A) pay to the Federal Government the Federal share of
the amount collected, subject to paragraph (3)(A);
``(B) retain, or pay to the family, the State share of the
amount collected, subject to paragraph (3)(B); and
``(C) pay to the family any remaining amount.
``(2) Families that formerly received assistance.--In the case
of a family that formerly received assistance from the State:
``(A) Current support.--To the extent that the amount
collected does not exceed the current support amount, the State
shall pay the amount to the family.
``(B) Arrearages.--Except as otherwise provided in an
election made under section 454(34), to the extent that the
amount collected exceeds the current support amount, the
State--
``(i) shall first pay to the family the excess amount,
to the extent necessary to satisfy support arrearages not
assigned pursuant to section 408(a)(3);
``(ii) if the amount collected exceeds the amount
required to be paid to the family under clause (i), shall--
``(I) pay to the Federal Government the Federal
share of the excess amount described in this clause,
subject to paragraph (3)(A); and
``(II) retain, or pay to the family, the State
share of the excess amount described in this clause,
subject to paragraph (3)(B); and
``(iii) shall pay to the family any remaining amount.
``(3) Limitations.--
``(A) Federal reimbursements.--The total of the amounts
paid by the State to the Federal Government under paragraphs
(1) and (2) of this subsection with respect to a family shall
not exceed the Federal share of the amount assigned with
respect to the family pursuant to section 408(a)(3).
``(B) State reimbursements.--The total of the amounts
retained by the State under paragraphs (1) and (2) of this
subsection with respect to a family shall not exceed the State
share of the amount assigned with respect to the family
pursuant to section 408(a)(3).
``(4) Families that never received assistance.--In the case of
any other family, the State shall distribute to the family the
portion of the amount so collected that remains after withholding
any fee pursuant to section 454(6)(B)(ii).
``(5) Families under certain agreements.--Notwithstanding
paragraphs (1) through (3), in the case of an amount collected for
a family in accordance with a cooperative agreement under section
454(33), the State shall distribute the amount collected pursuant
to the terms of the agreement.''.
(B) State option to pass through additional support with
federal financial participation beginning with fiscal year
2009.--
(i) In general.--Section 457(a) (42 U.S.C. 657(a)) is
amended by adding at the end the following:
``(7) State option to pass through additional support with
federal financial participation.--
``(A) Families that formerly received assistance.--
Notwithstanding paragraph (2), a State shall not be required to
pay to the Federal Government the Federal share of an amount
collected on behalf of a family that formerly received
assistance from the State to the extent that the State pays the
amount to the family.
``(B) Families that currently receive assistance.--
``(i) In general.--Notwithstanding paragraph (1), in
the case of a family that receives assistance from the
State, a State shall not be required to pay to the Federal
Government the Federal share of the excepted portion (as
defined in clause (ii)) of any amount collected on behalf
of such family during a month to the extent that--
``(I) the State pays the excepted portion to the
family; and
``(II) the excepted portion is disregarded in
determining the amount and type of assistance provided
to the family under such program.
``(ii) Excepted portion defined.--For purposes of this
subparagraph, the term ``excepted portion'' means that
portion of the amount collected on behalf of a family
during a month that does not exceed $100 per month, or in
the case of a family that includes 2 or more children, that
does not exceed an amount established by the State that is
not more than $200 per month.''.
(ii) Effective date.--The amendment made by clause (i)
shall take effect on October 1, 2008.
(iii) Redesignation.--Effective October 1, 2009,
paragraph (7) of section 457(a) of the Social Security Act
(as added by clause (i)) is redesignated as paragraph (6).
(C) State plan to include election as to which rules to
apply in distributing child support arrearages collected on
behalf of families formerly receiving assistance.--Section 454
(42 U.S.C. 654) is amended--
(i) by striking ``and'' at the end of paragraph (32);
(ii) by striking the period at the end of paragraph
(33) and inserting ``; and''; and
(iii) by inserting after paragraph (33) the following:
``(34) include an election by the State to apply section
457(a)(2)(B) of this Act or former section 457(a)(2)(B) of this Act
(as in effect for the State immediately before the date this
paragraph first applies to the State) to the distribution of the
amounts which are the subject of such sections and, for so long as
the State elects to so apply such former section, the amendments
made by subsection (b)(1) of section 7301 of the Deficit Reduction
Act of 2005 shall not apply with respect to the State,
notwithstanding subsection (e) of such section 7301.''.
(2) Current support amount defined.--Section 457(c) (42 U.S.C.
657(c)) is amended by adding at the end the following:
``(5) Current support amount.--The term `current support
amount' means, with respect to amounts collected as support on
behalf of a family, the amount designated as the monthly support
obligation of the noncustodial parent in the order requiring the
support or calculated by the State based on the order.''.
(c) State Option To Discontinue Older Support Assignments.--Section
457(b) (42 U.S.C. 657(b)) is amended to read as follows:
``(b) Continuation of Assignments.--
``(1) State option to discontinue pre-1997 support
assignments.--
``(A) In general.--Any rights to support obligations
assigned to a State as a condition of receiving assistance from
the State under part A and in effect on September 30, 1997 (or
such earlier date on or after August 22, 1996, as the State may
choose), may remain assigned after such date.
``(B) Distribution of amounts after assignment
discontinuation.--If a State chooses to discontinue the
assignment of a support obligation described in subparagraph
(A), the State may treat amounts collected pursuant to the
assignment as if the amounts had never been assigned and may
distribute the amounts to the family in accordance with
subsection (a)(4).
``(2) State option to discontinue post-1997 assignments.--
``(A) In general.--Any rights to support obligations
accruing before the date on which a family first receives
assistance under part A that are assigned to a State under that
part and in effect before the implementation date of this
section may remain assigned after such date.
``(B) Distribution of amounts after assignment
discontinuation.--If a State chooses to discontinue the
assignment of a support obligation described in subparagraph
(A), the State may treat amounts collected pursuant to the
assignment as if the amounts had never been assigned and may
distribute the amounts to the family in accordance with
subsection (a)(4).''.
(d) Conforming Amendments.--Section 6402(c) of the Internal Revenue
Code of 1986 (relating to offset of past-due support against
overpayments) is amended--
(1) in the first sentence, by striking ``the Social Security
Act.'' and inserting ``of such Act.''; and
(2) by striking the third sentence and inserting the following:
``The Secretary shall apply a reduction under this subsection first
to an amount certified by the State as past due support under
section 464 of the Social Security Act before any other reductions
allowed by law.''.
(e) Effective Date.--
(1) In general.--Except as otherwise provided in this section,
the amendments made by the preceding provisions of this section
shall take effect on October 1, 2009, and shall apply to payments
under parts A and D of title IV of the Social Security Act for
calendar quarters beginning on or after such date, and without
regard to whether regulations to implement the amendments (in the
case of State programs operated under such part D) are promulgated
by such date.
(2) State option to accelerate effective date.--Notwithstanding
paragraph (1), a State may elect to have the amendments made by the
preceding provisions of this section apply to the State and to
amounts collected by the State (and the payments under parts A and
D), on and after such date as the State may select that is not
earlier than October 1, 2008, and not later than September 30,
2009.
(f) Use of Tax Refund Intercept Program To Collect Past-Due Child
Support on Behalf of Children Who Are Not Minors.--
(1) In general.--Section 464 (42 U.S.C. 664) is amended--
(A) in subsection (a)(2)(A), by striking ``(as that term is
defined for purposes of this paragraph under subsection (c))'';
and
(B) in subsection (c)--
(i) in paragraph (1)--
(I) by striking ``(1) Except as provided in
paragraph (2), as used in'' and inserting ``In''; and
(II) by inserting ``(whether or not a minor)''
after ``a child'' each place it appears; and
(ii) by striking paragraphs (2) and (3).
(2) Effective date.--The amendments made by paragraph (1) shall
take effect on October 1, 2007.
(g) State Option To Use Statewide Automated Data Processing and
Information Retrieval System for Interstate Cases.--Section
466(a)(14)(A)(iii) (42 U.S.C. 666(a)(14)(A)(iii)) is amended by
inserting before the semicolon the following: ``(but the assisting
State may establish a corresponding case based on such other State's
request for assistance)''.
SEC. 7302. MANDATORY REVIEW AND ADJUSTMENT OF CHILD SUPPORT ORDERS FOR
FAMILIES RECEIVING TANF.
(a) In General.--Section 466(a)(10)(A)(i) (42 U.S.C.
666(a)(10)(A)(i)) is amended--
(1) by striking ``parent, or,'' and inserting ``parent or'';
and
(2) by striking ``upon the request of the State agency under
the State plan or of either parent,''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect on October 1, 2007.
SEC. 7303. DECREASE IN AMOUNT OF CHILD SUPPORT ARREARAGE TRIGGERING
PASSPORT DENIAL.
(a) In General.--Section 452(k)(1) (42 U.S.C. 652(k)(1)) is amended
by striking ``$5,000'' and inserting ``$2,500''.
(b) Conforming Amendment.--Section 454(31) (42 U.S.C. 654(31)) is
amended by striking ``$5,000'' and inserting ``$2,500''.
(c) Effective Date.--The amendments made by this section shall take
effect on October 1, 2006.
SEC. 7304. MAINTENANCE OF TECHNICAL ASSISTANCE FUNDING.
Section 452(j) (42 U.S.C. 652(j)) is amended by inserting ``or the
amount appropriated under this paragraph for fiscal year 2002,
whichever is greater'' before ``, which shall be available''.
SEC. 7305. MAINTENANCE OF FEDERAL PARENT LOCATOR SERVICE FUNDING.
Section 453(o) (42 U.S.C. 653(o)) is amended--
(1) in the first sentence, by inserting ``or the amount
appropriated under this paragraph for fiscal year 2002, whichever
is greater'' before ``, which shall be available''; and
(2) in the second sentence, by striking ``for each of fiscal
years 1997 through 2001''.
SEC. 7306. INFORMATION COMPARISONS WITH INSURANCE DATA.
(a) Duties of the Secretary.--Section 452 (42 U.S.C. 652) is
amended by adding at the end the following:
``(l) Comparisons With Insurance Information.--
``(1) In general.--The Secretary, through the Federal Parent
Locator Service, may--
``(A) compare information concerning individuals owing
past-due support with information maintained by insurers (or
their agents) concerning insurance claims, settlements, awards,
and payments; and
``(B) furnish information resulting from the data matches
to the State agencies responsible for collecting child support
from the individuals.
``(2) Liability.--An insurer (including any agent of an
insurer) shall not be liable under any Federal or State law to any
person for any disclosure provided for under this subsection, or
for any other action taken in good faith in accordance with this
subsection.''.
(b) State Reimbursement of Federal Costs.--Section 453(k)(3) (42
U.S.C. 653(k)(3)) is amended by inserting ``or section 452(l)'' after
``pursuant to this section''.
SEC. 7307. REQUIREMENT THAT STATE CHILD SUPPORT ENFORCEMENT AGENCIES
SEEK MEDICAL SUPPORT FOR CHILDREN FROM EITHER PARENT.
(a) State Agencies Required To Seek Medical Support From Either
Parent.--
(1) In general.--Section 466(a)(19)(A) (42 U.S.C.
666(a)(19)(A)) is amended by striking ``which include a provision
for the health care coverage of the child are enforced'' and
inserting ``shall include a provision for medical support for the
child to be provided by either or both parents, and shall be
enforced''.
(2) Conforming amendments.--
(A) Title iv-d.--
(i) Section 452(f) (42 U.S.C. 652(f)) is amended by
striking ``include medical support as part of any child
support order and enforce medical support'' and inserting
``enforce medical support included as part of a child
support order''.
(ii) Section 466(a)(19) (42 U.S.C. 666(a)(19)), as
amended by paragraph (1) of this subsection, is amended--
(I) in subparagraph (A)--
(aa) by striking ``section 401(e)(3)(C)'' and
inserting ``section 401(e)''; and
(bb) by striking ``section 401(f)(5)(C)'' and
inserting ``section 401(f)'';
(II) in subparagraph (B)--
(aa) by striking ``noncustodial'' each place it
appears; and
(bb) in clause (iii), by striking ``section
466(b)'' and inserting ``subsection (b)''; and
(III) in subparagraph (C), by striking
``noncustodial'' each place it appears and inserting
``obligated''.
(B) State or local governmental group health plans.--
Section 401(e)(2) of the Child Support Performance and
Incentive Act of 1998 (29 U.S.C. 1169 note) is amended, in the
matter preceding subparagraph (A), by striking ``who is a
noncustodial parent of the child''.
(C) Church plans.--Section 401(f)(5)(C) of the Child
Support Performance and Incentive Act of 1998 (29 U.S.C. 1169
note) is amended by striking ``noncustodial'' each place it
appears.
(b) Enforcement of Medical Support Requirements.--Section 452(f)
(42 U.S.C. 652(f)), as amended by subsection (a)(2)(A)(i), is amended
by inserting after the first sentence the following: ``A State agency
administering the program under this part may enforce medical support
against a custodial parent if health care coverage is available to the
custodial parent at a reasonable cost, notwithstanding any other
provision of this part.''.
(c) Definition of Medical Support.--Section 452(f) (42 U.S.C.
652(f)), as amended by subsections (a)(2)(A)(i) and (b) of this
section, is amended by adding at the end the following: ``For purposes
of this part, the term `medical support' may include health care
coverage, such as coverage under a health insurance plan (including
payment of costs of premiums, co-payments, and deductibles) and payment
for medical expenses incurred on behalf of a child.''.
SEC. 7308. REDUCTION OF FEDERAL MATCHING RATE FOR LABORATORY COSTS
INCURRED IN DETERMINING PATERNITY.
(a) In General.--Section 455(a)(1)(C) (42 U.S.C. 655(a)(1)(C)) is
amended by striking ``90 percent (rather than the percentage specified
in subparagraph (A))'' and inserting ``66 percent''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on October 1, 2006, and shall apply to costs incurred on or
after that date.
SEC. 7309. ENDING FEDERAL MATCHING OF STATE SPENDING OF FEDERAL
INCENTIVE PAYMENTS.
(a) In General.--Section 455(a)(1) (42 U.S.C. 655(a)(1)) is amended
by inserting ``from amounts paid to the State under section 458 or''
before ``to carry out an agreement''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on October 1, 2007.
SEC. 7310. MANDATORY FEE FOR SUCCESSFUL CHILD SUPPORT COLLECTION FOR
FAMILY THAT HAS NEVER RECEIVED TANF.
(a) In General.--Section 454(6)(B) (42 U.S.C. 654(6)(B)) is
amended--
(1) by inserting ``(i)'' after ``(B)'';
(2) by redesignating clauses (i) and (ii) as subclauses (I) and
(II), respectively;
(3) by adding ``and'' after the semicolon; and
(4) by adding after and below the end the following new clause:
``(ii) in the case of an individual who has never received
assistance under a State program funded under part A and for
whom the State has collected at least $500 of support, the
State shall impose an annual fee of $25 for each case in which
services are furnished, which shall be retained by the State
from support collected on behalf of the individual (but not
from the first $500 so collected), paid by the individual
applying for the services, recovered from the absent parent, or
paid by the State out of its own funds (the payment of which
from State funds shall not be considered as an administrative
cost of the State for the operation of the plan, and the fees
shall be considered income to the program);''.
(b) Conforming Amendments.--Section 457(a)(3) (42 U.S.C. 657(a)(3))
is amended to read as follows:
``(3) Families that never received assistance.--In the case of
any other family, the State shall distribute to the family the
portion of the amount so collected that remains after withholding
any fee pursuant to section 454(6)(B)(ii).''.
(c) Effective Date.--The amendments made by this section shall take
effect on October 1, 2006.
SEC. 7311. EXCEPTION TO GENERAL EFFECTIVE DATE FOR STATE PLANS
REQUIRING STATE LAW AMENDMENTS.
In the case of a State plan under part D of title IV of the Social
Security Act which the Secretary determines requires State legislation
in order for the plan to meet the additional requirements imposed by
the amendments made by this subtitle, the effective date of the
amendments imposing the additional requirements shall be 3 months after
the first day of the first calendar quarter beginning after the close
of the first regular session of the State legislature that begins after
the date of the enactment of this Act. For purposes of the preceding
sentence, in the case of a State that has a 2-year legislative session,
each year of the session shall be considered to be a separate regular
session of the State legislature.
Subtitle D--Child Welfare
SEC. 7401. STRENGTHENING COURTS.
(a) Court Improvement Grants.--
(1) In general.--Section 438(a) (42 U.S.C. 629h(a)) is
amended--
(A) by striking ``and'' at the end of paragraph (1);
(B) by striking the period at the end of paragraph (2) and
inserting a semicolon; and
(C) by adding at the end the following:
``(3) to ensure that the safety, permanence, and well-being
needs of children are met in a timely and complete manner; and
``(4) to provide for the training of judges, attorneys and
other legal personnel in child welfare cases.''.
(2) Applications.--Section 438(b) (42 U.S.C. 629h(b)) is
amended to read as follows:
``(b) Applications.--
``(1) In general.--In order to be eligible to receive a grant
under this section, a highest State court shall submit to the
Secretary an application at such time, in such form, and including
such information and assurances as the Secretary may require,
including--
``(A) in the case of a grant for the purpose described in
subsection (a)(3), a description of how courts and child
welfare agencies on the local and State levels will collaborate
and jointly plan for the collection and sharing of all relevant
data and information to demonstrate how improved case tracking
and analysis of child abuse and neglect cases will produce safe
and timely permanency decisions;
``(B) in the case of a grant for the purpose described in
subsection (a)(4), a demonstration that a portion of the grant
will be used for cross-training initiatives that are jointly
planned and executed with the State agency or any other agency
under contract with the State to administer the State program
under the State plan under subpart 1, the State plan approved
under section 434, or the State plan approved under part E; and
``(C) in the case of a grant for any purpose described in
subsection (a), a demonstration of meaningful and ongoing
collaboration among the courts in the State, the State agency
or any other agency under contract with the State who is
responsible for administering the State program under part B or
E, and, where applicable, Indian tribes.
``(2) Separate applications.--A highest State court desiring
grants under this section for 2 or more purposes shall submit
separate applications for the following grants:
``(A) A grant for the purposes described in paragraphs (1)
and (2) of subsection (a).
``(B) A grant for the purpose described in subsection
(a)(3).
``(C) A grant for the purpose described in subsection
(a)(4).''.
(3) Allotments.--Section 438(c) (42 U.S.C. 429h(c)) is
amended--
(A) in paragraph (1)--
(i) by inserting ``of this section for a grant
described in subsection (b)(2)(A) of this section'' after
``subsection (b)''; and
(ii) by striking ``paragraph (2) of this subsection''
and inserting ``subparagraph (B) of this paragraph'';
(B) in paragraph (2)--
(i) by striking ``this paragraph'' and inserting ``this
subparagraph'';
(ii) by striking ``paragraph (1) of this subsection''
and inserting ``subparagraph (A) of this paragraph''; and
(iii) by inserting ``for such a grant'' after
``subsection (b)'';
(C) by redesignating and indenting paragraphs (1) and (2)
as subparagraphs (A) and (B), respectively;
(D) by inserting before and above such subparagraph (A) the
following:
``(1) Grants to assess and improve handling of court
proceedings relating to foster care and adoption.--''; and
(E) by adding at the end the following:
``(2) Grants for improved data collection and training.--
``(A) In general.--Each highest State court which has an
application approved under subsection (b) of this section for a
grant referred to in subparagraph (B) or (C) of subsection
(b)(2) shall be entitled to payment, for each of fiscal years
2006 through 2010, from the amount made available under
whichever of paragraph (1) or (2) of subsection (e) applies
with respect to the grant, of an amount equal to the sum of
$85,000 plus the amount described in subparagraph (B) of this
paragraph for the fiscal year with respect to the grant.
``(B) Formula.--The amount described in this subparagraph
for any fiscal year with respect to a grant referred to in
subparagraph (B) or (C) of subsection (b)(2) is the amount that
bears the same ratio to the amount made available under
subsection (e) for such a grant (reduced by the dollar amount
specified in subparagraph (A) of this paragraph) as the number
of individuals in the State who have not attained 21 years of
age bears to the total number of such individuals in all States
the highest State courts of which have approved applications
under subsection (b) for such a grant.''.
(4) Funding.--Section 438 (42 U.S.C. 629h) is amended by adding
at the end the following:
``(e) Funding for Grants for Improved Data Collection and
Training.--Out of any money in the Treasury of the United States not
otherwise appropriated, there are appropriated to the Secretary, for
each of fiscal years 2006 through 2010--
``(1) $10,000,000 for grants referred to in subsection
(b)(2)(B); and
``(2) $10,000,000 for grants referred to in subsection
(b)(2)(C).''.
(b) Requirement To Demonstrate Meaningful Collaboration Between
Courts and Agencies in Child Welfare Services Programs.--Section 422(b)
(42 U.S.C. 622(b)) is amended--
(1) by striking ``and'' at the end of paragraph (13);
(2) by striking the period at the end of paragraph (14) and
inserting ``; and''; and
(3) by adding at the end the following:
``(15) demonstrate substantial, ongoing, and meaningful
collaboration with State courts in the development and
implementation of the State plan under subpart 1, the State plan
approved under subpart 2, and the State plan approved under part E,
and in the development and implementation of any program
improvement plan required under section 1123A.''.
(c) Use of Child Welfare Records in State Court Proceedings.--
Section 471 (42 U.S.C. 671) is amended--
(1) in subsection (a)(8), by inserting ``subject to subsection
(c),'' after ``(8)''; and
(2) by adding at the end the following:
``(c) Use of Child Welfare Records in State Court Proceedings.--
Subsection (a)(8) shall not be construed to limit the flexibility of a
State in determining State policies relating to public access to court
proceedings to determine child abuse and neglect or other court
hearings held pursuant to part B or this part, except that such
policies shall, at a minimum, ensure the safety and well-being of the
child, parents, and family.''.
SEC. 7402. FUNDING OF SAFE AND STABLE FAMILIES PROGRAMS.
Section 436(a) (42 U.S.C. 629f(a)) is amended to read as follows:
``(a) Authorization.--In addition to any amount otherwise made
available to carry out this subpart, there are authorized to be
appropriated to carry out this subpart $345,000,000 for fiscal year
2006. Notwithstanding the preceding sentence, the total amount
authorized to be so appropriated for fiscal year 2006 under this
subsection and under this subsection (as in effect before the date of
the enactment of the Deficit Reduction Act of 2005) is $345,000,000.''.
SEC. 7403. CLARIFICATION REGARDING FEDERAL MATCHING OF CERTAIN
ADMINISTRATIVE COSTS UNDER THE FOSTER CARE MAINTENANCE
PAYMENTS PROGRAM.
(a) Administrative Costs Relating to Unlicensed Care.--Section 472
(42 U.S.C. 672) is amended by inserting after subsection (h) the
following:
``(i) Administrative Costs Associated With Otherwise Eligible
Children Not in Licensed Foster Care Settings.--Expenditures by a State
that would be considered administrative expenditures for purposes of
section 474(a)(3) if made with respect to a child who was residing in a
foster family home or child-care institution shall be so considered
with respect to a child not residing in such a home or institution--
``(1) in the case of a child who has been removed in accordance
with subsection (a) of this section from the home of a relative
specified in section 406(a) (as in effect on July 16, 1996), only
for expenditures--
``(A) with respect to a period of not more than the lesser
of 12 months or the average length of time it takes for the
State to license or approve a home as a foster home, in which
the child is in the home of a relative and an application is
pending for licensing or approval of the home as a foster
family home; or
``(B) with respect to a period of not more than 1 calendar
month when a child moves from a facility not eligible for
payments under this part into a foster family home or child
care institution licensed or approved by the State; and
``(2) in the case of any other child who is potentially
eligible for benefits under a State plan approved under this part
and at imminent risk of removal from the home, only if--
``(A) reasonable efforts are being made in accordance with
section 471(a)(15) to prevent the need for, or if necessary to
pursue, removal of the child from the home; and
``(B) the State agency has made, not less often than every
6 months, a determination (or redetermination) as to whether
the child remains at imminent risk of removal from the home.''.
(b) Conforming Amendment.--Section 474(a)(3) (42 U.S.C. 674(a)(3))
is amended by inserting ``subject to section 472(i)'' before ``an
amount equal to''.
SEC. 7404. CLARIFICATION OF ELIGIBILITY FOR FOSTER CARE MAINTENANCE
PAYMENTS AND ADOPTION ASSISTANCE.
(a) Foster Care Maintenance Payments.--Section 472(a) (42 U.S.C.
672(a)) is amended to read as follows:
``(a) In General.--
``(1) Eligibility.--Each State with a plan approved under this
part shall make foster care maintenance payments on behalf of each
child who has been removed from the home of a relative specified in
section 406(a) (as in effect on July 16, 1996) into foster care
if--
``(A) the removal and foster care placement met, and the
placement continues to meet, the requirements of paragraph (2);
and
``(B) the child, while in the home, would have met the AFDC
eligibility requirement of paragraph (3).
``(2) Removal and foster care placement requirements.--The
removal and foster care placement of a child meet the requirements
of this paragraph if--
``(A) the removal and foster care placement are in
accordance with--
``(i) a voluntary placement agreement entered into by a
parent or legal guardian of the child who is the relative
referred to in paragraph (1); or
``(ii) a judicial determination to the effect that
continuation in the home from which removed would be
contrary to the welfare of the child and that reasonable
efforts of the type described in section 471(a)(15) for a
child have been made;
``(B) the child's placement and care are the responsibility
of--
``(i) the State agency administering the State plan
approved under section 471; or
``(ii) any other public agency with which the State
agency administering or supervising the administration of
the State plan has made an agreement which is in effect;
and
``(C) the child has been placed in a foster family home or
child-care institution.
``(3) AFDC eligibility requirement.--
``(A) In general.--A child in the home referred to in
paragraph (1) would have met the AFDC eligibility requirement
of this paragraph if the child--
``(i) would have received aid under the State plan
approved under section 402 (as in effect on July 16, 1996)
in the home, in or for the month in which the agreement was
entered into or court proceedings leading to the
determination referred to in paragraph (2)(A)(ii) of this
subsection were initiated; or
``(ii)(I) would have received the aid in the home, in
or for the month referred to in clause (i), if application
had been made therefor; or
``(II) had been living in the home within 6 months
before the month in which the agreement was entered into or
the proceedings were initiated, and would have received the
aid in or for such month, if, in such month, the child had
been living in the home with the relative referred to in
paragraph (1) and application for the aid had been made.
``(B) Resources determination.--For purposes of
subparagraph (A), in determining whether a child would have
received aid under a State plan approved under section 402 (as
in effect on July 16, 1996), a child whose resources
(determined pursuant to section 402(a)(7)(B), as so in effect)
have a combined value of not more than $10,000 shall be
considered a child whose resources have a combined value of not
more than $1,000 (or such lower amount as the State may
determine for purposes of section 402(a)(7)(B)).
``(4) Eligibility of certain alien children.--Subject to title
IV of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996, if the child is an alien disqualified
under section 245A(h) or 210(f) of the Immigration and Nationality
Act from receiving aid under the State plan approved under section
402 in or for the month in which the agreement described in
paragraph (2)(A)(i) was entered into or court proceedings leading
to the determination described in paragraph (2)(A)(ii) were
initiated, the child shall be considered to satisfy the
requirements of paragraph (3), with respect to the month, if the
child would have satisfied the requirements but for the
disqualification.''.
(b) Adoption Assistance.--Section 473(a)(2) (42 U.S.C. 673(a)(2))
is amended to read as follows:
``(2)(A) For purposes of paragraph (1)(B)(ii), a child meets the
requirements of this paragraph if the child--
``(i)(I)(aa) was removed from the home of a relative specified
in section 406(a) (as in effect on July 16, 1996) and placed in
foster care in accordance with a voluntary placement agreement with
respect to which Federal payments are provided under section 474
(or section 403, as such section was in effect on July 16, 1996),
or in accordance with a judicial determination to the effect that
continuation in the home would be contrary to the welfare of the
child; and
``(bb) met the requirements of section 472(a)(3) with respect
to the home referred to in item (aa) of this subclause;
``(II) meets all of the requirements of title XVI with respect
to eligibility for supplemental security income benefits; or
``(III) is a child whose costs in a foster family home or
child-care institution are covered by the foster care maintenance
payments being made with respect to the minor parent of the child
as provided in section 475(4)(B); and
``(ii) has been determined by the State, pursuant to subsection
(c) of this section, to be a child with special needs.
``(B) Section 472(a)(4) shall apply for purposes of subparagraph
(A) of this paragraph, in any case in which the child is an alien
described in such section.
``(C) A child shall be treated as meeting the requirements of this
paragraph for the purpose of paragraph (1)(B)(ii) if the child--
``(i) meets the requirements of subparagraph (A)(ii);
``(ii) was determined eligible for adoption assistance payments
under this part with respect to a prior adoption;
``(iii) is available for adoption because--
``(I) the prior adoption has been dissolved, and the
parental rights of the adoptive parents have been terminated;
or
``(II) the child's adoptive parents have died; and
``(iv) fails to meet the requirements of subparagraph (A) but
would meet such requirements if--
``(I) the child were treated as if the child were in the
same financial and other circumstances the child was in the
last time the child was determined eligible for adoption
assistance payments under this part; and
``(II) the prior adoption were treated as never having
occurred.''.
Subtitle E--Supplemental Security Income
SEC. 7501. REVIEW OF STATE AGENCY BLINDNESS AND DISABILITY
DETERMINATIONS.
Section 1633 (42 U.S.C. 1383b) is amended by adding at the end the
following:
``(e)(1) The Commissioner of Social Security shall review
determinations, made by State agencies pursuant to subsection (a) in
connection with applications for benefits under this title on the basis
of blindness or disability, that individuals who have attained 18 years
of age are blind or disabled as of a specified onset date. The
Commissioner of Social Security shall review such a determination
before any action is taken to implement the determination.
``(2)(A) In carrying out paragraph (1), the Commissioner of Social
Security shall review--
``(i) at least 20 percent of all determinations referred to in
paragraph (1) that are made in fiscal year 2006;
``(ii) at least 40 percent of all such determinations that are
made in fiscal year 2007; and
``(iii) at least 50 percent of all such determinations that are
made in fiscal year 2008 or thereafter.
``(B) In carrying out subparagraph (A), the Commissioner of Social
Security shall, to the extent feasible, select for review the
determinations which the Commissioner of Social Security identifies as
being the most likely to be incorrect.''.
SEC. 7502. PAYMENT OF CERTAIN LUMP SUM BENEFITS IN INSTALLMENTS UNDER
THE SUPPLEMENTAL SECURITY INCOME PROGRAM.
(a) In General.--Section 1631(a)(10)(A)(i) (42 U.S.C.
1383(a)(10)(A)(i)) is amended by striking ``12'' and inserting ``3''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect 3 months after the date of the enactment of this Act.
Subtitle F--Repeal of Continued Dumping and Subsidy Offset
SEC. 7601. REPEAL OF CONTINUED DUMPING AND SUBSIDY OFFSET.
(a) Repeal.--Effective upon the date of enactment of this Act,
section 754 of the Tariff Act of 1930 (19 U.S.C. 1675c), and the item
relating to section 754 in the table of contents of title VII of that
Act, are repealed.
(b) Distributions on Certain Entries.--All duties on entries of
goods made and filed before October 1, 2007, that would, but for
subsection (a) of this section, be distributed under section 754 of the
Tariff Act of 1930, shall be distributed as if section 754 of the
Tariff Act of 1930 had not been repealed by subsection (a).
Subtitle G--Effective Date
SEC. 7701. EFFECTIVE DATE.
Except as otherwise provided in this title, this title and the
amendments made by this title shall take effect as if enacted on
October 1, 2005.
TITLE VIII--EDUCATION AND PENSION BENEFIT PROVISIONS
Subtitle A--Higher Education Provisions
SEC. 8001. SHORT TITLE; REFERENCE; EFFECTIVE DATE.
(a) Short Title.--This subtitle may be cited as the ``Higher
Education Reconciliation Act of 2005''.
(b) References.--Except as otherwise expressly provided, whenever
in this subtitle an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of the
Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).
(c) Effective Date.--Except as otherwise provided in this subtitle
or the amendments made by this subtitle, the amendments made by this
subtitle shall be effective July 1, 2006.
SEC. 8002. MODIFICATION OF 50/50 RULE.
Section 102(a)(3) (20 U.S.C. 1002(a)(3)) is amended--
(1) in subparagraph (A), by inserting ``(excluding courses
offered by telecommunications as defined in section 484(l)(4))''
after ``courses by correspondence''; and
(2) in subparagraph (B), by inserting ``(excluding courses
offered by telecommunications as defined in section 484(l)(4))''
after ``correspondence courses''.
SEC. 8003. ACADEMIC COMPETITIVENESS GRANTS.
Subpart 1 of part A of title IV (20 U.S.C. 1070a) is amended by
adding after section 401 the following new section:
``SEC. 401A. ACADEMIC COMPETITIVENESS GRANTS.
``(a) Academic Competitiveness Grant Program.--
``(1) Academic competitiveness grants authorized.--The
Secretary shall award grants, in the amounts specified in
subsection (d)(1), to eligible students to assist the eligible
students in paying their college education expenses.
``(2) Academic competitiveness council.--
``(A) Establishment.--There is established an Academic
Competitiveness Council (referred to in this paragraph as the
`Council'). From the funds made available under subsection (e)
for fiscal year 2006, $50,000 shall be available to the Council
to carry out the duties described in subparagraph (B). The
Council shall be chaired by the Secretary of Education, and the
membership of the Council shall consist of officials from
Federal agencies with responsibilities for managing existing
Federal programs that promote mathematics and science (or
designees of such officials with significant decision-making
authority).
``(B) Duties.--The Council shall--
``(i) identify all Federal programs with a mathematics
or science focus;
``(ii) identify the target populations being served by
such programs;
``(iii) determine the effectiveness of such programs;
``(iv) identify areas of overlap or duplication in such
programs; and
``(v) recommend ways to efficiently integrate and
coordinate such programs.
``(C) Report.--Not later than one year after the date of
enactment of the Higher Education Reconciliation Act of 2005,
the Council shall transmit a report to each committee of
Congress with jurisdiction over a Federal program identified
under subparagraph (B)(i), detailing the findings and
recommendations under subparagraph (B), including
recommendations for legislative or administrative action.
``(b) Designation.--A grant under this section--
``(1) for the first or second academic year of a program of
undergraduate education shall be known as an `Academic
Competitiveness Grant'; and
``(2) for the third or fourth academic year of a program of
undergraduate education shall be known as a `National Science and
Mathematics Access to Retain Talent Grant' or a `National SMART
Grant'.
``(c) Definition of Eligible Student.--In this section the term
`eligible student' means a full-time student who, for the academic year
for which the determination of eligibility is made--
``(1) is a citizen of the United States;
``(2) is eligible for a Federal Pell Grant; and
``(3) in the case of a student enrolled or accepted for
enrollment in--
``(A) the first academic year of a program of undergraduate
education at a two- or four-year degree-granting institution of
higher education--
``(i) has successfully completed, after January 1,
2006, a rigorous secondary school program of study
established by a State or local educational agency and
recognized as such by the Secretary; and
``(ii) has not been previously enrolled in a program of
undergraduate education;
``(B) the second academic year of a program of
undergraduate education at a two- or four-year degree-granting
institution of higher education--
``(i) has successfully completed, after January 1,
2005, a rigorous secondary school program of study
established by a State or local educational agency and
recognized as such by the Secretary; and
``(ii) has obtained a cumulative grade point average of
at least 3.0 (or the equivalent as determined under
regulations prescribed by the Secretary) at the end of the
first academic year of such program of undergraduate
education; or
``(C) the third or fourth academic year of a program of
undergraduate education at a four-year degree-granting
institution of higher education--
``(i) is pursuing a major in--
``(I) the physical, life, or computer sciences,
mathematics, technology, or engineering (as determined
by the Secretary pursuant to regulations); or
``(II) a foreign language that the Secretary, in
consultation with the Director of National
Intelligence, determines is critical to the national
security of the United States; and
``(ii) has obtained a cumulative grade point average of
at least 3.0 (or the equivalent as determined under
regulations prescribed by the Secretary) in the coursework
required for the major described in clause (i).
``(d) Grant Award.--
``(1) Amounts.--
``(A) The Secretary shall award a grant under this section
in the amount of--
``(i) $750 for an eligible student under subsection
(c)(3)(A);
``(ii) $1,300 for an eligible student under subsection
(c)(3)(B); or
``(iii) $4,000 for an eligible student under subsection
(c)(3)(C).
``(B) Notwithstanding subparagraph (A)--
``(i) the amount of such grant, in combination with the
Federal Pell Grant assistance and other student financial
assistance available to such student, shall not exceed the
student's cost of attendance;
``(ii) if the amount made available under subsection
(e) for any fiscal year is less than the amount required to
be provided grants to all eligible students in the amounts
determined under subparagraph (A) and clause (i) of this
subparagraph, then the amount of the grant to each eligible
student shall be ratably reduced; and
``(iii) if additional amounts are appropriated for any
such fiscal year, such reduced amounts shall be increased
on the same basis as they were reduced.
``(2) Limitations.--The Secretary shall not award a grant under
this section--
``(A) to any student for an academic year of a program of
undergraduate education described in subparagraph (A), (B), or
(C) of subsection (c)(3) for which the student received credit
before the date of enactment of the Higher Education
Reconciliation Act of 2005; or
``(B) to any student for more than--
``(i) one academic year under subsection (c)(3)(A);
``(ii) one academic year under subsection (c)(3)(B); or
``(iii) two academic years under subsection (c)(3)(C).
``(e) Funding.--
``(1) Authorization and appropriation of funds.--There are
authorized to be appropriated, and there are appropriated, out of
any money in the Treasury not otherwise appropriated, for the
Department of Education to carry out this section--
``(A) $790,000,000 for fiscal year 2006;
``(B) $850,000,000 for fiscal year 2007;
``(C) $920,000,000 for fiscal year 2008;
``(D) $960,000,000 for fiscal year 2009; and
``(E) $1,010,000,000 for fiscal year 2010.
``(2) Use of excess funds.--If, at the end of a fiscal year,
the funds available for awarding grants under this section exceed
the amount necessary to make such grants in the amounts authorized
by subsection (d), then all of the excess funds shall remain
available for awarding grants under this section during the
subsequent fiscal year.
``(f) Recognition of Programs of Study.--The Secretary shall
recognize at least one rigorous secondary school program of study in
each State under subsection (c)(3)(A) and (B) for the purpose of
determining student eligibility under such subsection.
``(g) Sunset Provision.--The authority to make grants under this
section shall expire at the end of academic year 2010-2011.''.
SEC. 8004. REAUTHORIZATION OF FEDERAL FAMILY EDUCATION LOAN PROGRAM.
(a) Authorization of Appropriations.--Section 421(b)(5) (20 U.S.C.
1071(b)(5)) is amended by striking ``an administrative cost allowance''
and inserting ``a loan processing and issuance fee''.
(b) Extension of Authority.--
(1) Federal insurance limitations.--Section 424(a) (20 U.S.C.
1074(a)) is amended--
(A) by striking ``2004'' and inserting ``2012''; and
(B) by striking ``2008'' and inserting ``2016''.
(2) Guaranteed loans.--Section 428(a)(5) (20 U.S.C. 1078(a)(5))
is amended--
(A) by striking ``2004'' and inserting ``2012''; and
(B) by striking ``2008'' and inserting ``2016''.
(3) Consolidation loans.--Section 428C(e) (20 U.S.C. 1078-3(e))
is amended by striking ``2004'' and inserting ``2012''.
SEC. 8005. LOAN LIMITS.
(a) Federal Insurance Limits.--Section 425(a)(1)(A) (20 U.S.C.
1075(a)(1)(A)) is amended--
(1) in clause (i)(I), by striking ``$2,625'' and inserting
``$3,500''; and
(2) in clause (ii)(I), by striking ``$3,500'' and inserting
``$4,500''.
(b) Guarantee Limits.--Section 428(b)(1)(A) (20 U.S.C.
1078(b)(1)(A)) is amended--
(1) in clause (i)(I), by striking ``$2,625'' and inserting
``$3,500''; and
(2) in clause (ii)(I), by striking ``$3,500'' and inserting
``$4,500''.
(c) Federal PLUS Loans.--Section 428B (20 U.S.C. 1078-2) is
amended--
(1) in subsection (a)(1)--
(A) in the matter preceding subparagraph (A), by striking
``Parents'' and inserting ``A graduate or professional student
or the parents'';
(B) in subparagraph (A), by striking ``the parents'' and
inserting ``the graduate or professional student or the
parents''; and
(C) in subparagraph (B), by striking ``the parents'' and
inserting ``the graduate or professional student or the
parents'';
(2) in subsection (b), by striking ``any parent'' and inserting
``any graduate or professional student or any parent'';
(3) in subsection (c)(2), by striking ``parent'' and inserting
``graduate or professional student or parent''; and
(4) in subsection (d)(1), by striking ``the parent'' and
inserting ``the graduate or professional student or the parent''.
(d) Unsubsidized Stafford Loans for Graduate or Professional
Students.--Section 428H(d)(2) (20 U.S.C. 1078-8(d)(2)) is amended--
(1) in subparagraph (C), by striking ``$10,000'' and inserting
``$12,000''; and
(2) in subparagraph (D)--
(A) in clause (i), by striking ``$5,000'' and inserting
``$7,000''; and
(B) in clause (ii), by striking ``$5,000'' and inserting
``$7,000''.
(e) Effective Date of Increases.--The amendments made by
subsections (a), (b), and (d) shall be effective July 1, 2007.
SEC. 8006. PLUS LOAN INTEREST RATES AND ZERO SPECIAL ALLOWANCE PAYMENT.
(a) PLUS Loans.--Section 427A(l)(2) (20 U.S.C. 1077a(l)(2)) is
amended by striking ``7.9 percent'' and inserting ``8.5 percent''.
(b) Conforming Amendments for Special Allowances.--
(1) Amendments.--Subparagraph (I) of section 438(b)(2) (20
U.S.C. 1087-1(b)(2)) is amended--
(A) in clause (iii), by striking ``, subject to clause (v)
of this subparagraph'';
(B) in clause (iv), by striking ``, subject to clause (vi)
of this subparagraph''; and
(C) by striking clauses (v), (vi), and (vii) and inserting
the following:
``(v) Recapture of excess interest.--
``(I) Excess credited.--With respect to a loan on
which the applicable interest rate is determined under
subsection (k) or (l) of section 427A and for which the
first disbursement of principal is made on or after
April 1, 2006, if the applicable interest rate for any
3-month period exceeds the special allowance support
level applicable to such loan under this subparagraph
for such period, then an adjustment shall be made by
calculating the excess interest in the amount computed
under subclause (II) of this clause, and by crediting
the excess interest to the Government not less often
than annually.
``(II) Calculation of excess.--The amount of any
adjustment of interest on a loan to be made under this
subsection for any quarter shall be equal to--
``(aa) the applicable interest rate minus the
special allowance support level determined under
this subparagraph; multiplied by
``(bb) the average daily principal balance of
the loan (not including unearned interest added to
principal) during such calendar quarter; divided by
``(cc) four.
``(III) Special allowance support level.--For
purposes of this clause, the term `special allowance
support level' means, for any loan, a number expressed
as a percentage equal to the sum of the rates
determined under subclauses (I) and (III) of clause
(i), and applying any substitution rules applicable to
such loan under clauses (ii), (iii), and (iv) in
determining such sum.''.
(2) Effective date.--The amendments made by this subsection
shall not apply with respect to any special allowance payment made
under section 438 of the Higher Education Act of 1965 (20 U.S.C.
1087-1) before April 1, 2006.
SEC. 8007. DEFERMENT OF STUDENT LOANS FOR MILITARY SERVICE.
(a) Federal Family Education Loans.--Section 428(b)(1)(M) (20
U.S.C. 1078(b)(1)(M)) is amended--
(1) by striking ``or'' at the end of clause (ii);
(2) by redesignating clause (iii) as clause (iv); and
(3) by inserting after clause (ii) the following new clause:
``(iii) not in excess of 3 years during which the
borrower--
``(I) is serving on active duty during a war or
other military operation or national emergency; or
``(II) is performing qualifying National Guard duty
during a war or other military operation or national
emergency; or''.
(b) Direct Loans.--Section 455(f)(2) (20 U.S.C. 1087e(f)(2)) is
amended--
(1) by redesignating subparagraph (C) as subparagraph (D); and
(2) by inserting after subparagraph (B) the following new
subparagraph:
``(C) not in excess of 3 years during which the borrower--
``(i) is serving on active duty during a war or other
military operation or national emergency; or
``(ii) is performing qualifying National Guard duty
during a war or other military operation or national
emergency; or''.
(c) Perkins Loans.--Section 464(c)(2)(A) (20 U.S.C.
1087dd(c)(2)(A)) is amended--
(1) by redesignating clauses (iii) and (iv) as clauses (iv) and
(v), respectively; and
(2) by inserting after clause (ii) the following new clause:
``(iii) not in excess of 3 years during which the
borrower--
``(I) is serving on active duty during a war or
other military operation or national emergency; or
``(II) is performing qualifying National Guard duty
during a war or other military operation or national
emergency;''.
(d) Definitions.--Section 481 (20 U.S.C. 1088) is amended by adding
at the end the following new subsection:
``(d) Definitions for Military Deferments.--For purposes of parts
B, D, and E of this title:
``(1) Active duty.--The term `active duty' has the meaning
given such term in section 101(d)(1) of title 10, United States
Code, except that such term does not include active duty for
training or attendance at a service school.
``(2) Military operation.--The term `military operation' means
a contingency operation as such term is defined in section
101(a)(13) of title 10, United States Code.
``(3) National emergency.--The term `national emergency' means
the national emergency by reason of certain terrorist attacks
declared by the President on September 14, 2001, or subsequent
national emergencies declared by the President by reason of
terrorist attacks.
``(4) Serving on active duty.--The term `serving on active duty
during a war or other military operation or national emergency'
means service by an individual who is--
``(A) a Reserve of an Armed Force ordered to active duty
under section 12301(a), 12301(g), 12302, 12304, or 12306 of
title 10, United States Code, or any retired member of an Armed
Force ordered to active duty under section 688 of such title,
for service in connection with a war or other military
operation or national emergency, regardless of the location at
which such active duty service is performed; and
``(B) any other member of an Armed Force on active duty in
connection with such emergency or subsequent actions or
conditions who has been assigned to a duty station at a
location other than the location at which such member is
normally assigned.
``(5) Qualifying national guard duty.--The term `qualifying
National Guard duty during a war or other military operation or
national emergency' means service as a member of the National Guard
on full-time National Guard duty (as defined in section 101(d)(5)
of title 10, United States Code) under a call to active service
authorized by the President or the Secretary of Defense for a
period of more than 30 consecutive days under section 502(f) of
title 32, United States Code, in connection with a war, other
military operation, or a national emergency declared by the
President and supported by Federal funds.''.
(e) Rule of Construction.--Nothing in the amendments made by this
section shall be construed to authorize any refunding of any repayment
of a loan.
(f) Effective Date.--The amendments made by this section shall
apply with respect to loans for which the first disbursement is made on
or after July 1, 2001.
SEC. 8008. ADDITIONAL LOAN TERMS AND CONDITIONS.
(a) Disbursement.--Section 428(b)(1)(N) (20 U.S.C. 1078(b)(1)(N))
is amended--
(1) by striking ``or'' at the end of clause (i); and
(2) by striking clause (ii) and inserting the following:
``(ii) in the case of a student who is studying outside
the United States in a program of study abroad that is
approved for credit by the home institution at which such
student is enrolled, and only after verification of the
student's enrollment by the lender or guaranty agency, are,
at the request of the student, disbursed directly to the
student by the means described in clause (i), unless such
student requests that the check be endorsed, or the funds
transfer be authorized, pursuant to an authorized power-of-
attorney; or
``(iii) in the case of a student who is studying
outside the United States in a program of study at an
eligible foreign institution, are, at the request of the
foreign institution, disbursed directly to the student,
only after verification of the student's enrollment by the
lender or guaranty agency by the means described in clause
(i).''.
(b) Repayment Plans: Direct Loans.--Section 455(d)(1) (20 U.S.C.
1087e(d)(1)) is amended by striking subparagraphs (A), (B), and (C) and
inserting the following:
``(A) a standard repayment plan, consistent with subsection
(a)(1) of this section and with section 428(b)(9)(A)(i);
``(B) a graduated repayment plan, consistent with section
428(b)(9)(A)(ii);
``(C) an extended repayment plan, consistent with section
428(b)(9)(A)(v), except that the borrower shall annually repay
a minimum amount determined by the Secretary in accordance with
section 428(b)(1)(L); and''.
(c) Origination Fees.--
(1) FFEL program.--Paragraph (2) of section 438(c) (20 U.S.C.
1087-1(c)) is amended--
(A) by striking the designation and heading of such
paragraph and inserting the following:
``(2) Amount of origination fees.--
``(A) In general.--''; and
(B) by adding at the end the following new subparagraph:
``(B) Subsequent reductions.--Subparagraph (A) shall be
applied to loans made under this part (other than loans made
under sections 428C and 439(o))--
``(i) by substituting `2.0 percent' for `3.0 percent'
with respect to loans for which the first disbursement of
principal is made on or after July 1, 2006, and before July
1, 2007;
``(ii) by substituting `1.5 percent' for `3.0 percent'
with respect to loans for which the first disbursement of
principal is made on or after July 1, 2007, and before July
1, 2008;
``(iii) by substituting `1.0 percent' for `3.0 percent'
with respect to loans for which the first disbursement of
principal is made on or after July 1, 2008, and before July
1, 2009;
``(iv) by substituting `0.5 percent' for `3.0 percent'
with respect to loans for which the first disbursement of
principal is made on or after July 1, 2009, and before July
1, 2010; and
``(v) by substituting `0.0 percent' for `3.0 percent'
with respect to loans for which the first disbursement of
principal is made on or after July 1, 2010.''.
(2) Direct loan program.--Subsection (c) of section 455 (20
U.S.C. 1087e(c)) is amended--
(A) by striking ``(c) Loan Fee.--'' and inserting the
following:
``(c) Loan Fee.--
``(1) In general.--''; and
(B) by adding at the end the following:
``(2) Subsequent reduction.--Paragraph (1) shall be applied to
loans made under this part, other than Federal Direct Consolidation
loans and Federal Direct PLUS loans--
``(A) by substituting `3.0 percent' for `4.0 percent' with
respect to loans for which the first disbursement of principal
is made on or after the date of enactment of the Higher
Education Reconciliation Act of 2005, and before July 1, 2007;
``(B) by substituting `2.5 percent' for `4.0 percent' with
respect to loans for which the first disbursement of principal
is made on or after July 1, 2007, and before July 1, 2008;
``(C) by substituting `2.0 percent' for `4.0 percent' with
respect to loans for which the first disbursement of principal
is made on or after July 1, 2008, and before July 1, 2009;
``(D) by substituting `1.5 percent' for `4.0 percent' with
respect to loans for which the first disbursement of principal
is made on or after July 1, 2009, and before July 1, 2010; and
``(E) by substituting `1.0 percent' for `4.0 percent' with
respect to loans for which the first disbursement of principal
is made on or after July 1, 2010.''.
(3) Conforming amendment.--Section 455(b)(8)(A) (20 U.S.C.
1087e(b)(8)(A)) is amended by inserting ``or origination fee''
after ``reductions in the interest rate''.
SEC. 8009. CONSOLIDATION LOAN CHANGES.
(a) Consolidation Between Programs.--Section 428C (20 U.S.C. 1078-
3) is amended--
(1) in subsection (a)(3)(B)(i)--
(A) by inserting ``or under section 455(g)'' after ``under
this section'' both places it appears;
(B) by inserting ``under both sections'' after
``terminates'';
(C) by striking ``and'' at the end of subclause (III);
(D) by striking the period at the end of subclause (IV) and
inserting ``; and''; and
(E) by adding at the end the following new subclause:
``(V) an individual may obtain a subsequent consolidation
loan under section 455(g) only for the purposes of obtaining an
income contingent repayment plan, and only if the loan has been
submitted to the guaranty agency for default aversion.''; and
(2) in subsection (b)(5), by striking the first sentence and
inserting the following: ``In the event that a lender with an
agreement under subsection (a)(1) of this section denies a
consolidation loan application submitted to the lender by an
eligible borrower under this section, or denies an application
submitted to the lender by such a borrower for a consolidation loan
with income-sensitive repayment terms, the Secretary shall offer
any such borrower who applies for it, a Federal Direct
Consolidation loan. The Secretary shall offer such a loan to a
borrower who has defaulted, for the purpose of resolving the
default.''.
(b) Repeal of In-School Consolidation.--
(1) Definition of repayment period.--Section 428(b)(7)(A) (20
U.S.C. 1078(b)(7)(A)) is amended by striking ``shall begin--'' and
all that follows through ``earlier date.'' and inserting the
following: ``shall begin the day after 6 months after the date the
student ceases to carry at least one-half the normal full-time
academic workload (as determined by the institution).''.
(2) Conforming change to eligible borrower definition.--Section
428C(a)(3)(A)(ii)(I) (20 U.S.C. 1078-3(a)(3)(A)(ii)(I)) is amended
by inserting ``as determined under section 428(b)(7)(A)'' after
``repayment status''.
(c) Additional Amendments.--Section 428C (20 U.S.C. 1078-3) is
amended in subsection (a)(3), by striking subparagraph (C).
(d) Conforming Amendments to Direct Loan Program.--Section 455 (20
U.S.C. 1087e) is amended--
(1) in subsection (a)(1) by inserting ``428C,'' after
``428B,'';
(2) in subsection (a)(2)--
(A) by striking ``and'' at the end of subparagraph (B);
(B) by redesignating subparagraph (C) as subparagraph (D);
and
(C) by inserting after subparagraph (B) the following:
``(C) section 428C shall be known as `Federal Direct
Consolidation Loans'; and ''; and
(3) in subsection (g)--
(A) by striking the second sentence; and
(B) by adding at the end the following new sentences: ``To
be eligible for a consolidation loan under this part, a
borrower shall meet the eligibility criteria set forth in
section 428C(a)(3). The Secretary, upon application for such a
loan, shall comply with the requirements applicable to a lender
under section 428C(b)(1)(F).''.
SEC. 8010. REQUIREMENTS FOR DISBURSEMENTS OF STUDENT LOANS.
Section 428G (20 U.S.C. 1078-7) is amended--
(1) in subsection (a)(3), by adding at the end the following:
``Notwithstanding section 422(d) of the Higher Education Amendments
of 1998, this paragraph shall be effective beginning on the date of
enactment of the Higher Education Reconciliation Act of 2005.'';
(2) in subsection (b)(1), by adding at the end the following:
``Notwithstanding section 422(d) of the Higher Education Amendments
of 1998, the second sentence of this paragraph shall be effective
beginning on the date of enactment of the Higher Education
Reconciliation Act of 2005.''; and
(3) in subsection (e), by striking ``, made to a student to
cover the cost of attendance at an eligible institution outside the
United States''.
SEC. 8011. SCHOOL AS LENDER.
Paragraph (2) of section 435(d) (20 U.S.C. 1085(d)(2)) is amended
to read as follows:
``(2) Requirements for eligible institutions.--
``(A) In general.--To be an eligible lender under this
part, an eligible institution--
``(i) shall employ at least one person whose full-time
responsibilities are limited to the administration of
programs of financial aid for students attending such
institution;
``(ii) shall not be a home study school;
``(iii) shall not--
``(I) make a loan to any undergraduate student;
``(II) make a loan other than a loan under section
428 or 428H to a graduate or professional student; or
``(III) make a loan to a borrower who is not
enrolled at that institution;
``(iv) shall award any contract for financing,
servicing, or administration of loans under this title on a
competitive basis;
``(v) shall offer loans that carry an origination fee
or an interest rate, or both, that are less than such fee
or rate authorized under the provisions of this title;
``(vi) shall not have a cohort default rate (as defined
in section 435(m)) greater than 10 percent;
``(vii) shall, for any year for which the institution
engages in activities as an eligible lender, provide for a
compliance audit conducted in accordance with section
428(b)(1)(U)(iii)(I), and the regulations thereunder, and
submit the results of such audit to the Secretary;
``(viii) shall use any proceeds from special allowance
payments and interest payments from borrowers, interest
subsidies received from the Department of Education, and
any proceeds from the sale or other disposition of loans,
for need-based grant programs; and
``(ix) shall have met the requirements of subparagraphs
(A) through (F) of this paragraph as in effect on the day
before the date of enactment of the Higher Education
Reconciliation Act of 2005, and made loans under this part,
on or before April 1, 2006.
``(B) Administrative expenses.--An eligible lender under
subparagraph (A) shall be permitted to use a portion of the
proceeds described in subparagraph (A)(viii) for reasonable and
direct administrative expenses.
``(C) Supplement, not supplant.--An eligible lender under
subparagraph (A) shall ensure that the proceeds described in
subparagraph (A)(viii) are used to supplement, and not to
supplant, non-Federal funds that would otherwise be used for
need-based grant programs.''.
SEC. 8012. REPAYMENT BY THE SECRETARY OF LOANS OF BANKRUPT, DECEASED,
OR DISABLED BORROWERS; TREATMENT OF BORROWERS ATTENDING
SCHOOLS THAT FAIL TO PROVIDE A REFUND, ATTENDING CLOSED
SCHOOLS, OR FALSELY CERTIFIED AS ELIGIBLE TO BORROW.
Section 437 (20 U.S.C. 1087) is amended--
(1) in the section heading, by striking ``CLOSED SCHOOLS OR
FALSELY CERTIFIED AS ELIGIBLE TO BORROW'' and inserting ``SCHOOLS
THAT FAIL TO PROVIDE A REFUND, ATTENDING CLOSED SCHOOLS, OR FALSELY
CERTIFIED AS ELIGIBLE TO BORROW''; and
(2) in the first sentence of subsection (c)(1), by inserting
``or was falsely certified as a result of a crime of identity
theft'' after ``falsely certified by the eligible institution''.
SEC. 8013. ELIMINATION OF TERMINATION DATES FROM TAXPAYER-TEACHER
PROTECTION ACT OF 2004.
(a) Extension of Limitations on Special Allowance for Loans From
the Proceeds of Tax Exempt Issues.--Section 438(b)(2)(B) (20 U.S.C.
1087-1(b)(2)(B)) is amended--
(1) in clause (iv), by striking ``and before January 1,
2006,''; and
(2) in clause (v)(II)--
(A) by striking ``and before January 1, 2006,'' each place
it appears in divisions (aa) and (bb); and
(B) by striking ``, and before January 1, 2006'' in
division (cc).
(b) Additional Limitation on Special Allowance for Loans From the
Proceeds of Tax Exempt Issues.--Section 438(b)(2)(B) (20 U.S.C 1087-
1(b)(2)(B)) is further amended by adding at the end thereof the
following new clauses:
``(vi) Notwithstanding clauses (i), (ii), and (v), but subject
to clause (vii), the quarterly rate of the special allowance shall
be the rate determined under subparagraph (A), (E), (F), (G), (H),
or (I) of this paragraph, as the case may be, for a holder of
loans--
``(I) that were made or purchased on or after the date of
enactment of the Higher Education Reconciliation Act of 2005;
or
``(II) that were not earning a quarterly rate of special
allowance determined under clauses (i) or (ii) of subparagraph
(B) of this paragraph (20 U.S.C. 1087-1(b)(2)(b)) as of the
date of enactment of the Higher Education Reconciliation Act of
2005.
``(vii) Clause (vi) shall be applied by substituting `December
31, 2010' for `the date of enactment of the Higher Education
Reconciliation Act of 2005' in the case of a holder of loans that--
``(I) was, as of the date of enactment of the Higher
Education Reconciliation Act of 2005, and during the quarter
for which the special allowance is paid, a unit of State or
local government or a nonprofit private entity;
``(II) was, as of such date of enactment, and during such
quarter, not owned or controlled by, or under common ownership
or control with, a for-profit entity; and
``(III) held, directly or through any subsidiary,
affiliate, or trustee, a total unpaid balance of principal
equal to or less than $100,000,000 on loans for which special
allowances were paid under this subparagraph in the most recent
quarterly payment prior to September 30, 2005.''.
(c) Elimination of Effective Date Limitation on Higher Teacher Loan
Forgiveness Benefits.--
(1) Technical clarification.--The matter preceding paragraph
(1) of section 2 of the Taxpayer-Teacher Protection Act of 2004
(Public Law 108-409; 118 Stat. 2299) is amended by inserting ``of
the Higher Education Act of 1965'' after ``Section 438(b)(2)(B)''.
(2) Amendment.--Paragraph (3) of section 3(b) of the Taxpayer-
Teacher Protection Act of 2004 (20 U.S.C. 1078-10 note) is amended
by striking ``, and before October 1, 2005''.
(3) Effective dates.--The amendment made by paragraph (1) shall
be effective as if enacted on October 30, 2004, and the amendment
made by paragraph (2) shall be effective as if enacted on October
1, 2005.
(d) Coordination With Second Higher Education Extension Act of
2005.--
(1) Repeal.--Section 2 of the Second Higher Education Extension
Act of 2005 is amended by striking subsections (b) and (c).
(2) Effect on amendments.--The amendments made by subsections
(a) and (c) of this section shall be effective as if the amendments
made in subsections (b) and (c) of section 2 of the Second Higher
Education Extension Act of 2005 had not been enacted.
(e) Additional Changes to Teacher Loan Forgiveness Provisions.--
(1) FFEL provisions.--Section 428J (20 U.S.C. 1078-10) is
amended--
(A) in subsection (b)(1)(B), by inserting after ``1965''
the following: ``, or meets the requirements of subsection
(g)(3)''; and
(B) in subsection (g), by adding at the end the following
new paragraph:
``(3) Private school teachers.--An individual who is employed
as a teacher in a private school and is exempt from State
certification requirements (unless otherwise applicable under State
law), may, in lieu of the requirement of subsection (b)(1)(B), have
such employment treated as qualifying employment under this section
if such individual is permitted to and does satisfy rigorous
subject knowledge and skills tests by taking competency tests in
the applicable grade levels and subject areas. For such purposes,
the competency tests taken by such a private school teacher shall
be recognized by 5 or more States for the purpose of fulfilling the
highly qualified teacher requirements under section 9101 of the
Elementary and Secondary Education Act of 1965, and the score
achieved by such teacher on each test shall equal or exceed the
average passing score of those 5 States.''.
(2) Direct loan provisions.--Section 460 (20 U.S.C. 1087j) is
amended--
(A) in subsection (b)(1)(A)(ii), by inserting after
``1965'' the following: ``, or meets the requirements of
subsection (g)(3)''; and
(B) in subsection (g), by adding at the end the following
new paragraph:
``(3) Private school teachers.--An individual who is employed
as a teacher in a private school and is exempt from State
certification requirements (unless otherwise applicable under State
law), may, in lieu of the requirement of subsection (b)(1)(A)(ii),
have such employment treated as qualifying employment under this
section if such individual is permitted to and does satisfy
rigorous subject knowledge and skills tests by taking competency
tests in the applicable grade levels and subject areas. For such
purposes, the competency tests taken by such a private school
teacher shall be recognized by 5 or more States for the purpose of
fulfilling the highly qualified teacher requirements under section
9101 of the Elementary and Secondary Education Act of 1965, and the
score achieved by such teacher on each test shall equal or exceed
the average passing score of those 5 States.''.
SEC. 8014. ADDITIONAL ADMINISTRATIVE PROVISIONS.
(a) Insurance Percentage.--
(1) Amendment.--Subparagraph (G) of section 428(b)(1) (20
U.S.C. 1078(b)(1)(G)) is amended to read as follows:
``(G) insures 98 percent of the unpaid principal of loans
insured under the program, except that--
``(i) such program shall insure 100 percent of the
unpaid principal of loans made with funds advanced pursuant
to section 428(j) or 439(q);
``(ii) for any loan for which the first disbursement of
principal is made on or after July 1, 2006, the preceding
provisions of this subparagraph shall be applied by
substituting `97 percent' for `98 percent'; and
``(iii) notwithstanding the preceding provisions of
this subparagraph, such program shall insure 100 percent of
the unpaid principal amount of exempt claims as defined in
subsection (c)(1)(G);''.
(2) Effective date of amendment.--The amendment made by this
subsection shall apply with respect to loans for which the first
disbursement of principal is made on or after July 1, 2006.
(b) Federal Default Fees.--
(1) In general.--Subparagraph (H) of section 428(b)(1) (20
U.S.C. 1078(b)(1)(H)) is amended to read as follows:
``(H) provides--
``(i) for loans for which the date of guarantee of
principal is before July 1, 2006, for the collection of a
single insurance premium equal to not more than 1.0 percent
of the principal amount of the loan, by deduction
proportionately from each installment payment of the
proceeds of the loan to the borrower, and ensures that the
proceeds of the premium will not be used for incentive
payments to lenders; or
``(ii) for loans for which the date of guarantee of
principal is on or after July 1, 2006, for the collection,
and the deposit into the Federal Student Loan Reserve Fund
under section 422A of a Federal default fee of an amount
equal to 1.0 percent of the principal amount of the loan,
which fee shall be collected either by deduction from the
proceeds of the loan or by payment from other non-Federal
sources, and ensures that the proceeds of the Federal
default fee will not be used for incentive payments to
lenders;''.
(2) Unsubsidized loans.--Section 428H(h) (20 U.S.C. 1078-8(h))
is amended by adding at the end the following new sentences:
``Effective for loans for which the date of guarantee of principal
is on or after July 1, 2006, in lieu of the insurance premium
authorized under the preceding sentence, each State or nonprofit
private institution or organization having an agreement with the
Secretary under section 428(b)(1) shall collect and deposit into
the Federal Student Loan Reserve Fund under section 422A, a Federal
default fee of an amount equal to 1.0 percent of the principal
amount of the loan, which fee shall be collected either by
deduction from the proceeds of the loan or by payment from other
non-Federal sources. The Federal default fee shall not be used for
incentive payments to lenders.''.
(3) Voluntary flexible agreements.--Section 428A(a)(1) (20
U.S.C. 1078-1(a)(1)) is amended--
(A) by striking ``or'' at the end of subparagraph (A);
(B) by striking the period at the end of subparagraph (B)
and inserting ``; or''; and
(C) by adding at the end the following new subparagraph:
``(C) the Federal default fee required by section
428(b)(1)(H) and the second sentence of section 428H(h).''.
(c) Treatment of Exempt Claims.--
(1) Amendment.--Section 428(c)(1) (20 U.S.C. 1078(c)(1)) is
amended--
(A) by redesignating subparagraph (G) as subparagraph (H),
and moving such subparagraph 2 em spaces to the left; and
(B) by inserting after subparagraph (F) the following new
subparagraph:
``(G)(i) Notwithstanding any other provisions of this section,
in the case of exempt claims, the Secretary shall apply the
provisions of--
``(I) the fourth sentence of subparagraph (A) by
substituting `100 percent' for `95 percent';
``(II) subparagraph (B)(i) by substituting `100 percent'
for `85 percent'; and
``(III) subparagraph (B)(ii) by substituting `100 percent'
for `75 percent'.
``(ii) For purposes of clause (i) of this subparagraph, the
term `exempt claims' means claims with respect to loans for which
it is determined that the borrower (or the student on whose behalf
a parent has borrowed), without the lender's or the institution's
knowledge at the time the loan was made, provided false or
erroneous information or took actions that caused the borrower or
the student to be ineligible for all or a portion of the loan or
for interest benefits thereon.''.
(2) Effective date of amendments.--The amendments made by this
subsection shall apply with respect to loans for which the first
disbursement of principal is made on or after July 1, 2006.
(d) Consolidation of Defaulted Loans.--Section 428(c) (20 U.S.C.
1078(c)) is further amended--
(1) in paragraph (2)(A)--
(A) by inserting ``(i)'' after ``including''; and
(B) by inserting before the semicolon at the end the
following: ``and (ii) requirements establishing procedures to
preclude consolidation lending from being an excessive
proportion of guaranty agency recoveries on defaulted loans
under this part'';
(2) in paragraph (2)(D), by striking ``paragraph (6)'' and
inserting ``paragraph (6)(A)''; and
(3) in paragraph (6)--
(A) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively;
(B) by inserting ``(A)'' before ``For the purpose of
paragraph (2)(D),''; and
(C) by adding at the end the following new subparagraphs:
``(B) A guaranty agency shall--
``(i) on or after October 1, 2006--
``(I) not charge the borrower collection costs in an
amount in excess of 18.5 percent of the outstanding
principal and interest of a defaulted loan that is paid off
through consolidation by the borrower under this title; and
``(II) remit to the Secretary a portion of the
collection charge under subclause (I) equal to 8.5 percent
of the outstanding principal and interest of such defaulted
loan; and
``(ii) on and after October 1, 2009, remit to the Secretary
the entire amount charged under clause (i)(I) with respect to
each defaulted loan that is paid off with excess consolidation
proceeds.
``(C) For purposes of subparagraph (B), the term `excess
consolidation proceeds' means, with respect to any guaranty agency
for any Federal fiscal year beginning on or after October 1, 2009,
the proceeds of consolidation of defaulted loans under this title
that exceed 45 percent of the agency's total collections on
defaulted loans in such Federal fiscal year.''.
(e) Documentation of Forbearance Agreements.--Section 428(c) (20
U.S.C. 1078(c)) is further amended--
(1) in paragraph (3)(A)(i)--
(A) by striking ``in writing''; and
(B) by inserting ``and documented in accordance with
paragraph (10)'' after ``approval of the insurer''; and
(2) by adding at the end the following new paragraph:
``(10) Documentation of forbearance agreements.--For the
purposes of paragraph (3), the terms of forbearance agreed to by
the parties shall be documented by confirming the agreement of the
borrower by notice to the borrower from the lender, and by
recording the terms in the borrower's file.''.
(f) Voluntary Flexible Agreements.--Section 428A(a) (20 U.S.C.
1078-1(a)) is further amended--
(1) in paragraph (1)(B), by striking ``unless the Secretary''
and all that follows through ``designated guarantor'';
(2) by striking paragraph (2);
(3) by redesignating paragraph (3) as paragraph (2); and
(4) by striking paragraph (4).
(g) Fraud; Repayment Required.--Section 428B(a)(1) (20 U.S.C. 1078-
2(a)(1)) is further amended--
(1) by striking ``and'' at the end of subparagraph (A);
(2) by redesignating subparagraph (B) as subparagraph (C); and
(3) by inserting after subparagraph (A) the following new
subparagraph:
``(B) in the case of a graduate or professional student or
parent who has been convicted of, or has pled nolo contendere
or guilty to, a crime involving fraud in obtaining funds under
this title, such graduate or professional student or parent has
completed the repayment of such funds to the Secretary, or to
the holder in the case of a loan under this title obtained by
fraud; and''.
(h) Default Reduction Program.--Section 428F(a)(1) (20 U.S.C. 1078-
6(a)(1)) is amended--
(1) in subparagraph (A), by striking ``consecutive payments for
12 months'' and inserting ``9 payments made within 20 days of the
due date during 10 consecutive months'';
(2) by redesignating subparagraph (C) as subparagraph (D); and
(3) by inserting after subparagraph (B) the following new
subparagraph:
``(C) A guaranty agency may charge the borrower and retain
collection costs in an amount not to exceed 18.5 percent of the
outstanding principal and interest at the time of sale of a
loan rehabilitated under subparagraph (A).''.
(i) Exceptional Performance Insurance Rate.--Section 428I(b)(1) (20
U.S.C. 1078-9(b)(1)) is amended--
(1) in the heading, by striking ``100 percent'' and inserting
``99 percent''; and
(2) by striking ``100 percent of the unpaid'' and inserting
``99 percent of the unpaid''.
(j) Uniform Administrative and Claims Procedure.--Section
432(l)(1)(H) (20 U.S.C. 1082(l)(1)(H)) is amended by inserting ``and
anticipated graduation date'' after ``status change''.
(1) Section 428(a)(3)(A)(v) (20 U.S.C. 1078(a)(3)(A)(v)) is
amended--
(A) by striking ``or'' at the end of subclause (I);
(B) by striking the period at the end of subclause (II) and
inserting ``; or''; and
(C) by adding after subclause (II) the following new
subclause:
``(III) in the case of a loan disbursed through an escrow
agent, 3 days before the first disbursement of the loan.''.
(2) Section 428(c)(1)(A) (20 U.S.C. 1078(c)(1)(A)) is amended
by striking ``45 days'' in the last sentence and inserting ``30
days''.
(3) Section 428(i)(1) (20 U.S.C. 1078(i)(1)) is amended by
striking ``21 days'' in the third sentence and inserting ``10
days''.
SEC. 8015. FUNDS FOR ADMINISTRATIVE EXPENSES.
Section 458 is amended to read as follows:
``SEC. 458. FUNDS FOR ADMINISTRATIVE EXPENSES.
``(a) Administrative Expenses.--
``(1) Mandatory funds for fiscal year 2006.--For fiscal year
2006, there shall be available to the Secretary, from funds not
otherwise appropriated, funds to be obligated for--
``(A) administrative costs under this part and part B,
including the costs of the direct student loan programs under
this part; and
``(B) account maintenance fees payable to guaranty agencies
under part B and calculated in accordance with subsections (b)
and (c),
not to exceed (from such funds not otherwise appropriated)
$820,000,000 in fiscal year 2006.
``(2) Authorization for administrative costs beginning in
fiscal years 2007 through 2011.--For each of the fiscal years 2007
through 2011, there are authorized to be appropriated such sums as
may be necessary for administrative costs under this part and part
B, including the costs of the direct student loan programs under
this part.
``(3) Continuing mandatory funds for account maintenance
fees.--For each of the fiscal years 2007 through 2011, there shall
be available to the Secretary, from funds not otherwise
appropriated, funds to be obligated for account maintenance fees
payable to guaranty agencies under part B and calculated in
accordance with subsection (b).
``(4) Account maintenance fees.--Account maintenance fees under
paragraph (3) shall be paid quarterly and deposited in the Agency
Operating Fund established under section 422B.
``(5) Carryover.--The Secretary may carry over funds made
available under this section to a subsequent fiscal year.
``(b) Calculation Basis.--Account maintenance fees payable to
guaranty agencies under subsection (a)(3) shall not exceed the basis of
0.10 percent of the original principal amount of outstanding loans on
which insurance was issued under part B.
``(c) Budget Justification.--No funds may be expended under this
section unless the Secretary includes in the Department of Education's
annual budget justification to Congress a detailed description of the
specific activities for which the funds made available by this section
have been used in the prior and current years (if applicable), the
activities and costs planned for the budget year, and the projection of
activities and costs for each remaining year for which administrative
expenses under this section are made available.''.
SEC. 8016. COST OF ATTENDANCE.
Section 472 (20 U.S.C. 1087ll) is amended--
(1) by striking paragraph (4) and inserting the following:
``(4) for less than half-time students (as determined by the
institution), tuition and fees and an allowance for only--
``(A) books, supplies, and transportation (as determined by
the institution);
``(B) dependent care expenses (determined in accordance
with paragraph (8)); and
``(C) room and board costs (determined in accordance with
paragraph (3)), except that a student may receive an allowance
for such costs under this subparagraph for not more than 3
semesters or the equivalent, of which not more than 2 semesters
or the equivalent may be consecutive;'';
(2) in paragraph (11), by striking ``and'' after the semicolon;
(3) in paragraph (12), by striking the period and inserting ``;
and''; and
(4) by adding at the end the following:
``(13) at the option of the institution, for a student in a
program requiring professional licensure or certification, the one-
time cost of obtaining the first professional credentials (as
determined by the institution).''.
SEC. 8017. FAMILY CONTRIBUTION.
(a) Family Contribution for Dependent Students.--
(1) Amendments.--Section 475 (20 U.S.C. 1087oo) is amended--
(A) in subsection (g)(2)(D), by striking ``$2,200'' and
inserting ``$3,000''; and
(B) in subsection (h), by striking ``35'' and inserting
``20''.
(2) Effective date.--The amendments made by paragraph (1) shall
apply with respect to determinations of need for periods of
enrollment beginning on or after July 1, 2007.
(b) Family Contribution for Independent Students Without Dependents
Other Than a Spouse.--
(1) Amendments.--Section 476 (20 U.S.C. 1087pp) is amended--
(A) in subsection (b)(1)(A)(iv)--
(i) in subclause (I), by striking ``$5,000'' and
inserting ``$6,050'';
(ii) in subclause (II), by striking ``$5,000'' and
inserting ``$6,050''; and
(iii) in subclause (III), by striking ``$8,000'' and
inserting ``$9,700''; and
(B) in subsection (c)(4), by striking ``35'' and inserting
``20''.
(2) Effective date.--The amendments made by paragraph (1) shall
apply with respect to determinations of need for periods of
enrollment beginning on or after July 1, 2007.
(c) Family Contribution for Independent Students With Dependents
Other Than a Spouse.--
(1) Amendment.--Section 477(c)(4) (20 U.S.C. 1087qq(c)(4)) is
amended by striking ``12'' and inserting ``7''.
(2) Effective date.--The amendment made by paragraph (1) shall
apply with respect to determinations of need for periods of
enrollment beginning on or after July 1, 2007.
(d) Regulations; Updated Tables.--Section 478(b) (20 U.S.C.
1087rr(b)) is amended--
(1) in paragraph (1), by adding at the end the following: ``For
the 2007-2008 academic year, the Secretary shall revise the tables
in accordance with this paragraph, except that the Secretary shall
increase the amounts contained in the table in section 477(b)(4) by
a percentage equal to the greater of the estimated percentage
increase in the Consumer Price Index (as determined under the
preceding sentence) or 5 percent.''; and
(2) in paragraph (2)--
(A) by striking ``2000-2001'' and inserting ``2007-2008'';
and
(B) by striking ``1999'' and inserting ``2006''.
(e) Employment Expense Allowance.--Section 478(h) (20 U.S.C.
1087rr(h)) is amended--
(1) by striking ``476(b)(4)(B),''; and
(2) by striking ``meals away from home, apparel and upkeep,
transportation, and housekeeping services'' and inserting ``food
away from home, apparel, transportation, and household furnishings
and operations''.
SEC. 8018. SIMPLIFIED NEED TEST AND AUTOMATIC ZERO IMPROVEMENTS.
(a) Amendments.--Section 479 (20 U.S.C. 1087ss) is amended--
(1) in subsection (b)--
(A) in paragraph (1)--
(i) in subparagraph (A), by striking clause (i) and
inserting the following:
``(i) the student's parents--
``(I) file, or are eligible to file, a form
described in paragraph (3);
``(II) certify that the parents are not required to
file a Federal income tax return; or
``(III) received, or the student received, benefits
at some time during the previous 12-month period under
a means-tested Federal benefit program as defined under
subsection (d); and''; and
(ii) in subparagraph (B), by striking clause (i) and
inserting the following:
``(i) the student (and the student's spouse, if any)--
``(I) files, or is eligible to file, a form
described in paragraph (3);
``(II) certifies that the student (and the
student's spouse, if any) is not required to file a
Federal income tax return; or
``(III) received benefits at some time during the
previous 12-month period under a means-tested Federal
benefit program as defined under subsection (d); and'';
and
(B) in the matter preceding subparagraph (A) of paragraph
(3), by striking ``A student or family files a form described
in this subsection, or subsection (c), as the case maybe, if
the student or family, respectively, files'' and inserting ``In
the case of an independent student, the student, or in the case
of a dependent student, the family, files a form described in
this subsection, or subsection (c), as the case may be, if the
student or family, as appropriate, files'';
(2) in subsection (c)--
(A) in paragraph (1)--
(i) by striking subparagraph (A) and inserting the
following:
``(A) the student's parents--
``(i) file, or are eligible to file, a form described
in subsection (b)(3);
``(ii) certify that the parents are not required to
file a Federal income tax return; or
``(iii) received, or the student received, benefits at
some time during the previous 12-month period under a
means-tested Federal benefit program as defined under
subsection (d); and''; and
(ii) by striking subparagraph (B) and inserting the
following:
``(B) the sum of the adjusted gross income of the parents
is less than or equal to $20,000; or''; and
(B) in paragraph (2)--
(i) by striking subparagraph (A) and inserting the
following:
``(A) the student (and the student's spouse, if any)--
``(i) files, or is eligible to file, a form described
in subsection (b)(3);
``(ii) certifies that the student (and the student's
spouse, if any) is not required to file a Federal income
tax return; or
``(iii) received benefits at some time during the
previous 12-month period under a means-tested Federal
benefit program as defined under subsection (d); and''; and
(ii) by striking subparagraph (B) and inserting the
following:
``(B) the sum of the adjusted gross income of the student
and spouse (if appropriate) is less than or equal to
$20,000.''; and
(3) by adding at the end the following:
``(d) Definition of Means-Tested Federal Benefit Program.--In this
section, the term `means-tested Federal benefit program' means a
mandatory spending program of the Federal Government, other than a
program under this title, in which eligibility for the program's
benefits, or the amount of such benefits, are determined on the basis
of income or resources of the individual or family seeking the benefit,
and may include such programs as--
``(1) the supplemental security income program under title XVI
of the Social Security Act (42 U.S.C. 1381 et seq.);
``(2) the food stamp program under the Food Stamp Act of 1977
(7 U.S.C. 2011 et seq.);
``(3) the free and reduced price school lunch program
established under the Richard B. Russell National School Lunch Act
(42 U.S.C. 1751 et seq.);
``(4) the program of block grants for States for temporary
assistance for needy families established under part A of title IV
of the Social Security Act (42 U.S.C. 601 et seq.);
``(5) the special supplemental nutrition program for women,
infants, and children established by section 17 of the Child
Nutrition Act of 1966 (42 U.S.C. 1786); and
``(6) other programs identified by the Secretary.''.
(b) Evaluation of Simplified Needs Test.--
(1) Eligibility guidelines.--The Secretary of Education shall
regularly evaluate the impact of the eligibility guidelines in
subsections (b)(1)(A)(i), (b)(1)(B)(i), (c)(1)(A), and (c)(2)(A) of
section 479 of the Higher Education Act of 1965 (20 U.S.C.
1087ss(b)(1)(A)(i), (b)(1)(B)(i), (c)(1)(A), and (c)(2)(A)).
(2) Means-tested federal benefit program.--For each 3-year
period, the Secretary of Education shall evaluate the impact of
including the receipt of benefits by a student or parent under a
means-tested Federal benefit program (as defined in section 479(d)
of the Higher Education Act of 1965 (20 U.S.C. 1087ss(d)) as a
factor in determining eligibility under subsections (b) and (c) of
section 479 of the Higher Education Act of 1965 (20 U.S.C.
1087ss(b) and (c)).
SEC. 8019. ADDITIONAL NEED ANALYSIS AMENDMENTS.
(a) Treating Active Duty Members of the Armed Forces as Independent
Students.--Section 480(d)(3) (20 U.S.C. 1087vv(d)(3)) is amended by
inserting before the semicolon at the end the following: ``or is
currently serving on active duty in the Armed Forces for other than
training purposes''.
(b) Definition of Assets.--Section 480(f)(1) (20 U.S.C.
1087vv(f)(1)) is amended by inserting ``qualified education benefits
(except as provided in paragraph (3)),'' after ``tax shelters,''.
(c) Treatment of Family Ownership of Small Businesses.--Section
480(f)(2) (20 U.S.C. 1087vv(f)(2)) is amended--
(1) in subparagraph (A), by striking ``or'';
(2) in subparagraph (B), by striking the period at the end and
inserting ``; or''; and
(3) by adding at the end the following new subparagraph:
``(C) a small business with not more than 100 full-time or
full-time equivalent employees (or any part of such a small
business) that is owned and controlled by the family.''.
(d) Additional Definitions.--Section 480(f) is further amended by
adding at the end the following new paragraphs:
``(3) A qualified education benefit shall not be considered an
asset of a student for purposes of section 475.
``(4) In determining the value of assets in a determination of need
under this title (other than for subpart 4 of part A), the value of a
qualified education benefit shall be--
``(A) the refund value of any tuition credits or certificates
purchased under a qualified education benefit; and
``(B) in the case of a program in which contributions are made
to an account that is established for the purpose of meeting the
qualified higher education expenses of the designated beneficiary
of the account, the current balance of such account.
``(5) In this subsection:
``(A) The term `qualified education benefit' means--
``(i) a qualified tuition program (as defined in section
529(b)(1)(A) of the Internal Revenue Code of 1986) or other
prepaid tuition plan offered by a State; and
``(ii) a Coverdell education savings account (as defined in
section 530(b)(1) of the Internal Revenue Code of 1986).
``(B) The term `qualified higher education expenses' has the
meaning given the term in section 529(e) of the Internal Revenue
Code of 1986.''.
(e) Designated Assistance.--Section 480(j) (20 U.S.C. 1087vv(j)) is
amended--
(1) in the subsection heading, by striking ``; Tuition
Prepayment Plans'';
(2) by striking paragraph (2);
(3) by redesignating paragraph (3) as paragraph (2); and
(4) by adding at the end the following new paragraph:
``(3) Notwithstanding paragraph (1) and section 472, assistance not
received under this title may be excluded from both estimated financial
assistance and cost of attendance, if that assistance is provided by a
State and is designated by such State to offset a specific component of
the cost of attendance. If that assistance is excluded from either
estimated financial assistance or cost of attendance, it shall be
excluded from both.''.
SEC. 8020. GENERAL PROVISIONS.
(a) Academic Year.--Paragraph (2) of section 481(a) (20 U.S.C.
1088(a)) is amended to read as follows:
``(2)(A) For the purpose of any program under this title, the term
`academic year' shall--
``(i) require a minimum of 30 weeks of instructional time for a
course of study that measures its program length in credit hours;
or
``(ii) require a minimum of 26 weeks of instructional time for
a course of study that measures its program length in clock hours;
and
``(iii) require an undergraduate course of study to contain an
amount of instructional time whereby a full-time student is
expected to complete at least--
``(I) 24 semester or trimester hours or 36 quarter credit
hours in a course of study that measures its program length in
credit hours; or
``(II) 900 clock hours in a course of study that measures
its program length in clock hours.
``(B) The Secretary may reduce such minimum of 30 weeks to not less
than 26 weeks for good cause, as determined by the Secretary on a case-
by-case basis, in the case of an institution of higher education that
provides a 2-year or 4-year program of instruction for which the
institution awards an associate or baccalaureate degree.''.
(b) Distance Education: Eligible Program.--Section 481(b) (20
U.S.C. 1088(b)) is amended by adding at the end the following new
paragraphs:
``(3) An otherwise eligible program that is offered in whole or in
part through telecommunications is eligible for the purposes of this
title if the program is offered by an institution, other than a foreign
institution, that has been evaluated and determined (before or after
the date of enactment of the Higher Education Reconciliation Act of
2005) to have the capability to effectively deliver distance education
programs by an accrediting agency or association that--
``(A) is recognized by the Secretary under subpart 2 of part H;
and
``(B) has evaluation of distance education programs within the
scope of its recognition, as described in section 496(n)(3).
``(4) For purposes of this title, the term `eligible program'
includes an instructional program that, in lieu of credit hours or
clock hours as the measure of student learning, utilizes direct
assessment of student learning, or recognizes the direct assessment of
student learning by others, if such assessment is consistent with the
accreditation of the institution or program utilizing the results of
the assessment. In the case of a program being determined eligible for
the first time under this paragraph, such determination shall be made
by the Secretary before such program is considered to be an eligible
program.''.
(c) Correspondence Courses.--Section 484(l)(1) (20 U.S.C.
1091(l)(1)) is amended--
(1) in subparagraph (A)--
(A) by striking ``for a program of study of 1 year or
longer''; and
(B) by striking ``unless the total'' and all that follows
through ``courses at the institution''; and
(2) by amending subparagraph (B) to read as follows:
``(B) Exception.--Subparagraph (A) shall not apply to an
institution or school described in section 3(3)(C) of the Carl
D. Perkins Vocational and Technical Education Act of 1998.''.
SEC. 8021. STUDENT ELIGIBILITY.
(a) Fraud: Repayment Required.--Section 484(a) (20 U.S.C. 1091(a))
is amended--
(1) by striking the period at the end of paragraph (5) and
inserting ``; and''; and
(2) by adding at the end the following new paragraph:
``(6) if the student has been convicted of, or has pled nolo
contendere or guilty to, a crime involving fraud in obtaining funds
under this title, have completed the repayment of such funds to the
Secretary, or to the holder in the case of a loan under this title
obtained by fraud.''.
(b) Verification of Income Date.--Paragraph (1) of section 484(q)
(20 U.S.C. 1091(q)) is amended to read as follows:
``(1) Confirmation with irs.--The Secretary of Education, in
cooperation with the Secretary of the Treasury, is authorized to
confirm with the Internal Revenue Service the information specified
in section 6103(l)(13) of the Internal Revenue Code of 1986
reported by applicants (including parents) under this title on
their Federal income tax returns for the purpose of verifying the
information reported by applicants on student financial aid
applications.''.
(c) Suspension of Eligibility for Drug Offenses.--Section 484(r)(1)
(20 U.S.C. 1091(r)(1)) is amended by striking everything preceding the
table and inserting the following:
``(1) In general.--A student who is convicted of any offense
under any Federal or State law involving the possession or sale of
a controlled substance for conduct that occurred during a period of
enrollment for which the student was receiving any grant, loan, or
work assistance under this title shall not be eligible to receive
any grant, loan, or work assistance under this title from the date
of that conviction for the period of time specified in the
following table:''.
SEC. 8022. INSTITUTIONAL REFUNDS.
Section 484B (20 U.S.C. 1091b) is amended--
(1) in the matter preceding clause (i) of subsection (a)(2)(A),
by striking ``a leave of'' and inserting ``1 or more leaves of'';
(2) in subsection (a)(3)(B)(ii), by inserting ``(as determined
in accordance with subsection (d))'' after ``student has
completed'';
(3) in subsection (a)(3)(C)(i), by striking ``grant or loan
assistance under this title'' and inserting ``grant assistance
under subparts 1 and 3 of part A, or loan assistance under parts B,
D, and E,'';
(4) in subsection (a)(4), by amending subparagraph (A) to read
as follows:
``(A) In general.--After determining the eligibility of the
student for a late disbursement or post-withdrawal disbursement
(as required in regulations prescribed by the Secretary), the
institution of higher education shall contact the borrower and
obtain confirmation that the loan funds are still required by
the borrower. In making such contact, the institution shall
explain to the borrower the borrower's obligation to repay the
funds following any such disbursement. The institution shall
document in the borrower's file the result of such contact and
the final determination made concerning such disbursement.'';
(5) in subsection (b)(1), by inserting ``not later than 45 days
from the determination of withdrawal'' after ``return'';
(6) in subsection (b)(2), by amending subparagraph (C) to read
as follows:
``(C) Grant overpayment requirements.--
``(i) In general.--Notwithstanding subparagraphs (A)
and (B), a student shall only be required to return grant
assistance in the amount (if any) by which--
``(I) the amount to be returned by the student (as
determined under subparagraphs (A) and (B)), exceeds
``(II) 50 percent of the total grant assistance
received by the student under this title for the
payment period or period of enrollment.
``(ii) Minimum.--A student shall not be required to
return amounts of $50 or less.'';
(7) in subsection (d), by striking ``(a)(3)(B)(i)'' and
inserting ``(a)(3)(B)''; and
(8) in subsection (d)(2), by striking ``clock hours--'' and all
that follows through the period and inserting ``clock hours
scheduled to be completed by the student in that period as of the
day the student withdrew.''.
SEC. 8023. COLLEGE ACCESS INITIATIVE.
Part G is further amended by inserting after section 485C (20
U.S.C. 1092c) the following new section:
``SEC. 485D. COLLEGE ACCESS INITIATIVE.
``(a) State-by-State Information.--The Secretary shall direct each
guaranty agency with which the Secretary has an agreement under section
428(c) to provide to the Secretary the information necessary for the
development of Internet web links and access for students and families
to a comprehensive listing of the postsecondary education
opportunities, programs, publications, Internet web sites, and other
services available in the States for which such agency serves as the
designated guarantor.
``(b) Guaranty Agency Activities.--
``(1) Plan and activity required.--Each guaranty agency with
which the Secretary has an agreement under section 428(c) shall
develop a plan, and undertake the activity necessary, to gather the
information required under subsection (a) and to make such
information available to the public and to the Secretary in a form
and manner as prescribed by the Secretary.
``(2) Activities.--Each guaranty agency shall undertake such
activities as are necessary to promote access to postsecondary
education for students through providing information on college
planning, career preparation, and paying for college. The guaranty
agency shall publicize such information and coordinate such
activities with other entities that either provide or distribute
such information in the States for which such guaranty agency
serves as the designated guarantor.
``(3) Funding.--The activities required by this section may be
funded from the guaranty agency's Operating Fund established
pursuant to section 422B and, to the extent funds remain, from
earnings on the restricted account established pursuant to section
422(h)(4).
``(4) Rule of construction.--Nothing in this subsection shall
be construed to require a guaranty agency to duplicate any efforts
under way on the date of enactment of the Higher Education
Reconciliation Act of 2005 that meet the requirements of this
section.
``(c) Access to Information.--
``(1) Secretary's responsibility.--The Secretary shall ensure
the availability of the information provided, by the guaranty
agencies in accordance with this section, to students, parents, and
other interested individuals, through Internet web links or other
methods prescribed by the Secretary.
``(2) Guaranty agency responsibility.--The guaranty agencies
shall ensure that the information required by this section is
available without charge in printed format for students and parents
requesting such information.
``(3) Publicity.--Not later than 270 days after the date of
enactment of the Higher Education Reconciliation Act of 2005, the
Secretary and guaranty agencies shall publicize the availability of
the information required by this section, with special emphasis on
ensuring that populations that are traditionally underrepresented
in postsecondary education are made aware of the availability of
such information.''.
SEC. 8024. WAGE GARNISHMENT REQUIREMENT.
Section 488A(a)(1) (20 U.S.C. 1095a(a)(1)) is amended by striking
``10 percent'' and inserting ``15 percent''.
Subtitle B--Pensions
SEC. 8101. INCREASES IN PBGC PREMIUMS.
(a) Flat-Rate Premiums.--
(1) Single-employer plans.--
(A) In general.--Clause (i) of section 4006(a)(3)(A) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)(A)) is amended by striking ``$19'' and inserting
``$30''.
(B) Adjustment for inflation.--Section 4006(a)(3) of such
Act (29 U.S.C. 1306(a)(3)) is amended by adding at the end the
following new subparagraph:
``(F) For each plan year beginning in a calendar year after 2006,
there shall be substituted for the premium rate specified in clause (i)
of subparagraph (A) an amount equal to the greater of--
``(i) the product derived by multiplying the premium rate
specified in clause (i) of subparagraph (A) by the ratio of--
``(I) the national average wage index (as defined in
section 209(k)(1) of the Social Security Act) for the first of
the 2 calendar years preceding the calendar year in which such
plan year begins, to
``(II) the national average wage index (as so defined) for
2004; and
``(ii) the premium rate in effect under clause (i) of
subparagraph (A) for plan years beginning in the preceding calendar
year.
If the amount determined under this subparagraph is not a multiple of
$1, such product shall be rounded to the nearest multiple of $1.''.
(2) Multiemployer plans.--
(A) In general.--Section 4006(a)(3)(A) of such Act (29
U.S.C. 1306(a)(3)(A)) is amended--
(i) in clause (iii)--
(I) by inserting ``and before January 1, 2006,''
after ``Act of 1980,''; and
(II) by striking the period at the end and
inserting ``, or''; and
(ii) by adding at the end the following:
``(iv) in the case of a multiemployer plan, for plan years
beginning after December 31, 2005, $8.00 for each individual who is
a participant in such plan during the applicable plan year.''.
(B) Adjustment for inflation.--Section 4006(a)(3) of such
Act (29 U.S.C. 1306(a)(3)), as amended by this subsection, is
amended by adding at the end the following new subparagraph:
``(G) For each plan year beginning in a calendar year after 2006,
there shall be substituted for the premium rate specified in clause
(iv) of subparagraph (A) an amount equal to the greater of--
``(i) the product derived by multiplying the premium rate
specified in clause (iv) of subparagraph (A) by the ratio of--
``(I) the national average wage index (as defined in
section 209(k)(1) of the Social Security Act) for the first of
the 2 calendar years preceding the calendar year in which such
plan year begins, to
``(II) the national average wage index (as so defined) for
2004; and
``(ii) the premium rate in effect under clause (iv) of
subparagraph (A) for plan years beginning in the preceding calendar
year.
If the amount determined under this subparagraph is not a multiple of
$1, such product shall be rounded to the nearest multiple of $1.''.
(b) Premium Rate for Certain Terminated Single-Employer Plans.--
Subsection (a) of section 4006 of such Act (29 U.S.C. 1306) is amended
by adding at the end the following:
``(7) Premium Rate for Certain Terminated Single-Employer Plans.--
``(A) In general.--If there is a termination of a single-
employer plan under clause (ii) or (iii) of section 4041(c)(2)(B)
or section 4042, there shall be payable to the corporation, with
respect to each applicable 12-month period, a premium at a rate
equal to $1,250 multiplied by the number of individuals who were
participants in the plan immediately before the termination date.
Such premium shall be in addition to any other premium under this
section.
``(B) Special rule for plans terminated in bankruptcy
reorganization.--In the case of a single-employer plan terminated
under section 4041(c)(2)(B)(ii) or under section 4042 during
pendency of any bankruptcy reorganization proceeding under chapter
11 of title 11, United States Code, or under any similar law of a
State or a political subdivision of a State (or a case described in
section 4041(c)(2)(B)(i) filed by or against such person has been
converted, as of such date, to such a case in which reorganization
is sought), subparagraph (A) shall not apply to such plan until the
date of the discharge or dismissal of such person in such case.
``(C) Applicable 12-month period.--For purposes of subparagraph
(A)--
``(i) In general.--The term `applicable 12-month period'
means--
``(I) the 12-month period beginning with the first
month following the month in which the termination date
occurs, and
``(II) each of the first two 12-month periods
immediately following the period described in subclause
(I).
``(ii) Plans terminated in bankruptcy reorganization.--In
any case in which the requirements of subparagraph (B)(i)(I)
are met in connection with the termination of the plan with
respect to 1 or more persons described in such subparagraph,
the 12-month period described in clause (i)(I) shall be the 12-
month period beginning with the first month following the month
which includes the earliest date as of which each such person
is discharged or dismissed in the case described in such clause
in connection with such person.
``(D) Coordination with section 4007.--
``(i) Notwithstanding section 4007--
``(I) premiums under this paragraph shall be due within
30 days after the beginning of any applicable 12-month
period, and
``(II) the designated payor shall be the person who is
the contributing sponsor as of immediately before the
termination date.
``(ii) The fifth sentence of section 4007(a) shall not
apply in connection with premiums determined under this
paragraph.
``(E) Termination.--Subparagraph (A) shall not apply with
respect to any plan terminated after December 31, 2010.''.
(c) Conforming Amendment.--Section 4006(a)(3)(B) of such Act (29
U.S.C. 1306(a)(3)(B)) is amended by striking ``subparagraph (A)(iii)''
and inserting ``clause (iii) or (iv) of subparagraph (A)''.
(d) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to plan
years beginning after December 31, 2005.
(2) Premium rate for certain terminated single-employer
plans.--
(A) In general.--Except as provided in subparagraph (B),
the amendment made by subsection (b) shall apply to plans
terminated after December 31, 2005.
(B) Special rule for plans terminated in bankruptcy.--The
amendment made by subsection (b) shall not apply to a
termination of a single-employer plan that is terminated during
the pendency of any bankruptcy reorganization proceeding under
chapter 11 of title 11, United States Code (or under any
similar law of a State or political subdivision of a State), if
the proceeding is pursuant to a bankruptcy filing occurring
before October 18, 2005.
TITLE IX--LIHEAP PROVISIONS
SEC. 9001. FUNDING AVAILABILITY.
(a) In General.--In addition to amounts otherwise made available,
there are appropriated, out of any money in the Treasury not otherwise
appropriated, to the Secretary of Health and Human Services for a 1-
time only obligation and expenditure--
(1) $250,000,000 for fiscal year 2007 for allocation under
section 2604(a) through (d) of the Low-Income Home Energy
Assistance Act of 1981 (42 U.S.C. 8623(a) through (d)); and
(2) $750,000,000 for fiscal year 2007 for allocation under
section 2604(e) of the Low-Income Home Energy Assistance Act of
1981 (42 U.S.C. 8623(e)).
(b) Sunset.--The provisions of this section shall terminate, be
null and void, and have no force and effect whatsoever after September
30, 2007. No monies provided for under this section shall be available
after such date.
TITLE X--JUDICIARY RELATED PROVISIONS
Subtitle A--Civil Filing Adjustments
SEC. 10001. CIVIL CASE FILING FEE INCREASES.
(a) Civil Actions Filed in District Courts.--Section 1914(a) of
title 28, United States Code, is amended by striking ``$250'' and
inserting ``$350''.
(b) Appeals Filed in Courts of Appeals.--The $250 fee for docketing
a case on appeal or review, or docketing any other proceeding, in a
court of appeals, as prescribed by the Judicial Conference, effective
as of January 1, 2005, under section 1913 of title 28, United States
Code, shall be increased to $450.
(c) Expenditure Limitation.--Incremental amounts collected by
reason of the enactment of this section shall be deposited in a special
fund in the Treasury to be established after the enactment of this Act.
Such amounts shall be available for the purposes specified in section
1931(a) of title 28, United States Code, but only to the extent
specifically appropriated by an Act of Congress enacted after the
enactment of this Act.
(d) Effective Date.--This section and the amendment made by this
section shall take effect 60 days after the date of the enactment of
this Act.
Subtitle B--Bankruptcy Fees
SEC. 10101. BANKRUPTCY FEES.
(a) Bankruptcy Filing Fees.--Section 1930(a) of title 28, United
States Code, is amended--
(1) in paragraph (1)--
(A) in subparagraph (A) by striking ``$220'' and inserting
``$245''; and
(B) in subparagraph (B) by striking ``$150'' and inserting
``$235''; and
(2) in paragraph (2) by striking ``$1,000'' and inserting
``$2,750''.
(b) Expenditure Limitation.--Incremental amounts collected by
reason of the amendments made by subsection (a) shall be deposited in a
special fund in the Treasury to be established after the enactment of
this Act. Such amounts shall be available for the purposes specified in
section 1931(a) of title 28, United States Code, but only to the extent
specifically appropriated by an Act of Congress enacted after the
enactment of this Act.
(c) Effective Date.--This section and the amendments made by this
section shall take effect 60 days after the date of the enactment of
this Act.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.