[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 976 Enrolled Bill (ENR)]

        H.R.976

                       One Hundred Tenth Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

          Begun and held at the City of Washington on Thursday,
            the fourth day of January, two thousand and seven


                                 An Act


 
To amend title XXI of the Social Security Act to extend and improve the 
      Children's Health Insurance Program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; REFERENCES; 
TABLE OF CONTENTS.
    (a) Short Title.--This Act may be cited as ``Children's Health 
Insurance Program Reauthorization Act of 2007''.
    (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this Act an amendment 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 that section or other 
provision of the Social Security Act.
    (c) References to CHIP; Medicaid; Secretary.--In this Act:
        (1) CHIP.--The term ``CHIP'' means the State Children's Health 
    Insurance Program established under title XXI of the Social 
    Security Act (42 U.S.C. 1397aa et seq.).
        (2) Medicaid.--The term ``Medicaid'' means the program for 
    medical assistance established under title XIX of the Social 
    Security Act (42 U.S.C. 1396 et seq.).
        (3) Secretary.--The term ``Secretary'' means the Secretary of 
    Health and Human Services.
    (d) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; amendments to Social Security Act; references; 
          table of contents.
Sec. 2.  Purpose.
Sec. 3. General effective date; exception for State legislation; 
          contingent effective date; reliance on law.

                           TITLE I--FINANCING

                           Subtitle A--Funding

Sec. 101. Extension of CHIP.
Sec. 102. Allotments for States and territories for fiscal years 2008 
          through 2012.
Sec. 103. Child Enrollment Contingency Fund.
Sec. 104. CHIP performance bonus payment to offset additional enrollment 
          costs resulting from enrollment and retention efforts.
Sec. 105. 2-year initial availability of CHIP allotments.
Sec. 106. Redistribution of unused allotments to address State funding 
          shortfalls.
Sec. 107. Option for qualifying States to receive the enhanced portion 
          of the CHIP matching rate for Medicaid coverage of certain 
          children.
Sec. 108. One-time appropriation.
Sec. 109. Improving funding for the territories under CHIP and Medicaid.

       Subtitle B--Focus on Low-Income Children and Pregnant Women

Sec. 111. State option to cover low-income pregnant women under CHIP 
          through a State plan amendment.
Sec. 112. Phase-Out of coverage for nonpregnant childless adults under 
          CHIP; conditions for coverage of parents.
Sec. 113. Elimination of counting Medicaid child presumptive eligibility 
          costs against Title XXI allotment.
Sec. 114. Limitation on matching rate for States that propose to cover 
          children with effective family income that exceeds 300 percent 
          of the poverty line.
Sec. 115. State authority under Medicaid.
Sec. 116. Preventing substitution of CHIP coverage for private coverage.

                    TITLE II--OUTREACH AND ENROLLMENT

             Subtitle A--Outreach and Enrollment Activities

Sec. 201. Grants and enhanced administrative funding for outreach and 
          enrollment.
Sec. 202. Increased outreach and enrollment of Indians.
Sec. 203. State option to rely on findings from an Express Lane agency 
          to conduct simplified eligibility determinations.

               Subtitle B--Reducing Barriers to Enrollment

Sec. 211. Verification of declaration of citizenship or nationality for 
          purposes of eligibility for Medicaid and CHIP.
Sec. 212. Reducing administrative barriers to enrollment.
Sec. 213. Model of Interstate coordinated enrollment and coverage 
          process.

      TITLE III--REDUCING BARRIERS TO PROVIDING PREMIUM ASSISTANCE

  Subtitle A--Additional State Option for Providing Premium Assistance

Sec. 301. Additional State option for providing premium assistance.
Sec. 302. Outreach, education, and enrollment assistance.

    Subtitle B--Coordinating Premium Assistance With Private Coverage

Sec. 311. Special enrollment period under group health plans in case of 
          termination of Medicaid or CHIP coverage or eligibility for 
          assistance in purchase of employment-based coverage; 
          coordination of coverage.

       TITLE IV--STRENGTHENING QUALITY OF CARE AND HEALTH OUTCOMES

Sec. 401. Child health quality improvement activities for children 
          enrolled in Medicaid or CHIP.
Sec. 402. Improved availability of public information regarding 
          enrollment of children in CHIP and Medicaid.
Sec. 403. Application of certain managed care quality safeguards to 
          CHIP.

                  TITLE V--IMPROVING ACCESS TO BENEFITS

Sec. 501. Dental benefits.
Sec. 502. Mental health parity in CHIP plans.
Sec. 503. Application of prospective payment system for services 
          provided by Federally-Qualified Health Centers and rural 
          health clinics.
Sec. 504. Premium grace period.
Sec. 505. Demonstration projects relating to diabetes prevention.
Sec. 506. Clarification of coverage of services provided through school-
          based health centers.

     TITLE VI--PROGRAM INTEGRITY AND OTHER MISCELLANEOUS PROVISIONS

            Subtitle A--Program Integrity and Data Collection

Sec. 601. Payment error rate measurement (``PERM'').
Sec. 602. Improving data collection.
Sec. 603. Updated Federal evaluation of CHIP.
Sec. 604. Access to records for IG and GAO audits and evaluations.
Sec. 605. No Federal funding for illegal aliens.

               Subtitle B--Miscellaneous Health Provisions

Sec. 611. Deficit Reduction Act technical corrections.
Sec. 612. References to title XXI.
Sec. 613. Prohibiting initiation of new health opportunity account 
          demonstration programs.
Sec. 614. County medicaid health insuring organizations; GAO report on 
          Medicaid managed care payment rates.
Sec. 615. Adjustment in computation of Medicaid FMAP to disregard an 
          extraordinary employer pension contribution.
Sec. 616. Moratorium on certain payment restrictions.
Sec. 617. Medicaid DSH allotments for Tennessee and Hawaii.
Sec. 618. Clarification treatment of regional medical center.
Sec. 619. Extension of SSI web-based asset demonstration project to the 
          Medicaid program.

                      Subtitle C--Other Provisions

Sec. 621. Support for injured servicemembers.
Sec. 622. Military family job protection.
Sec. 623. Outreach regarding health insurance options available to 
          children.
Sec. 624. Sense of Senate regarding access to affordable and meaningful 
          health insurance coverage.

                      TITLE VII--REVENUE PROVISIONS

Sec. 701. Increase in excise tax rate on tobacco products.
Sec. 702. Administrative improvements.
Sec. 703. Time for payment of corporate estimated taxes.
SEC. 2. PURPOSE.
    It is the purpose of this Act to provide dependable and stable 
funding for children's health insurance under titles XXI and XIX of the 
Social Security Act in order to enroll all six million uninsured 
children who are eligible, but not enrolled, for coverage today through 
such titles.
SEC. 3. GENERAL EFFECTIVE DATE; EXCEPTION FOR STATE LEGISLATION; 
CONTINGENT EFFECTIVE DATE; RELIANCE ON LAW.
    (a) General Effective Date.--Unless otherwise provided in this Act, 
subject to subsections (b) and (c), this Act (and the amendments made 
by this Act) shall take effect on October 1, 2007, and shall apply to 
child health assistance and medical assistance provided on or after 
that date without regard to whether or not final regulations to carry 
out this Act (or such amendments) have been promulgated by such date.
    (b) Exception for State Legislation.--In the case of a State plan 
under title XIX or State child health plan under XXI of the Social 
Security Act, which the Secretary of Health and Human Services 
determines requires State legislation in order for respective plan to 
meet one or more additional requirements imposed by amendments made by 
this Act, the respective 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 such an additional requirement 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.
    (c) Contingent Effective Date for CHIP Funding for Fiscal Year 
2008.--Notwithstanding any other provision of law, if funds are 
appropriated under any law (other than this Act) to provide allotments 
to States under CHIP for all (or any portion) of fiscal year 2008--
        (1) any amounts that are so appropriated that are not so 
    allotted and obligated before the date of the enactment of this Act 
    are rescinded; and
        (2) any amount provided for CHIP allotments to a State under 
    this Act (and the amendments made by this Act) for such fiscal year 
    shall be reduced by the amount of such appropriations so allotted 
    and obligated before such date.
    (d) Reliance on Law.--With respect to amendments made by this Act 
(other than title VII) that become effective as of a date--
        (1) such amendments are effective as of such date whether or 
    not regulations implementing such amendments have been issued; and
        (2) Federal financial participation for medical assistance or 
    child health assistance furnished under title XIX or XXI, 
    respectively, of the Social Security Act on or after such date by a 
    State in good faith reliance on such amendments before the date of 
    promulgation of final regulations, if any, to carry out such 
    amendments (or before the date of guidance, if any, regarding the 
    implementation of such amendments) shall not be denied on the basis 
    of the State's failure to comply with such regulations or guidance.

                           TITLE I--FINANCING
                          Subtitle A--Funding

    SEC. 101. EXTENSION OF CHIP.
    Section 2104(a) (42 U.S.C. 1397dd(a)) is amended--
        (1) in paragraph (9), by striking ``and'' at the end;
        (2) in paragraph (10), by striking the period at the end and 
    inserting a semicolon; and
        (3) by adding at the end the following new paragraphs:
        ``(11) for fiscal year 2008, $9,125,000,000;
        ``(12) for fiscal year 2009, $10,675,000,000;
        ``(13) for fiscal year 2010, $11,850,000,000;
        ``(14) for fiscal year 2011, $13,750,000,000; and
        ``(15) for fiscal year 2012, for purposes of making 2 semi-
    annual allotments--
            ``(A) $1,750,000,000 for the period beginning on October 1, 
        2011, and ending on March 31, 2012, and
            ``(B) $1,750,000,000 for the period beginning on April 1, 
        2012, and ending on September 30, 2012.''.
    SEC. 102. ALLOTMENTS FOR STATES AND TERRITORIES FOR FISCAL YEARS 
      2008 THROUGH 2012.
    Section 2104 (42 U.S.C. 1397dd) is amended--
        (1) in subsection (b)(1), by striking ``subsection (d)'' and 
    inserting ``subsections (d) and (i)'';
        (2) in subsection (c)(1), by striking ``subsection (d)'' and 
    inserting ``subsections (d) and (i)(4)''; and
        (3) by adding at the end the following new subsection:
    ``(i) Allotments for Fiscal Years 2008 Through 2012.--
        ``(1) For fiscal year 2008.--
            ``(A) For the 50 states and the district of columbia.--
        Subject to the succeeding provisions of this paragraph and 
        paragraph (4), the Secretary shall allot for fiscal year 2008 
        from the amount made available under subsection (a)(11), to 
        each of the 50 States and the District of Columbia 110 percent 
        of the highest of the following amounts for such State or 
        District:
                ``(i) The total Federal payments to the State under 
            this title for fiscal year 2007, multiplied by the 
            allotment increase factor determined under paragraph (5) 
            for fiscal year 2008.
                ``(ii) The Federal share of the amount allotted to the 
            State for fiscal year 2007 under subsection (b), multiplied 
            by the allotment increase factor determined under paragraph 
            (5) for fiscal year 2008.
                ``(iii) Only in the case of--

                    ``(I) a State that received a payment, 
                redistribution, or allotment under any of paragraph 
                (1), (2), or (4) of subsection (h), the amount of the 
                projected total Federal payments to the State under 
                this title for fiscal year 2007, as determined on the 
                basis of the November 2006 estimates certified by the 
                State to the Secretary;
                    ``(II) a State whose projected total Federal 
                payments to the State under this title for fiscal year 
                2007, as determined on the basis of the May 2006 
                estimates certified by the State to the Secretary, were 
                at least $95,000,000 but not more than $96,000,000 
                higher than the projected total Federal payments to the 
                State under this title for fiscal year 2007 on the 
                basis of the November 2006 estimates, the amount of the 
                projected total Federal payments to the State under 
                this title for fiscal year 2007 on the basis of the May 
                2006 estimates; or
                    ``(III) a State whose projected total Federal 
                payments under this title for fiscal year 2007, as 
                determined on the basis of the November 2006 estimates 
                certified by the State to the Secretary, exceeded all 
                amounts available to the State for expenditure for 
                fiscal year 2007 (including any amounts paid, allotted, 
                or redistributed to the State in prior fiscal years), 
                the amount of the projected total Federal payments to 
                the State under this title for fiscal year 2007, as 
                determined on the basis of the November 2006 estimates 
                certified by the State to the Secretary,

            multiplied by the allotment increase factor determined 
            under paragraph (5) for fiscal year 2008.
                ``(iv) The projected total Federal payments to the 
            State under this title for fiscal year 2008, as determined 
            on the basis of the August 2007 projections certified by 
            the State to the Secretary by not later than September 30, 
            2007.
            ``(B) For the commonwealths and territories.--Subject to 
        the succeeding provisions of this paragraph and paragraph (4), 
        the Secretary shall allot for fiscal year 2008 from the amount 
        made available under subsection (a)(11) to each of the 
        commonwealths and territories described in subsection (c)(3) an 
        amount equal to the highest amount of Federal payments to the 
        commonwealth or territory under this title for any fiscal year 
        occurring during the period of fiscal years 1998 through 2007, 
        multiplied by the allotment increase factor determined under 
        paragraph (5) for fiscal year 2008, except that subparagraph 
        (B) thereof shall be applied by substituting `the United 
        States' for `the State'.
            ``(C) Deadline and data for determining fiscal year 2008 
        allotments.--In computing the amounts under subparagraphs (A) 
        and (B) that determine the allotments to States for fiscal year 
        2008, the Secretary shall use the most recent data available to 
        the Secretary before the start of that fiscal year. The 
        Secretary may adjust such amounts and allotments, as necessary, 
        on the basis of the expenditure data for the prior year 
        reported by States on CMS Form 64 or CMS Form 21 not later than 
        November 30, 2007, but in no case shall the Secretary adjust 
        the allotments provided under subparagraph (A) or (B) for 
        fiscal year 2008 after December 31, 2007.
            ``(D) Adjustment for qualifying states.--In the case of a 
        qualifying State described in paragraph (2) of section 2105(g), 
        the Secretary shall permit the State to submit revised 
        projection described in subparagraph (A)(iv) in order to take 
        into account changes in such projections attributable to the 
        application of paragraph (4) of such section.
        ``(2) For fiscal years 2009 through 2011.--
            ``(A) In general.--Subject to paragraphs (4) and (6), from 
        the amount made available under paragraphs (12) through (14) of 
        subsection (a) for each of fiscal years 2009 through 2011, 
        respectively, the Secretary shall compute a State allotment for 
        each State (including the District of Columbia and each 
        commonwealth and territory) for each such fiscal year as 
        follows:
                ``(i) Growth factor update for fiscal year 2009.--For 
            fiscal year 2009, the allotment of the State is equal to 
            the sum of--

                    ``(I) the amount of the State allotment under 
                paragraph (1) for fiscal year 2008; and
                    ``(II) the amount of any payments made to the State 
                under subsection (j) for fiscal year 2008,

            multiplied by the allotment increase factor under paragraph 
            (5) for fiscal year 2009.
                ``(ii) Rebasing in fiscal year 2010.--For fiscal year 
            2010, the allotment of a State is equal to the Federal 
            payments to the State that are attributable to (and 
            countable towards) the total amount of allotments available 
            under this section to the State in fiscal year 2009 
            (including payments made to the State under subsection (j) 
            for fiscal year 2009 as well as amounts redistributed to 
            the State in fiscal year 2009) multiplied by the allotment 
            increase factor under paragraph (5) for fiscal year 2010.
                ``(iii) Growth factor update for fiscal year 2011.--For 
            fiscal year 2011, the allotment of the State is equal to 
            the sum of--

                    ``(I) the amount of the State allotment under 
                clause (ii) for fiscal year 2010; and
                    ``(II) the amount of any payments made to the State 
                under subsection (j) for fiscal year 2010,

            multiplied by the allotment increase factor under paragraph 
            (5) for fiscal year 2011.
        ``(3) For fiscal year 2012.--
            ``(A) First half.--Subject to paragraphs (4) and (6), from 
        the amount made available under subparagraph (A) of paragraph 
        (15) of subsection (a) for the semi-annual period described in 
        such paragraph, increased by the amount of the appropriation 
        for such period under section 108 of the Children's Health 
        Insurance Program Reauthorization Act of 2007, the Secretary 
        shall compute a State allotment for each State (including the 
        District of Columbia and each commonwealth and territory) for 
        such semi-annual period in an amount equal to the first half 
        ratio (described in subparagraph (D)) of the amount described 
        in subparagraph (C).
            ``(B) Second half.--Subject to paragraphs (4) and (6), from 
        the amount made available under subparagraph (B) of paragraph 
        (15) of subsection (a) for the semi-annual period described in 
        such paragraph, the Secretary shall compute a State allotment 
        for each State (including the District of Columbia and each 
        commonwealth and territory) for such semi-annual period in an 
        amount equal to the amount made available under such 
        subparagraph multiplied by the ratio of--
                ``(i) the amount of the allotment to such State under 
            subparagraph (A); to
                ``(ii) the total of the amount of all of the allotments 
            made available under such subparagraph.
            ``(C) Full year amount based on rebased amount.--The amount 
        described in this subparagraph for a State is equal to the 
        Federal payments to the State that are attributable to (and 
        countable towards) the total amount of allotments available 
        under this section to the State in fiscal year 2011 (including 
        payments made to the State under subsection (j) for fiscal year 
        2011 as well as amounts redistributed to the State in fiscal 
        year 2011) multiplied by the allotment increase factor under 
        paragraph (5) for fiscal year 2012.
            ``(D) First half ratio.--The first half ratio described in 
        this subparagraph is the ratio of--
                ``(i) the sum of--

                    ``(I) the amount made available under subsection 
                (a)(15)(A); and
                    ``(II) the amount of the appropriation for such 
                period under section 108 of the Children's Health 
                Insurance Program Reauthorization Act of 2007; to

                ``(ii) the sum of the--

                    ``(I) amount described in clause (i); and
                    ``(II) the amount made available under subsection 
                (a)(15)(B).

        ``(4) Proration rule.--If, after the application of this 
    subsection without regard to this paragraph, the sum of the 
    allotments determined under paragraph (1), (2), or (3) for a fiscal 
    year (or, in the case of fiscal year 2012, for a semi-annual period 
    in such fiscal year) exceeds the amount available under subsection 
    (a) for such fiscal year or period, the Secretary shall reduce each 
    allotment for any State under such paragraph for such fiscal year 
    or period on a proportional basis.
        ``(5) Allotment increase factor.--The allotment increase factor 
    under this paragraph for a fiscal year is equal to the product of 
    the following:
            ``(A) Per capita health care growth factor.--1 plus the 
        percentage increase in the projected per capita amount of 
        National Health Expenditures from the calendar year in which 
        the previous fiscal year ends to the calendar year in which the 
        fiscal year involved ends, as most recently published by the 
        Secretary before the beginning of the fiscal year.
            ``(B) Child population growth factor.--1 plus the 
        percentage increase (if any) in the population of children in 
        the State from July 1 in the previous fiscal year to July 1 in 
        the fiscal year involved, as determined by the Secretary based 
        on the most recent published estimates of the Bureau of the 
        Census before the beginning of the fiscal year involved, plus 1 
        percentage point.
        ``(6) Increase in allotment to account for approved program 
    expansions.--In the case of one of the 50 States or the District of 
    Columbia that--
            ``(A) has submitted to the Secretary, and has approved by 
        the Secretary, a State plan amendment or waiver request 
        relating to an expansion of eligibility for children or 
        benefits under this title that becomes effective for a fiscal 
        year (beginning with fiscal year 2009 and ending with fiscal 
        year 2012); and
            ``(B) has submitted to the Secretary, before the August 31 
        preceding the beginning of the fiscal year, a request for an 
        expansion allotment adjustment under this paragraph for such 
        fiscal year that specifies--
                ``(i) the additional expenditures that are attributable 
            to the eligibility or benefit expansion provided under the 
            amendment or waiver described in subparagraph (A), as 
            certified by the State and submitted to the Secretary by 
            not later than August 31 preceding the beginning of the 
            fiscal year; and
                ``(ii) the extent to which such additional expenditures 
            are projected to exceed the allotment of the State or 
            District for the year,
    subject to paragraph (4), the amount of the allotment of the State 
    or District under this subsection for such fiscal year shall be 
    increased by the excess amount described in subparagraph (B)(i). A 
    State or District may only obtain an increase under this paragraph 
    for an allotment for fiscal year 2009 or fiscal year 2011.
        ``(7) Availability of amounts for semi-annual periods in fiscal 
    year 2012.--Each semi-annual allotment made under paragraph (3) for 
    a period in fiscal year 2012 shall remain available for expenditure 
    under this title for periods after the end of such fiscal year in 
    the same manner as if the allotment had been made available for the 
    entire fiscal year.''.
    SEC. 103. CHILD ENROLLMENT CONTINGENCY FUND.
    Section 2104 (42 U.S.C. 1397dd), as amended by section 102, is 
amended by adding at the end the following new subsection:
    ``(j) Child Enrollment Contingency Fund.--
        ``(1) Establishment.--There is hereby established in the 
    Treasury of the United States a fund which shall be known as the 
    `Child Enrollment Contingency Fund' (in this subsection referred to 
    as the `Fund'). Amounts in the Fund shall be available without 
    further appropriations for payments under this subsection.
        ``(2) Deposits into fund.--
            ``(A) Initial and subsequent appropriations.--Subject to 
        subparagraphs (B) and (D), out of any money in the Treasury of 
        the United States not otherwise appropriated, there are 
        appropriated to the Fund--
                ``(i) for fiscal year 2008, an amount equal to 20 
            percent of the amount made available under paragraph (11) 
            of subsection (a) for the fiscal year; and
                ``(ii) for each of fiscal years 2009 through 2011 (and 
            for each of the semi-annual allotment periods for fiscal 
            year 2012) , such sums as are necessary for making payments 
            to eligible States for such fiscal year or period, but not 
            in excess of the aggregate cap described in subparagraph 
            (B).
            ``(B) Aggregate cap.--The total amount available for 
        payment from the Fund for each of fiscal years 2009 through 
        2011 (and for each of the semi-annual allotment periods for 
        fiscal year 2012), taking into account deposits made under 
        subparagraph (C), shall not exceed 20 percent of the amount 
        made available under subsection (a) for the fiscal year or 
        period.
            ``(C) Investment of fund.--The Secretary of the Treasury 
        shall invest, in interest bearing securities of the United 
        States, such currently available portions of the Fund as are 
        not immediately required for payments from the Fund. The income 
        derived from these investments constitutes a part of the Fund.
            ``(D) Availability of excess funds for performance 
        bonuses.--Any amounts in excess of the aggregate cap described 
        in subparagraph (B) for a fiscal year or period shall be made 
        available for purposes of carrying out section 2105(a)(3) for 
        any succeeding fiscal year and the Secretary of the Treasury 
        shall reduce the amount in the Fund by the amount so made 
        available.
        ``(3) Child enrollment contingency fund payments.--
            ``(A) In general.--If a State's expenditures under this 
        title in fiscal year 2008, fiscal year 2009, fiscal year 2010, 
        fiscal year 2011, or a semi-annual allotment period for fiscal 
        year 2012, exceed the total amount of allotments available 
        under this section to the State in the fiscal year or period 
        (determined without regard to any redistribution it receives 
        under subsection (f) that is available for expenditure during 
        such fiscal year or period, but including any carryover from a 
        previous fiscal year) and if the average monthly unduplicated 
        number of children enrolled under the State plan under this 
        title (including children receiving health care coverage 
        through funds under this title pursuant to a waiver under 
        section 1115) during such fiscal year or period exceeds its 
        target average number of such enrollees (as determined under 
        subparagraph (B)) for that fiscal year or period, subject to 
        subparagraph (D), the Secretary shall pay to the State from the 
        Fund an amount equal to the product of--
                ``(i) the amount by which such average monthly caseload 
            exceeds such target number of enrollees; and
                ``(ii) the projected per capita expenditures under the 
            State child health plan (as determined under subparagraph 
            (C) for the fiscal year), multiplied by the enhanced FMAP 
            (as defined in section 2105(b)) for the State and fiscal 
            year involved (or in which the period occurs).
            ``(B) Target average number of child enrollees.--In this 
        paragraph, the target average number of child enrollees for a 
        State--
                ``(i) for fiscal year 2008 is equal to the monthly 
            average unduplicated number of children enrolled in the 
            State child health plan under this title (including such 
            children receiving health care coverage through funds under 
            this title pursuant to a waiver under section 1115) during 
            fiscal year 2007 increased by the population growth for 
            children in that State for the year ending on June 30, 2006 
            (as estimated by the Bureau of the Census) plus 1 
            percentage point; or
                ``(ii) for a subsequent fiscal year (or semi-annual 
            period occurring in a fiscal year) is equal to the target 
            average number of child enrollees for the State for the 
            previous fiscal year increased by the child population 
            growth factor described in subsection (i)(5)(B) for the 
            State for the prior fiscal year.
            ``(C) Projected per capita expenditures.--For purposes of 
        subparagraph (A)(ii), the projected per capita expenditures 
        under a State child health plan--
                ``(i) for fiscal year 2008 is equal to the average per 
            capita expenditures (including both State and Federal 
            financial participation) under such plan for the targeted 
            low-income children counted in the average monthly caseload 
            for purposes of this paragraph during fiscal year 2007, 
            increased by the annual percentage increase in the 
            projected per capita amount of National Health Expenditures 
            (as estimated by the Secretary) for 2008; or
                ``(ii) for a subsequent fiscal year (or semi-annual 
            period occurring in a fiscal year) is equal to the 
            projected per capita expenditures under such plan for the 
            previous fiscal year (as determined under clause (i) or 
            this clause) increased by the annual percentage increase in 
            the projected per capita amount of National Health 
            Expenditures (as estimated by the Secretary) for the year 
            in which such subsequent fiscal year ends.
            ``(D) Proration rule.--If the amounts available for payment 
        from the Fund for a fiscal year or period are less than the 
        total amount of payments determined under subparagraph (A) for 
        the fiscal year or period, the amount to be paid under such 
        subparagraph to each eligible State shall be reduced 
        proportionally.
            ``(E) Timely payment; reconciliation.--Payment under this 
        paragraph for a fiscal year or period shall be made before the 
        end of the fiscal year or period based upon the most recent 
        data for expenditures and enrollment and the provisions of 
        subsection (e) of section 2105 shall apply to payments under 
        this subsection in the same manner as they apply to payments 
        under such section.
            ``(F) Continued reporting.--For purposes of this paragraph 
        and subsection (f), the State shall submit to the Secretary the 
        State's projected Federal expenditures, even if the amount of 
        such expenditures exceeds the total amount of allotments 
        available to the State in such fiscal year or period.
            ``(G) Application to commonwealths and territories.--No 
        payment shall be made under this paragraph to a commonwealth or 
        territory described in subsection (c)(3) until such time as the 
        Secretary determines that there are in effect methods, 
        satisfactory to the Secretary, for the collection and reporting 
        of reliable data regarding the enrollment of children described 
        in subparagraphs (A) and (B) in order to accurately determine 
        the commonwealth's or territory's eligibility for, and amount 
        of payment, under this paragraph.''.
    SEC. 104. CHIP PERFORMANCE BONUS PAYMENT TO OFFSET ADDITIONAL 
      ENROLLMENT COSTS RESULTING FROM ENROLLMENT AND RETENTION EFFORTS.
    Section 2105(a) (42 U.S.C. 1397ee(a)) is amended by adding at the 
end the following new paragraphs:
        ``(3) Performance bonus payment to offset additional medicaid 
    and chip child enrollment costs resulting from enrollment and 
    retention efforts.--
            ``(A) In general.--In addition to the payments made under 
        paragraph (1), for each fiscal year (beginning with fiscal year 
        2008 and ending with fiscal year 2012) the Secretary shall pay 
        from amounts made available under subparagraph (E), to each 
        State that meets the condition under paragraph (4) for the 
        fiscal year, an amount equal to the amount described in 
        subparagraph (B) for the State and fiscal year. The payment 
        under this paragraph shall be made, to a State for a fiscal 
        year, as a single payment not later than the last day of the 
        first calendar quarter of the following fiscal year.
            ``(B) Amount.--Subject to subparagraph (E), the amount 
        described in this subparagraph for a State for a fiscal year is 
        equal to the sum of the following amounts:
                ``(i) For above baseline medicaid child enrollment 
            costs.--

                    ``(I) First tier above baseline medicaid 
                enrollees.--An amount equal to the number of first tier 
                above baseline child enrollees (as determined under 
                subparagraph (C)(i)) under title XIX for the State and 
                fiscal year multiplied by 15 percent of the projected 
                per capita State Medicaid expenditures (as determined 
                under subparagraph (D)(i)) for the State and fiscal 
                year under title XIX.
                    ``(II) Second tier above baseline medicaid 
                enrollees.--An amount equal to the number of second 
                tier above baseline child enrollees (as determined 
                under subparagraph (C)(ii)) under title XIX for the 
                State and fiscal year multiplied by 60 percent of the 
                projected per capita State Medicaid expenditures (as 
                determined under subparagraph (D)(i)) for the State and 
                fiscal year under title XIX.

                ``(ii) For above baseline chip enrollment costs.--

                    ``(I) First tier above baseline chip enrollees.--An 
                amount equal to the number of first tier above baseline 
                child enrollees under this title (as determined under 
                subparagraph (C)(i)) for the State and fiscal year 
                multiplied by 10 percent of the projected per capita 
                State CHIP expenditures (as determined under 
                subparagraph (D)(ii)) for the State and fiscal year 
                under this title.
                    ``(II) Second tier above baseline chip enrollees.--
                An amount equal to the number of second tier above 
                baseline child enrollees under this title (as 
                determined under subparagraph (C)(ii)) for the State 
                and fiscal year multiplied by 40 percent of the 
                projected per capita State CHIP expenditures (as 
                determined under subparagraph (D)(ii)) for the State 
                and fiscal year under this title.

            ``(C) Number of first and second tier above baseline child 
        enrollees; baseline number of child enrollees.--For purposes of 
        this paragraph:
                ``(i) First tier above baseline child enrollees.--The 
            number of first tier above baseline child enrollees for a 
            State for a fiscal year under this title or title XIX is 
            equal to the number (if any, as determined by the 
            Secretary) by which--

                    ``(I) the monthly average unduplicated number of 
                qualifying children (as defined in subparagraph (F)) 
                enrolled during the fiscal year under the State child 
                health plan under this title or under the State plan 
                under title XIX, respectively; exceeds
                    ``(II) the baseline number of enrollees described 
                in clause (iii) for the State and fiscal year under 
                this title or title XIX, respectively;

            but not to exceed 3 percent (in the case of title XIX) or 
            7.5 percent (in the case of this title) of the baseline 
            number of enrollees described in subclause (II).
                ``(ii) Second tier above baseline child enrollees.--The 
            number of second tier above baseline child enrollees for a 
            State for a fiscal year under this title or title XIX is 
            equal to the number (if any, as determined by the 
            Secretary) by which--

                    ``(I) the monthly average unduplicated number of 
                qualifying children (as defined in subparagraph (F)) 
                enrolled during the fiscal year under this title or 
                under title XIX, respectively, as described in clause 
                (i)(I); exceeds
                    ``(II) the sum of the baseline number of child 
                enrollees described in clause (iii) for the State and 
                fiscal year under this title or title XIX, 
                respectively, as described in clause (i)(II), and the 
                maximum number of first tier above baseline child 
                enrollees for the State and fiscal year under this 
                title or title XIX, respectively, as determined under 
                clause (i).

                ``(iii) Baseline number of child enrollees.--Subject to 
            subparagraph (H), the baseline number of child enrollees 
            for a State under this title or title XIX--

                    ``(I) for fiscal year 2008 is equal to the monthly 
                average unduplicated number of qualifying children 
                enrolled in the State child health plan under this 
                title or in the State plan under title XIX, 
                respectively, during fiscal year 2007 increased by the 
                population growth for children in that State for the 
                year ending on June 30, 2006 (as estimated by the 
                Bureau of the Census) plus 1 percentage point; or
                    ``(II) for a subsequent fiscal year is equal to the 
                baseline number of child enrollees for the State for 
                the previous fiscal year under this title or title XIX, 
                respectively, increased by the population growth for 
                children in that State for the year ending on June 30 
                before the beginning of the fiscal year (as estimated 
                by the Bureau of the Census) plus 1 percentage point.

            ``(D) Projected per capita state expenditures.--For 
        purposes of subparagraph (B)--
                ``(i) Projected per capita state medicaid 
            expenditures.--The projected per capita State Medicaid 
            expenditures for a State and fiscal year under title XIX is 
            equal to the average per capita expenditures (including 
            both State and Federal financial participation) for 
            children under the State plan under such title, including 
            under waivers but not including such children eligible for 
            assistance by virtue of the receipt of benefits under title 
            XVI, for the most recent fiscal year for which actual data 
            are available (as determined by the Secretary), increased 
            (for each subsequent fiscal year up to and including the 
            fiscal year involved) by the annual percentage increase in 
            per capita amount of National Health Expenditures (as 
            estimated by the Secretary) for the calendar year in which 
            the respective subsequent fiscal year ends and multiplied 
            by a State matching percentage equal to 100 percent minus 
            the Federal medical assistance percentage (as defined in 
            section 1905(b)) for the fiscal year involved.
                ``(ii) Projected per capita state chip expenditures.--
            The projected per capita State CHIP expenditures for a 
            State and fiscal year under this title is equal to the 
            average per capita expenditures (including both State and 
            Federal financial participation) for children under the 
            State child health plan under this title, including under 
            waivers, for the most recent fiscal year for which actual 
            data are available (as determined by the Secretary), 
            increased (for each subsequent fiscal year up to and 
            including the fiscal year involved) by the annual 
            percentage increase in per capita amount of National Health 
            Expenditures (as estimated by the Secretary) for the 
            calendar year in which the respective subsequent fiscal 
            year ends and multiplied by a State matching percentage 
            equal to 100 percent minus the enhanced FMAP (as defined in 
            section 2105(b)) for the fiscal year involved.
            ``(E) Amounts available for payments.--
                ``(i) Initial appropriation.--Out of any money in the 
            Treasury not otherwise appropriated, there are appropriated 
            $3,000,000,000 for fiscal year 2008 for making payments 
            under this paragraph, to be available until expended.
                ``(ii) Transfers.--Notwithstanding any other provision 
            of this title, the following amounts shall also be 
            available, without fiscal year limitation, for making 
            payments under this paragraph:

                    ``(I) Unobligated national allotment.--

                        ``(aa) Fiscal years 2008 through 2011.--As of 
                    December 31 of fiscal year 2008, and as of December 
                    31 of each succeeding fiscal year through fiscal 
                    year 2011, the portion, if any, of the amount 
                    appropriated under subsection (a) for such fiscal 
                    year that is unobligated for allotment to a State 
                    under subsection (i) for such fiscal year or set 
                    aside under subsection (a)(3) or (b)(2) of section 
                    2111 for such fiscal year.
                        ``(bb) First half of fiscal year 2012.--As of 
                    December 31 of fiscal year 2012, the portion, if 
                    any, of the sum of the amounts appropriated under 
                    subsection (a)(15)(A) and under section 108 of the 
                    Children's Health Insurance Reauthorization Act of 
                    2007 for the period beginning on October 1, 2011, 
                    and ending on March 31, 2012, that is unobligated 
                    for allotment to a State under subsection (i) for 
                    such fiscal year or set aside under subsection 
                    (b)(2) of section 2111 for such fiscal year.
                        ``(cc) Second half of fiscal year 2012.--As of 
                    June 30 of fiscal year 2012, the portion, if any, 
                    of the amount appropriated under subsection 
                    (a)(15)(B) for the period beginning on April 1, 
                    2012, and ending on September 30, 2012, that is 
                    unobligated for allotment to a State under 
                    subsection (i) for such fiscal year or set aside 
                    under subsection (b)(2) of section 2111 for such 
                    fiscal year.

                    ``(II) Unexpended allotments not used for 
                redistribution.--As of November 15 of each of fiscal 
                years 2009 through 2012, the total amount of allotments 
                made to States under section 2104 for the second 
                preceding fiscal year (third preceding fiscal year in 
                the case of the fiscal year 2006 and 2007 allotments) 
                that is not expended or redistributed under section 
                2104(f) during the period in which such allotments are 
                available for obligation.
                    ``(III) Excess child enrollment contingency 
                funds.--As of October 1 of each of fiscal years 2009 
                through 2012, any amount in excess of the aggregate cap 
                applicable to the Child Enrollment Contingency Fund for 
                the fiscal year under section 2104(j).
                    ``(IV) Unexpended transitional coverage block grant 
                for nonpregnant childless adults.--As of October 1, 
                2009, any amounts set aside under section 2111(a)(3) 
                that are not expended by September 30, 2009.

                ``(iii) Proportional reduction.--If the sum of the 
            amounts otherwise payable under this paragraph for a fiscal 
            year exceeds the amount available for the fiscal year under 
            this subparagraph, the amount to be paid under this 
            paragraph to each State shall be reduced proportionally.
            ``(F) Qualifying children defined.--For purposes of this 
        subsection, the term `qualifying children' means, with respect 
        to this title or title XIX, children who meet the eligibility 
        criteria (including income, categorical eligibility, age, and 
        immigration status criteria) in effect as of July 1, 2007, for 
        enrollment under this title or title XIX, respectively, taking 
        into account criteria applied as of such date under this title 
        or title XIX, respectively, pursuant to a waiver under section 
        1115.
            ``(G) Application to commonwealths and territories.--The 
        provisions of subparagraph (H) of section 2104(j)(3) shall 
        apply with respect to payments under this paragraph in the same 
        manner as such provisions apply to payment under such section.
            ``(H)  Application to states that implement a medicaid 
        expansion for children after fiscal year 2007.--In the case of 
        a State that provides coverage under paragraph (1) or (2) of 
        section 115(b) of the Children's Health Insurance Program 
        Reauthorization Act of 2007 for any fiscal year after fiscal 
        year 2007--
                ``(i) any child enrolled in the State plan under title 
            XIX through the application of such an election shall be 
            disregarded from the determination for the State of the 
            monthly average unduplicated number of qualifying children 
            enrolled in such plan during the first 3 fiscal years in 
            which such an election is in effect; and
                ``(ii) in determining the baseline number of child 
            enrollees for the State for any fiscal year subsequent to 
            such first 3 fiscal years, the baseline number of child 
            enrollees for the State under this title or title XIX for 
            the third of such fiscal years shall be the monthly average 
            unduplicated number of qualifying children enrolled in the 
            State child health plan under this title or in the State 
            plan under title XIX, respectively, for such third fiscal 
            year.
        ``(4) Enrollment and retention provisions for children.--For 
    purposes of paragraph (3)(A), a State meets the condition of this 
    paragraph for a fiscal year if it is implementing at least 4 of the 
    following enrollment and retention provisions (treating each 
    subparagraph as a separate enrollment and retention provision) 
    throughout the entire fiscal year:
            ``(A) Continuous eligibility.--The State has elected the 
        option of continuous eligibility for a full 12 months for all 
        children described in section 1902(e)(12) under title XIX under 
        19 years of age, as well as applying such policy under its 
        State child health plan under this title.
            ``(B) Liberalization of asset requirements.--The State 
        meets the requirement specified in either of the following 
        clauses:
                ``(i) Elimination of asset test.--The State does not 
            apply any asset or resource test for eligibility for 
            children under title XIX or this title.
                ``(ii) Administrative verification of assets.--The 
            State--

                    ``(I) permits a parent or caretaker relative who is 
                applying on behalf of a child for medical assistance 
                under title XIX or child health assistance under this 
                title to declare and certify by signature under penalty 
                of perjury information relating to family assets for 
                purposes of determining and redetermining financial 
                eligibility; and
                    ``(II) takes steps to verify assets through means 
                other than by requiring documentation from parents and 
                applicants except in individual cases of discrepancies 
                or where otherwise justified.

            ``(C) Elimination of in-person interview requirement.--The 
        State does not require an application of a child for medical 
        assistance under title XIX (or for child health assistance 
        under this title), including an application for renewal of such 
        assistance, to be made in person nor does the State require a 
        face-to-face interview, unless there are discrepancies or 
        individual circumstances justifying an in-person application or 
        face-to-face interview.
            ``(D) Use of joint application for medicaid and chip.--The 
        application form and supplemental forms (if any) and 
        information verification process is the same for purposes of 
        establishing and renewing eligibility for children for medical 
        assistance under title XIX and child health assistance under 
        this title.
            ``(E) Automatic renewal (use of administrative renewal).--
                ``(i) In general.--The State provides, in the case of 
            renewal of a child's eligibility for medical assistance 
            under title XIX or child health assistance under this 
            title, a pre-printed form completed by the State based on 
            the information available to the State and notice to the 
            parent or caretaker relative of the child that eligibility 
            of the child will be renewed and continued based on such 
            information unless the State is provided other information. 
            Nothing in this clause shall be construed as preventing a 
            State from verifying, through electronic and other means, 
            the information so provided.
                ``(ii) Satisfaction through demonstrated use of ex 
            parte process.--A State shall be treated as satisfying the 
            requirement of clause (i) if renewal of eligibility of 
            children under title XIX or this title is determined 
            without any requirement for an in-person interview, unless 
            sufficient information is not in the State's possession and 
            cannot be acquired from other sources (including other 
            State agencies) without the participation of the applicant 
            or the applicant's parent or caretaker relative.
            ``(F) Presumptive eligibility for children.--The State is 
        implementing section 1920A under title XIX as well as, pursuant 
        to section 2107(e)(1), under this title.
            ``(G) Express lane.--The State is implementing the option 
        described in section 1902(e)(13) under title XIX as well as, 
        pursuant to section 2107(e)(1), under this title.''.
    SEC. 105. 2-YEAR INITIAL AVAILABILITY OF CHIP ALLOTMENTS.
    Section 2104(e) (42 U.S.C. 1397dd(e)) is amended to read as 
follows:
    ``(e) Availability of Amounts Allotted.--
        ``(1) In general.--Except as provided in paragraph (2), amounts 
    allotted to a State pursuant to this section--
            ``(A) for each of fiscal years 1998 through 2007, shall 
        remain available for expenditure by the State through the end 
        of the second succeeding fiscal year; and
            ``(B) for fiscal year 2008 and each fiscal year thereafter, 
        shall remain available for expenditure by the State through the 
        end of the succeeding fiscal year.
        ``(2) Availability of amounts redistributed.--Amounts 
    redistributed to a State under subsection (f) shall be available 
    for expenditure by the State through the end of the fiscal year in 
    which they are redistributed.''.
    SEC. 106. REDISTRIBUTION OF UNUSED ALLOTMENTS TO ADDRESS STATE 
      FUNDING SHORTFALLS.
    (a) Fiscal Year 2005 Allotments.--
        (1) In general.--Notwithstanding section 2104(f) of the Social 
    Security Act (42 U.S.C. 1397dd(f)), subject to paragraph (2), with 
    respect to fiscal year 2008, the Secretary shall provide for a 
    redistribution under such section from the allotments for fiscal 
    year 2005 under subsections (b) and (c) of such section that are 
    not expended by the end of fiscal year 2007, to each State 
    described in clause (iii) of section 2104(i)(1)(A) of the Social 
    Security Act, as added by section 102, of an amount that bears the 
    same ratio to such unexpended fiscal year 2005 allotments as the 
    ratio of the fiscal year 2007 allotment determined for each such 
    State under subsection (b) of section 2104 of such Act for fiscal 
    year 2007 (without regard to any amounts paid, allotted, or 
    redistributed to the State under section 2104 for any preceding 
    fiscal year) bears to the total amount of the fiscal year 2007 
    allotments for all such States (as so determined).
        (2) Contingency.--Paragraph (1) shall not apply if the 
    redistribution described in such paragraph has occurred as of the 
    date of the enactment of this Act.
    (b) Allotments for Subsequent Fiscal Years.--Section 2104(f) (42 
U.S.C. 1397dd(f)) is amended--
        (1) by striking ``The Secretary'' and inserting the following:
        ``(1) In general.--The Secretary'';
        (2) by striking ``States that have fully expended the amount of 
    their allotments under this section.'' and inserting ``States that 
    the Secretary determines with respect to the fiscal year for which 
    unused allotments are available for redistribution under this 
    subsection, are shortfall States described in paragraph (2) for 
    such fiscal year, but not to exceed the amount of the shortfall 
    described in paragraph (2)(A) for each such State (as may be 
    adjusted under paragraph (2)(C)).''; and
        (3) by adding at the end the following new paragraph:
        ``(2) Shortfall states described.--
            ``(A) In general.--For purposes of paragraph (1), with 
        respect to a fiscal year, a shortfall State described in this 
        subparagraph 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, that the 
        projected expenditures under such plan for the State for the 
        fiscal year will exceed the sum of--
                ``(i) the amount of the State's allotments for any 
            preceding fiscal years that remains available for 
            expenditure and that will not be expended by the end of the 
            immediately preceding fiscal year;
                ``(ii) the amount (if any) of the child enrollment 
            contingency fund payment under subsection (j); and
                ``(iii) the amount of the State's allotment for the 
            fiscal year.
            ``(B) Proration rule.--If the amounts available for 
        redistribution under paragraph (1) for a fiscal year are less 
        than the total amounts of the estimated shortfalls determined 
        for the year under subparagraph (A), the amount to be 
        redistributed under such paragraph for each shortfall State 
        shall be reduced proportionally.
            ``(C) Retrospective adjustment.--The Secretary may adjust 
        the estimates and determinations made under paragraph (1) and 
        this paragraph with respect to a fiscal year as necessary on 
        the basis of the amounts reported by States not later than 
        November 30 of the succeeding fiscal year, as approved by the 
        Secretary.''.
    SEC. 107. OPTION FOR QUALIFYING STATES TO RECEIVE THE ENHANCED 
      PORTION OF THE CHIP MATCHING RATE FOR MEDICAID COVERAGE OF 
      CERTAIN CHILDREN.
    Section 2105(g) (42 U.S.C. 1397ee(g)) is amended--
        (1) in paragraph (1)(A), by inserting ``subject to paragraph 
    (4),'' after ``Notwithstanding any other provision of law,''; and
        (2) by adding at the end the following new paragraph:
        ``(4) Option for allotments for fiscal years 2008 through 
    2012.--
            ``(A) Payment of enhanced portion of matching rate for 
        certain expenditures.--In the case of expenditures described in 
        subparagraph (B), a qualifying State (as defined in paragraph 
        (2)) may elect to be paid from the State's allotment made under 
        section 2104 for any of fiscal years 2008 through 2012 (insofar 
        as the allotment is available to the State under subsections 
        (e) and (i) of such section) an amount each quarter equal to 
        the additional amount that would have been paid to the State 
        under title XIX with respect to such expenditures if the 
        enhanced FMAP (as determined under subsection (b)) had been 
        substituted for the Federal medical assistance percentage (as 
        defined in section 1905(b)).
            ``(B) Expenditures described.--For purposes of subparagraph 
        (A), the expenditures described in this subparagraph are 
        expenditures made after the date of the enactment of this 
        paragraph and during the period in which funds are available to 
        the qualifying State for use under subparagraph (A), for the 
        provision of medical assistance to individuals residing in the 
        State who are eligible for medical assistance under the State 
        plan under title XIX or under a waiver of such plan and who 
        have not attained age 19 (or, if a State has so elected under 
        the State plan under title XIX, age 20 or 21), and whose family 
        income equals or exceeds 133 percent of the poverty line but 
        does not exceed the Medicaid applicable income level.''.
    SEC. 108. ONE-TIME APPROPRIATION.
    There is appropriated to the Secretary, out of any money in the 
Treasury not otherwise appropriated, $12,500,000,000 to accompany the 
allotment made for the period beginning on October 1, 2011, and ending 
on March 31, 2012, under section 2104(a)(15)(A) of the Social Security 
Act (42 U.S.C. 1397dd(a)(15)(A)) (as added by section 101), to remain 
available until expended. Such amount shall be used to provide 
allotments to States under paragraph (3) of section 2104(i) of the 
Social Security Act (42 U.S.C. 1397dd(i)), as added by section 102, for 
the first 6 months of fiscal year 2012 in the same manner as allotments 
are provided under subsection (a)(15)(A) of such section 2104 and 
subject to the same terms and conditions as apply to the allotments 
provided from such subsection (a)(15)(A).
    SEC. 109. IMPROVING FUNDING FOR THE TERRITORIES UNDER CHIP AND 
      MEDICAID.
    (a) Removal of Federal Matching Payments for Data Reporting Systems 
From the Overall Limit on Payments to Territories Under Title XIX.--
Section 1108(g) (42 U.S.C. 1308(g)) is amended by adding at the end the 
following new paragraph:
        ``(4) Exclusion of certain expenditures from payment limits.--
    With respect to fiscal years beginning with fiscal year 2008, if 
    Puerto Rico, the Virgin Islands, Guam, the Northern Mariana 
    Islands, or American Samoa qualify for a payment under subparagraph 
    (A)(i), (B), or (F) of section 1903(a)(3) for a calendar quarter of 
    such fiscal year, the payment shall not be taken into account in 
    applying subsection (f) (as increased in accordance with paragraphs 
    (1), (2), and (3) of this subsection) to such commonwealth or 
    territory for such fiscal year.''.
    (b) GAO Study and Report.--Not later than September 30, 2009, the 
Comptroller General of the United States shall submit a report to the 
Committee on Finance of the Senate and the Committee on Energy and 
Commerce of the House of Representatives regarding Federal funding 
under Medicaid and CHIP for Puerto Rico, the United States Virgin 
Islands, Guam, American Samoa, and the Northern Mariana Islands. The 
report shall include the following:
        (1) An analysis of all relevant factors with respect to--
            (A) eligible Medicaid and CHIP populations in such 
        commonwealths and territories;
            (B) historical and projected spending needs of such 
        commonwealths and territories and the ability of capped funding 
        streams to respond to those spending needs;
            (C) the extent to which Federal poverty guidelines are used 
        by such commonwealths and territories to determine Medicaid and 
        CHIP eligibility; and
            (D) the extent to which such commonwealths and territories 
        participate in data collection and reporting related to 
        Medicaid and CHIP, including an analysis of territory 
        participation in the Current Population Survey versus the 
        American Community Survey.
        (2) Recommendations regarding methods for the collection and 
    reporting of reliable data regarding the enrollment under Medicaid 
    and CHIP of children in such commonwealths and territories.
        (3) Recommendations for improving Federal funding under 
    Medicaid and CHIP for such commonwealths and territories.

      Subtitle B--Focus on Low-Income Children and Pregnant Women

    SEC. 111. STATE OPTION TO COVER LOW-INCOME PREGNANT WOMEN UNDER 
      CHIP THROUGH A STATE PLAN AMENDMENT.
    (a) In General.--Title XXI (42 U.S.C. 1397aa et seq.), as amended 
by section 112(a), is amended by adding at the end the following new 
section:
``SEC. 2112. OPTIONAL COVERAGE OF TARGETED LOW-INCOME PREGNANT WOMEN 
THROUGH A STATE PLAN AMENDMENT.
    ``(a) In General.--Subject to the succeeding provisions of this 
section, a State may elect through an amendment to its State child 
health plan under section 2102 to provide pregnancy-related assistance 
under such plan for targeted low-income pregnant women.
    ``(b) Conditions.--A State may only elect the option under 
subsection (a) if the following conditions are satisfied:
        ``(1) Minimum income eligibility levels for pregnant women and 
    children.--The State has established an income eligibility level--
            ``(A) for pregnant women under subsection 
        (a)(10)(A)(i)(III), (a)(10)(A)(i)(IV), or (l)(1)(A) of section 
        1902 that is at least 185 percent (or such higher percent as 
        the State has in effect with regard to pregnant women under 
        this title) of the poverty line applicable to a family of the 
        size involved, but in no case lower than the percent in effect 
        under any such subsection as of July 1, 2007; and
            ``(B) for children under 19 years of age under this title 
        (or title XIX) that is at least 200 percent of the poverty line 
        applicable to a family of the size involved.
        ``(2) No chip income eligibility level for pregnant women lower 
    than the state's medicaid level.--The State does not apply an 
    effective income level for pregnant women under the State plan 
    amendment that is lower than the effective income level (expressed 
    as a percent of the poverty line and considering applicable income 
    disregards) specified under subsection (a)(10)(A)(i)(III), 
    (a)(10)(A)(i)(IV), or (l)(1)(A) of section 1902, on the date of 
    enactment of this paragraph to be eligible for medical assistance 
    as a pregnant woman.
        ``(3) No coverage for higher income pregnant women without 
    covering lower income pregnant women.--The State does not provide 
    coverage for pregnant women with higher family income without 
    covering pregnant women with a lower family income.
        ``(4) Application of requirements for coverage of targeted low-
    income children.--The State provides pregnancy-related assistance 
    for targeted low-income pregnant women in the same manner, and 
    subject to the same requirements, as the State provides child 
    health assistance for targeted low-income children under the State 
    child health plan, and in addition to providing child health 
    assistance for such women.
        ``(5) No preexisting condition exclusion or waiting period.--
    The State does not apply any exclusion of benefits for pregnancy-
    related assistance based on any preexisting condition or any 
    waiting period (including any waiting period imposed to carry out 
    section 2102(b)(3)(C)) for receipt of such assistance.
        ``(6) Application of cost-sharing protection.--The State 
    provides pregnancy-related assistance to a targeted low-income 
    woman consistent with the cost-sharing protections under section 
    2103(e) and applies the limitation on total annual aggregate cost 
    sharing imposed under paragraph (3)(B) of such section to the 
    family of such a woman.
        ``(7) No waiting list for children.--The State does not impose, 
    with respect to the enrollment under the State child health plan of 
    targeted low-income children during the quarter, any enrollment cap 
    or other numerical limitation on enrollment, any waiting list, any 
    procedures designed to delay the consideration of applications for 
    enrollment, or similar limitation with respect to enrollment.
    ``(c) Option To Provide Presumptive Eligibility.--A State that 
elects the option under subsection (a) and satisfies the conditions 
described in subsection (b) may elect to apply section 1920 (relating 
to presumptive eligibility for pregnant women) to the State child 
health plan in the same manner as such section applies to the State 
plan under title XIX.
    ``(d) Definitions.--For purposes of this section:
        ``(1) Pregnancy-related assistance.--The term `pregnancy-
    related assistance' has the meaning given the term `child health 
    assistance' in section 2110(a) and includes any medical assistance 
    that the State would provide for a pregnant woman under the State 
    plan under title XIX during the period described in paragraph 
    (2)(A).
        ``(2) Targeted low-income pregnant woman.--The term `targeted 
    low-income pregnant woman' means a woman--
            ``(A) during pregnancy and through the end of the month in 
        which the 60-day period (beginning on the last day of her 
        pregnancy) ends;
            ``(B) whose family income exceeds 185 percent (or, if 
        higher, the percent applied under subsection (b)(1)(A)) of the 
        poverty line applicable to a family of the size involved, but 
        does not exceed the income eligibility level established under 
        the State child health plan under this title for a targeted 
        low-income child; and
            ``(C) who satisfies the requirements of paragraphs (1)(A), 
        (1)(C), (2), and (3) of section 2110(b) in the same manner as a 
        child applying for child health assistance would have to 
        satisfy such requirements.
    ``(e) Automatic Enrollment for Children Born to Women Receiving 
Pregnancy-Related Assistance.--If a child is born to a targeted low-
income pregnant woman who was receiving pregnancy-related assistance 
under this section on the date of the child's birth, the child shall be 
deemed to have applied for child health assistance under the State 
child health plan and to have been found eligible for such assistance 
under such plan or to have applied for medical assistance under title 
XIX and to have been found eligible for such assistance under such 
title, as appropriate, on the date of such birth and to remain eligible 
for such assistance until the child attains 1 year of age. During the 
period in which a child is deemed under the preceding sentence to be 
eligible for child health or medical assistance, the child health or 
medical assistance eligibility identification number of the mother 
shall also serve as the identification number of the child, and all 
claims shall be submitted and paid under such number (unless the State 
issues a separate identification number for the child before such 
period expires).
    ``(f) States Providing Assistance Through Other Options.--
        ``(1) Continuation of other options for providing assistance.--
    The option to provide assistance in accordance with the preceding 
    subsections of this section shall not limit any other option for a 
    State to provide--
            ``(A) child health assistance through the application of 
        sections 457.10, 457.350(b)(2), 457.622(c)(5), and 
        457.626(a)(3) of title 42, Code of Federal Regulations (as in 
        effect after the final rule adopted by the Secretary and set 
        forth at 67 Fed. Reg. 61956-61974 (October 2, 2002)), or
            ``(B) pregnancy-related services through the application of 
        any waiver authority (as in effect on June 1, 2007).
        ``(2) Clarification of authority to provide postpartum 
    services.--Any State that provides child health assistance under 
    any authority described in paragraph (1) may continue to provide 
    such assistance, as well as postpartum services, through the end of 
    the month in which the 60-day period (beginning on the last day of 
    the pregnancy) ends, in the same manner as such assistance and 
    postpartum services would be provided if provided under the State 
    plan under title XIX, but only if the mother would otherwise 
    satisfy the eligibility requirements that apply under the State 
    child health plan (other than with respect to age) during such 
    period.
        ``(3) No inference.--Nothing in this subsection shall be 
    construed--
            ``(A) to infer congressional intent regarding the legality 
        or illegality of the content of the sections specified in 
        paragraph (1)(A); or
            ``(B) to modify the authority to provide pregnancy-related 
        services under a waiver specified in paragraph (1)(B).''.
    (b) Additional Conforming Amendments.--
        (1) No cost sharing for pregnancy-related benefits.--Section 
    2103(e)(2) (42 U.S.C. 1397cc(e)(2)) is amended--
            (A) in the heading, by inserting ``or pregnancy-related 
        assistance'' after ``preventive services''; and
            (B) by inserting before the period at the end the 
        following: ``or for pregnancy-related assistance''.
        (2) No waiting period.--Section 2102(b)(1)(B) (42 U.S.C. 
    1397bb(b)(1)(B)) is amended--
            (A) in clause (i), by striking ``, and'' at the end and 
        inserting a semicolon;
            (B) in clause (ii), by striking the period at the end and 
        inserting ``; and''; and
            (C) by adding at the end the following new clause:
                ``(iii) may not apply a waiting period (including a 
            waiting period to carry out paragraph (3)(C)) in the case 
            of a targeted low-income pregnant woman provided pregnancy-
            related assistance under section 2112.''.
    SEC. 112. PHASE-OUT OF COVERAGE FOR NONPREGNANT CHILDLESS ADULTS 
      UNDER CHIP; CONDITIONS FOR COVERAGE OF PARENTS.
    (a) Phase-Out Rules.--
        (1) In general.--Title XXI (42 U.S.C. 1397aa et seq.) is 
    amended by adding at the end the following new section:
``SEC. 2111. PHASE-OUT OF COVERAGE FOR NONPREGNANT CHILDLESS ADULTS; 
CONDITIONS FOR COVERAGE OF PARENTS.
    ``(a) Termination of Coverage for Nonpregnant Childless Adults.--
        ``(1) No new chip waivers; automatic extensions at state option 
    through fiscal year 2008.--Notwithstanding section 1115 or any 
    other provision of this title, except as provided in this 
    subsection--
            ``(A) the Secretary shall not on or after the date of the 
        enactment of the Children's Health Insurance Program 
        Reauthorization Act of 2007, approve or renew 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; and
            ``(B) notwithstanding the terms and conditions of an 
        applicable existing waiver, the provisions of paragraphs (2) 
        and (3) shall apply for purposes of any fiscal year beginning 
        on or after October 1, 2008, in determining the period to which 
        the waiver applies, the individuals eligible to be covered by 
        the waiver, and the amount of the Federal payment under this 
        title.
        ``(2) Termination of chip coverage under applicable existing 
    waivers at the end of fiscal year 2008.--
            ``(A) In general.--No funds shall be available under this 
        title for child health assistance or other health benefits 
        coverage that is provided to a nonpregnant childless adult 
        under an applicable existing waiver after September 30, 2008.
            ``(B) Extension upon state request.--If an applicable 
        existing waiver described in subparagraph (A) would otherwise 
        expire before October 1, 2008, and the State requests an 
        extension of such waiver, the Secretary shall grant such an 
        extension, but only through September 30, 2008.
            ``(C) Application of enhanced fmap.--The enhanced FMAP 
        determined under section 2105(b) shall apply to expenditures 
        under an applicable existing waiver for the provision of child 
        health assistance or other health benefits coverage to a 
        nonpregnant childless adult during fiscal year 2008.
        ``(3) Optional 1-year transitional coverage block grant funded 
    from state allotment.--Subject to paragraph (4)(B), each State for 
    which coverage under an applicable existing waiver is terminated 
    under paragraph (2)(A) may elect to provide nonpregnant childless 
    adults who were provided child health assistance or health benefits 
    coverage under the applicable existing waiver at any time during 
    fiscal year 2008 with such assistance or coverage during fiscal 
    year 2009, as if the authority to provide such assistance or 
    coverage under an applicable existing waiver was extended through 
    that fiscal year, but subject to the following terms and 
    conditions:
            ``(A) Block grant set aside from state allotment.--The 
        Secretary shall set aside for the State an amount equal to the 
        Federal share of the State's projected expenditures under the 
        applicable existing waiver for providing child health 
        assistance or health benefits coverage to all nonpregnant 
        childless adults under such waiver for fiscal year 2008 (as 
        certified by the State and submitted to the Secretary by not 
        later than August 31, 2008, and without regard to whether any 
        such individual lost coverage during fiscal year 2008 and was 
        later provided child health assistance or other health benefits 
        coverage under the waiver in that fiscal year), increased by 
        the annual adjustment for fiscal year 2009 determined under 
        section 2104(i)(5)(A). The Secretary may adjust the amount set 
        aside under the preceding sentence, as necessary, on the basis 
        of the expenditure data for fiscal year 2008 reported by States 
        on CMS Form 64 or CMS Form 21 not later than November 30, 2008, 
        but in no case shall the Secretary adjust such amount after 
        December 31, 2008.
            ``(B) No coverage for nonpregnant childless adults who were 
        not covered during fiscal year 2008.--
                ``(i) FMAP applied to expenditures.--The Secretary 
            shall pay the State for each quarter of fiscal year 2009, 
            from the amount set aside under subparagraph (A), an amount 
            equal to the Federal medical assistance percentage (as 
            determined under section 1905(b) without regard to clause 
            (4) of such section) of expenditures in the quarter for 
            providing child health assistance or other health benefits 
            coverage to a nonpregnant childless adult but only if such 
            adult was enrolled in the State program under this title 
            during fiscal year 2008 (without regard to whether the 
            individual lost coverage during fiscal year 2008 and was 
            reenrolled in that fiscal year or in fiscal year 2009).
                ``(ii) Federal payments limited to amount of block 
            grant set-aside.--No payments shall be made to a State for 
            expenditures described in this subparagraph after the total 
            amount set aside under subparagraph (A) for fiscal year 
            2009 has been paid to the State.
        ``(4) State option to apply for medicaid waiver to continue 
    coverage for nonpregnant childless adults.--
            ``(A) In general.--Each State for which coverage under an 
        applicable existing waiver is terminated under paragraph (2)(A) 
        may submit, not later than June 30, 2009, an application to the 
        Secretary for a waiver under section 1115 of the State plan 
        under title XIX to provide medical assistance to a nonpregnant 
        childless adult whose coverage is so terminated (in this 
        subsection referred to as a `Medicaid nonpregnant childless 
        adults waiver').
            ``(B) Deadline for approval.--The Secretary shall make a 
        decision to approve or deny an application for a Medicaid 
        nonpregnant childless adults waiver submitted under 
        subparagraph (A) within 90 days of the date of the submission 
        of the application. If no decision has been made by the 
        Secretary as of September 30, 2009, on the application of a 
        State for a Medicaid nonpregnant childless adults waiver that 
        was submitted to the Secretary by June 30, 2009, the 
        application shall be deemed approved.
            ``(C) Standard for budget neutrality.--The budget 
        neutrality requirement applicable with respect to expenditures 
        for medical assistance under a Medicaid nonpregnant childless 
        adults waiver shall--
                ``(i) in the case of fiscal year 2010, allow 
            expenditures for medical assistance under title XIX for all 
            such adults to not exceed the total amount of payments made 
            to the State under paragraph (3)(B) for fiscal year 2009, 
            increased by the percentage increase (if any) in the 
            projected nominal per capita amount of National Health 
            Expenditures for calendar year 2010 over calendar year 
            2009, as most recently published by the Secretary; and
                ``(ii) in the case of any succeeding fiscal year, allow 
            such expenditures to not exceed the amount in effect under 
            this subparagraph for the preceding fiscal year, increased 
            by the percentage increase (if any) in the projected 
            nominal per capita amount of National Health Expenditures 
            for the calendar year that begins during the fiscal year 
            involved over the preceding calendar year, as most recently 
            published by the Secretary.
    ``(b) Rules and Conditions for Coverage of Parents of Targeted Low-
Income Children.--
        ``(1) Two-year transition period; automatic extension at state 
    option through fiscal year 2009.--
            ``(A) No new chip waivers.--Notwithstanding section 1115 or 
        any other provision of this title, except as provided in this 
        subsection--
                ``(i) the Secretary shall not on or after the date of 
            the enactment of the Children's Health Insurance Program 
            Reauthorization Act of 2007 approve or renew 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 parent of a targeted low-income child; and
                ``(ii) notwithstanding the terms and conditions of an 
            applicable existing waiver, the provisions of paragraphs 
            (2) and (3) shall apply for purposes of any fiscal year 
            beginning on or after October 1, 2009, in determining the 
            period to which the waiver applies, the individuals 
            eligible to be covered by the waiver, and the amount of the 
            Federal payment under this title.
            ``(B) Extension upon state request.--If an applicable 
        existing waiver described in subparagraph (A) would otherwise 
        expire before October 1, 2009, and the State requests an 
        extension of such waiver, the Secretary shall grant such an 
        extension, but only, subject to paragraph (2)(A), through 
        September 30, 2009.
            ``(C) Application of enhanced fmap.--The enhanced FMAP 
        determined under section 2105(b) shall apply to expenditures 
        under an applicable existing waiver for the provision of child 
        health assistance or other health benefits coverage to a parent 
        of a targeted low-income child during fiscal years 2008 and 
        2009.
        ``(2) Rules for fiscal years 2010 through 2012.--
            ``(A) Payments for coverage limited to block grant funded 
        from state allotment.--Any State that provides child health 
        assistance or health benefits coverage under an applicable 
        existing waiver for a parent of a targeted low-income child may 
        elect to continue to provide such assistance or coverage 
        through fiscal year 2010, 2011, or 2012, subject to the same 
        terms and conditions that applied under the applicable existing 
        waiver, unless otherwise modified in subparagraph (B).
            ``(B) Terms and conditions.--
                ``(i) Block grant set aside from state allotment.--If 
            the State makes an election under subparagraph (A), the 
            Secretary shall set aside for the State for each such 
            fiscal year an amount equal to the Federal share of 110 
            percent of the State's projected expenditures under the 
            applicable existing waiver for providing child health 
            assistance or health benefits coverage to all parents of 
            targeted low-income children enrolled under such waiver for 
            the fiscal year (as certified by the State and submitted to 
            the Secretary by not later than August 31 of the preceding 
            fiscal year). In the case of fiscal year 2012, the set 
            aside for any State shall be computed separately for each 
            period described in subparagraphs (A) and (B) of section 
            2104(a)(15) and any reduction in the allotment for either 
            such period under section 2104(i)(4) shall be allocated on 
            a pro rata basis to such set aside.
                ``(ii) Payments from block grant.--The Secretary shall 
            pay the State from the amount set aside under clause (i) 
            for the fiscal year, an amount for each quarter of such 
            fiscal year equal to the applicable percentage determined 
            under clause (iii) or (iv) for expenditures in the quarter 
            for providing child health assistance or other health 
            benefits coverage to a parent of a targeted low-income 
            child.
                ``(iii) Enhanced fmap only in fiscal year 2010 for 
            states with significant child outreach or that achieve 
            child coverage benchmarks; fmap for any other states.--For 
            purposes of clause (ii), the applicable percentage for any 
            quarter of fiscal year 2010 is equal to--

                    ``(I) the enhanced FMAP determined under section 
                2105(b) in the case of a State that meets the outreach 
                or coverage benchmarks described in any of subparagraph 
                (A), (B), or (C) of paragraph (3) for fiscal year 2009; 
                or
                    ``(II) the Federal medical assistance percentage 
                (as determined under section 1905(b) without regard to 
                clause (4) of such section) in the case of any other 
                State.

                ``(iv) Amount of federal matching payment in 2011 or 
            2012.--For purposes of clause (ii), the applicable 
            percentage for any quarter of fiscal year 2011 or 2012 is 
            equal to--

                    ``(I) the REMAP percentage if--

                        ``(aa) the applicable percentage for the State 
                    under clause (iii) was the enhanced FMAP for fiscal 
                    year 2009; and
                        ``(bb) the State met either of the coverage 
                    benchmarks described in subparagraph (B) or (C) of 
                    paragraph (3) for the preceding fiscal year; or

                    ``(II) the Federal medical assistance percentage 
                (as so determined) in the case of any State to which 
                subclause (I) does not apply.

            For purposes of subclause (I), the REMAP percentage is the 
            percentage which is the sum of such Federal medical 
            assistance percentage and a number of percentage points 
            equal to one-half of the difference between such Federal 
            medical assistance percentage and such enhanced FMAP.
                ``(v) No federal payments other than from block grant 
            set aside.--No payments shall be made to a State for 
            expenditures described in clause (ii) after the total 
            amount set aside under clause (i) for a fiscal year has 
            been paid to the State.
                ``(vi) No increase in income eligibility level for 
            parents.--No payments shall be made to a State from the 
            amount set aside under clause (i) for a fiscal year for 
            expenditures for providing child health assistance or 
            health benefits coverage to a parent of a targeted low-
            income child whose family income exceeds the income 
            eligibility level applied under the applicable existing 
            waiver to parents of targeted low-income children on the 
            date of enactment of the Children's Health Insurance 
            Program Reauthorization Act of 2007.
        ``(3) Outreach or coverage benchmarks.--For purposes of 
    paragraph (2), the outreach or coverage benchmarks described in 
    this paragraph are as follows:
            ``(A) Significant child outreach campaign.--The State--
                ``(i) was awarded a grant under section 2113 for fiscal 
            year 2009;
                ``(ii) implemented 1 or more of the enrollment and 
            retention provisions described in section 2105(a)(4) for 
            such fiscal year; or
                ``(iii) has submitted a specific plan for outreach for 
            such fiscal year.
            ``(B) High-performing state.--The State, on the basis of 
        the most timely and accurate published estimates of the Bureau 
        of the Census, ranks in the lowest \1/3\ of States in terms of 
        the State's percentage of low-income children without health 
        insurance.
            ``(C) State increasing enrollment of low-income children.--
        The State qualified for a performance bonus payment under 
        section 2105(a)(3)(B) for the most recent fiscal year 
        applicable under such section.
        ``(4) Rules of construction.--Nothing in this subsection shall 
    be construed as prohibiting a State from submitting an application 
    to the Secretary for a waiver under section 1115 of the State plan 
    under title XIX to provide medical assistance to a parent of a 
    targeted low-income child that was provided child health assistance 
    or health benefits coverage under an applicable existing waiver.
    ``(c) Applicable Existing Waiver.--For purposes of this section--
        ``(1) In general.--The term `applicable existing waiver' means 
    a waiver, experimental, pilot, or demonstration project under 
    section 1115, grandfathered under section 6102(c)(3) of the Deficit 
    Reduction Act of 2005, or otherwise conducted under authority 
    that--
            ``(A) would allow funds made available under this title to 
        be used to provide child health assistance or other health 
        benefits coverage to--
                ``(i) a parent of a targeted low-income child;
                ``(ii) a nonpregnant childless adult; or
                ``(iii) individuals described in both clauses (i) and 
            (ii); and
            ``(B) was in effect during fiscal year 2007.
        ``(2) Definitions.--
            ``(A) Parent.--The term `parent' includes a caretaker 
        relative (as such term is used in carrying out section 1931) 
        and a legal guardian.
            ``(B) Nonpregnant childless adult.--The term `nonpregnant 
        childless adult' has the meaning given such term by section 
        2107(f).''.
        (2) Conforming amendments.--
            (A) Section 2107(f) (42 U.S.C. 1397gg(f)) is amended--
                (i) by striking ``, the Secretary'' and inserting ``:
        ``(1) The Secretary'';
                (ii) in the first sentence, by inserting ``or a parent 
            (as defined in section 2111(c)(2)(A)), who is not pregnant, 
            of a targeted low-income child'' before the period;
                (iii) by striking the second sentence; and
                (iv) by adding at the end the following new paragraph:
        ``(2) The Secretary may not approve, extend, renew, or amend a 
    waiver, experimental, pilot, or demonstration project with respect 
    to a State after the date of enactment of the Children's Health 
    Insurance Program Reauthorization Act of 2007 that would waive or 
    modify the requirements of section 2111.''.
            (B) Section 6102(c) of the Deficit Reduction Act of 2005 
        (Public Law 109-171; 120 Stat. 131) is amended by striking 
        ``Nothing'' and inserting ``Subject to section 2111 of the 
        Social Security Act, as added by section 112 of the Children's 
        Health Insurance Program Reauthorization Act of 2007, 
        nothing''.
    (b) GAO Study and Report.--
        (1) In general.--The Comptroller General of the United States 
    shall conduct a study of whether--
            (A) the coverage of a parent, a caretaker relative (as such 
        term is used in carrying out section 1931), or a legal guardian 
        of a targeted low-income child under a State health plan under 
        title XXI of the Social Security Act increases the enrollment 
        of, or the quality of care for, children, and
            (B) such parents, relatives, and legal guardians who enroll 
        in such a plan are more likely to enroll their children in such 
        a plan or in a State plan under title XIX of such Act.
        (2) Report.--Not later than 2 years after the date of the 
    enactment of this Act, the Comptroller General shall report the 
    results of the study to the Committee on Finance of the Senate and 
    the Committee on Energy and Commerce of the House of 
    Representatives, including recommendations (if any) for changes in 
    legislation.
    SEC. 113. ELIMINATION OF COUNTING MEDICAID CHILD PRESUMPTIVE 
      ELIGIBILITY COSTS AGAINST TITLE XXI ALLOTMENT.
    (a) In General.--Section 2105(a)(1) (42 U.S.C. 1397ee(a)(1)) is 
amended--
        (1) in the matter preceding subparagraph (A), by striking 
    ``(or, in the case of expenditures described in subparagraph (B), 
    the Federal medical assistance percentage (as defined in the first 
    sentence of section 1905(b)))''; and
        (2) by striking subparagraph (B) and inserting the following 
    new subparagraph:
            ``(B) [reserved]''.
    (b) Amendments to Medicaid.--
        (1) Eligibility of a newborn.--Section 1902(e)(4) (42 U.S.C. 
    1396a(e)(4)) is amended in the first sentence by striking ``so long 
    as the child is a member of the woman's household and the woman 
    remains (or would remain if pregnant) eligible for such 
    assistance''.
        (2) Application of qualified entities to presumptive 
    eligibility for pregnant women under medicaid.--Section 1920(b) (42 
    U.S.C. 1396r-1(b)) is amended by adding after paragraph (2) the 
    following flush sentence:
``The term `qualified provider' also includes a qualified entity, as 
defined in section 1920A(b)(3).''.
    SEC. 114. LIMITATION ON MATCHING RATE FOR STATES THAT PROPOSE TO 
      COVER CHILDREN WITH EFFECTIVE FAMILY INCOME THAT EXCEEDS 300 
      PERCENT OF THE POVERTY LINE.
    (a) FMAP Applied to Expenditures.--Section 2105(c) (42 U.S.C. 
1397ee(c)) is amended by adding at the end the following new paragraph:
        ``(8) Limitation on matching rate for expenditures for child 
    health assistance provided to children whose effective family 
    income exceeds 300 percent of the poverty line.--
            ``(A) FMAP applied to expenditures.--Except as provided in 
        subparagraph (B), for fiscal years beginning with fiscal year 
        2008, the Federal medical assistance percentage (as determined 
        under section 1905(b) without regard to clause (4) of such 
        section) shall be substituted for the enhanced FMAP under 
        subsection (a)(1) with respect to any expenditures for 
        providing child health assistance or health benefits coverage 
        for a targeted low-income child whose effective family income 
        would exceed 300 percent of the poverty line but for the 
        application of a general exclusion of a block of income that is 
        not determined by type of expense or type of income.
            ``(B) Exception.--Subparagraph (A) shall not apply to any 
        State that, on the date of enactment of the Children's Health 
        Insurance Program Reauthorization Act of 2007, has an approved 
        State plan amendment or waiver to provide, or has enacted a 
        State law to submit a State plan amendment to provide, 
        expenditures described in such subparagraph under the State 
        child health plan.''.
    (b) Rule of Construction.--Nothing in the amendments made by this 
section shall be construed as--
        (1) changing any income eligibility level for children under 
    title XXI of the Social Security Act; or
        (2) changing the flexibility provided States under such title 
    to establish the income eligibility level for targeted low-income 
    children under a State child health plan and the methodologies used 
    by the State to determine income or assets under such plan.
    SEC. 115. STATE AUTHORITY UNDER MEDICAID.
    (a) State Authority to Expand Income or Resource Eligibility Levels 
for Children.--Nothing in this Act, the amendments made by this Act, or 
title XIX of the Social Security Act, including paragraph (2)(B) of 
section 1905(u) of such Act, shall be construed as limiting the 
flexibility afforded States under such title to increase the income or 
resource eligibility levels for children under a State plan or waiver 
under such title.
    (b) State Authority to Receive Payments Under Medicaid for 
Providing Medical Assistance to Children Eligible as a Result of an 
Income or Resource Eligibility Level Expansion.--A State may, 
notwithstanding the fourth sentence of subsection (b) of section 1905 
of the Social Security Act (42 U.S.C. 1396d) or subsection (u) of such 
section--
        (1) cover individuals described in section 
    1902(a)(10)(A)(ii)(IX) of the Social Security Act and thereby 
    receive Federal financial participation for medical assistance for 
    such individuals under title XIX of the Social Security Act; or
        (2) receive Federal financial participation for expenditures 
    for medical assistance under Medicaid for children described in 
    paragraph (2)(B) or (3) of section 1905(u) of such Act based on the 
    Federal medical assistance percentage, as otherwise determined 
    based on the first and third sentences of subsection (b) of section 
    1905 of the Social Security Act, rather than on the basis of an 
    enhanced FMAP (as defined in section 2105(b) of such Act).
    SEC. 116. PREVENTING SUBSTITUTION OF CHIP COVERAGE FOR PRIVATE 
      COVERAGE.
    (a) Findings.--
        (1) Congress agrees with the President that low-income children 
    should be the first priority of all States in providing child 
    health assistance under CHIP.
        (2) Congress agrees with the President and the Congressional 
    Budget Office that the substitution of CHIP coverage for private 
    coverage occurs more frequently for children in families at higher 
    income levels.
        (3) Congress agrees with the President that it is appropriate 
    that States that expand CHIP eligibility to children at higher 
    income levels should have achieved a high level of health benefits 
    coverage for low-income children and should implement strategies to 
    address such substitution.
        (4) Congress concludes that the policies specified in this 
    section (and the amendments made by this section) are the 
    appropriate policies to address these issues.
    (b) Analyses of Best Practices and Methodology in Addressing Crowd-
Out.--
        (1) GAO report.--Not later than 18 months after the date of the 
    enactment of this Act, the Comptroller General of the United States 
    shall submit to the Committee on Finance of the Senate and the 
    Committee on Energy and Commerce of the House of Representatives 
    and the Secretary a report describing the best practices by States 
    in addressing the issue of CHIP crowd-out. Such report shall 
    include analyses of--
            (A) the impact of different geographic areas, including 
        urban and rural areas, on CHIP crowd-out;
            (B) the impact of different State labor markets on CHIP 
        crowd-out;
            (C) the impact of different strategies for addressing CHIP 
        crowd-out;
            (D) the incidence of crowd-out for children with different 
        levels of family income; and
            (E) the relationship (if any) between changes in the 
        availability and affordability of dependent coverage under 
        employer-sponsored health insurance and CHIP crowd-out.
        (2) IOM report on methodology.--The Secretary shall enter into 
    an arrangement with the Institute of Medicine under which the 
    Institute submits to the Committee on Finance of the Senate and the 
    Committee on Energy and Commerce of the House of Representatives 
    and the Secretary, not later than 18 months after the date of the 
    enactment of this Act, a report on--
            (A) the most accurate, reliable, and timely way to 
        measure--
                (i) on a State-by-State basis, the rate of public and 
            private health benefits coverage among low-income children 
            with family income that does not exceed 200 percent of the 
            poverty line; and
                (ii) CHIP crowd-out, including in the case of children 
            with family income that exceeds 200 percent of the poverty 
            line; and
            (B) the least burdensome way to gather the necessary data 
        to conduct the measurements described in subparagraph (A).
    Out of any money in the Treasury not otherwise appropriated, there 
    are hereby appropriated $2,000,000 to carry out this paragraph for 
    the period ending September 30, 2009.
        (3) Incorporation of definitions.--In this section, the terms 
    ``CHIP crowd-out'', ``children'', ``poverty line'', and ``State'' 
    have the meanings given such terms for purposes of CHIP.
        (4) Definition of chip crowd-out.--Section 2110(c) (42 U.S.C. 
    1397jj(c)) is amended by adding at the end the following:
        ``(9) CHIP crowd-out.--The term `CHIP crowd-out' means the 
    substitution of--
            ``(A) health benefits coverage for a child under this 
        title, for
            ``(B) health benefits coverage for the child other than 
        under this title or title XIX.''.
    (c) Development of Best Practice Recommendations.--Section 2107 (42 
U.S.C. 1397gg) is amended by adding at the end the following:
    ``(g) Development of Best Practice Recommendations.--Within 6 
months after the date of receipt of the reports under subsections (a) 
and (b) of section 116 of the Children's Health Insurance Program 
Reauthorization Act of 2007, the Secretary, in consultation with 
States, including Medicaid and CHIP directors in States, shall publish 
in the Federal Register, and post on the public website for the 
Department of Health and Human Services--
        ``(1) recommendations regarding best practices for States to 
    use to address CHIP crowd-out; and
        ``(2) uniform standards for data collection by States to 
    measure and report--
            ``(A) health benefits coverage for children with family 
        income below 200 percent of the poverty line; and
            ``(B) on CHIP crowd-out, including for children with family 
        income that exceeds 200 percent of the poverty line.
The Secretary, in consultation with States, including Medicaid and CHIP 
directors in States, may from time to time update the best practice 
recommendations and uniform standards set published under paragraphs 
(1) and (2) and shall provide for publication and posting of such 
updated recommendations and standards.''.
    (d) Requirement to Address CHIP Crowd-Out; Secretarial Review.--
Section 2106 (42 U.S.C. 1397ff) is amended by adding at the end the 
following:
    ``(f) Requirement to Address CHIP Crowd-Out; Secretarial Review.--
        ``(1) In general.--Each State that, on or after the best 
    practice application date described in paragraph (3), submits a 
    plan amendment (or waiver request) to provide for eligibility for 
    child health assistance under the State child health plan for 
    higher income children described in section 2105(c)(9)(D) (relating 
    to children whose effective family income exceeds 300 percent of 
    the poverty line) shall include with such plan amendment or request 
    a description of how the State--
            ``(A) will address CHIP crowd-out for such children; and
            ``(B) will incorporate recommended best practices referred 
        to in such paragraph.
        ``(2) Application to certain states.--Each State that, as of 
    the best practice application date described in paragraph (3), has 
    a State child health plan that provides (whether under the plan or 
    through a waiver) for eligibility for child health assistance for 
    children referred to in paragraph (1) shall submit to the 
    Secretary, not later than 6 months after the date of such 
    application, a State plan amendment describing how the State--
            ``(A) will address CHIP crowd-out for such children; and
            ``(B) will incorporate recommended best practices referred 
        to in such paragraph.
        ``(3) Best practice application date.--The best practice 
    application date described in this paragraph is the date that is 6 
    months after the date of publication of recommendations regarding 
    best practices under section 2107(g)(1).
        ``(4) Secretarial review.--The Secretary shall--
            ``(A) review each State plan amendment or waiver request 
        submitted under paragraph (1) or (2);
            ``(B) determine whether the amendment or request 
        incorporates recommended best practices referred to in 
        paragraph (3);
            ``(C) determine whether the State meets the enrollment 
        targets required under reference section 2105(c)(9)(C); and
            ``(D) notify the State of such determinations.''.
    (e) Limitation on Payments for States Covering Higher Income 
Children.--Section 2105(c) (42 U.S.C. 1397ee(c)), as amended by section 
114(a), is amended by adding at the end the following new subsection:
        ``(9) Limitation on payments for states covering higher income 
    children.--
            ``(A) Determinations.--
                ``(i) In general.--The Secretary shall determine, for 
            each State that is a higher income eligibility State as of 
            April 1 of 2010 and each subsequent year, whether the State 
            meets the target rate of coverage of low-income children 
            required under subparagraph (C) and shall notify the State 
            in that month of such determination.
                ``(ii) Determination of failure.--If the Secretary 
            determines in such month that a higher income eligibility 
            State does not meet such target rate of coverage, subject 
            to subparagraph (E), no payment shall be made as of October 
            1 of such year on or after October 1, 2010, under this 
            section for child health assistance provided for higher-
            income children (as defined in subparagraph (D)) under the 
            State child health plan unless and until the State 
            establishes it is in compliance with such requirement.
            ``(B) Higher income eligibility state.--A higher income 
        eligibility State described in this clause is a State that--
                ``(i) applies under its State child health plan an 
            eligibility income standard for targeted low-income 
            children that exceeds 300 percent of the poverty line; or
                ``(ii) because of the application of a general 
            exclusion of a block of income that is not determined by 
            type of expense or type of income, applies an effective 
            income standard under the State child health plan for such 
            children that exceeds 300 percent of the poverty line. 
            ``(C) Requirement for target rate of coverage of low-income 
        children.--
                ``(i) In general.--The requirement of this subparagraph 
            for a State is that the rate of health benefits coverage 
            (both private and public) for low-income children in the 
            State is not statistically significantly (at a p=0.05 
            level) less than the target rate of coverage specified in 
            clause (ii).
                ``(ii) Target rate.--The target rate of coverage 
            specified in this clause is the average rate (determined by 
            the Secretary) of health benefits coverage (both private 
            and public) as of January 1, 2010, among the 10 of the 50 
            States and the District of Columbia with the highest 
            percentage of health benefits coverage (both private and 
            public) for low-income children.
                ``(iii) Standards for data.--In applying this 
            subparagraph, rates of health benefits coverage for States 
            shall be determined using the uniform standards identified 
            by the Secretary under section 2107(g)(2).
            ``(D) Higher-income child.--For purposes of this paragraph, 
        the term `higher income child' means, with respect to a State 
        child health plan, a targeted low-income child whose family 
        income--
                ``(i) exceeds 300 percent of the poverty line; or
                ``(ii) would exceed 300 percent of the poverty line if 
            there were not taken into account any general exclusion 
            described in subparagraph (B)(ii).
            ``(E) Notice and opportunity to comply with target rate.--
        If the Secretary makes a determination described in 
        subparagraph (A)(ii) in April of a year, the Secretary--
                ``(i) shall provide the State with the opportunity to 
            submit and implement a corrective action plan for the State 
            to come into compliance with the requirement of 
            subparagraph (C) before October 1 of such year;
                ``(ii) shall not effect a denial of payment under 
            subparagraph (A) on the basis of such determination before 
            October 1 of such year; and
                ``(iii) shall not effect such a denial if the Secretary 
            determines that there is a reasonable likelihood that the 
            implementation of such a correction action plan will bring 
            the State into compliance with the requirement of 
            subparagraph (C).''.
    (f) Treatment of Medical Support Orders.--Section 2102(b) (42 
U.S.C. 1397bb(c)) is amended by adding at the end the following:
        ``(5) Treatment of medical support orders.--
            ``(A) In general.--Nothing in this title shall be construed 
        to allow the Secretary to require that a State deny eligibility 
        for child health assistance to a child who is otherwise 
        eligible on the basis of the existence of a valid medical 
        support order being in effect.
            ``(B) State election.--A State may elect to limit 
        eligibility for child health assistance to a targeted low-
        income child on the basis of the existence of a valid medical 
        support order on the child's behalf, but only if the State does 
        not deny such eligibility for a child on such basis if the 
        child asserts that the order is not being complied with for any 
        of the reasons described in subparagraph (C) unless the State 
        demonstrates that none of such reasons applies in the case 
        involved.
            ``(C) Reasons for noncompliance.--The reasons described in 
        this subparagraph for noncompliance with a medical support 
        order with respect to a child are that the child is not being 
        provided health benefits coverage pursuant to such order 
        because--
                ``(i) of failure of the noncustodial parent to comply 
            with the order;
                ``(ii) of the failure of an employer, group health plan 
            or health insurance issuer to comply with such order; or
                ``(iii) the child resides in a geographic area in which 
            benefits under the health benefits coverage are generally 
            unavailable.''.
    (g) Effective Date of Amendments; Consistency of Policies.--The 
amendments made by this section shall take effect as if enacted on 
August 16, 2007. The Secretary may not impose (or continue in effect) 
any requirement, prevent the implementation of any provision, or 
condition the approval of any provision under any State child health 
plan, State plan amendment, or waiver request on the basis of any 
policy or interpretation relating to CHIP crowd-out or medical support 
order other than under the amendments made by this section.

                   TITLE II--OUTREACH AND ENROLLMENT
             Subtitle A--Outreach and Enrollment Activities

    SEC. 201. GRANTS AND ENHANCED ADMINISTRATIVE FUNDING FOR OUTREACH 
      AND ENROLLMENT.
    (a) Grants.--Title XXI (42 U.S.C. 1397aa et seq.), as amended by 
section 107, is amended by adding at the end the following:
``SEC. 2113. GRANTS TO IMPROVE OUTREACH AND ENROLLMENT.
    ``(a) Outreach and Enrollment Grants; National Campaign.--
        ``(1) In general.--From the amounts appropriated under 
    subsection (g), subject to paragraph (2), the Secretary shall award 
    grants to eligible entities during the period of fiscal years 2008 
    through 2012 to conduct outreach and enrollment efforts that are 
    designed to increase the enrollment and participation of eligible 
    children under this title and title XIX.
        ``(2) Ten percent set aside for national enrollment campaign.--
    An amount equal to 10 percent of such amounts shall be used by the 
    Secretary for expenditures during such period to carry out a 
    national enrollment campaign in accordance with subsection (h).
    ``(b) Priority for Award of Grants.--
        ``(1) In general.--In awarding grants under subsection (a), the 
    Secretary shall give priority to eligible entities that--
            ``(A) propose to target geographic areas with high rates 
        of--
                ``(i) eligible but unenrolled children, including such 
            children who reside in rural areas; or
                ``(ii) racial and ethnic minorities and health 
            disparity populations, including those proposals that 
            address cultural and linguistic barriers to enrollment; and
            ``(B) submit the most demonstrable evidence required under 
        paragraphs (1) and (2) of subsection (c).
        ``(2) Ten percent set aside for outreach to indian children.--
    An amount equal to 10 percent of the funds appropriated under 
    subsection (g) shall be used by the Secretary to award grants to 
    Indian Health Service providers and urban Indian organizations 
    receiving funds under title V of the Indian Health Care Improvement 
    Act (25 U.S.C. 1651 et seq.) for outreach to, and enrollment of, 
    children who are Indians.
    ``(c) Application.--An eligible entity that desires to receive a 
grant under subsection (a) shall submit an application to the Secretary 
in such form and manner, and containing such information, as the 
Secretary may decide. Such application shall include--
        ``(1) evidence demonstrating that the entity includes members 
    who have access to, and credibility with, ethnic or low-income 
    populations in the communities in which activities funded under the 
    grant are to be conducted;
        ``(2) evidence demonstrating that the entity has the ability to 
    address barriers to enrollment, such as lack of awareness of 
    eligibility, stigma concerns and punitive fears associated with 
    receipt of benefits, and other cultural barriers to applying for 
    and receiving child health assistance or medical assistance;
        ``(3) specific quality or outcomes performance measures to 
    evaluate the effectiveness of activities funded by a grant awarded 
    under this section; and
        ``(4) an assurance that the eligible entity shall--
            ``(A) conduct an assessment of the effectiveness of such 
        activities against the performance measures;
            ``(B) cooperate with the collection and reporting of 
        enrollment data and other information in order for the 
        Secretary to conduct such assessments; and
            ``(C) in the case of an eligible entity that is not the 
        State, provide the State with enrollment data and other 
        information as necessary for the State to make necessary 
        projections of eligible children and pregnant women.
    ``(d) Dissemination of Enrollment Data and Information Determined 
From Effectiveness Assessments; Annual Report.--The Secretary shall--
        ``(1) make publicly available the enrollment data and 
    information collected and reported in accordance with subsection 
    (c)(4)(B); and
        ``(2) submit an annual report to Congress on the outreach and 
    enrollment activities conducted with funds appropriated under this 
    section.
    ``(e) Maintenance of Effort for States Awarded Grants; No State 
Match Required.--In the case of a State that is awarded a grant under 
this section--
        ``(1) the State share of funds expended for outreach and 
    enrollment activities under the State child health plan shall not 
    be less than the State share of such funds expended in the fiscal 
    year preceding the first fiscal year for which the grant is 
    awarded; and
        ``(2) no State matching funds shall be required for the State 
    to receive a grant under this section.
    ``(f) Definitions.--In this section:
        ``(1) Eligible entity.--The term `eligible entity' means any of 
    the following:
            ``(A) A State with an approved child health plan under this 
        title.
            ``(B) A local government.
            ``(C) An Indian tribe or tribal consortium, a tribal 
        organization, an urban Indian organization receiving funds 
        under title V of the Indian Health Care Improvement Act (25 
        U.S.C. 1651 et seq.), or an Indian Health Service provider.
            ``(D) A Federal health safety net organization.
            ``(E) A national, State, local, or community-based public 
        or nonprofit private organization, including organizations that 
        use community health workers or community-based doula programs.
            ``(F) A faith-based organization or consortia, to the 
        extent that a grant awarded to such an entity is consistent 
        with the requirements of section 1955 of the Public Health 
        Service Act (42 U.S.C. 300x-65) relating to a grant award to 
        nongovernmental entities.
            ``(G) An elementary or secondary school.
        ``(2) Federal health safety net organization.--The term 
    `Federal health safety net organization' means--
            ``(A) a Federally-qualified health center (as defined in 
        section 1905(l)(2)(B));
            ``(B) a hospital defined as a disproportionate share 
        hospital for purposes of section 1923;
            ``(C) a covered entity described in section 340B(a)(4) of 
        the Public Health Service Act (42 U.S.C. 256b(a)(4)); and
            ``(D) any other entity or consortium that serves children 
        under a federally funded program, including the special 
        supplemental nutrition program for women, infants, and children 
        (WIC) established under section 17 of the Child Nutrition Act 
        of 1966 (42 U.S.C. 1786), the Head Start and Early Head Start 
        programs under the Head Start Act (42 U.S.C. 9801 et seq.), the 
        school lunch program established under the Richard B. Russell 
        National School Lunch Act, and an elementary or secondary 
        school.
        ``(3) Indians; indian tribe; tribal organization; urban indian 
    organization.--The terms `Indian', `Indian tribe', `tribal 
    organization', and `urban Indian organization' have the meanings 
    given such terms in section 4 of the Indian Health Care Improvement 
    Act (25 U.S.C. 1603).
        ``(4) Community health worker.--The term `community health 
    worker' means an individual who promotes health or nutrition within 
    the community in which the individual resides--
            ``(A) by serving as a liaison between communities and 
        health care agencies;
            ``(B) by providing guidance and social assistance to 
        community residents;
            ``(C) by enhancing community residents' ability to 
        effectively communicate with health care providers;
            ``(D) by providing culturally and linguistically 
        appropriate health or nutrition education;
            ``(E) by advocating for individual and community health or 
        nutrition needs; and
            ``(F) by providing referral and followup services.
    ``(g) Appropriation.--There is appropriated, out of any money in 
the Treasury not otherwise appropriated, $100,000,000 for the period of 
fiscal years 2008 through 2012, for the purpose of awarding grants 
under this section. Amounts appropriated and paid under the authority 
of this section shall be in addition to amounts appropriated under 
section 2104 and paid to States in accordance with section 2105, 
including with respect to expenditures for outreach activities in 
accordance with subsections (a)(1)(D)(iii) and (c)(2)(C) of that 
section.
    ``(h) National Enrollment Campaign.--From the amounts made 
available under subsection (a)(2), the Secretary shall develop and 
implement a national enrollment campaign to improve the enrollment of 
underserved child populations in the programs established under this 
title and title XIX. Such campaign may include--
        ``(1) the establishment of partnerships with the Secretary of 
    Education and the Secretary of Agriculture to develop national 
    campaigns to link the eligibility and enrollment systems for the 
    assistance programs each Secretary administers that often serve the 
    same children;
        ``(2) the integration of information about the programs 
    established under this title and title XIX in public health 
    awareness campaigns administered by the Secretary;
        ``(3) increased financial and technical support for enrollment 
    hotlines maintained by the Secretary to ensure that all States 
    participate in such hotlines;
        ``(4) the establishment of joint public awareness outreach 
    initiatives with the Secretary of Education and the Secretary of 
    Labor regarding the importance of health insurance to building 
    strong communities and the economy;
        ``(5) the development of special outreach materials for Native 
    Americans or for individuals with limited English proficiency; and
        ``(6) such other outreach initiatives as the Secretary 
    determines would increase public awareness of the programs under 
    this title and title XIX.''.
    (b) Enhanced Administrative Funding for Translation or 
Interpretation Services Under CHIP and Medicaid.--
        (1) CHIP.--Section 2105(a)(1) (42 U.S.C. 1397ee(a)(1)), as 
    amended by section 113, is amended--
            (A) in the matter preceding subparagraph (A), by inserting 
        ``(or, in the case of expenditures described in subparagraph 
        (D)(iv), the higher of 75 percent or the sum of the enhanced 
        FMAP plus 5 percentage points)'' after ``enhanced FMAP''; and
            (B) in subparagraph (D)--
                (i) in clause (iii), by striking ``and'' at the end;
                (ii) by redesignating clause (iv) as clause (v); and
                (iii) by inserting after clause (iii) the following new 
            clause:
                ``(iv) for translation or interpretation services in 
            connection with the enrollment of, retention of, and use of 
            services under this title by, individuals for whom English 
            is not their primary language (as found necessary by the 
            Secretary for the proper and efficient administration of 
            the State plan); and''.
        (2) Medicaid.--
            (A) Use of medicaid funds.--Section 1903(a)(2) (42 U.S.C. 
        1396b(a)(2)) is amended by adding at the end the following new 
        subparagraph:
        ``(E) an amount equal to 75 percent of so much of the sums 
    expended during such quarter (as found necessary by the Secretary 
    for the proper and efficient administration of the State plan) as 
    are attributable to translation or interpretation services in 
    connection with the enrollment of, retention of, and use of 
    services under this title by, children of families for whom English 
    is not the primary language; plus''.
            (B) Use of community health workers for outreach 
        activities.--
                (i) In general.--Section 2102(c)(1) of such Act (42 
            U.S.C. 1397bb(c)(1)) is amended by inserting ``(through 
            community health workers and others)'' after ``Outreach''.
                (ii) In federal evaluation.--Section 2108(c)(3)(B) of 
            such Act (42 U.S.C. 1397hh(c)(3)(B)) is amended by 
            inserting ``(such as through community health workers and 
            others)'' after ``including practices''.
    SEC. 202. INCREASED OUTREACH AND ENROLLMENT OF INDIANS.
    (a) In General.--Section 1139 (42 U.S.C. 1320b-9) is amended to 
read as follows:
``SEC. 1139. IMPROVED ACCESS TO, AND DELIVERY OF, HEALTH CARE FOR 
INDIANS UNDER TITLES XIX AND XXI.
    ``(a) Agreements With States for Medicaid and CHIP Outreach On or 
Near Reservations To Increase the Enrollment of Indians in Those 
Programs.--
        ``(1) In general.--In order to improve the access of Indians 
    residing on or near a reservation to obtain benefits under the 
    Medicaid and State children's health insurance programs established 
    under titles XIX and XXI, the Secretary shall encourage the State 
    to take steps to provide for enrollment on or near the reservation. 
    Such steps may include outreach efforts such as the outstationing 
    of eligibility workers, entering into agreements with the Indian 
    Health Service, Indian Tribes, Tribal Organizations, and Urban 
    Indian Organizations to provide outreach, education regarding 
    eligibility and benefits, enrollment, and translation services when 
    such services are appropriate.
        ``(2) Construction.--Nothing in paragraph (1) shall be 
    construed as affecting arrangements entered into between States and 
    the Indian Health Service, Indian Tribes, Tribal Organizations, or 
    Urban Indian Organizations for such Service, Tribes, or 
    Organizations to conduct administrative activities under such 
    titles.
    ``(b) Requirement To Facilitate Cooperation.--The Secretary, acting 
through the Centers for Medicare & Medicaid Services, shall take such 
steps as are necessary to facilitate cooperation with, and agreements 
between, States and the Indian Health Service, Indian Tribes, Tribal 
Organizations, or Urban Indian Organizations with respect to the 
provision of health care items and services to Indians under the 
programs established under title XIX or XXI.
    ``(c) Definition of Indian; Indian Tribe; Indian Health Program; 
Tribal Organization; Urban Indian Organization.--In this section, the 
terms `Indian', `Indian Tribe', `Indian Health Program', `Tribal 
Organization', and `Urban Indian Organization' have the meanings given 
those terms in section 4 of the Indian Health Care Improvement Act.''.
    (b) Nonapplication of 10 Percent Limit on Outreach and Certain 
Other Expenditures.--Section 2105(c)(2) (42 U.S.C. 1397ee(c)(2)) is 
amended by adding at the end the following:
            ``(C) Nonapplication to certain expenditures.--The 
        limitation under subparagraph (A) shall not apply with respect 
        to the following expenditures:
                ``(i) Expenditures to increase outreach to, and the 
            enrollment of, indian children under this title and title 
            xix.--Expenditures for outreach activities to families of 
            Indian children likely to be eligible for child health 
            assistance under the plan or medical assistance under the 
            State plan under title XIX (or under a waiver of such 
            plan), to inform such families of the availability of, and 
            to assist them in enrolling their children in, such plans, 
            including such activities conducted under grants, 
            contracts, or agreements entered into under section 
            1139(a).''.
    SEC. 203. STATE OPTION TO RELY ON FINDINGS FROM AN EXPRESS LANE 
      AGENCY TO CONDUCT SIMPLIFIED ELIGIBILITY DETERMINATIONS.
    (a) Application Under Medicaid and CHIP Programs.--
        (1) Medicaid.--Section 1902(e) (42 U.S.C. 1396a(e)) is amended 
    by adding at the end the following:
    ``(13) Express Lane Option.--
        ``(A) In general.--
            ``(i) Option to use a finding from an express lane 
        agency.--At the option of the State, the State plan may provide 
        that in determining eligibility under this title for a child 
        (as defined in subparagraph (G)), the State may rely on a 
        finding made within a reasonable period (as determined by the 
        State) from an Express Lane agency (as defined in subparagraph 
        (F)) when it determines whether a child satisfies one or more 
        components of eligibility for medical assistance under this 
        title. The State may rely on a finding from an Express Lane 
        agency notwithstanding sections 1902(a)(46)(B) and 1137(d) and 
        any differences in budget unit, disregard, deeming or other 
        methodology, if the following requirements are met:
                ``(I) Prohibition on determining children ineligible 
            for coverage.--If a finding from an Express Lane agency 
            would result in a determination that a child does not 
            satisfy an eligibility requirement for medical assistance 
            under this title and for child health assistance under 
            title XXI, the State shall determine eligibility for 
            assistance using its regular procedures.
                ``(II) Notice requirement.--For any child who is found 
            eligible for medical assistance under the State plan under 
            this title or child health assistance under title XXI and 
            who is subject to premiums based on an Express Lane 
            agency's finding of such child's income level, the State 
            shall provide notice that the child may qualify for lower 
            premium payments if evaluated by the State using its 
            regular policies and of the procedures for requesting such 
            an evaluation.
                ``(III) Compliance with screen and enroll 
            requirement.--The State shall satisfy the requirements 
            under subparagraphs (A) and (B) of section 2102(b)(3) 
            (relating to screen and enroll) before enrolling a child in 
            child health assistance under title XXI. At its option, the 
            State may fulfill such requirements in accordance with 
            either option provided under subparagraph (C) of this 
            paragraph.
                ``(IV) Verification of citizenship or nationality 
            status.--The State shall satisfy the requirements of 
            section 1902(a)(46)(B) or 2105(c)(10), as applicable for 
            verifications of citizenship or nationality status.
                ``(V) Coding.--The State meets the requirements of 
            subparagraph (E).
            ``(ii) Option to apply to renewals and redeterminations.--
        The State may apply the provisions of this paragraph when 
        conducting initial determinations of eligibility, 
        redeterminations of eligibility, or both, as described in the 
        State plan.
        ``(B) Rules of construction.--Nothing in this paragraph shall 
    be construed--
            ``(i) to limit or prohibit a State from taking any actions 
        otherwise permitted under this title or title XXI in 
        determining eligibility for or enrolling children into medical 
        assistance under this title or child health assistance under 
        title XXI; or
            ``(ii) to modify the limitations in section 1902(a)(5) 
        concerning the agencies that may make a determination of 
        eligibility for medical assistance under this title.
        ``(C) Options for satisfying the screen and enroll 
    requirement.--
            ``(i) In general.--With respect to a child whose 
        eligibility for medical assistance under this title or for 
        child health assistance under title XXI has been evaluated by a 
        State agency using an income finding from an Express Lane 
        agency, a State may carry out its duties under subparagraphs 
        (A) and (B) of section 2102(b)(3) (relating to screen and 
        enroll) in accordance with either clause (ii) or clause (iii).
            ``(ii) Establishing a screening threshold.--
                ``(I) In general.--Under this clause, the State 
            establishes a screening threshold set as a percentage of 
            the Federal poverty level that exceeds the highest income 
            threshold applicable under this title to the child by a 
            minimum of 30 percentage points or, at State option, a 
            higher number of percentage points that reflects the value 
            (as determined by the State and described in the State 
            plan) of any differences between income methodologies used 
            by the program administered by the Express Lane agency and 
            the methodologies used by the State in determining 
            eligibility for medical assistance under this title.
                ``(II) Children with income not above threshold.--If 
            the income of a child does not exceed the screening 
            threshold, the child is deemed to satisfy the income 
            eligibility criteria for medical assistance under this 
            title regardless of whether such child would otherwise 
            satisfy such criteria.
                ``(III) Children with income above threshold.--If the 
            income of a child exceeds the screening threshold, the 
            child shall be considered to have an income above the 
            Medicaid applicable income level described in section 
            2110(b)(4) and to satisfy the requirement under section 
            2110(b)(1)(C) (relating to the requirement that CHIP 
            matching funds be used only for children not eligible for 
            Medicaid). If such a child is enrolled in child health 
            assistance under title XXI, the State shall provide the 
            parent, guardian, or custodial relative with the following:

                    ``(aa) Notice that the child may be eligible to 
                receive medical assistance under the State plan under 
                this title if evaluated for such assistance under the 
                State's regular procedures and notice of the process 
                through which a parent, guardian, or custodial relative 
                can request that the State evaluate the child's 
                eligibility for medical assistance under this title 
                using such regular procedures.
                    ``(bb) A description of differences between the 
                medical assistance provided under this title and child 
                health assistance under title XXI, including 
                differences in cost-sharing requirements and covered 
                benefits.

            ``(iii) Temporary enrollment in chip pending screen and 
        enroll.--
                ``(I) In general.--Under this clause, a State enrolls a 
            child in child health assistance under title XXI for a 
            temporary period if the child appears eligible for such 
            assistance based on an income finding by an Express Lane 
            agency.
                ``(II) Determination of eligibility.--During such 
            temporary enrollment period, the State shall determine the 
            child's eligibility for child health assistance under title 
            XXI or for medical assistance under this title in 
            accordance with this clause.
                ``(III) Prompt follow up.--In making such a 
            determination, the State shall take prompt action to 
            determine whether the child should be enrolled in medical 
            assistance under this title or child health assistance 
            under title XXI pursuant to subparagraphs (A) and (B) of 
            section 2102(b)(3) (relating to screen and enroll).
                ``(IV) Requirement for simplified determination.--In 
            making such a determination, the State shall use procedures 
            that, to the maximum feasible extent, reduce the burden 
            imposed on the individual of such determination. Such 
            procedures may not require the child's parent, guardian, or 
            custodial relative to provide or verify information that 
            already has been provided to the State agency by an Express 
            Lane agency or another source of information unless the 
            State agency has reason to believe the information is 
            erroneous.
                ``(V) Availability of chip matching funds during 
            temporary enrollment period.--Medical assistance for items 
            and services that are provided to a child enrolled in title 
            XXI during a temporary enrollment period under this clause 
            shall be treated as child health assistance under such 
            title.
        ``(D) Option for automatic enrollment.--
            ``(i) In general.--The State may initiate and determine 
        eligibility for medical assistance under the State Medicaid 
        plan or for child health assistance under the State CHIP plan 
        without a program application from, or on behalf of, the child 
        based on data obtained from sources other than the child (or 
        the child's family), but a child can only be automatically 
        enrolled in the State Medicaid plan or the State CHIP plan if 
        the child or the family affirmatively consents to being 
        enrolled through affirmation and signature on an Express Lane 
        agency application, if the requirement of clause (ii) is met.
            ``(ii) Information requirement.--The requirement of this 
        clause is that the State informs the parent, guardian, or 
        custodial relative of the child of the services that will be 
        covered, appropriate methods for using such services, premium 
        or other cost sharing charges (if any) that apply, medical 
        support obligations (under section 1912(a)) created by 
        enrollment (if applicable), and the actions the parent, 
        guardian, or relative must take to maintain enrollment and 
        renew coverage.
        ``(E) Coding; application to enrollment error rates.--
            ``(i) In general.--For purposes of subparagraph (A)(iv), 
        the requirement of this subparagraph for a State is that the 
        State agrees to--
                ``(I) assign such codes as the Secretary shall require 
            to the children who are enrolled in the State Medicaid plan 
            or the State CHIP plan through reliance on a finding made 
            by an Express Lane agency for the duration of the State's 
            election under this paragraph;
                ``(II) annually provide the Secretary with a 
            statistically valid sample (that is approved by Secretary) 
            of the children enrolled in such plans through reliance on 
            such a finding by conducting a full Medicaid eligibility 
            review of the children identified for such sample for 
            purposes of determining an eligibility error rate (as 
            described in clause (iv)) with respect to the enrollment of 
            such children (and shall not include such children in any 
            data or samples used for purposes of complying with a 
            Medicaid Eligibility Quality Control (MEQC) review or a 
            payment error rate measurement (PERM) requirement);
                ``(III) submit the error rate determined under 
            subclause (II) to the Secretary;
                ``(IV) if such error rate exceeds 3 percent for either 
            of the first 2 fiscal years in which the State elects to 
            apply this paragraph, demonstrate to the satisfaction of 
            the Secretary the specific corrective actions implemented 
            by the State to improve upon such error rate; and
                ``(V) if such error rate exceeds 3 percent for any 
            fiscal year in which the State elects to apply this 
            paragraph, a reduction in the amount otherwise payable to 
            the State under section 1903(a) for quarters for that 
            fiscal year, equal to the total amount of erroneous excess 
            payments determined for the fiscal year only with respect 
            to the children included in the sample for the fiscal year 
            that are in excess of a 3 percent error rate with respect 
            to such children.
            ``(ii) No punitive action based on error rate.--The 
        Secretary shall not apply the error rate derived from the 
        sample under clause (i) to the entire population of children 
        enrolled in the State Medicaid plan or the State CHIP plan 
        through reliance on a finding made by an Express Lane agency, 
        or to the population of children enrolled in such plans on the 
        basis of the State's regular procedures for determining 
        eligibility, or penalize the State on the basis of such error 
        rate in any manner other than the reduction of payments 
        provided for under clause (i)(V).
            ``(iii) Rule of construction.--Nothing in this paragraph 
        shall be construed as relieving a State that elects to apply 
        this paragraph from being subject to a penalty under section 
        1903(u), for payments made under the State Medicaid plan with 
        respect to ineligible individuals and families that are 
        determined to exceed the error rate permitted under that 
        section (as determined without regard to the error rate 
        determined under clause (i)(II)).
            ``(iv) Error rate defined.--In this subparagraph, the term 
        `error rate' means the rate of erroneous excess payments for 
        medical assistance (as defined in section 1903(u)(1)(D)) for 
        the period involved, except that such payments shall be limited 
        to individuals for which eligibility determinations are made 
        under this paragraph and except that in applying this paragraph 
        under title XXI, there shall be substituted for references to 
        provisions of this title corresponding provisions within title 
        XXI.
        ``(F) Express lane agency.--
            ``(i) In general.--In this paragraph, the term `Express 
        Lane agency' means a public agency that--
                ``(I) is determined by the State Medicaid agency or the 
            State CHIP agency (as applicable) to be capable of making 
            the determinations of one or more eligibility requirements 
            described in subparagraph (A)(i);
                ``(II) is identified in the State Medicaid plan or the 
            State CHIP plan; and
                ``(III) notifies the child's family--

                    ``(aa) of the information which shall be disclosed 
                in accordance with this paragraph;
                    ``(bb) that the information disclosed will be used 
                solely for purposes of determining eligibility for 
                medical assistance under the State Medicaid plan or for 
                child health assistance under the State CHIP plan; and
                    ``(cc) that the family may elect to not have the 
                information disclosed for such purposes; and

                ``(IV) enters into, or is subject to, an interagency 
            agreement to limit the disclosure and use of the 
            information disclosed.
            ``(ii) Inclusion of specific public agencies.--Such term 
        includes the following:
                ``(I) A public agency that determines eligibility for 
            assistance under any of the following:

                    ``(aa) The temporary assistance for needy families 
                program funded under part A of title IV.
                    ``(bb) A State program funded under part D of title 
                IV.
                    ``(cc) The State Medicaid plan.
                    ``(dd) The State CHIP plan.
                    ``(ee) The Food Stamp Act of 1977 (7 U.S.C. 2011 et 
                seq.).
                    ``(ff) The Head Start Act (42 U.S.C. 9801 et seq.).
                    ``(gg) The Richard B. Russell National School Lunch 
                Act (42 U.S.C. 1751 et seq.).
                    ``(hh) The Child Nutrition Act of 1966 (42 U.S.C. 
                1771 et seq.).
                    ``(ii) The Child Care and Development Block Grant 
                Act of 1990 (42 U.S.C. 9858 et seq.).
                    ``(jj) The Stewart B. McKinney Homeless Assistance 
                Act (42 U.S.C. 11301 et seq.).
                    ``(kk) The United States Housing Act of 1937 (42 
                U.S.C. 1437 et seq.).
                    ``(ll) The Native American Housing Assistance and 
                Self-Determination Act of 1996 (25 U.S.C. 4101 et 
                seq.).

                ``(II) A State-specified governmental agency that has 
            fiscal liability or legal responsibility for the accuracy 
            of the eligibility determination findings relied on by the 
            State.
                ``(III) A public agency that is subject to an 
            interagency agreement limiting the disclosure and use of 
            the information disclosed for purposes of determining 
            eligibility under the State Medicaid plan or the State CHIP 
            plan.
            ``(iii) Exclusions.--Such term does not include an agency 
        that determines eligibility for a program established under the 
        Social Services Block Grant established under title XX or a 
        private, for-profit organization.
            ``(iv) Rules of construction.--Nothing in this paragraph 
        shall be construed as--
                ``(I) exempting a State Medicaid agency from complying 
            with the requirements of section 1902(a)(4) relating to 
            merit-based personnel standards for employees of the State 
            Medicaid agency and safeguards against conflicts of 
            interest); or
                ``(II) authorizing a State Medicaid agency that elects 
            to use Express Lane agencies under this subparagraph to use 
            the Express Lane option to avoid complying with such 
            requirements for purposes of making eligibility 
            determinations under the State Medicaid plan.
            ``(v) Additional definitions.--In this paragraph:
                ``(I) State.--The term `State' means 1 of the 50 States 
            or the District of Columbia.
                ``(II) State chip agency.--The term `State CHIP agency' 
            means the State agency responsible for administering the 
            State CHIP plan.
                ``(III) State chip plan.--The term `State CHIP plan' 
            means the State child health plan established under title 
            XXI and includes any waiver of such plan.
                ``(IV) State medicaid agency.--The term `State Medicaid 
            agency' means the State agency responsible for 
            administering the State Medicaid plan.
                ``(V) State medicaid plan.--The term `State Medicaid 
            plan' means the State plan established under title XIX and 
            includes any waiver of such plan.
        ``(G) Child defined.--For purposes of this paragraph, the term 
    `child' means an individual under 19 years of age, or, at the 
    option of a State, such higher age, not to exceed 21 years of age, 
    as the State may elect.
        ``(H) Application.--This paragraph shall not apply to with 
    respect to eligibility determinations made after September 30, 
    2012.''.
        (2) CHIP.--Section 2107(e)(1) (42 U.S.C. 1397gg(e)(1)) is 
    amended by redesignating subparagraphs (B), (C), and (D) as 
    subparagraphs (C), (D), and (E), respectively, and by inserting 
    after subparagraph (A) the following new subparagraph:
            ``(B) Section 1902(e)(13) (relating to the State option to 
        rely on findings from an Express Lane agency to help evaluate a 
        child's eligibility for medical assistance).''.
    (b) Evaluation and Report.--
        (1) Evaluation.--The Secretary shall conduct, by grant, 
    contract, or interagency agreement, a comprehensive, independent 
    evaluation of the option provided under the amendments made by 
    subsection (a). Such evaluation shall include an analysis of the 
    effectiveness of the option, and shall include--
            (A) obtaining a statistically valid sample of the children 
        who were enrolled in the State Medicaid plan or the State CHIP 
        plan through reliance on a finding made by an Express Lane 
        agency and determining the percentage of children who were 
        erroneously enrolled in such plans;
            (B) determining whether enrolling children in such plans 
        through reliance on a finding made by an Express Lane agency 
        improves the ability of a State to identify and enroll low-
        income, uninsured children who are eligible but not enrolled in 
        such plans;
            (C) evaluating the administrative costs or savings related 
        to identifying and enrolling children in such plans through 
        reliance on such findings, and the extent to which such costs 
        differ from the costs that the State otherwise would have 
        incurred to identify and enroll low-income, uninsured children 
        who are eligible but not enrolled in such plans; and
            (D) any recommendations for legislative or administrative 
        changes that would improve the effectiveness of enrolling 
        children in such plans through reliance on such findings.
        (2) Report to congress.--Not later than September 30, 2011, the 
    Secretary shall submit a report to Congress on the results of the 
    evaluation under paragraph (1).
        (3) Funding.--
            (A) In general.--Out of any funds in the Treasury not 
        otherwise appropriated, there is appropriated to the Secretary 
        to carry out the evaluation under this subsection $5,000,000 
        for the period of fiscal years 2008 through 2011.
            (B) Budget authority.--Subparagraph (A) constitutes budget 
        authority in advance of appropriations Act and represents the 
        obligation of the Federal Government to provide for the payment 
        of such amount to conduct the evaluation under this subsection.
    (c) Electronic Transmission of Information.--Section 1902 (42 
U.S.C. 1396a) is amended by adding at the end the following new 
subsection:
    ``(dd) Electronic Transmission of Information.--If the State agency 
determining eligibility for medical assistance under this title or 
child health assistance under title XXI verifies an element of 
eligibility based on information from an Express Lane Agency (as 
defined in subsection (e)(13)(F)), or from another public agency, then 
the applicant's signature under penalty of perjury shall not be 
required as to such element. Any signature requirement for an 
application for medical assistance may be satisfied through an 
electronic signature, as defined in section 1710(1) of the Government 
Paperwork Elimination Act (44 U.S.C. 3504 note). The requirements of 
subparagraphs (A) and (B) of section 1137(d)(2) may be met through 
evidence in digital or electronic form.''.
    (d) Authorization of Information Disclosure.--
        (1) In general.--Title XIX is amended--
            (A) by redesignating section 1939 as section 1940; and
            (B) by inserting after section 1938 the following new 
        section:
``SEC. 1939. AUTHORIZATION TO RECEIVE RELEVANT INFORMATION.
    ``(a) In General.--Notwithstanding any other provision of law, a 
Federal or State agency or private entity in possession of the sources 
of data directly relevant to eligibility determinations under this 
title (including eligibility files maintained by Express Lane agencies 
described in section 1902(e)(13)(F), information described in paragraph 
(2) or (3) of section 1137(a), vital records information about births 
in any State, and information described in sections 453(i) and 
1902(a)(25)(I)) is authorized to convey such data or information to the 
State agency administering the State plan under this title, to the 
extent such conveyance meets the requirements of subsection (b).
    ``(b) Requirements for Conveyance.--Data or information may be 
conveyed pursuant to subsection (a) only if the following requirements 
are met:
        ``(1) The individual whose circumstances are described in the 
    data or information (or such individual's parent, guardian, 
    caretaker relative, or authorized representative) has either 
    provided advance consent to disclosure or has not objected to 
    disclosure after receiving advance notice of disclosure and a 
    reasonable opportunity to object.
        ``(2) Such data or information are used solely for the purposes 
    of--
            ``(A) identifying individuals who are eligible or 
        potentially eligible for medical assistance under this title 
        and enrolling or attempting to enroll such individuals in the 
        State plan; and
            ``(B) verifying the eligibility of individuals for medical 
        assistance under the State plan.
        ``(3) An interagency or other agreement, consistent with 
    standards developed by the Secretary--
            ``(A) prevents the unauthorized use, disclosure, or 
        modification of such data and otherwise meets applicable 
        Federal requirements safeguarding privacy and data security; 
        and
            ``(B) requires the State agency administering the State 
        plan to use the data and information obtained under this 
        section to seek to enroll individuals in the plan.
    ``(c) Penalties for Improper Disclosure.--
        ``(1) Civil money penalty.--A private entity described in the 
    subsection (a) that publishes, discloses, or makes known in any 
    manner, or to any extent not authorized by Federal law, any 
    information obtained under this section is subject to a civil money 
    penalty in an amount equal to $10,000 for each such unauthorized 
    publication or disclosure. The provisions of section 1128A (other 
    than subsections (a) and (b) and the second sentence of subsection 
    (f)) shall apply to a civil money penalty under this paragraph in 
    the same manner as such provisions apply to a penalty or proceeding 
    under section 1128A(a).
        ``(2) Criminal penalty.--A private entity described in the 
    subsection (a) that willfully publishes, discloses, or makes known 
    in any manner, or to any extent not authorized by Federal law, any 
    information obtained under this section shall be fined not more 
    than $10,000 or imprisoned not more than 1 year, or both, for each 
    such unauthorized publication or disclosure.
    ``(d) Rule of Construction.--The limitations and requirements that 
apply to disclosure pursuant to this section shall not be construed to 
prohibit the conveyance or disclosure of data or information otherwise 
permitted under Federal law (without regard to this section).''.
        (2) Conforming amendment to title xxi.--Section 2107(e)(1) (42 
    U.S.C. 1397gg(e)(1)), as amended by subsection (a)(2), is amended 
    by adding at the end the following new subparagraph:
            ``(F) Section 1939 (relating to authorization to receive 
        data directly relevant to eligibility determinations).''.
        (3) Conforming amendment to provide access to data about 
    enrollment in insurance for purposes of evaluating applications and 
    for chip.--Section 1902(a)(25)(I)(i) (42 U.S.C. 1396a(a)(25)(I)(i)) 
    is amended--
            (A) by inserting ``(and, at State option, individuals who 
        apply or whose eligibility for medical assistance is being 
        evaluated in accordance with section 1902(e)(13)(D))'' after 
        ``with respect to individuals who are eligible''; and
            (B) by inserting ``under this title (and, at State option, 
        child health assistance under title XXI)'' after ``the State 
        plan''.
    (e) Authorization for States Electing Express Lane Option To 
Receive Certain Data Directly Relevant To Determining Eligibility and 
Correct Amount of Assistance.--The Secretary shall enter into such 
agreements as are necessary to permit a State that elects the Express 
Lane option under section 1902(e)(13) of the Social Security Act to 
receive data directly relevant to eligibility determinations and 
determining the correct amount of benefits under a State child health 
plan under CHIP or a State plan under Medicaid from the following:
        (1) The National Directory of New Hires established under 
    section 453(i) of the Social Security Act (42 U.S.C. 653(i)).
        (2) Data regarding enrollment in insurance that may help to 
    facilitate outreach and enrollment under the State Medicaid plan, 
    the State CHIP plan, and such other programs as the Secretary may 
    specify.
    (f) Effective Date.--The amendments made by this section are 
effective on January 1, 2008.

              Subtitle B--Reducing Barriers to Enrollment

    SEC. 211. VERIFICATION OF DECLARATION OF CITIZENSHIP OR NATIONALITY 
      FOR PURPOSES OF ELIGIBILITY FOR MEDICAID AND CHIP.
    (a) State Option To Verify Declaration of Citizenship or 
Nationality for Purposes of Eligibility for Medicaid Through 
Verification of Name and Social Security Number.--
        (1) Alternative to documentation requirement.--
            (A) In general.--Section 1902 (42 U.S.C. 1396a), as amended 
        by section 203(c), is amended--
                (i) in subsection (a)(46)--

                    (I) by inserting ``(A)'' after ``(46)'';
                    (II) by adding ``and'' after the semicolon; and
                    (III) by adding at the end the following new 
                subparagraph:

        ``(B) provide, with respect to an individual declaring to be a 
    citizen or national of the United States for purposes of 
    establishing eligibility under this title, that the State shall 
    satisfy the requirements of--
            ``(i) section 1903(x); or
            ``(ii) subsection (ee);''; and
                (ii) by adding at the end the following new subsection:
    ``(ee)(1) For purposes of subsection (a)(46)(B)(ii), the 
requirements of this subsection with respect to an individual declaring 
to be a citizen or national of the United States for purposes of 
establishing eligibility under this title, are, in lieu of requiring 
the individual to present satisfactory documentary evidence of 
citizenship or nationality under section 1903(x) (if the individual is 
not described in paragraph (2) of that section), as follows:
        ``(A) The State submits the name and social security number of 
    the individual to the Commissioner of Social Security as part of 
    the program established under paragraph (2).
        ``(B) If the State receives notice from the Commissioner of 
    Social Security that the name or social security number of the 
    individual is invalid--
            ``(i) the State makes a reasonable effort to identify and 
        address the causes of such invalid match, including through 
        typographical or other clerical errors, by contacting the 
        individual to confirm the accuracy of the name or social 
        security number, respectively, submitted, and by taking such 
        additional actions as the Secretary, through regulation or 
        other guidance, or the State may identify, and continues to 
        provide the individual with medical assistance while making 
        such effort; and
            ``(ii) in the case that the name or social security number 
        of the individual remains invalid after such reasonable 
        efforts, the State--
                ``(I) notifies the individual of such fact;
                ``(II) provides the individual with a period of 90 days 
            from the date on which the notice required under subclause 
            (I) is received by the individual to either present 
            satisfactory documentary evidence of citizenship or 
            nationality (as defined in section 1903(x)(3)) or cure the 
            invalid determination with the Commissioner of Social 
            Security (and continues to provide the individual with 
            medical assistance during such 90-day period); and
                ``(III) disenrolls the individual from the State plan 
            under this title within 30 days after the end of such 90-
            day period if no such documentary evidence is presented or 
            if such invalid determination is not cured.
    ``(2)(A) Each State electing to satisfy the requirements of this 
subsection for purposes of section 1902(a)(46)(B) shall establish a 
program under which the State submits each month to the Commissioner of 
Social Security for verification the name and social security number of 
each individual newly enrolled in the State plan under this title that 
month who is not described in section 1903(x)(2).
    ``(B) In establishing the State program under this paragraph, the 
State may enter into an agreement with the Commissioner of Social 
Security--
        ``(i) to provide for the electronic submission and 
    verification, through an on-line system or otherwise, of the name 
    and social security number of an individual enrolled in the State 
    plan under this title;
        ``(ii) to submit to the Commissioner the names and social 
    security numbers of such individuals on a batch basis, provided 
    that such batches are submitted at least on a monthly basis; or
        ``(iii) to provide for the verification of the names and social 
    security numbers of such individuals through such other method as 
    agreed to by the State and the Commissioner and approved by the 
    Secretary, provided that such method is no more burdensome for 
    individuals to comply with than any burdens that may apply under a 
    method described in clause (i) or (ii).
    ``(C) The program established under this paragraph shall provide 
that, in the case of any individual who is required to submit a social 
security number to the State under subparagraph (A) and who is unable 
to provide the State with such number, shall be provided with at least 
the reasonable opportunity to present satisfactory documentary evidence 
of citizenship or nationality (as defined in section 1903(x)(3)) as is 
provided under clauses (i) and (ii) of section 1137(d)(4)(A) to an 
individual for the submittal to the State of evidence indicating a 
satisfactory immigration status.
    ``(3)(A) The State agency implementing the plan approved under this 
title shall, at such times and in such form as the Secretary may 
specify, provide information on the percentage each month that the 
invalid names and numbers submitted bears to the total submitted for 
verification. For purposes of the previous sentence, a name or social 
security number of an individual shall be treated as invalid and 
included in the determination of such percentage only if--
        ``(i) the name or social security number, respectively, 
    submitted by the individual does not match Social Security 
    Administration records;
        ``(ii) the inconsistency between the name or number, 
    respectively, so submitted and the Social Security Administration 
    records could not be resolved by the State;
        ``(iii) the individual was provided with a reasonable period of 
    time to resolve the inconsistency with the Social Security 
    Administration or provide satisfactory documentation of citizenship 
    and did not successfully resolve such inconsistency; and
        ``(iv) payment has been made for an item or service furnished 
    to the individual under this title.
    ``(B) If, for any fiscal year, the average monthly percentage 
determined under subparagraph (A) is greater than 3 percent--
        ``(i) the State shall develop and adopt a corrective plan to 
    review its procedures for verifying the identities of individuals 
    seeking to enroll in the State plan under this title and to 
    identify and implement changes in such procedures to improve their 
    accuracy; and
        ``(ii) pay to the Secretary an amount equal to the amount which 
    bears the same ratio to the total payments under the State plan for 
    the fiscal year for providing medical assistance to individuals who 
    provided invalid information as the number of individuals with 
    invalid information in excess of 3 percent of such total submitted 
    bears to the total number of individuals with invalid information.
    ``(C) The Secretary may waive, in certain limited cases, all or 
part of the payment under subparagraph (B)(ii) if the State is unable 
to reach the allowable error rate despite a good faith effort by such 
State.
    ``(D) This paragraph shall not apply to a State for a fiscal year 
if there is an agreement described in paragraph (2)(B) in effect as of 
the close of the fiscal year.
    ``(4) Nothing in this subsection shall affect the rights of any 
individual under this title to appeal any disenrollment from a State 
plan.''.
            (B) Costs of implementing and maintaining system.--Section 
        1903(a)(3) (42 U.S.C. 1396b(a)(3)) is amended--
                (i) by striking ``plus'' at the end of subparagraph (E) 
            and inserting ``and'', and
                (ii) by adding at the end the following new 
            subparagraph:
            ``(F)(i) 90 percent of the sums expended during the quarter 
        as are attributable to the design, development, or installation 
        of such mechanized verification and information retrieval 
        systems as the Secretary determines are necessary to implement 
        section 1902(ee) (including a system described in paragraph 
        (2)(B) thereof), and
            ``(ii) 75 percent of the sums expended during the quarter 
        as are attributable to the operation of systems to which clause 
        (i) applies, plus''.
        (2) Limitation on waiver authority.--Notwithstanding any 
    provision of section 1115 of the Social Security Act (42 U.S.C. 
    1315), or any other provision of law, the Secretary may not waive 
    the requirements of section 1902(a)(46)(B) of such Act (42 U.S.C. 
    1396a(a)(46)(B)) with respect to a State.
        (3) Conforming amendments.--Section 1903 (42 U.S.C. 1396b) is 
    amended--
            (A) in subsection (i)(22), by striking ``subsection (x)'' 
        and inserting ``section 1902(a)(46)(B)''; and
            (B) in subsection (x)(1), by striking ``subsection 
        (i)(22)'' and inserting ``section 1902(a)(46)(B)(i)''.
    (b) Clarification of Requirements Relating to Presentation of 
Satisfactory Documentary Evidence of Citizenship or Nationality.--
        (1) Acceptance of documentary evidence issued by a federally 
    recognized indian tribe.--Section 1903(x)(3)(B) (42 U.S.C. 
    1396b(x)(3)(B)) is amended--
            (A) by redesignating clause (v) as clause (vi); and
            (B) by inserting after clause (iv), the following new 
        clause:
        ``(v)(I) Except as provided in subclause (II), a document 
    issued by a federally recognized Indian tribe evidencing membership 
    or enrollment in, or affiliation with, such tribe (such as a tribal 
    enrollment card or certificate of degree of Indian blood).
        ``(II) With respect to those federally recognized Indian tribes 
    located within States having an international border whose 
    membership includes individuals who are not citizens of the United 
    States, the Secretary shall, after consulting with such tribes, 
    issue regulations authorizing the presentation of such other forms 
    of documentation (including tribal documentation, if appropriate) 
    that the Secretary determines to be satisfactory documentary 
    evidence of citizenship or nationality for purposes of satisfying 
    the requirement of this subsection.''.
        (2) Requirement to provide reasonable opportunity to present 
    satisfactory documentary evidence.--Section 1903(x) (42 U.S.C. 
    1396b(x)) is amended by adding at the end the following new 
    paragraph:
    ``(4) In the case of an individual declaring to be a citizen or 
national of the United States with respect to whom a State requires the 
presentation of satisfactory documentary evidence of citizenship or 
nationality under section 1902(a)(46)(B)(i), the individual shall be 
provided at least the reasonable opportunity to present satisfactory 
documentary evidence of citizenship or nationality under this 
subsection as is provided under clauses (i) and (ii) of section 
1137(d)(4)(A) to an individual for the submittal to the State of 
evidence indicating a satisfactory immigration status.''.
        (3) Children born in the united states to mothers eligible for 
    medicaid.--
            (A) Clarification of rules.--Section 1903(x) (42 U.S.C. 
        1396b(x)), as amended by paragraph (2), is amended--
                (i) in paragraph (2)--

                    (I) in subparagraph (C), by striking ``or'' at the 
                end;
                    (II) by redesignating subparagraph (D) as 
                subparagraph (E); and
                    (III) by inserting after subparagraph (C) the 
                following new subparagraph:

        ``(D) pursuant to the application of section 1902(e)(4) (and, 
    in the case of an individual who is eligible for medical assistance 
    on such basis, the individual shall be deemed to have provided 
    satisfactory documentary evidence of citizenship or nationality and 
    shall not be required to provide further documentary evidence on 
    any date that occurs during or after the period in which the 
    individual is eligible for medical assistance on such basis); or''; 
    and
                (ii) by adding at the end the following new paragraph:
    ``(5) Nothing in subparagraph (A) or (B) of section 1902(a)(46), 
the preceding paragraphs of this subsection, or the Deficit Reduction 
Act of 2005, including section 6036 of such Act, shall be construed as 
changing the requirement of section 1902(e)(4) that a child born in the 
United States to an alien mother for whom medical assistance for the 
delivery of such child is available as treatment of an emergency 
medical condition pursuant to subsection (v) shall be deemed eligible 
for medical assistance during the first year of such child's life.''.
            (B) State requirement to issue separate identification 
        number.--Section 1902(e)(4) (42 U.S.C. 1396a(e)(4)) is amended 
        by adding at the end the following new sentence: 
        ``Notwithstanding the preceding sentence, in the case of a 
        child who is born in the United States to an alien mother for 
        whom medical assistance for the delivery of the child is made 
        available pursuant to section 1903(v), the State immediately 
        shall issue a separate identification number for the child upon 
        notification by the facility at which such delivery occurred of 
        the child's birth.''.
        (4) Technical amendments.--Section 1903(x)(2) (42 U.S.C. 
    1396b(x)) is amended--
            (A) in subparagraph (B)--
                (i) by realigning the left margin of the matter 
            preceding clause (i) 2 ems to the left; and
                (ii) by realigning the left margins of clauses (i) and 
            (ii), respectively, 2 ems to the left; and
            (B) in subparagraph (C)--
                (i) by realigning the left margin of the matter 
            preceding clause (i) 2 ems to the left; and
                (ii) by realigning the left margins of clauses (i) and 
            (ii), respectively, 2 ems to the left.
    (c) Application of Documentation System to CHIP.--
        (1) In general.--Section 2105(c) (42 U.S.C. 1397ee(c)), as 
    amended by sections 114(a) and 116(c), is amended by adding at the 
    end the following new paragraph:
        ``(10) Citizenship documentation requirements.--
            ``(A) In general.--No payment may be made under this 
        section with respect to an individual who has, or is, declared 
        to be a citizen or national of the United States for purposes 
        of establishing eligibility under this title unless the State 
        meets the requirements of section 1902(a)(46)(B) with respect 
        to the individual.
            ``(B) Enhanced payments.--Notwithstanding subsection (b), 
        the enhanced FMAP with respect to payments under subsection (a) 
        for expenditures described in clause (i) or (ii) of section 
        1903(a)(3)(F) necessary to comply with subparagraph (A) shall 
        in no event be less than 90 percent and 75 percent, 
        respectively.''.
        (2) Nonapplication of administrative expenditures cap.--Section 
    2105(c)(2)(C) (42 U.S.C. 1397ee(c)(2)(C)), as amended by section 
    202(b), is amended by adding at the end the following:
                ``(ii) Expenditures to comply with citizenship or 
            nationality verification requirements.--Expenditures 
            necessary for the State to comply with paragraph (9)(A).''.
    (d) Effective Date.--
        (1) In general.--
            (A) In general.--Except as provided in subparagraph (B), 
        the amendments made by this section shall take effect on 
        October 1, 2008.
            (B) Technical amendments.--The amendments made by--
                (i) paragraphs (1), (2), and (3) of subsection (b) 
            shall take effect as if included in the enactment of 
            section 6036 of the Deficit Reduction Act of 2005 (Public 
            Law 109-171; 120 Stat. 80); and
                (ii) paragraph (4) of subsection (b) shall take effect 
            as if included in the enactment of section 405 of division 
            B of the Tax Relief and Health Care Act of 2006 (Public Law 
            109-432; 120 Stat. 2996).
        (2) Restoration of eligibility.--In the case of an individual 
    who, during the period that began on July 1, 2006, and ends on 
    October 1, 2008, was determined to be ineligible for medical 
    assistance under a State Medicaid plan, including any waiver of 
    such plan, solely as a result of the application of subsections 
    (i)(22) and (x) of section 1903 of the Social Security Act (as in 
    effect during such period), but who would have been determined 
    eligible for such assistance if such subsections, as amended by 
    subsection (b), had applied to the individual, a State may deem the 
    individual to be eligible for such assistance as of the date that 
    the individual was determined to be ineligible for such medical 
    assistance on such basis.
        (3) Special transition rule for indians.--During the period 
    that begins on July 1, 2006, and ends on the effective date of 
    final regulations issued under subclause (II) of section 
    1903(x)(3)(B)(v) of the Social Security Act (42 U.S.C. 
    1396b(x)(3)(B)(v)) (as added by subsection (b)(1)(B)), an 
    individual who is a member of a federally-recognized Indian tribe 
    described in subclause (II) of that section who presents a document 
    described in subclause (I) of such section that is issued by such 
    Indian tribe, shall be deemed to have presented satisfactory 
    evidence of citizenship or nationality for purposes of satisfying 
    the requirement of subsection (x) of section 1903 of such Act.
    SEC. 212. REDUCING ADMINISTRATIVE BARRIERS TO ENROLLMENT.
    Section 2102(b) (42 U.S.C. 1397bb(b)) is amended--
        (1) by redesignating paragraph (4) as paragraph (5); and
        (2) by inserting after paragraph (3) the following new 
    paragraph:
        ``(4) Reduction of administrative barriers to enrollment.--
            ``(A) In general.--Subject to subparagraph (B), the plan 
        shall include a description of the procedures used to reduce 
        administrative barriers to the enrollment of children and 
        pregnant women who are eligible for medical assistance under 
        title XIX or for child health assistance or health benefits 
        coverage under this title. Such procedures shall be established 
        and revised as often as the State determines appropriate to 
        take into account the most recent information available to the 
        State identifying such barriers.
            ``(B) Deemed compliance if joint application and renewal 
        process that permits application other than in person.--A State 
        shall be deemed to comply with subparagraph (A) if the State's 
        application and renewal forms and supplemental forms (if any) 
        and information verification process is the same for purposes 
        of establishing and renewing eligibility for children and 
        pregnant women for medical assistance under title XIX and child 
        health assistance under this title, and such process does not 
        require an application to be made in person or a face-to-face 
        interview.''.
    SEC. 213. MODEL OF INTERSTATE COORDINATED ENROLLMENT AND COVERAGE 
      PROCESS.
    (a) In General.--In order to assure continuity of coverage of low-
income children under the Medicaid program and the State Children's 
Health Insurance Program (CHIP), not later than 18 months after the 
date of the enactment of this Act, the Secretary of Health and Human 
Services, in consultation with State Medicaid and CHIP directors and 
organizations representing program beneficiaries, shall develop a model 
process for the coordination of the enrollment, retention, and coverage 
under such programs of children who, because of migration of families, 
emergency evacuations, natural or other disasters, public health 
emergencies, educational needs, or otherwise, frequently change their 
State of residency or otherwise are temporarily located outside of the 
State of their residency.
    (b) Report to Congress.--After development of such model process, 
the Secretary of Health and Human Services shall submit to Congress a 
report describing additional steps or authority needed to make further 
improvements to coordinate the enrollment, retention, and coverage 
under CHIP and Medicaid of children described in subsection (a).

      TITLE III--REDUCING BARRIERS TO PROVIDING PREMIUM ASSISTANCE
  Subtitle A--Additional State Option for Providing Premium Assistance

    SEC. 301. ADDITIONAL STATE OPTION FOR PROVIDING PREMIUM ASSISTANCE.
    (a) CHIP.--
        (1) In general.--Section 2105(c) (42 U.S.C. 1397ee(c)), as 
    amended by sections 114(a), 116(c), and 211(c), is amended by 
    adding at the end the following:
        ``(11) State option to offer premium assistance.--
            ``(A) In general.--A State may elect to offer a premium 
        assistance subsidy (as defined in subparagraph (C)) for 
        qualified employer-sponsored coverage (as defined in 
        subparagraph (B)) to all targeted low-income children who are 
        eligible for child health assistance under the plan and have 
        access to such coverage in accordance with the requirements of 
        this paragraph. No subsidy shall be provided to a targeted low-
        income child under this paragraph unless the child (or the 
        child's parent) voluntarily elects to receive such a subsidy. A 
        State may not require such an election as a condition of 
        receipt of child health assistance.
            ``(B) Qualified employer-sponsored coverage.--
                ``(i) In general.--Subject to clause (ii), in this 
            paragraph, the term `qualified employer-sponsored coverage' 
            means a group health plan or health insurance coverage 
            offered through an employer--

                    ``(I) that qualifies as creditable coverage as a 
                group health plan under section 2701(c)(1) of the 
                Public Health Service Act;
                    ``(II) for which the employer contribution toward 
                any premium for such coverage is at least 40 percent; 
                and
                    ``(III) that is offered to all individuals in a 
                manner that would be considered a nondiscriminatory 
                eligibility classification for purposes of paragraph 
                (3)(A)(ii) of section 105(h) of the Internal Revenue 
                Code of 1986 (but determined without regard to clause 
                (i) of subparagraph (B) of such paragraph).

                ``(ii) Exception.--Such term does not include coverage 
            consisting of--

                    ``(I) benefits provided under a health flexible 
                spending arrangement (as defined in section 106(c)(2) 
                of the Internal Revenue Code of 1986); or
                    ``(II) a high deductible health plan (as defined in 
                section 223(c)(2) of such Code), without regard to 
                whether the plan is purchased in conjunction with a 
                health savings account (as defined under section 223(d) 
                of such Code).

            ``(C) Premium assistance subsidy.--
                ``(i) In general.--In this paragraph, the term `premium 
            assistance subsidy' means, with respect to a targeted low-
            income child, the amount equal to the difference between 
            the employee contribution required for enrollment only of 
            the employee under qualified employer-sponsored coverage 
            and the employee contribution required for enrollment of 
            the employee and the child in such coverage, less any 
            applicable premium cost-sharing applied under the State 
            child health plan (subject to the limitations imposed under 
            section 2103(e), including the requirement to count the 
            total amount of the employee contribution required for 
            enrollment of the employee and the child in such coverage 
            toward the annual aggregate cost-sharing limit applied 
            under paragraph (3)(B) of such section).
                ``(ii) State payment option.--A State may provide a 
            premium assistance subsidy either as reimbursement to an 
            employee for out-of-pocket expenditures or, subject to 
            clause (iii), directly to the employee's employer.
                ``(iii) Employer opt-out.--An employer may notify a 
            State that it elects to opt-out of being directly paid a 
            premium assistance subsidy on behalf of an employee. In the 
            event of such a notification, an employer shall withhold 
            the total amount of the employee contribution required for 
            enrollment of the employee and the child in the qualified 
            employer-sponsored coverage and the State shall pay the 
            premium assistance subsidy directly to the employee.
                ``(iv) Treatment as child health assistance.--
            Expenditures for the provision of premium assistance 
            subsidies shall be considered child health assistance 
            described in paragraph (1)(C) of subsection (a) for 
            purposes of making payments under that subsection.
            ``(D) Application of secondary payor rules.--The State 
        shall be a secondary payor for any items or services provided 
        under the qualified employer-sponsored coverage for which the 
        State provides child health assistance under the State child 
        health plan.
            ``(E) Requirement to provide supplemental coverage for 
        benefits and cost-sharing protection provided under the state 
        child health plan.--
                ``(i) In general.--Notwithstanding section 
            2110(b)(1)(C), the State shall provide for each targeted 
            low-income child enrolled in qualified employer-sponsored 
            coverage, supplemental coverage consisting of--

                    ``(I) items or services that are not covered, or 
                are only partially covered, under the qualified 
                employer-sponsored coverage; and
                    ``(II) cost-sharing protection consistent with 
                section 2103(e).

                ``(ii) Record keeping requirements.--For purposes of 
            carrying out clause (i), a State may elect to directly pay 
            out-of-pocket expenditures for cost-sharing imposed under 
            the qualified employer-sponsored coverage and collect or 
            not collect all or any portion of such expenditures from 
            the parent of the child.
            ``(F) Application of waiting period imposed under the 
        state.--Any waiting period imposed under the State child health 
        plan prior to the provision of child health assistance to a 
        targeted low-income child under the State plan shall apply to 
        the same extent to the provision of a premium assistance 
        subsidy for the child under this paragraph.
            ``(G) Opt-out permitted for any month.--A State shall 
        establish a process for permitting the parent of a targeted 
        low-income child receiving a premium assistance subsidy to 
        disenroll the child from the qualified employer-sponsored 
        coverage and enroll the child in, and receive child health 
        assistance under, the State child health plan, effective on the 
        first day of any month for which the child is eligible for such 
        assistance and in a manner that ensures continuity of coverage 
        for the child.
            ``(H) Application to parents.--If a State provides child 
        health assistance or health benefits coverage to parents of a 
        targeted low-income child in accordance with section 2111(b), 
        the State may elect to offer a premium assistance subsidy to a 
        parent of a targeted low-income child who is eligible for such 
        a subsidy under this paragraph in the same manner as the State 
        offers such a subsidy for the enrollment of the child in 
        qualified employer-sponsored coverage, except that--
                ``(i) the amount of the premium assistance subsidy 
            shall be increased to take into account the cost of the 
            enrollment of the parent in the qualified employer-
            sponsored coverage or, at the option of the State if the 
            State determines it cost-effective, the cost of the 
            enrollment of the child's family in such coverage; and
                ``(ii) any reference in this paragraph to a child is 
            deemed to include a reference to the parent or, if 
            applicable under clause (i), the family of the child.
            ``(I) Additional state option for providing premium 
        assistance.--
                ``(i) In general.--A State may establish an employer-
            family premium assistance purchasing pool for employers 
            with less than 250 employees who have at least 1 employee 
            who is a pregnant woman eligible for assistance under the 
            State child health plan (including through the application 
            of an option described in section 2112(f)) or a member of a 
            family with at least 1 targeted low-income child and to 
            provide a premium assistance subsidy under this paragraph 
            for enrollment in coverage made available through such 
            pool.
                ``(ii) Access to choice of coverage.--A State that 
            elects the option under clause (i) shall identify and offer 
            access to not less than 2 private health plans that are 
            health benefits coverage that is equivalent to the benefits 
            coverage in a benchmark benefit package described in 
            section 2103(b) or benchmark-equivalent coverage that meets 
            the requirements of section 2103(a)(2) for employees 
            described in clause (i).
                ``(iii) Clarification of payment for administrative 
            expenditures.--Nothing in this subparagraph shall be 
            construed as permitting payment under this section for 
            administrative expenditures attributable to the 
            establishment or operation of such pool, except to the 
            extent that such payment would otherwise be permitted under 
            this title.
            ``(J) No effect on premium assistance waiver programs.--
        Nothing in this paragraph shall be construed as limiting the 
        authority of a State to offer premium assistance under section 
        1906 or 1906A, a waiver described in paragraph (2)(B) or (3), a 
        waiver approved under section 1115, or other authority in 
        effect prior to the date of enactment of the Children's Health 
        Insurance Program Reauthorization Act of 2007.
            ``(K) Notice of availability.--If a State elects to provide 
        premium assistance subsidies in accordance with this paragraph, 
        the State shall--
                ``(i) include on any application or enrollment form for 
            child health assistance a notice of the availability of 
            premium assistance subsidies for the enrollment of targeted 
            low-income children in qualified employer-sponsored 
            coverage;
                ``(ii) provide, as part of the application and 
            enrollment process under the State child health plan, 
            information describing the availability of such subsidies 
            and how to elect to obtain such a subsidy; and
                ``(iii) establish such other procedures as the State 
            determines necessary to ensure that parents are fully 
            informed of the choices for receiving child health 
            assistance under the State child health plan or through the 
            receipt of premium assistance subsidies.
            ``(L) Application to qualified employer-sponsored benchmark 
        coverage.--If a group health plan or health insurance coverage 
        offered through an employer is certified by an actuary as 
        health benefits coverage that is equivalent to the benefits 
        coverage in a benchmark benefit package described in section 
        2103(b) or benchmark-equivalent coverage that meets the 
        requirements of section 2103(a)(2), the State may provide 
        premium assistance subsidies for enrollment of targeted low-
        income children in such group health plan or health insurance 
        coverage in the same manner as such subsidies are provided 
        under this paragraph for enrollment in qualified employer-
        sponsored coverage, but without regard to the requirement to 
        provide supplemental coverage for benefits and cost-sharing 
        protection provided under the State child health plan under 
        subparagraph (E).
            ``(M) Satisfaction of cost-effectiveness test.--Premium 
        assistance subsidies for qualified employer-sponsored coverage 
        offered under this paragraph shall be deemed to meet the 
        requirement of subparagraph (A) of paragraph (3).''.
        (2) Determination of cost-effectiveness for premium assistance 
    or purchase of family coverage.--
            (A) In general.--Section 2105(c)(3)(A) (42 U.S.C. 
        1397ee(c)(3)(A)) is amended by striking ``relative to'' and all 
        that follows through the comma and inserting ``relative to
                ``(i) the amount of expenditures under the State child 
            health plan, including administrative expenditures, that 
            the State would have made to provide comparable coverage of 
            the targeted low-income child involved or the family 
            involved (as applicable); or
                ``(ii) the aggregate amount of expenditures that the 
            State would have made under the State child health plan, 
            including administrative expenditures, for providing 
            coverage under such plan for all such children or 
            families.''.
            (B) Nonapplication to previously approved coverage.--The 
        amendment made by subparagraph (A) shall not apply to coverage 
        the purchase of which has been approved by the Secretary under 
        section 2105(c)(3) of the Social Security Act prior to the date 
        of enactment of this Act.
    (b) Medicaid.--Title XIX is amended by inserting after section 1906 
the following new section:


                 ``PREMIUM ASSISTANCE OPTION FOR CHILDREN

    ``Sec. 1906A.  (a) In General.--A State may elect to offer a 
premium assistance subsidy (as defined in subsection (c)) for qualified 
employer-sponsored coverage (as defined in subsection (b)) to all 
individuals under age 19 who are entitled to medical assistance under 
this title (and to the parent of such an individual) who have access to 
such coverage if the State meets the requirements of this section.
    ``(b) Qualified Employer-Sponsored Coverage.--
        ``(1) In general.--Subject to paragraph (2)), in this 
    paragraph, the term `qualified employer-sponsored coverage' means a 
    group health plan or health insurance coverage offered through an 
    employer--
            ``(A) that qualifies as creditable coverage as a group 
        health plan under section 2701(c)(1) of the Public Health 
        Service Act;
            ``(B) for which the employer contribution toward any 
        premium for such coverage is at least 40 percent; and
            ``(C) that is offered to all individuals in a manner that 
        would be considered a nondiscriminatory eligibility 
        classification for purposes of paragraph (3)(A)(ii) of section 
        105(h) of the Internal Revenue Code of 1986 (but determined 
        without regard to clause (i) of subparagraph (B) of such 
        paragraph).
        ``(2) Exception.--Such term does not include coverage 
    consisting of--
            ``(A) benefits provided under a health flexible spending 
        arrangement (as defined in section 106(c)(2) of the Internal 
        Revenue Code of 1986); or
            ``(B) a high deductible health plan (as defined in section 
        223(c)(2) of such Code), without regard to whether the plan is 
        purchased in conjunction with a health savings account (as 
        defined under section 223(d) of such Code).
        ``(3) Treatment as third party liability.--The State shall 
    treat the coverage provided under qualified employer-sponsored 
    coverage as a third party liability under section 1902(a)(25).
    ``(c) Premium Assistance Subsidy.--In this section, the term 
`premium assistance subsidy' means the amount of the employee 
contribution for enrollment in the qualified employer-sponsored 
coverage by the individual under age 19 or by the individual's family. 
Premium assistance subsidies under this section shall be considered, 
for purposes of section 1903(a), to be a payment for medical 
assistance.
    ``(d) Voluntary Participation.--
        ``(1) Employers.--Participation by an employer in a premium 
    assistance subsidy offered by a State under this section shall be 
    voluntary. An employer may notify a State that it elects to opt-out 
    of being directly paid a premium assistance subsidy on behalf of an 
    employee.
        ``(2) Beneficiaries.--No subsidy shall be provided to an 
    individual under age 19 under this section unless the individual 
    (or the individual's parent) voluntarily elects to receive such a 
    subsidy. A State may not require such an election as a condition of 
    receipt of medical assistance. State may not require, as a 
    condition of an individual under age 19 (or the individual's 
    parent) being or remaining eligible for medical assistance under 
    this title, apply for enrollment in qualified employer-sponsored 
    coverage under this section.
        ``(3) Opt-out permitted for any month.--A State shall establish 
    a process for permitting the parent of an individual under age 19 
    receiving a premium assistance subsidy to disenroll the individual 
    from the qualified employer-sponsored coverage.
    ``(e) Requirement to Pay Premiums and Cost-Sharing and Provide 
Supplemental Coverage.--In the case of the participation of an 
individual under age 19 (or the individual's parent) in a premium 
assistance subsidy under this section for qualified employer-sponsored 
coverage, the State shall provide for payment of all enrollee premiums 
for enrollment in such coverage and all deductibles, coinsurance, and 
other cost-sharing obligations for items and services otherwise covered 
under the State plan under this title (exceeding the amount otherwise 
permitted under section 1916 or, if applicable, section 1916A). The 
fact that an individual under age 19 (or a parent) elects to enroll in 
qualified employer-sponsored coverage under this section shall not 
change the individual's (or parent's) eligibility for medical 
assistance under the State plan, except insofar as section 1902(a)(25) 
provides that payments for such assistance shall first be made under 
such coverage.''.
    (c) GAO Study and Report.--Not later than January 1, 2009, the 
Comptroller General of the United States shall study cost and coverage 
issues relating to any State premium assistance programs for which 
Federal matching payments are made under title XIX or XXI of the Social 
Security Act, including under waiver authority, and shall submit a 
report to the Committee on Finance of the Senate and the Committee on 
Energy and Commerce of the House of Representatives on the results of 
such study.
    SEC. 302. OUTREACH, EDUCATION, AND ENROLLMENT ASSISTANCE.
    (a) Requirement To Include Description of Outreach, Education, and 
Enrollment Efforts Related to Premium Assistance Subsidies in State 
Child Health Plan.--Section 2102(c) (42 U.S.C. 1397bb(c)) is amended by 
adding at the end the following new paragraph:
        ``(3) Premium assistance subsidies.--In the case of a State 
    that provides for premium assistance subsidies under the State 
    child health plan in accordance with paragraph (2)(B), (3), or (10) 
    of section 2105(c), or a waiver approved under section 1115, 
    outreach, education, and enrollment assistance for families of 
    children likely to be eligible for such subsidies, to inform such 
    families of the availability of, and to assist them in enrolling 
    their children in, such subsidies, and for employers likely to 
    provide coverage that is eligible for such subsidies, including the 
    specific, significant resources the State intends to apply to 
    educate employers about the availability of premium assistance 
    subsidies under the State child health plan.''.
    (b) Nonapplication of 10 Percent Limit on Outreach and Certain 
Other Expenditures.--Section 2105(c)(2)(C) (42 U.S.C. 1397ee(c)(2)(C)), 
as amended by section 301(c)(2), is amended by adding at the end the 
following new clause:
                ``(iv) Expenditures for outreach to increase the 
            enrollment of children under this title and title xix 
            through premium assistance subsidies.--Expenditures for 
            outreach activities to families of children likely to be 
            eligible for premium assistance subsidies in accordance 
            with paragraph (2)(B), (3), or (10), or a waiver approved 
            under section 1115, to inform such families of the 
            availability of, and to assist them in enrolling their 
            children in, such subsidies, and to employers likely to 
            provide qualified employer-sponsored coverage (as defined 
            in subparagraph (B) of such paragraph), but not to exceed 
            an amount equal to 1.25 percent of the maximum amount 
            permitted to be expended under subparagraph (A) for items 
            described in subsection (a)(1)(D).''.

   Subtitle B--Coordinating Premium Assistance With Private Coverage

    SEC. 311. SPECIAL ENROLLMENT PERIOD UNDER GROUP HEALTH PLANS IN 
      CASE OF TERMINATION OF MEDICAID OR CHIP COVERAGE OR ELIGIBILITY 
      FOR ASSISTANCE IN PURCHASE OF EMPLOYMENT-BASED COVERAGE; 
      COORDINATION OF COVERAGE.
    (a) Amendments to Internal Revenue Code of 1986.--Section 9801(f) 
of the Internal Revenue Code of 1986 (relating to special enrollment 
periods) is amended by adding at the end the following new paragraph:
        ``(3) Special rules relating to medicaid and chip.--
            ``(A) In general.--A group health plan shall permit an 
        employee who is eligible, but not enrolled, for coverage under 
        the terms of the plan (or a dependent of such an employee if 
        the dependent is eligible, but not enrolled, for coverage under 
        such terms) to enroll for coverage under the terms of the plan 
        if either of the following conditions is met:
                ``(i) Termination of medicaid or chip coverage.--The 
            employee or dependent is covered under a Medicaid plan 
            under title XIX of the Social Security Act or under a State 
            child health plan under title XXI of such Act and coverage 
            of the employee or dependent under such a plan is 
            terminated as a result of loss of eligibility for such 
            coverage and the employee requests coverage under the group 
            health plan not later than 60 days after the date of 
            termination of such coverage.
                ``(ii) Eligibility for employment assistance under 
            medicaid or chip.--The employee or dependent becomes 
            eligible for assistance, with respect to coverage under the 
            group health plan under such Medicaid plan or State child 
            health plan (including under any waiver or demonstration 
            project conducted under or in relation to such a plan), if 
            the employee requests coverage under the group health plan 
            not later than 60 days after the date the employee or 
            dependent is determined to be eligible for such assistance.
            ``(B) Employee outreach and disclosure.--
                ``(i) Outreach to employees regarding availability of 
            medicaid and chip coverage.--

                    ``(I) In general.--Each employer that maintains a 
                group health plan in a State that provides medical 
                assistance under a State Medicaid plan under title XIX 
                of the Social Security Act, or child health assistance 
                under a State child health plan under title XXI of such 
                Act, in the form of premium assistance for the purchase 
                of coverage under a group health plan, shall provide to 
                each employee a written notice informing the employee 
                of potential opportunities then currently available in 
                the State in which the employee resides for premium 
                assistance under such plans for health coverage of the 
                employee or the employee's dependents. For purposes of 
                compliance with this clause, the employer may use any 
                State-specific model notice developed in accordance 
                with section 701(f)(3)(B)(i)(II) of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1181(f)(3)(B)(i)(II)).
                    ``(II) Option to provide concurrent with provision 
                of plan materials to employee.--An employer may provide 
                the model notice applicable to the State in which an 
                employee resides concurrent with the furnishing of 
                materials notifying the employee of health plan 
                eligibility, concurrent with materials provided to the 
                employee in connection with an open season or election 
                process conducted under the plan, or concurrent with 
                the furnishing of the summary plan description as 
                provided in section 104(b) of the Employee Retirement 
                Income Security Act of 1974 (29 U.S.C. 1024).

                ``(ii) Disclosure about group health plan benefits to 
            states for medicaid and chip eligible individuals.--In the 
            case of a participant or beneficiary of a group health plan 
            who is covered under a Medicaid plan of a State under title 
            XIX of the Social Security Act or under a State child 
            health plan under title XXI of such Act, the plan 
            administrator of the group health plan shall disclose to 
            the State, upon request, information about the benefits 
            available under the group health plan in sufficient 
            specificity, as determined under regulations of the 
            Secretary of Health and Human Services in consultation with 
            the Secretary that require use of the model coverage 
            coordination disclosure form developed under section 
            311(b)(1)(C) of the Children's Health Insurance Program 
            Reauthorization Act of 2007, so as to permit the State to 
            make a determination (under paragraph (2)(B), (3), or (10) 
            of section 2105(c) of the Social Security Act or otherwise) 
            concerning the cost-effectiveness of the State providing 
            medical or child health assistance through premium 
            assistance for the purchase of coverage under such group 
            health plan and in order for the State to provide 
            supplemental benefits required under paragraph (10)(E) of 
            such section or other authority.''.
    (b) Conforming Amendments.--
        (1) Amendments to employee retirement income security act.--
            (A) In general.--Section 701(f) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1181(f)) is amended by 
        adding at the end the following new paragraph:
        ``(3) Special rules for application in case of medicaid and 
    chip.--
            ``(A) In general.--A group health plan, and a health 
        insurance issuer offering group health insurance coverage in 
        connection with a group health plan, shall permit an employee 
        who is eligible, but not enrolled, for coverage under the terms 
        of the plan (or a dependent of such an employee if the 
        dependent is eligible, but not enrolled, for coverage under 
        such terms) to enroll for coverage under the terms of the plan 
        if either of the following conditions is met:
                ``(i) Termination of medicaid or chip coverage.--The 
            employee or dependent is covered under a Medicaid plan 
            under title XIX of the Social Security Act or under a State 
            child health plan under title XXI of such Act and coverage 
            of the employee or dependent under such a plan is 
            terminated as a result of loss of eligibility for such 
            coverage and the employee requests coverage under the group 
            health plan (or health insurance coverage) not later than 
            60 days after the date of termination of such coverage.
                ``(ii) Eligibility for employment assistance under 
            medicaid or chip.--The employee or dependent becomes 
            eligible for assistance, with respect to coverage under the 
            group health plan or health insurance coverage, under such 
            Medicaid plan or State child health plan (including under 
            any waiver or demonstration project conducted under or in 
            relation to such a plan), if the employee requests coverage 
            under the group health plan or health insurance coverage 
            not later than 60 days after the date the employee or 
            dependent is determined to be eligible for such assistance.
            ``(B) Coordination with medicaid and chip.--
                ``(i) Outreach to employees regarding availability of 
            medicaid and chip coverage.--

                    ``(I) In general.--Each employer that maintains a 
                group health plan in a State that provides medical 
                assistance under a State Medicaid plan under title XIX 
                of the Social Security Act, or child health assistance 
                under a State child health plan under title XXI of such 
                Act, in the form of premium assistance for the purchase 
                of coverage under a group health plan, shall provide to 
                each employee a written notice informing the employee 
                of potential opportunities then currently available in 
                the State in which the employee resides for premium 
                assistance under such plans for health coverage of the 
                employee or the employee's dependents.
                    ``(II) Model notice.--Not later than 1 year after 
                the date of enactment of the Children's Health 
                Insurance Program Reauthorization Act of 2007, the 
                Secretary and the Secretary of Health and Human 
                Services, in consultation with Directors of State 
                Medicaid agencies under title XIX of the Social 
                Security Act and Directors of State CHIP agencies under 
                title XXI of such Act, shall jointly develop national 
                and State-specific model notices for purposes of 
                subparagraph (A). The Secretary shall provide employers 
                with such model notices so as to enable employers to 
                timely comply with the requirements of subparagraph 
                (A). Such model notices shall include information 
                regarding how an employee may contact the State in 
                which the employee resides for additional information 
                regarding potential opportunities for such premium 
                assistance, including how to apply for such assistance.
                    ``(III) Option to provide concurrent with provision 
                of plan materials to employee.--An employer may provide 
                the model notice applicable to the State in which an 
                employee resides concurrent with the furnishing of 
                materials notifying the employee of health plan 
                eligibility, concurrent with materials provided to the 
                employee in connection with an open season or election 
                process conducted under the plan, or concurrent with 
                the furnishing of the summary plan description as 
                provided in section 104(b).

                ``(ii) Disclosure about group health plan benefits to 
            states for medicaid and chip eligible individuals.--In the 
            case of a participant or beneficiary of a group health plan 
            who is covered under a Medicaid plan of a State under title 
            XIX of the Social Security Act or under a State child 
            health plan under title XXI of such Act, the plan 
            administrator of the group health plan shall disclose to 
            the State, upon request, information about the benefits 
            available under the group health plan in sufficient 
            specificity, as determined under regulations of the 
            Secretary of Health and Human Services in consultation with 
            the Secretary that require use of the model coverage 
            coordination disclosure form developed under section 
            311(b)(1)(C) of the Children's Health Insurance Program 
            Reauthorization Act of 2007, so as to permit the State to 
            make a determination (under paragraph (2)(B), (3), or (10) 
            of section 2105(c) of the Social Security Act or otherwise) 
            concerning the cost-effectiveness of the State providing 
            medical or child health assistance through premium 
            assistance for the purchase of coverage under such group 
            health plan and in order for the State to provide 
            supplemental benefits required under paragraph (10)(E) of 
            such section or other authority.''.
            (B) Conforming amendment.--Section 102(b) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1022(b)) is 
        amended--
                (i) by striking ``and the remedies'' and inserting ``, 
            the remedies''; and
                (ii) by inserting before the period the following: ``, 
            and if the employer so elects for purposes of complying 
            with section 701(f)(3)(B)(i), the model notice applicable 
            to the State in which the participants and beneficiaries 
            reside''.
            (C) Working group to develop model coverage coordination 
        disclosure form.--
                (i) Medicaid, chip, and employer-sponsored coverage 
            coordination working group.--

                    (I) In general.--Not later than 60 days after the 
                date of enactment of this Act, the Secretary of Health 
                and Human Services and the Secretary of Labor shall 
                jointly establish a Medicaid, CHIP, and Employer-
                Sponsored Coverage Coordination Working Group (in this 
                subparagraph referred to as the ``Working Group''). The 
                purpose of the Working Group shall be to develop the 
                model coverage coordination disclosure form described 
                in subclause (II) and to identify the impediments to 
                the effective coordination of coverage available to 
                families that include employees of employers that 
                maintain group health plans and members who are 
                eligible for medical assistance under title XIX of the 
                Social Security Act or child health assistance or other 
                health benefits coverage under title XXI of such Act.
                    (II) Model coverage coordination disclosure form 
                described.--The model form described in this subclause 
                is a form for plan administrators of group health plans 
                to complete for purposes of permitting a State to 
                determine the availability and cost-effectiveness of 
                the coverage available under such plans to employees 
                who have family members who are eligible for premium 
                assistance offered under a State plan under title XIX 
                or XXI of such Act and to allow for coordination of 
                coverage for enrollees of such plans. Such form shall 
                provide the following information in addition to such 
                other information as the Working Group determines 
                appropriate:

                        (aa) A determination of whether the employee is 
                    eligible for coverage under the group health plan.
                        (bb) The name and contract information of the 
                    plan administrator of the group health plan.
                        (cc) The benefits offered under the plan.
                        (dd) The premiums and cost-sharing required 
                    under the plan.
                        (ee) Any other information relevant to coverage 
                    under the plan.
                (ii) Membership.--The Working Group shall consist of 
            not more than 30 members and shall be composed of 
            representatives of--

                    (I) the Department of Labor;
                    (II) the Department of Health and Human Services;
                    (III) State directors of the Medicaid program under 
                title XIX of the Social Security Act;
                    (IV) State directors of the State Children's Health 
                Insurance Program under title XXI of the Social 
                Security Act;
                    (V) employers, including owners of small businesses 
                and their trade or industry representatives and 
                certified human resource and payroll professionals;
                    (VI) plan administrators and plan sponsors of group 
                health plans (as defined in section 607(1) of the 
                Employee Retirement Income Security Act of 1974);
                    (VII) health insurance issuers; and
                    (VIII) children and other beneficiaries of medical 
                assistance under title XIX of the Social Security Act 
                or child health assistance or other health benefits 
                coverage under title XXI of such Act.

                (iii) Compensation.--The members of the Working Group 
            shall serve without compensation.
                (iv) Administrative support.--The Department of Health 
            and Human Services and the Department of Labor shall 
            jointly provide appropriate administrative support to the 
            Working Group, including technical assistance. The Working 
            Group may use the services and facilities of either such 
            Department, with or without reimbursement, as jointly 
            determined by such Departments.
                (v) Report.--

                    (I) Report by working group to the secretaries.--
                Not later than 18 months after the date of the 
                enactment of this Act, the Working Group shall submit 
                to the Secretary of Labor and the Secretary of Health 
                and Human Services the model form described in clause 
                (i)(II) along with a report containing recommendations 
                for appropriate measures to address the impediments to 
                the effective coordination of coverage between group 
                health plans and the State plans under titles XIX and 
                XXI of the Social Security Act.
                    (II) Report by secretaries to the congress.--Not 
                later than 2 months after receipt of the report 
                pursuant to subclause (I), the Secretaries shall 
                jointly submit a report to each House of the Congress 
                regarding the recommendations contained in the report 
                under such subclause.

                (vi) Termination.--The Working Group shall terminate 30 
            days after the date of the issuance of its report under 
            clause (v).
            (D) Effective dates.--The Secretary of Labor and the 
        Secretary of Health and Human Services shall develop the 
        initial model notices under section 701(f)(3)(B)(i)(II) of the 
        Employee Retirement Income Security Act of 1974, and the 
        Secretary of Labor shall provide such notices to employers, not 
        later than the date that is 1 year after the date of enactment 
        of this Act, and each employer shall provide the initial annual 
        notices to such employer's employees beginning with the first 
        plan year that begins after the date on which such initial 
        model notices are first issued. The model coverage coordination 
        disclosure form developed under subparagraph (C) shall apply 
        with respect to requests made by States beginning with the 
        first plan year that begins after the date on which such model 
        coverage coordination disclosure form is first issued.
            (E) Enforcement.--Section 502 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1132) is amended--
                (i) in subsection (a)(6), by striking ``or (8)'' and 
            inserting ``(8), or (9)''; and
                (ii) in subsection (c), by redesignating paragraph (9) 
            as paragraph (10), and by inserting after paragraph (8) the 
            following:
    ``(9)(A) The Secretary may assess a civil penalty against any 
employer of up to $100 a day from the date of the employer's failure to 
meet the notice requirement of section 701(f)(3)(B)(i)(I). For purposes 
of this subparagraph, each violation with respect to any single 
employee shall be treated as a separate violation.
    ``(B) The Secretary may assess a civil penalty against any plan 
administrator of up to $100 a day from the date of the plan 
administrator's failure to timely provide to any State the information 
required to be disclosed under section 701(f)(3)(B)(ii). For purposes 
of this subparagraph, each violation with respect to any single 
participant or beneficiary shall be treated as a separate violation.''.
        (2) Amendments to public health service act.--Section 2701(f) 
    of the Public Health Service Act (42 U.S.C. 300gg(f)) is amended by 
    adding at the end the following new paragraph:
        ``(3) Special rules for application in case of medicaid and 
    chip.--
            ``(A) In general.--A group health plan, and a health 
        insurance issuer offering group health insurance coverage in 
        connection with a group health plan, shall permit an employee 
        who is eligible, but not enrolled, for coverage under the terms 
        of the plan (or a dependent of such an employee if the 
        dependent is eligible, but not enrolled, for coverage under 
        such terms) to enroll for coverage under the terms of the plan 
        if either of the following conditions is met:
                ``(i) Termination of medicaid or chip coverage.--The 
            employee or dependent is covered under a Medicaid plan 
            under title XIX of the Social Security Act or under a State 
            child health plan under title XXI of such Act and coverage 
            of the employee or dependent under such a plan is 
            terminated as a result of loss of eligibility for such 
            coverage and the employee requests coverage under the group 
            health plan (or health insurance coverage) not later than 
            60 days after the date of termination of such coverage.
                ``(ii) Eligibility for employment assistance under 
            medicaid or chip.--The employee or dependent becomes 
            eligible for assistance, with respect to coverage under the 
            group health plan or health insurance coverage, under such 
            Medicaid plan or State child health plan (including under 
            any waiver or demonstration project conducted under or in 
            relation to such a plan), if the employee requests coverage 
            under the group health plan or health insurance coverage 
            not later than 60 days after the date the employee or 
            dependent is determined to be eligible for such assistance.
            ``(B) Coordination with medicaid and chip.--
                ``(i) Outreach to employees regarding availability of 
            medicaid and chip coverage.--

                    ``(I) In general.--Each employer that maintains a 
                group health plan in a State that provides medical 
                assistance under a State Medicaid plan under title XIX 
                of the Social Security Act, or child health assistance 
                under a State child health plan under title XXI of such 
                Act, in the form of premium assistance for the purchase 
                of coverage under a group health plan, shall provide to 
                each employee a written notice informing the employee 
                of potential opportunities then currently available in 
                the State in which the employee resides for premium 
                assistance under such plans for health coverage of the 
                employee or the employee's dependents. For purposes of 
                compliance with this subclause, the employer may use 
                any State-specific model notice developed in accordance 
                with section 701(f)(3)(B)(i)(II) of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1181(f)(3)(B)(i)(II)).
                    ``(II) Option to provide concurrent with provision 
                of plan materials to employee.--An employer may provide 
                the model notice applicable to the State in which an 
                employee resides concurrent with the furnishing of 
                materials notifying the employee of health plan 
                eligibility, concurrent with materials provided to the 
                employee in connection with an open season or election 
                process conducted under the plan, or concurrent with 
                the furnishing of the summary plan description as 
                provided in section 104(b) of the Employee Retirement 
                Income Security Act of 1974.

                ``(ii) Disclosure about group health plan benefits to 
            states for medicaid and chip eligible individuals.--In the 
            case of an enrollee in a group health plan who is covered 
            under a Medicaid plan of a State under title XIX of the 
            Social Security Act or under a State child health plan 
            under title XXI of such Act, the plan administrator of the 
            group health plan shall disclose to the State, upon 
            request, information about the benefits available under the 
            group health plan in sufficient specificity, as determined 
            under regulations of the Secretary of Health and Human 
            Services in consultation with the Secretary that require 
            use of the model coverage coordination disclosure form 
            developed under section 311(b)(1)(C) of the Children's 
            Health Insurance Reauthorization Act of 2007, so as to 
            permit the State to make a determination (under paragraph 
            (2)(B), (3), or (10) of section 2105(c) of the Social 
            Security Act or otherwise) concerning the cost-
            effectiveness of the State providing medical or child 
            health assistance through premium assistance for the 
            purchase of coverage under such group health plan and in 
            order for the State to provide supplemental benefits 
            required under paragraph (10)(E) of such section or other 
            authority.''.

      TITLE IV--STRENGTHENING QUALITY OF CARE AND HEALTH OUTCOMES

    SEC. 401. CHILD HEALTH QUALITY IMPROVEMENT ACTIVITIES FOR CHILDREN 
      ENROLLED IN MEDICAID OR CHIP.
    (a) Development of Child Health Quality Measures for Children 
Enrolled in Medicaid or Chip.--Title XI (42 U.S.C. 1301 et seq.) is 
amended by inserting after section 1139 the following new section:
``SEC. 1139A. CHILD HEALTH QUALITY MEASURES.
    ``(a) Development of an Initial Core Set of Health Care Quality 
Measures for Children Enrolled in Medicaid or Chip.--
        ``(1) In general.--Not later than January 1, 2009, the 
    Secretary shall identify and publish for general comment an 
    initial, recommended core set of child health quality measures for 
    use by State programs administered under titles XIX and XXI, health 
    insurance issuers and managed care entities that enter into 
    contracts with such programs, and providers of items and services 
    under such programs.
        ``(2) Identification of initial core measures.--In consultation 
    with the individuals and entities described in subsection (b)(3), 
    the Secretary shall identify existing quality of care measures for 
    children that are in use under public and privately sponsored 
    health care coverage arrangements, or that are part of reporting 
    systems that measure both the presence and duration of health 
    insurance coverage over time.
        ``(3) Recommendations and dissemination.--Based on such 
    existing and identified measures, the Secretary shall publish an 
    initial core set of child health quality measures that includes 
    (but is not limited to) the following:
            ``(A) The duration of children's health insurance coverage 
        over a 12-month time period.
            ``(B) The availability and effectiveness of a full range 
        of--
                ``(i) preventive services, treatments, and services for 
            acute conditions, including services to promote healthy 
            birth, prevent and treat premature birth, and detect the 
            presence or risk of physical or mental conditions that 
            could adversely affect growth and development; and
                ``(ii) treatments to correct or ameliorate the effects 
            of physical and mental conditions, including chronic 
            conditions, in infants, young children, school-age 
            children, and adolescents.
            ``(C) The availability of care in a range of ambulatory and 
        inpatient health care settings in which such care is furnished.
            ``(D) The types of measures that, taken together, can be 
        used to estimate the overall national quality of health care 
        for children, including children with special needs, and to 
        perform comparative analyses of pediatric health care quality 
        and racial, ethnic, and socioeconomic disparities in child 
        health and health care for children.
        ``(4) Encourage voluntary and standardized reporting.--Not 
    later than 2 years after the date of enactment of the Children's 
    Health Insurance Program Reauthorization Act of 2007, the 
    Secretary, in consultation with States, shall develop a 
    standardized format for reporting information and procedures and 
    approaches that encourage States to use the initial core 
    measurement set to voluntarily report information regarding the 
    quality of pediatric health care under titles XIX and XXI.
        ``(5) Adoption of best practices in implementing quality 
    programs.--The Secretary shall disseminate information to States 
    regarding best practices among States with respect to measuring and 
    reporting on the quality of health care for children, and shall 
    facilitate the adoption of such best practices. In developing best 
    practices approaches, the Secretary shall give particular attention 
    to State measurement techniques that ensure the timeliness and 
    accuracy of provider reporting, encourage provider reporting 
    compliance, encourage successful quality improvement strategies, 
    and improve efficiency in data collection using health information 
    technology.
        ``(6) Reports to congress.--Not later than January 1, 2010, and 
    every 3 years thereafter, the Secretary shall report to Congress 
    on--
            ``(A) the status of the Secretary's efforts to improve--
                ``(i) quality related to the duration and stability of 
            health insurance coverage for children under titles XIX and 
            XXI;
                ``(ii) the quality of children's health care under such 
            titles, including preventive health services, health care 
            for acute conditions, chronic health care, and health 
            services to ameliorate the effects of physical and mental 
            conditions and to aid in growth and development of infants, 
            young children, school-age children, and adolescents with 
            special health care needs; and
                ``(iii) the quality of children's health care under 
            such titles across the domains of quality, including 
            clinical quality, health care safety, family experience 
            with health care, health care in the most integrated 
            setting, and elimination of racial, ethnic, and 
            socioeconomic disparities in health and health care;
            ``(B) the status of voluntary reporting by States under 
        titles XIX and XXI, utilizing the initial core quality 
        measurement set; and
            ``(C) any recommendations for legislative changes needed to 
        improve the quality of care provided to children under titles 
        XIX and XXI, including recommendations for quality reporting by 
        States.
        ``(7) Technical assistance.--The Secretary shall provide 
    technical assistance to States to assist them in adopting and 
    utilizing core child health quality measures in administering the 
    State plans under titles XIX and XXI.
        ``(8) Definition of core set.--In this section, the term `core 
    set' means a group of valid, reliable, and evidence-based quality 
    measures that, taken together--
            ``(A) provide information regarding the quality of health 
        coverage and health care for children;
            ``(B) address the needs of children throughout the 
        developmental age span; and
            ``(C) allow purchasers, families, and health care providers 
        to understand the quality of care in relation to the preventive 
        needs of children, treatments aimed at managing and resolving 
        acute conditions, and diagnostic and treatment services whose 
        purpose is to correct or ameliorate physical, mental, or 
        developmental conditions that could, if untreated or poorly 
        treated, become chronic.
    ``(b) Advancing and Improving Pediatric Quality Measures.--
        ``(1) Establishment of pediatric quality measures program.--Not 
    later than January 1, 2010, the Secretary shall establish a 
    pediatric quality measures program to--
            ``(A) improve and strengthen the initial core child health 
        care quality measures established by the Secretary under 
        subsection (a);
            ``(B) expand on existing pediatric quality measures used by 
        public and private health care purchasers and advance the 
        development of such new and emerging quality measures; and
            ``(C) increase the portfolio of evidence-based, consensus 
        pediatric quality measures available to public and private 
        purchasers of children's health care services, providers, and 
        consumers.
        ``(2) Evidence-based measures.--The measures developed under 
    the pediatric quality measures program shall, at a minimum, be--
            ``(A) evidence-based and, where appropriate, risk adjusted;
            ``(B) designed to identify and eliminate racial and ethnic 
        disparities in child health and the provision of health care;
            ``(C) designed to ensure that the data required for such 
        measures is collected and reported in a standard format that 
        permits comparison of quality and data at a State, plan, and 
        provider level;
            ``(D) periodically updated; and
            ``(E) responsive to the child health needs, services, and 
        domains of health care quality described in clauses (i), (ii), 
        and (iii) of subsection (a)(6)(A).
        ``(3) Process for pediatric quality measures program.--In 
    identifying gaps in existing pediatric quality measures and 
    establishing priorities for development and advancement of such 
    measures, the Secretary shall consult with--
            ``(A) States;
            ``(B) pediatricians, children's hospitals, and other 
        primary and specialized pediatric health care professionals 
        (including members of the allied health professions) who 
        specialize in the care and treatment of children, particularly 
        children with special physical, mental, and developmental 
        health care needs;
            ``(C) dental professionals, including pediatric dental 
        professionals;
            ``(D) health care providers that furnish primary health 
        care to children and families who live in urban and rural 
        medically underserved communities or who are members of 
        distinct population sub-groups at heightened risk for poor 
        health outcomes;
            ``(E) national organizations representing children, 
        including children with disabilities and children with chronic 
        conditions;
            ``(F) national organizations representing consumers and 
        purchasers of children's health care;
            ``(G) national organizations and individuals with expertise 
        in pediatric health quality measurement; and
            ``(H) voluntary consensus standards setting organizations 
        and other organizations involved in the advancement of 
        evidence-based measures of health care.
        ``(4) Developing, validating, and testing a portfolio of 
    pediatric quality measures.--As part of the program to advance 
    pediatric quality measures, the Secretary shall--
            ``(A) award grants and contracts for the development, 
        testing, and validation of new, emerging, and innovative 
        evidence-based measures for children's health care services 
        across the domains of quality described in clauses (i), (ii), 
        and (iii) of subsection (a)(6)(A); and
            ``(B) award grants and contracts for--
                ``(i) the development of consensus on evidence-based 
            measures for children's health care services;
                ``(ii) the dissemination of such measures to public and 
            private purchasers of health care for children; and
                ``(iii) the updating of such measures as necessary.
        ``(5) Revising, strengthening, and improving initial core 
    measures.--Beginning no later than January 1, 2012, and annually 
    thereafter, the Secretary shall publish recommended changes to the 
    core measures described in subsection (a) that shall reflect the 
    testing, validation, and consensus process for the development of 
    pediatric quality measures described in subsection paragraphs (1) 
    through (4).
        ``(6) Definition of pediatric quality measure.--In this 
    subsection, the term `pediatric quality measure' means a 
    measurement of clinical care that is capable of being examined 
    through the collection and analysis of relevant information, that 
    is developed in order to assess 1 or more aspects of pediatric 
    health care quality in various institutional and ambulatory health 
    care settings, including the structure of the clinical care system, 
    the process of care, the outcome of care, or patient experiences in 
    care.
        ``(7) Construction.--Nothing in this section shall be construed 
    as supporting the restriction of coverage, under title XIX or XXI 
    or otherwise, to only those services that are evidence-based.
    ``(c) Annual State Reports Regarding State-Specific Quality of Care 
Measures Applied Under Medicaid or Chip.--
        ``(1) Annual state reports.--Each State with a State plan 
    approved under title XIX or a State child health plan approved 
    under title XXI shall annually report to the Secretary on the--
            ``(A) State-specific child health quality measures applied 
        by the States under such plans, including measures described in 
        subparagraphs (A) and (B) of subsection (a)(6); and
            ``(B) State-specific information on the quality of health 
        care furnished to children under such plans, including 
        information collected through external quality reviews of 
        managed care organizations under section 1932 of the Social 
        Security Act (42 U.S.C. 1396u-4) and benchmark plans under 
        sections 1937 and 2103 of such Act (42 U.S.C. 1396u-7, 1397cc).
        ``(2) Publication.--Not later than September 30, 2009, and 
    annually thereafter, the Secretary shall collect, analyze, and make 
    publicly available the information reported by States under 
    paragraph (1).
    ``(d) Demonstration Projects for Improving the Quality of 
Children's Health Care and the Use of Health Information Technology.--
        ``(1) In general.--During the period of fiscal years 2008 
    through 2012, the Secretary shall award not more than 10 grants to 
    States and child health providers to conduct demonstration projects 
    to evaluate promising ideas for improving the quality of children's 
    health care provided under title XIX or XXI, including projects 
    to--
            ``(A) experiment with, and evaluate the use of, new 
        measures of the quality of children's health care under such 
        titles (including testing the validity and suitability for 
        reporting of such measures);
            ``(B) promote the use of health information technology in 
        care delivery for children under such titles;
            ``(C) evaluate provider-based models which improve the 
        delivery of children's health care services under such titles, 
        including care management for children with chronic conditions 
        and the use of evidence-based approaches to improve the 
        effectiveness, safety, and efficiency of health care services 
        for children; or
            ``(D) demonstrate the impact of the model electronic health 
        record format for children developed and disseminated under 
        subsection (f) on improving pediatric health, including the 
        effects of chronic childhood health conditions, and pediatric 
        health care quality as well as reducing health care costs.
        ``(2) Requirements.--In awarding grants under this subsection, 
    the Secretary shall ensure that--
            ``(A) only 1 demonstration project funded under a grant 
        awarded under this subsection shall be conducted in a State; 
        and
            ``(B) demonstration projects funded under grants awarded 
        under this subsection shall be conducted evenly between States 
        with large urban areas and States with large rural areas.
        ``(3) Authority for multistate projects.--A demonstration 
    project conducted with a grant awarded under this subsection may be 
    conducted on a multistate basis, as needed.
        ``(4) Funding.--$20,000,000 of the amount appropriated under 
    subsection (i) for a fiscal year shall be used to carry out this 
    subsection.
    ``(e) Childhood Obesity Demonstration Project.--
        ``(1) Authority to conduct demonstration.--The Secretary, in 
    consultation with the Administrator of the Centers for Medicare & 
    Medicaid Services, shall conduct a demonstration project to develop 
    a comprehensive and systematic model for reducing childhood obesity 
    by awarding grants to eligible entities to carry out such project. 
    Such model shall--
            ``(A) identify, through self-assessment, behavioral risk 
        factors for obesity among children;
            ``(B) identify, through self-assessment, needed clinical 
        preventive and screening benefits among those children 
        identified as target individuals on the basis of such risk 
        factors;
            ``(C) provide ongoing support to such target individuals 
        and their families to reduce risk factors and promote the 
        appropriate use of preventive and screening benefits; and
            ``(D) be designed to improve health outcomes, satisfaction, 
        quality of life, and appropriate use of items and services for 
        which medical assistance is available under title XIX or child 
        health assistance is available under title XXI among such 
        target individuals.
        ``(2) Eligibility entities.--For purposes of this subsection, 
    an eligible entity is any of the following:
            ``(A) A city, county, or Indian tribe.
            ``(B) A local or tribal educational agency.
            ``(C) An accredited university, college, or community 
        college.
            ``(D) A Federally-qualified health center.
            ``(E) A local health department.
            ``(F) A health care provider.
            ``(G) A community-based organization.
            ``(H) Any other entity determined appropriate by the 
        Secretary, including a consortia or partnership of entities 
        described in any of subparagraphs (A) through (G).
        ``(3) Use of funds.--An eligible entity awarded a grant under 
    this subsection shall use the funds made available under the grant 
    to--
            ``(A) carry out community-based activities related to 
        reducing childhood obesity, including by--
                ``(i) forming partnerships with entities, including 
            schools and other facilities providing recreational 
            services, to establish programs for after school and 
            weekend community activities that are designed to reduce 
            childhood obesity;
                ``(ii) forming partnerships with daycare facilities to 
            establish programs that promote healthy eating behaviors 
            and physical activity; and
                ``(iii) developing and evaluating community educational 
            activities targeting good nutrition and promoting healthy 
            eating behaviors;
            ``(B) carry out age-appropriate school-based activities 
        that are designed to reduce childhood obesity, including by--
                ``(i) developing and testing educational curricula and 
            intervention programs designed to promote healthy eating 
            behaviors and habits in youth, which may include--

                    ``(I) after hours physical activity programs; and
                    ``(II) science-based interventions with multiple 
                components to prevent eating disorders including 
                nutritional content, understanding and responding to 
                hunger and satiety, positive body image development, 
                positive self-esteem development, and learning life 
                skills (such as stress management, communication 
                skills, problemsolving and decisionmaking skills), as 
                well as consideration of cultural and developmental 
                issues, and the role of family, school, and community;

                ``(ii) providing education and training to educational 
            professionals regarding how to promote a healthy lifestyle 
            and a healthy school environment for children;
                ``(iii) planning and implementing a healthy lifestyle 
            curriculum or program with an emphasis on healthy eating 
            behaviors and physical activity; and
                ``(iv) planning and implementing healthy lifestyle 
            classes or programs for parents or guardians, with an 
            emphasis on healthy eating behaviors and physical activity 
            for children;
            ``(C) carry out educational, counseling, promotional, and 
        training activities through the local health care delivery 
        systems including by--
                ``(i) promoting healthy eating behaviors and physical 
            activity services to treat or prevent eating disorders, 
            being overweight, and obesity;
                ``(ii) providing patient education and counseling to 
            increase physical activity and promote healthy eating 
            behaviors;
                ``(iii) training health professionals on how to 
            identify and treat obese and overweight individuals which 
            may include nutrition and physical activity counseling; and
                ``(iv) providing community education by a health 
            professional on good nutrition and physical activity to 
            develop a better understanding of the relationship between 
            diet, physical activity, and eating disorders, obesity, or 
            being overweight; and
            ``(D) provide, through qualified health professionals, 
        training and supervision for community health workers to--
                ``(i) educate families regarding the relationship 
            between nutrition, eating habits, physical activity, and 
            obesity;
                ``(ii) educate families about effective strategies to 
            improve nutrition, establish healthy eating patterns, and 
            establish appropriate levels of physical activity; and
                ``(iii) educate and guide parents regarding the ability 
            to model and communicate positive health behaviors.
        ``(4) Priority.--In awarding grants under paragraph (1), the 
    Secretary shall give priority to awarding grants to eligible 
    entities--
            ``(A) that demonstrate that they have previously applied 
        successfully for funds to carry out activities that seek to 
        promote individual and community health and to prevent the 
        incidence of chronic disease and that can cite published and 
        peer-reviewed research demonstrating that the activities that 
        the entities propose to carry out with funds made available 
        under the grant are effective;
            ``(B) that will carry out programs or activities that seek 
        to accomplish a goal or goals set by the State in the Healthy 
        People 2010 plan of the State;
            ``(C) that provide non-Federal contributions, either in 
        cash or in-kind, to the costs of funding activities under the 
        grants;
            ``(D) that develop comprehensive plans that include a 
        strategy for extending program activities developed under 
        grants in the years following the fiscal years for which they 
        receive grants under this subsection;
            ``(E) located in communities that are medically 
        underserved, as determined by the Secretary;
            ``(F) located in areas in which the average poverty rate is 
        at least 150 percent or higher of the average poverty rate in 
        the State involved, as determined by the Secretary; and
            ``(G) that submit plans that exhibit multisectoral, 
        cooperative conduct that includes the involvement of a broad 
        range of stakeholders, including--
                ``(i) community-based organizations;
                ``(ii) local governments;
                ``(iii) local educational agencies;
                ``(iv) the private sector;
                ``(v) State or local departments of health;
                ``(vi) accredited colleges, universities, and community 
            colleges;
                ``(vii) health care providers;
                ``(viii) State and local departments of transportation 
            and city planning; and
                ``(ix) other entities determined appropriate by the 
            Secretary.
        ``(5) Program design.--
            ``(A) Initial design.--Not later than 1 year after the date 
        of enactment of the Children's Health Insurance Program 
        Reauthorization Act of 2007, the Secretary shall design the 
        demonstration project. The demonstration should draw upon 
        promising, innovative models and incentives to reduce 
        behavioral risk factors. The Administrator of the Centers for 
        Medicare & Medicaid Services shall consult with the Director of 
        the Centers for Disease Control and Prevention, the Director of 
        the Office of Minority Health, the heads of other agencies in 
        the Department of Health and Human Services, and such 
        professional organizations, as the Secretary determines to be 
        appropriate, on the design, conduct, and evaluation of the 
        demonstration.
            ``(B) Number and project areas.--Not later than 2 years 
        after the date of enactment of the Children's Health Insurance 
        Program Reauthorization Act of 2007, the Secretary shall award 
        1 grant that is specifically designed to determine whether 
        programs similar to programs to be conducted by other grantees 
        under this subsection should be implemented with respect to the 
        general population of children who are eligible for child 
        health assistance under State child health plans under title 
        XXI in order to reduce the incidence of childhood obesity among 
        such population.
        ``(6) Report to congress.--Not later than 3 years after the 
    date the Secretary implements the demonstration project under this 
    subsection, the Secretary shall submit to Congress a report that 
    describes the project, evaluates the effectiveness and cost 
    effectiveness of the project, evaluates the beneficiary 
    satisfaction under the project, and includes any such other 
    information as the Secretary determines to be appropriate.
        ``(7) Definitions.--In this subsection:
            ``(A) Federally-qualified health center.--The term 
        `Federally-qualified health center' has the meaning given that 
        term in section 1905(l)(2)(B).
            ``(B) Indian tribe.--The term `Indian tribe' has the 
        meaning given that term in section 4 of the Indian Health Care 
        Improvement Act (25 U.S.C. 1603).
            ``(C) Self-assessment.--The term `self-assessment' means a 
        form that--
                ``(i) includes questions regarding--

                    ``(I) behavioral risk factors;
                    ``(II) needed preventive and screening services; 
                and
                    ``(III) target individuals' preferences for 
                receiving follow-up information;

                ``(ii) is assessed using such computer generated 
            assessment programs; and
                ``(iii) allows for the provision of such ongoing 
            support to the individual as the Secretary determines 
            appropriate.
            ``(D) Ongoing support.--The term `ongoing support' means--
                ``(i) to provide any target individual with 
            information, feedback, health coaching, and recommendations 
            regarding--

                    ``(I) the results of a self-assessment given to the 
                individual;
                    ``(II) behavior modification based on the self-
                assessment; and
                    ``(III) any need for clinical preventive and 
                screening services or treatment including medical 
                nutrition therapy;

                ``(ii) to provide any target individual with referrals 
            to community resources and programs available to assist the 
            target individual in reducing health risks; and
                ``(iii) to provide the information described in clause 
            (i) to a health care provider, if designated by the target 
            individual to receive such information.
        ``(8) Authorization of appropriations.--There is authorized to 
    be appropriated to carry out this subsection, $25,000,000 for the 
    period of fiscal years 2008 through 2012.
    ``(f) Development of Model Electronic Health Record Format for 
Children Enrolled in Medicaid or CHIP.--
        ``(1) In general.--Not later than January 1, 2009, the 
    Secretary shall establish a program to encourage the development 
    and dissemination of a model electronic health record format for 
    children enrolled in the State plan under title XIX or the State 
    child health plan under title XXI that is--
            ``(A) subject to State laws, accessible to parents, 
        caregivers, and other consumers for the sole purpose of 
        demonstrating compliance with school or leisure activity 
        requirements, such as appropriate immunizations or physicals;
            ``(B) designed to allow interoperable exchanges that 
        conform with Federal and State privacy and security 
        requirements;
            ``(C) structured in a manner that permits parents and 
        caregivers to view and understand the extent to which the care 
        their children receive is clinically appropriate and of high 
        quality; and
            ``(D) capable of being incorporated into, and otherwise 
        compatible with, other standards developed for electronic 
        health records.
        ``(2) Funding.--$5,000,000 of the amount appropriated under 
    subsection (i) for a fiscal year shall be used to carry out this 
    subsection.
    ``(g) Study of Pediatric Health and Health Care Quality Measures.--
        ``(1) In general.--Not later than July 1, 2009, the Institute 
    of Medicine shall study and report to Congress on the extent and 
    quality of efforts to measure child health status and the quality 
    of health care for children across the age span and in relation to 
    preventive care, treatments for acute conditions, and treatments 
    aimed at ameliorating or correcting physical, mental, and 
    developmental conditions in children. In conducting such study and 
    preparing such report, the Institute of Medicine shall--
            ``(A) consider all of the major national population-based 
        reporting systems sponsored by the Federal Government that are 
        currently in place, including reporting requirements under 
        Federal grant programs and national population surveys and 
        estimates conducted directly by the Federal Government;
            ``(B) identify the information regarding child health and 
        health care quality that each system is designed to capture and 
        generate, the study and reporting periods covered by each 
        system, and the extent to which the information so generated is 
        made widely available through publication;
            ``(C) identify gaps in knowledge related to children's 
        health status, health disparities among subgroups of children, 
        the effects of social conditions on children's health status 
        and use and effectiveness of health care, and the relationship 
        between child health status and family income, family stability 
        and preservation, and children's school readiness and 
        educational achievement and attainment; and
            ``(D) make recommendations regarding improving and 
        strengthening the timeliness, quality, and public transparency 
        and accessibility of information about child health and health 
        care quality.
        ``(2) Funding.--Up to $1,000,000 of the amount appropriated 
    under subsection (i) for a fiscal year shall be used to carry out 
    this subsection.
    ``(h) Rule of Construction.--Notwithstanding any other provision in 
this section, no evidence based quality measure developed, published, 
or used as a basis of measurement or reporting under this section may 
be used to establish an irrebuttable presumption regarding either the 
medical necessity of care or the maximum permissible coverage for any 
individual child who is eligible for and receiving medical assistance 
under title XIX or child health assistance under title XXI.
    ``(i) Appropriation.--Out of any funds in the Treasury not 
otherwise appropriated, there is appropriated for each of fiscal years 
2008 through 2012, $45,000,000 for the purpose of carrying out this 
section (other than subsection (e)). Funds appropriated under this 
subsection shall remain available until expended.''.
    (b) Increased Matching Rate for Collecting and Reporting on Child 
Health Measures.--Section 1903(a)(3)(A) (42 U.S.C. 1396b(a)(3)(A)), is 
amended--
        (1) by striking ``and'' at the end of clause (i); and
        (2) by adding at the end the following new clause:
            ``(iii) an amount equal to the Federal medical assistance 
        percentage (as defined in section 1905(b)) of so much of the 
        sums expended during such quarter (as found necessary by the 
        Secretary for the proper and efficient administration of the 
        State plan) as are attributable to such developments or 
        modifications of systems of the type described in clause (i) as 
        are necessary for the efficient collection and reporting on 
        child health measures; and''.
    SEC. 402. IMPROVED AVAILABILITY OF PUBLIC INFORMATION REGARDING 
      ENROLLMENT OF CHILDREN IN CHIP AND MEDICAID.
    (a) Inclusion of Process and Access Measures in Annual State 
Reports.--Section 2108 (42 U.S.C. 1397hh) is amended--
        (1) in subsection (a), in the matter preceding paragraph (1), 
    by striking ``The State'' and inserting ``Subject to subsection 
    (e), the State''; and
        (2) by adding at the end the following new subsection:
    ``(e) Information Required for Inclusion in State Annual Report.--
The State shall include the following information in the annual report 
required under subsection (a):
        ``(1) Eligibility criteria, enrollment, and retention data 
    (including data with respect to continuity of coverage or duration 
    of benefits).
        ``(2) Data regarding the extent to which the State uses process 
    measures with respect to determining the eligibility of children 
    under the State child health plan, including measures such as 12-
    month continuous eligibility, self-declaration of income for 
    applications or renewals, or presumptive eligibility.
        ``(3) Data regarding denials of eligibility and 
    redeterminations of eligibility.
        ``(4) Data regarding access to primary and specialty services, 
    access to networks of care, and care coordination provided under 
    the State child health plan, using quality care and consumer 
    satisfaction measures included in the Consumer Assessment of 
    Healthcare Providers and Systems (CAHPS) survey.
        ``(5) If the State provides child health assistance in the form 
    of premium assistance for the purchase of coverage under a group 
    health plan, data regarding the provision of such assistance, 
    including the extent to which employer-sponsored health insurance 
    coverage is available for children eligible for child health 
    assistance under the State child health plan, the range of the 
    monthly amount of such assistance provided on behalf of a child or 
    family, the number of children or families provided such assistance 
    on a monthly basis, the income of the children or families provided 
    such assistance, the benefits and cost-sharing protection provided 
    under the State child health plan to supplement the coverage 
    purchased with such premium assistance, the effective strategies 
    the State engages in to reduce any administrative barriers to the 
    provision of such assistance, and, the effects, if any, of the 
    provision of such assistance on preventing the coverage provided 
    under the State child health plan from substituting for coverage 
    provided under employer-sponsored health insurance offered in the 
    State.
        ``(6) To the extent applicable, a description of any State 
    activities that are designed to reduce the number of uncovered 
    children in the State, including through a State health insurance 
    connector program or support for innovative private health coverage 
    initiatives.''.
    (b) Standardized Reporting Format.--
        (1) In general.--Not later than 1 year after the date of 
    enactment of this Act, the Secretary shall specify a standardized 
    format for States to use for reporting the information required 
    under section 2108(e) of the Social Security Act, as added by 
    subsection (a)(2).
        (2) Transition period for states.--Each State that is required 
    to submit a report under subsection (a) of section 2108 of the 
    Social Security Act that includes the information required under 
    subsection (e) of such section may use up to 3 reporting periods to 
    transition to the reporting of such information in accordance with 
    the standardized format specified by the Secretary under paragraph 
    (1).
    (c) Additional Funding for the Secretary To Improve Timeliness of 
Data Reporting and Analysis for Purposes of Determining Enrollment 
Increases Under Medicaid and CHIP.--
        (1) Appropriation.--There is appropriated, out of any money in 
    the Treasury not otherwise appropriated, $5,000,000 to the 
    Secretary for fiscal year 2008 for the purpose of improving the 
    timeliness of the data reported and analyzed from the Medicaid 
    Statistical Information System (MSIS) for purposes of providing 
    more timely data on enrollment and eligibility of children under 
    Medicaid and CHIP and to provide guidance to States with respect to 
    any new reporting requirements related to such improvements. 
    Amounts appropriated under this paragraph shall remain available 
    until expended.
        (2) Requirements.--The improvements made by the Secretary under 
    paragraph (1) shall be designed and implemented (including with 
    respect to any necessary guidance for States to report such 
    information in a complete and expeditious manner) so that, 
    beginning no later than October 1, 2008, data regarding the 
    enrollment of low-income children (as defined in section 2110(c)(4) 
    of the Social Security Act (42 U.S.C. 1397jj(c)(4)) of a State 
    enrolled in the State plan under Medicaid or the State child health 
    plan under CHIP with respect to a fiscal year shall be collected 
    and analyzed by the Secretary within 6 months of submission.
    (d) GAO Study and Report on Access to Primary and Speciality 
Services.--
        (1) In general.--The Comptroller General of the United States 
    shall conduct a study of children's access to primary and specialty 
    services under Medicaid and CHIP, including--
            (A) the extent to which providers are willing to treat 
        children eligible for such programs;
            (B) information on such children's access to networks of 
        care;
            (C) geographic availability of primary and specialty 
        services under such programs;
            (D) the extent to which care coordination is provided for 
        children's care under Medicaid and CHIP; and
            (E) as appropriate, information on the degree of 
        availability of services for children under such programs.
        (2) Report.--Not later than 2 years after the date of enactment 
    of this Act, the Comptroller General shall submit a report to the 
    Committee on Finance of the Senate and the Committee on Energy and 
    Commerce of the House of Representatives on the study conducted 
    under paragraph (1) that includes recommendations for such Federal 
    and State legislative and administrative changes as the Comptroller 
    General determines are necessary to address any barriers to access 
    to children's care under Medicaid and CHIP that may exist.
    SEC. 403. APPLICATION OF CERTAIN MANAGED CARE QUALITY SAFEGUARDS TO 
      CHIP.
    (a) In General.--Section 2103(f) of Social Security Act (42 U.S.C. 
1397bb(f)) is amended by adding at the end the following new paragraph:
        ``(3) Compliance with managed care requirements.--The State 
    child health plan shall provide for the application of subsections 
    (a)(4), (a)(5), (b), (c), (d), and (e) of section 1932 (relating to 
    requirements for managed care) to coverage, State agencies, 
    enrollment brokers, managed care entities, and managed care 
    organizations under this title in the same manner as such 
    subsections apply to coverage and such entities and organizations 
    under title XIX.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to contract years for health plans beginning on or after July 1, 
2008.

                 TITLE V--IMPROVING ACCESS TO BENEFITS

    SEC. 501. DENTAL BENEFITS.
    (a) Coverage.--
        (1) In general.--Section 2103 (42 U.S.C. 1397cc) is amended--
            (A) in subsection (a)--
                (i) in the matter before paragraph (1), by striking 
            ``subsection (c)(5)'' and inserting ``paragraphs (5) and 
            (7) of subsection (c)''; and
                (ii) in paragraph (1), by inserting ``at least'' after 
            ``that is''; and
            (B) in subsection (c)--
                (i) by redesignating paragraph (5) as paragraph (7); 
            and
                (ii) by inserting after paragraph (4), the following:
        ``(5) Dental benefits.--
            ``(A) In general.--The child health assistance provided to 
        a targeted low-income child shall include coverage of dental 
        services necessary to prevent disease and promote oral health, 
        restore oral structures to health and function, and treat 
        emergency conditions.
            ``(B) Permitting use of dental benchmark plans by certain 
        states.--A State may elect to meet the requirement of 
        subparagraph (A) through dental coverage that is equivalent to 
        a benchmark dental benefit package described in subparagraph 
        (C).
            ``(C) Benchmark dental benefit packages.--The benchmark 
        dental benefit packages are as follows:
                ``(i) FEHBP children's dental coverage.--A dental 
            benefits plan under chapter 89A of title 5, United States 
            Code, that has been selected most frequently by employees 
            seeking dependent coverage, among such plans that provide 
            such dependent coverage, in either of the previous 2 plan 
            years.
                ``(ii) State employee dependent dental coverage.--A 
            dental benefits plan that is offered and generally 
            available to State employees in the State involved and that 
            has been selected most frequently by employees seeking 
            dependent coverage, among such plans that provide such 
            dependent coverage, in either of the previous 2 plan years.
                ``(iii) Coverage offered through commercial dental 
            plan.--A dental benefits plan that has the largest insured 
            commercial, non-medicaid enrollment of dependent covered 
            lives of such plans that is offered in the State 
            involved.''.
        (2) Assuring access to care.--Section 2102(a)(7)(B) (42 U.S.C. 
    1397bb(c)(2)) is amended by inserting ``and services described in 
    section 2103(c)(5)'' after ``emergency services''.
        (3) Effective date.--The amendments made by paragraph (1) shall 
    apply to coverage of items and services furnished on or after 
    October 1, 2008.
    (b) Dental Education for Parents of Newborns.--The Secretary shall 
develop and implement, through entities that fund or provide perinatal 
care services to targeted low-income children under a State child 
health plan under title XXI of the Social Security Act, a program to 
deliver oral health educational materials that inform new parents about 
risks for, and prevention of, early childhood caries and the need for a 
dental visit within their newborn's first year of life.
    (c) Provision of Dental Services Through FQHCs.--
        (1) Medicaid.--Section 1902(a) (42 U.S.C. 1396a(a)) is 
    amended--
            (A) by striking ``and'' at the end of paragraph (69);
            (B) by striking the period at the end of paragraph (70) and 
        inserting ``; and''; and
            (C) by inserting after paragraph (70) the following new 
        paragraph:
        ``(71) provide that the State will not prevent a Federally-
    qualified health center from entering into contractual 
    relationships with private practice dental providers in the 
    provision of Federally-qualified health center services.''.
        (2) CHIP.--Section 2107(e)(1) (42 U.S.C. 1397g(e)(1)), as 
    amended by subsections (a)(2) and (d)(2) of section 203, is amended 
    by inserting after subparagraph (B) the following new subparagraph 
    (and redesignating the succeeding subparagraphs accordingly):
            ``(C) Section 1902(a)(71) (relating to limiting FQHC 
        contracting for provision of dental services).''.
        (3) Effective date.--The amendments made by this subsection 
    shall take effect on January 1, 2008.
    (d) Reporting Information on Dental Health.--
        (1) Medicaid.--Section 1902(a)(43)(D)(iii) (42 U.S.C. 
    1396a(a)(43)(D)(iii)) is amended by inserting ``and other 
    information relating to the provision of dental services to such 
    children described in section 2108(e)'' after ``receiving dental 
    services,''.
        (2) CHIP.--Section 2108 (42 U.S.C. 1397hh) is amended by adding 
    at the end the following new subsection:
    ``(e) Information on Dental Care for Children.--
        ``(1) In general.--Each annual report under subsection (a) 
    shall include the following information with respect to care and 
    services described in section 1905(r)(3) provided to targeted low-
    income children enrolled in the State child health plan under this 
    title at any time during the year involved:
            ``(A) The number of enrolled children by age grouping used 
        for reporting purposes under section 1902(a)(43).
            ``(B) For children within each such age grouping, 
        information of the type contained in questions 12(a)-(c) of CMS 
        Form 416 (that consists of the number of enrolled targeted low 
        income children who receive any, preventive, or restorative 
        dental care under the State plan).
            ``(C) For the age grouping that includes children 8 years 
        of age, the number of such children who have received a 
        protective sealant on at least one permanent molar tooth.
        ``(2) Inclusion of information on enrollees in managed care 
    plans.--The information under paragraph (1) shall include 
    information on children who are enrolled in managed care plans and 
    other private health plans and contracts with such plans under this 
    title shall provide for the reporting of such information by such 
    plans to the State.''.
        (3) Effective date.--The amendments made by this subsection 
    shall be effective for annual reports submitted for years beginning 
    after date of enactment.
    (e) Improved Accessibility of Dental Provider Information to 
Enrollees Under Medicaid and CHIP.--The Secretary shall--
        (1) work with States, pediatric dentists, and other dental 
    providers (including providers that are, or are affiliated with, a 
    school of dentistry) to include, not later than 6 months after the 
    date of the enactment of this Act, on the Insure Kids Now website 
    (http://www.insurekidsnow.gov/) and hotline (1-877-KIDS-NOW) (or on 
    any successor websites or hotlines) a current and accurate list of 
    all such dentists and providers within each State that provide 
    dental services to children enrolled in the State plan (or waiver) 
    under Medicaid or the State child health plan (or waiver) under 
    CHIP, and shall ensure that such list is updated at least 
    quarterly; and
        (2) work with States to include, not later than 6 months after 
    the date of the enactment of this Act, a description of the dental 
    services provided under each State plan (or waiver) under Medicaid 
    and each State child health plan (or waiver) under CHIP on such 
    Insure Kids Now website, and shall ensure that such list is updated 
    at least annually.
    (f) Inclusion of Status of Efforts To Improve Dental Care in 
Reports on the Quality of Children's Health Care Under Medicaid and 
CHIP.--Section 1139A(a), as added by section 401(a), is amended--
        (1) in paragraph (3)(B)(ii), by inserting ``and, with respect 
    to dental care, conditions requiring the restoration of teeth, 
    relief of pain and infection, and maintenance of dental health'' 
    after ``chronic conditions''; and
        (2) in paragraph (6)(A)(ii), by inserting ``dental care,'' 
    after ``preventive health services,''.
    (g) GAO Study and Report.--
        (1) Study.--The Comptroller General of the United States shall 
    provide for a study that examines--
            (A) access to dental services by children in underserved 
        areas;
            (B) children's access to oral health care, including 
        preventive and restorative services, under Medicaid and CHIP, 
        including--
                (i) the extent to which dental providers are willing to 
            treat children eligible for such programs;
                (ii) information on such children's access to networks 
            of care, including such networks that serve special needs 
            children; and
                (iii) geographic availability of oral health care, 
            including preventive and restorative services, under such 
            programs; and
            (C) the feasibility and appropriateness of using qualified 
        mid-level dental health providers, in coordination with 
        dentists, to improve access for children to oral health 
        services and public health overall.
        (2) Report.--Not later than 18 months year after the date of 
    the enactment of this Act, the Comptroller General shall submit to 
    Congress a report on the study conducted under paragraph (1). The 
    report shall include recommendations for such Federal and State 
    legislative and administrative changes as the Comptroller General 
    determines are necessary to address any barriers to access to oral 
    health care, including preventive and restorative services, under 
    Medicaid and CHIP that may exist.
    SEC. 502. MENTAL HEALTH PARITY IN CHIP PLANS.
    (a) Assurance of Parity.--Section 2103(c) (42 U.S.C. 1397cc(c)), as 
amended by section 501(a)(1)(B), is amended by inserting after 
paragraph (5), the following:
        ``(6) Mental health services parity.--
            ``(A) In general.--In the case of a State child health plan 
        that provides both medical and surgical benefits and mental 
        health or substance abuse benefits, such plan shall ensure that 
        the financial requirements and treatment limitations applicable 
        to such mental health or substance abuse benefits are no more 
        restrictive than the financial requirements and treatment 
        limitations applied to substantially all medical and surgical 
        benefits covered by the plan.
            ``(B) Deemed compliance.--To the extent that a State child 
        health plan includes coverage with respect to an individual 
        described in section 1905(a)(4)(B) and covered under the State 
        plan under section 1902(a)(10)(A) of the services described in 
        section 1905(a)(4)(B) (relating to early and periodic 
        screening, diagnostic, and treatment services defined in 
        section 1905(r)) and provided in accordance with section 
        1902(a)(43), such plan shall be deemed to satisfy the 
        requirements of subparagraph (A).''.
    (b) Conforming Amendments.--Section 2103 (42 U.S.C. 1397cc) is 
amended--
        (1) in subsection (a), as amended by section 501(a)(1)(A)(i), 
    in the matter preceding paragraph (1), by inserting ``, (6),'' 
    after ``(5)''; and
        (2) in subsection (c)(2), by striking subparagraph (B) and 
    redesignating subparagraphs (C) and (D) as subparagraphs (B) and 
    (C), respectively.
    SEC. 503. APPLICATION OF PROSPECTIVE PAYMENT SYSTEM FOR SERVICES 
      PROVIDED BY FEDERALLY-QUALIFIED HEALTH CENTERS AND RURAL HEALTH 
      CLINICS.
    (a) Application of Prospective Payment System.--
        (1) In general.--Section 2107(e)(1) (42 U.S.C. 1397gg(e)(1)), 
    as amended by section 501(c)(2) is amended by inserting after 
    subparagraph (C) the following new subparagraph (and redesignating 
    the succeeding subparagraphs accordingly):
            ``(D) Section 1902(bb) (relating to payment for services 
        provided by Federally-qualified health centers and rural health 
        clinics).''.
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply to services provided on or after October 1, 2008.
    (b) Transition Grants.--
        (1) Appropriation.--Out of any funds in the Treasury not 
    otherwise appropriated, there is appropriated to the Secretary for 
    fiscal year 2008, $5,000,000, to remain available until expended, 
    for the purpose of awarding grants to States with State child 
    health plans under CHIP that are operated separately from the State 
    Medicaid plan under title XIX of the Social Security Act (including 
    any waiver of such plan), or in combination with the State Medicaid 
    plan, for expenditures related to transitioning to compliance with 
    the requirement of section 2107(e)(1)(D) of the Social Security Act 
    (as added by subsection (a)) to apply the prospective payment 
    system established under section 1902(bb) of the such Act (42 
    U.S.C. 1396a(bb)) to services provided by Federally-qualified 
    health centers and rural health clinics.
        (2) Monitoring and report.--The Secretary shall monitor the 
    impact of the application of such prospective payment system on the 
    States described in paragraph (1) and, not later than October 1, 
    2010, shall report to Congress on any effect on access to benefits, 
    provider payment rates, or scope of benefits offered by such States 
    as a result of the application of such payment system.
    SEC. 504. PREMIUM GRACE PERIOD.
    (a) In General.--Section 2103(e)(3) (42 U.S.C. 1397cc(e)(3)) is 
amended by adding at the end the following new subparagraph:
            ``(C) Premium grace period.--The State child health plan--
                ``(i) shall afford individuals enrolled under the plan 
            a grace period of at least 30 days from the beginning of a 
            new coverage period to make premium payments before the 
            individual's coverage under the plan may be terminated; and
                ``(ii) shall provide to such an individual, not later 
            than 7 days after the first day of such grace period, 
            notice--

                    ``(I) that failure to make a premium payment within 
                the grace period will result in termination of coverage 
                under the State child health plan; and
                    ``(II) of the individual's right to challenge the 
                proposed termination pursuant to the applicable Federal 
                regulations.

        For purposes of clause (i), the term `new coverage period' 
        means the month immediately following the last month for which 
        the premium has been paid.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to new coverage periods beginning on or after January 1, 2009.
    SEC. 505. DEMONSTRATION PROJECTS RELATING TO DIABETES PREVENTION.
    There is authorized to be appropriated $15,000,000 during the 
period of fiscal years 2008 through 2012 to fund demonstration projects 
in up to 10 States over 3 years for voluntary incentive programs to 
promote children's receipt of relevant screenings and improvements in 
healthy eating and physical activity with the aim of reducing the 
incidence of type 2 diabetes. Such programs may involve reductions in 
cost-sharing or premiums when children receive regular screening and 
reach certain benchmarks in healthy eating and physical activity. Under 
such programs, a State may also provide financial bonuses for 
partnerships with entities, such as schools, which increase their 
education and efforts with respect to reducing the incidence of type 2 
diabetes and may also devise incentives for providers serving children 
covered under this title and title XIX to perform relevant screening 
and counseling regarding healthy eating and physical activity. Upon 
completion of these demonstrations, the Secretary shall provide a 
report to Congress on the results of the State demonstration projects 
and the degree to which they helped improve health outcomes related to 
type 2 diabetes in children in those States.
    SEC. 506. CLARIFICATION OF COVERAGE OF SERVICES PROVIDED THROUGH 
      SCHOOL-BASED HEALTH CENTERS.
    Section 2103(c) (42 U.S.C. 1397cc(c)), as amended by section 
501(a)(1)(B), is amended by adding at the end the following new 
paragraph:
        ``(8) Availability of coverage for items and services furnished 
    through school-based health centers.--Nothing in this title shall 
    be construed as limiting a State's ability to provide child health 
    assistance for covered items and services that are furnished 
    through school-based health centers.''.

     TITLE VI--PROGRAM INTEGRITY AND OTHER MISCELLANEOUS PROVISIONS
           Subtitle A--Program Integrity and Data Collection

    SEC. 601. PAYMENT ERROR RATE MEASUREMENT (``PERM'').
    (a) Expenditures Related to Compliance With Requirements.--
        (1) Enhanced payments.--Section 2105(c) (42 U.S.C. 1397ee(c)), 
    as amended by section 301(a), is amended by adding at the end the 
    following new paragraph:
        ``(12) Enhanced payments.--Notwithstanding subsection (b), the 
    enhanced FMAP with respect to payments under subsection (a) for 
    expenditures related to the administration of the payment error 
    rate measurement (PERM) requirements applicable to the State child 
    health plan in accordance with the Improper Payments Information 
    Act of 2002 and parts 431 and 457 of title 42, Code of Federal 
    Regulations (or any related or successor guidance or regulations) 
    shall in no event be less than 90 percent.''.
        (2) Exclusion of from cap on administrative expenditures.--
    Section 2105(c)(2)(C) (42 U.S.C. 1397ee(c)(2)C)), as amended by 
    section 302(b)), is amended by adding at the end the following:
                ``(iv) Payment error rate measurement (perm) 
            expenditures.--Expenditures related to the administration 
            of the payment error rate measurement (PERM) requirements 
            applicable to the State child health plan in accordance 
            with the Improper Payments Information Act of 2002 and 
            parts 431 and 457 of title 42, Code of Federal Regulations 
            (or any related or successor guidance or regulations).''.
    (b) Final Rule Required To Be in Effect for All States.--
Notwithstanding parts 431 and 457 of title 42, Code of Federal 
Regulations (as in effect on the date of enactment of this Act), the 
Secretary shall not calculate or publish any national or State-specific 
error rate based on the application of the payment error rate 
measurement (in this section referred to as ``PERM'') requirements to 
CHIP until after the date that is 6 months after the date on which a 
final rule implementing such requirements in accordance with the 
requirements of subsection (c) is in effect for all States. Any 
calculation of a national error rate or a State specific error rate 
after such final rule in effect for all States may only be inclusive of 
errors, as defined in such final rule or in guidance issued within a 
reasonable time frame after the effective date for such final rule that 
includes detailed guidance for the specific methodology for error 
determinations.
    (c) Requirements for Final Rule.--For purposes of subsection (b), 
the requirements of this subsection are that the final rule 
implementing the PERM requirements shall--
        (1) include--
            (A) clearly defined criteria for errors for both States and 
        providers;
            (B) a clearly defined process for appealing error 
        determinations by--
                (i) review contractors; or
                (ii) the agency and personnel described in section 
            431.974(a)(2) of title 42, Code of Federal Regulations, as 
            in effect on September 1, 2007, responsible for the 
            development, direction, implementation, and evaluation of 
            eligibility reviews and associated activities; and
            (C) clearly defined responsibilities and deadlines for 
        States in implementing any corrective action plans; and
        (2) provide that the payment error rate determined for a State 
    shall not take into account payment errors resulting from the 
    State's verification of an applicant's self-declaration or self-
    certification of eligibility for, and the correct amount of, 
    medical assistance or child health assistance, if the State process 
    for verifying an applicant's self-declaration or self-certification 
    satisfies the requirements for such process applicable under 
    regulations promulgated by the Secretary or otherwise approved by 
    the Secretary.
    (d) Option for Application of Data for States in First Application 
Cycle Under the Interim Final Rule.--After the final rule implementing 
the PERM requirements in accordance with the requirements of subsection 
(c) is in effect for all States, a State for which the PERM 
requirements were first in effect under an interim final rule for 
fiscal year 2007 may elect to accept any payment error rate determined 
in whole or in part for the State on the basis of data for that fiscal 
year or may elect to not have any payment error rate determined on the 
basis of such data and, instead, shall be treated as if fiscal year 
2010 were the first fiscal year for which the PERM requirements apply 
to the State.
    (e) Harmonization of MEQC and PERM.--
        (1) Reduction of redundancies.--The Secretary shall review the 
    Medicaid Eligibility Quality Control (in this subsection referred 
    to as the ``MEQC'') requirements with the PERM requirements and 
    coordinate consistent implementation of both sets of requirements, 
    while reducing redundancies.
        (2) State option to apply perm data.--A State may elect, for 
    purposes of determining the erroneous excess payments for medical 
    assistance ratio applicable to the State for a fiscal year under 
    section 1903(u) of the Social Security Act (42 U.S.C. 1396b(u)) to 
    substitute data resulting from the application of the PERM 
    requirements to the State after the final rule implementing such 
    requirements is in effect for all States for data obtained from the 
    application of the MEQC requirements to the State with respect to a 
    fiscal year.
        (3) State option to apply meqc data.--For purposes of 
    satisfying the requirements of subpart Q of part 431 of title 42, 
    Code of Federal Regulations, as in effect on September 1, 2007, 
    relating to Medicaid eligibility reviews, a State may elect to 
    substitute data obtained through MEQC reviews conducted in 
    accordance with section 1903(u) of the Social Security Act (42 
    U.S.C. 1396b(u)) for data required for purposes of PERM 
    requirements, but only if the State MEQC reviews are based on a 
    broad, representative sample of Medicaid applicants or enrollees in 
    the States.
    (f) Identification of Improved State-Specific Sample Sizes.--The 
Secretary shall establish State-specific sample sizes for application 
of the PERM requirements with respect to State child health plans for 
fiscal years beginning with fiscal year 2009, on the basis of such 
information as the Secretary determines appropriate. In establishing 
such sample sizes, the Secretary shall, to the greatest extent 
practicable--
        (1) minimize the administrative cost burden on States under 
    Medicaid and CHIP; and
        (2) maintain State flexibility to manage such programs.
    SEC. 602. IMPROVING DATA COLLECTION.
    (a) Increased Appropriation.--Section 2109(b)(2) (42 U.S.C. 
1397ii(b)(2)) is amended by striking ``$10,000,000 for fiscal year 
2000'' and inserting ``$20,000,000 for fiscal year 2008''.
    (b) Use of Additional Funds.--Section 2109(b) (42 U.S.C. 
1397ii(b)), as amended by subsection (a), is amended--
        (1) by redesignating paragraph (2) as paragraph (4); and
        (2) by inserting after paragraph (1), the following new 
    paragraphs:
        ``(2) Additional requirements.--In addition to making the 
    adjustments required to produce the data described in paragraph 
    (1), with respect to data collection occurring for fiscal years 
    beginning with fiscal year 2008, in appropriate consultation with 
    the Secretary of Health and Human Services, the Secretary of 
    Commerce shall do the following:
            ``(A) Make appropriate adjustments to the Current 
        Population Survey to develop more accurate State-specific 
        estimates of the number of children enrolled in health coverage 
        under title XIX or this title.
            ``(B) Make appropriate adjustments to the Current 
        Population Survey to improve the survey estimates used to 
        determine the child population growth factor under section 
        2104(i)(5)(B) and any other data necessary for carrying out 
        this title.
            ``(C) Include health insurance survey information in the 
        American Community Survey related to children.
            ``(D) Assess whether American Community Survey estimates, 
        once such survey data are first available, produce more 
        reliable estimates than the Current Population Survey with 
        respect to the purposes described in subparagraph (B).
            ``(E) On the basis of the assessment required under 
        subparagraph (D), recommend to the Secretary of Health and 
        Human Services whether American Community Survey estimates 
        should be used in lieu of, or in some combination with, Current 
        Population Survey estimates for the purposes described in 
        subparagraph (B).
            ``(F) Continue making the adjustments described in the last 
        sentence of paragraph (1) with respect to expansion of the 
        sample size used in State sampling units, the number of 
        sampling units in a State, and using an appropriate 
        verification element.
        ``(3) Authority for the secretary of health and human services 
    to transition to the use of all, or some combination of, acs 
    estimates upon recommendation of the secretary of commerce.--If, on 
    the basis of the assessment required under paragraph (2)(D), the 
    Secretary of Commerce recommends to the Secretary of Health and 
    Human Services that American Community Survey estimates should be 
    used in lieu of, or in some combination with, Current Population 
    Survey estimates for the purposes described in paragraph (2)(B), 
    the Secretary of Health and Human Services, in consultation with 
    the States, may provide for a period during which the Secretary may 
    transition from carrying out such purposes through the use of 
    Current Population Survey estimates to the use of American 
    Community Survey estimates (in lieu of, or in combination with the 
    Current Population Survey estimates, as recommended), provided that 
    any such transition is implemented in a manner that is designed to 
    avoid adverse impacts upon States with approved State child health 
    plans under this title.''.
    SEC. 603. UPDATED FEDERAL EVALUATION OF CHIP.
    Section 2108(c) (42 U.S.C. 1397hh(c)) is amended by striking 
paragraph (5) and inserting the following:
        ``(5) Subsequent evaluation using updated information.--
            ``(A) In general.--The Secretary, directly or through 
        contracts or interagency agreements, shall conduct an 
        independent subsequent evaluation of 10 States with approved 
        child health plans.
            ``(B) Selection of states and matters included.--Paragraphs 
        (2) and (3) shall apply to such subsequent evaluation in the 
        same manner as such provisions apply to the evaluation 
        conducted under paragraph (1).
            ``(C) Submission to congress.--Not later than December 31, 
        2010, the Secretary shall submit to Congress the results of the 
        evaluation conducted under this paragraph.
            ``(D) Funding.--Out of any money in the Treasury of the 
        United States not otherwise appropriated, there are 
        appropriated $10,000,000 for fiscal year 2009 for the purpose 
        of conducting the evaluation authorized under this paragraph. 
        Amounts appropriated under this subparagraph shall remain 
        available for expenditure through fiscal year 2011.''.
    SEC. 604. ACCESS TO RECORDS FOR IG AND GAO AUDITS AND EVALUATIONS.
    Section 2108(d) (42 U.S.C. 1397hh(d)) is amended to read as 
follows:
    ``(d) Access to Records for IG and GAO Audits and Evaluations.--For 
the purpose of evaluating and auditing the program established under 
this title, or title XIX, the Secretary, the Office of Inspector 
General, and the Comptroller General shall have access to any books, 
accounts, records, correspondence, and other documents that are related 
to the expenditure of Federal funds under this title and that are in 
the possession, custody, or control of States receiving Federal funds 
under this title or political subdivisions thereof, or any grantee or 
contractor of such States or political subdivisions.''.
    SEC. 605. NO FEDERAL FUNDING FOR ILLEGAL ALIENS.
    Nothing in this Act allows Federal payment for individuals who are 
not legal residents.

              Subtitle B--Miscellaneous Health Provisions

    SEC. 611. DEFICIT REDUCTION ACT TECHNICAL CORRECTIONS.
    (a) Clarification of Requirement to Provide EPSDT Services for All 
Children in Benchmark Benefit Packages Under Medicaid.--Section 
1937(a)(1) (42 U.S.C. 1396u-7(a)(1)), as inserted by section 6044(a) of 
the Deficit Reduction Act of 2005 (Public Law 109-171, 120 Stat. 88), 
is amended--
        (1) in subparagraph (A)--
            (A) in the matter before clause (i)--
                (i) by striking ``Notwithstanding any other provision 
            of this title'' and inserting ``Notwithstanding section 
            1902(a)(1) (relating to statewideness), section 
            1902(a)(10)(B) (relating to comparability) and any other 
            provision of this title which would be directly contrary to 
            the authority under this section and subject to subsection 
            (E)''; and
                (ii) by striking ``enrollment in coverage that 
            provides'' and inserting ``coverage that'';
            (B) in clause (i), by inserting ``provides'' after ``(i)''; 
        and
            (C) by striking clause (ii) and inserting the following:
                ``(ii) for any individual described in section 
            1905(a)(4)(B) who is eligible under the State plan in 
            accordance with paragraphs (10) and (17) of section 
            1902(a), consists of the items and services described in 
            section 1905(a)(4)(B) (relating to early and periodic 
            screening, diagnostic, and treatment services defined in 
            section 1905(r)) and provided in accordance with the 
            requirements of section 1902(a)(43).'';
        (2) in subparagraph (C)--
            (A) in the heading, by striking ``wrap-around'' and 
        inserting ``additional''; and
            (B) by striking ``wrap-around or''; and
        (3) by adding at the end the following new subparagraph:
            ``(E) Rule of construction.--Nothing in this paragraph 
        shall be construed as--
                ``(i) requiring a State to offer all or any of the 
            items and services required by subparagraph (A)(ii) through 
            an issuer of benchmark coverage described in subsection 
            (b)(1) or benchmark equivalent coverage described in 
            subsection (b)(2);
                ``(ii) preventing a State from offering all or any of 
            the items and services required by subparagraph (A)(ii) 
            through an issuer of benchmark coverage described in 
            subsection (b)(1) or benchmark equivalent coverage 
            described in subsection (b)(2); or
                ``(iii) affecting a child's entitlement to care and 
            services described in subsections (a)(4)(B) and (r) of 
            section 1905 and provided in accordance with section 
            1902(a)(43) whether provided through benchmark coverage, 
            benchmark equivalent coverage, or otherwise.''.
    (b) Correction of Reference to Children in Foster Care Receiving 
Child Welfare Services.--Section 1937(a)(2)(B)(viii) (42 U.S.C. 1396u-
7(a)(2)(B)(viii), as inserted by section 6044(a) of the Deficit 
Reduction Act of 2005, is amended by striking ``aid or assistance is 
made available under part B of title IV to children in foster care and 
individuals'' and inserting ``child welfare services are made available 
under part B of title IV on the basis of being a child in foster care 
or''.
    (c) Transparency.--Section 1937 (42 U.S.C. 1396u-7), as inserted by 
section 6044(a) of the Deficit Reduction Act of 2005, is amended by 
adding at the end the following:
    ``(c) Publication of Provisions Affected.--With respect to a State 
plan amendment to provide benchmark benefits in accordance with 
subsections (a) and (b) that is approved by the Secretary, the 
Secretary shall publish on the Internet website of the Centers for 
Medicare & Medicaid Services, a list of the provisions of this title 
that the Secretary has determined do not apply in order to enable the 
State to carry out the plan amendment and the reason for each such 
determination on the date such approval is made, and shall publish such 
list in the Federal Register and not later than 30 days after such date 
of approval.''.
    (d) Effective Date.--The amendments made by subsections (a), (b), 
and (c) of this section shall take effect as if included in the 
amendment made by section 6044(a) of the Deficit Reduction Act of 2005.
    SEC. 612. REFERENCES TO TITLE XXI.
    Section 704 of the Medicare, Medicaid, and SCHIP Balanced Budget 
Refinement Act of 1999, as enacted into law by division B of Public Law 
106-113 (113 Stat. 1501A-402) is repealed.
    SEC. 613. PROHIBITING INITIATION OF NEW HEALTH OPPORTUNITY ACCOUNT 
      DEMONSTRATION PROGRAMS.
    After the date of the enactment of this Act, the Secretary of 
Health and Human Services may not approve any new demonstration 
programs under section 1938 of the Social Security Act (42 U.S.C. 
1396u-8).
    SEC. 614. COUNTY MEDICAID HEALTH INSURING ORGANIZATIONS; GAO REPORT 
      ON MEDICAID MANAGED CARE PAYMENT RATES.
    (a) In General.--Section 9517(c)(3) of the Consolidated Omnibus 
Budget Reconciliation Act of 1985 (42 U.S.C. 1396b note), as added by 
section 4734 of the Omnibus Budget Reconciliation Act of 1990 and as 
amended by section 704 of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000, is amended--
        (1) in subparagraph (A), by inserting ``, in the case of any 
    health insuring organization described in such subparagraph that is 
    operated by a public entity established by Ventura County, and in 
    the case of any health insuring organization described in such 
    subparagraph that is operated by a public entity established by 
    Merced County'' after ``described in subparagraph (B)''; and
        (2) in subparagraph (C), by striking ``14 percent'' and 
    inserting ``16 percent''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on the date of the enactment of this Act.
    (c) GAO Report on Actuarial Soundness of Medicaid Managed Care 
Payment Rates.--Not later than 18 months after the date of the 
enactment of this Act, the Comptroller General of the United States 
shall submit a report to the Committee on Finance of the Senate and the 
Committee on Energy and Commerce of the House of Representatives 
analyzing the extent to which State payment rates for medicaid managed 
care organizations under title XIX of the Social Security Act are 
actuarially sound.
    SEC. 615. ADJUSTMENT IN COMPUTATION OF MEDICAID FMAP TO DISREGARD 
      AN EXTRAORDINARY EMPLOYER PENSION CONTRIBUTION.
    (a) In General.--Only for purposes of computing the FMAP (as 
defined in subsection (e)) for a State for a fiscal year (beginning 
with fiscal year 2006) and applying the FMAP under title XIX of the 
Social Security Act, any significantly disproportionate employer 
pension or insurance fund contribution described in subsection (b) 
shall be disregarded in computing the per capita income of such State, 
but shall not be disregarded in computing the per capita income for the 
continental United States (and Alaska) and Hawaii.
    (b) Significantly Disproportionate Employer Pension and Insurance 
Fund Contribution.--
        (1) In general.--For purposes of this section, a significantly 
    disproportionate employer pension and insurance fund contribution 
    described in this subsection with respect to a State is any 
    identifiable employer contribution towards pension or other 
    employee insurance funds that is estimated to accrue to residents 
    of such State for a calendar year (beginning with calendar year 
    2003) if the increase in the amount so estimated exceeds 25 percent 
    of the total increase in personal income in that State for the year 
    involved.
        (2) Data to be used.--For estimating and adjustment a FMAP 
    already calculated as of the date of the enactment of this Act for 
    a State with a significantly disproportionate employer pension and 
    insurance fund contribution, the Secretary shall use the personal 
    income data set originally used in calculating such FMAP.
        (3) Special adjustment for negative growth.--If in any calendar 
    year the total personal income growth in a State is negative, an 
    employer pension and insurance fund contribution for the purposes 
    of calculating the State's FMAP for a calendar year shall not 
    exceed 125 percent of the amount of such contribution for the 
    previous calendar year for the State.
    (c) Hold Harmless.--No State shall have its FMAP for a fiscal year 
reduced as a result of the application of this section.
    (d) Report.--Not later than May 15, 2008, the Secretary shall 
submit to the Congress a report on the problems presented by the 
current treatment of pension and insurance fund contributions in the 
use of Bureau of Economic Affairs calculations for the FMAP and for 
Medicaid and on possible alternative methodologies to mitigate such 
problems.
    (e) FMAP Defined.--For purposes of this section, the term ``FMAP'' 
means the Federal medical assistance percentage, as defined in section 
1905(b) of the Social Security Act (42 U.S.C. 1396(d)).
    SEC. 616. MORATORIUM ON CERTAIN PAYMENT RESTRICTIONS.
    Notwithstanding any other provision of law, the Secretary of Health 
and Human Services shall not, prior to May 28, 2008, take any action 
(through promulgation of regulation, issuance of regulatory guidance, 
use of federal payment audit procedures, or other administrative 
action, policy, or practice, including a Medical Assistance Manual 
transmittal or letter to State Medicaid directors) to restrict coverage 
or payment under title XIX of the Social Security Act for 
rehabilitation services, or school-based administration, 
transportation, or medical services if such restrictions are more 
restrictive in any aspect than those applied to such coverage or 
payment as of July 1, 2007.
    SEC. 617. MEDICAID DSH ALLOTMENTS FOR TENNESSEE AND HAWAII.
    (a) Tennessee.--The DSH allotments for Tennessee for each fiscal 
year beginning with fiscal year 2008 under subsection (f)(3) of section 
1923 of the Social Security Act (42 U.S.C. 1396r-4) are deemed to be 
$30,000,000. The Secretary of Health and Human Services may impose a 
limitation on the total amount of payments made to hospitals under the 
TennCare Section 1115 waiver only to the extent that such limitation is 
necessary to ensure that a hospital does not receive payment in excess 
of the amounts described in subsection (f) of such section or as 
necessary to ensure that the waiver remains budget neutral.
    (b) Hawaii.--Section 1923(f)(6) (42 U.S.C. 1396r-4(f)(6)) is 
amended--
        (1) in the paragraph heading, by striking ``for fiscal year 
    2007''; and
        (2) in subparagraph (B)--
            (A) in clause (i), by striking ``Only with respect to 
        fiscal year 2007'' and inserting ``With respect to each of 
        fiscal years 2007 and 2008'';
            (B) by redesignating clause (ii) as clause (iv); and
            (C) by inserting after clause (i), the following new 
        clauses:
                ``(ii) Treatment as a low-dsh state.--With respect to 
            fiscal year 2009 and each fiscal year thereafter, 
            notwithstanding the table set forth in paragraph (2), the 
            DSH allotment for Hawaii shall be increased in the same 
            manner as allotments for low DSH States are increased for 
            such fiscal year under clauses (ii) and (iii) of paragraph 
            (5)(B).
                ``(iii) Certain hospital payments.--The Secretary may 
            not impose a limitation on the total amount of payments 
            made to hospitals under the QUEST section 1115 
            Demonstration Project except to the extent that such 
            limitation is necessary to ensure that a hospital does not 
            receive payments in excess of the amounts described in 
            subsection (g), or as necessary to ensure that such 
            payments under the waiver and such payments pursuant to the 
            allotment provided in this section do not, in the aggregate 
            in any year, exceed the amount that the Secretary 
            determines is equal to the Federal medical assistance 
            percentage component attributable to disproportionate share 
            hospital payment adjustments for such year that is 
            reflected in the budget neutrality provision of the QUEST 
            Demonstration Project.''.
    SEC. 618. CLARIFICATION TREATMENT OF REGIONAL MEDICAL CENTER.
    (a) 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 subsection 
(b), so long as the Secretary determines that such use of funds is 
proper and in the interest of the program under title XIX.
    (b) Center Described.--A center described in this subsection is a 
publicly-owned regional medical center that--
        (1) provides level 1 trauma and burn care services;
        (2) provides level 3 neonatal care services;
        (3) is obligated to serve all patients, regardless of ability 
    to pay;
        (4) is located within a Standard Metropolitan Statistical Area 
    (SMSA) that includes at least 3 States;
        (5) provides services as a tertiary care provider for patients 
    residing within a 125-mile radius; and
        (6) meets the criteria for a disproportionate share hospital 
    under section 1923 of such Act (42 U.S.C. 1396r-4) in at least one 
    State other than the State in which the center is located.
    SEC. 619. EXTENSION OF SSI WEB-BASED ASSET DEMONSTRATION PROJECT TO 
      THE MEDICAID PROGRAM.
    (a) In General.--Beginning on October 1, 2012, the Secretary of 
Health and Human Services shall provide for the application to asset 
eligibility determinations under the Medicaid program under title XIX 
of the Social Security Act of the automated, secure, web-based asset 
verification request and response process being applied for determining 
eligibility for benefits under the Supplemental Security Income (SSI) 
program under title XVI of such Act under a demonstration project 
conducted under the authority of section 1631(e)(1)(B)(ii) of such Act 
(42 U.S.C. 1383(e)(1)(B)(ii)).
    (b) Limitation.--Such application shall only extend to those States 
in which such demonstration project is operating and only for the 
period in which such project is otherwise provided.
    (c) Rules of Application.--For purposes of carrying out subsection 
(a), notwithstanding any other provision of law, information obtained 
from a financial institution that is used for purposes of eligibility 
determinations under such demonstration project with respect to the 
Secretary of Health and Human Services under the SSI program may also 
be shared and used by States for purposes of eligibility determinations 
under the Medicaid program. In applying section 1631(e)(1)(B)(ii) of 
the Social Security Act under this subsection, references to the 
Commissioner of Social Security and benefits under title XVI of such 
Act shall be treated as including a reference to a State described in 
subsection (b) and medical assistance under title XIX of such Act 
provided by such a State.

                      Subtitle C--Other Provisions

    SEC. 621. SUPPORT FOR INJURED SERVICEMEMBERS.
    (a) Short Title.--This section may be cited as the ``Support for 
Injured Servicemembers Act''.
    (b) Servicemember Family Leave.--
        (1) Definitions.--Section 101 of the Family and Medical Leave 
    Act of 1993 (29 U.S.C. 2611) is amended by adding at the end the 
    following:
        ``(14) Active duty.--The term `active duty' means duty under a 
    call or order to active duty under a provision of law referred to 
    in section 101(a)(13)(B) of title 10, United States Code.
        ``(15) Covered servicemember.--The term `covered servicemember' 
    means a member of the Armed Forces, including a member of the 
    National Guard or a Reserve, who is undergoing medical treatment, 
    recuperation, or therapy, is otherwise in medical hold or medical 
    holdover status, or is otherwise on the temporary disability 
    retired list, for a serious injury or illness.
        ``(16) Medical hold or medical holdover status.--The term 
    `medical hold or medical holdover status' means--
            ``(A) the status of a member of the Armed Forces, including 
        a member of the National Guard or a Reserve, assigned or 
        attached to a military hospital for medical care; and
            ``(B) the status of a member of a reserve component of the 
        Armed Forces who is separated, whether pre-deployment or post-
        deployment, from the member's unit while in need of health care 
        based on a medical condition identified while the member is on 
        active duty in the Armed Forces.
        ``(17) Next of kin.--The term `next of kin', used with respect 
    to an individual, means the nearest blood relative of that 
    individual.
        ``(18) Serious injury or illness.--The term `serious injury or 
    illness', in the case of a member of the Armed Forces, means an 
    injury or illness incurred by the member in line of duty on active 
    duty in the Armed Forces that may render the member medically unfit 
    to perform the duties of the member's office, grade, rank, or 
    rating.''.
        (2) Entitlement to leave.--Section 102(a) of such Act (29 
    U.S.C. 2612(a)) is amended by adding at the end the following:
        ``(3) Servicemember family leave.--Subject to section 103, an 
    eligible employee who is the spouse, son, daughter, parent, or next 
    of kin of a covered servicemember shall be entitled to a total of 
    26 workweeks of leave during a 12-month period to care for the 
    servicemember. The leave described in this paragraph shall only be 
    available during a single 12-month period.
        ``(4) Combined leave total.--During the single 12-month period 
    described in paragraph (3), an eligible employee shall be entitled 
    to a combined total of 26 workweeks of leave under paragraphs (1) 
    and (3). Nothing in this paragraph shall be construed to limit the 
    availability of leave under paragraph (1) during any other 12-month 
    period.''.
        (3) Requirements relating to leave.--
            (A) Schedule.--Section 102(b) of such Act (29 U.S.C. 
        2612(b)) is amended--
                (i) in paragraph (1), in the second sentence--

                    (I) by striking ``section 103(b)(5)'' and inserting 
                ``subsection (b)(5) or (f) (as appropriate) of section 
                103''; and
                    (II) by inserting ``or under subsection (a)(3)'' 
                after ``subsection (a)(1)''; and

                (ii) in paragraph (2), by inserting ``or under 
            subsection (a)(3)'' after ``subsection (a)(1)''.
            (B) Substitution of paid leave.--Section 102(d) of such Act 
        (29 U.S.C. 2612(d)) is amended--
                (i) in paragraph (1)--

                    (I) by inserting ``(or 26 workweeks in the case of 
                leave provided under subsection (a)(3))'' after ``12 
                workweeks'' the first place it appears; and
                    (II) by inserting ``(or 26 workweeks, as 
                appropriate)'' after ``12 workweeks'' the second place 
                it appears; and

                (ii) in paragraph (2)(B), by adding at the end the 
            following: ``An eligible employee may elect, or an employer 
            may require the employee, to substitute any of the accrued 
            paid vacation leave, personal leave, family leave, or 
            medical or sick leave of the employee for leave provided 
            under subsection (a)(3) for any part of the 26-week period 
            of such leave under such subsection.''.
            (C) Notice.--Section 102(e)(2) of such Act (29 U.S.C. 
        2612(e)(2)) is amended by inserting ``or under subsection 
        (a)(3)'' after ``subsection (a)(1)''.
            (D) Spouses employed by same employer.--Section 102(f) of 
        such Act (29 U.S.C. 2612(f)) is amended--
                (i) by redesignating paragraphs (1) and (2) as 
            subparagraphs (A) and (B), and aligning the margins of the 
            subparagraphs with the margins of section 102(e)(2)(A);
                (ii) by striking ``In any'' and inserting the 
            following:
        ``(1) In general.--In any''; and
                (iii) by adding at the end the following:
        ``(2) Servicemember family leave.--
            ``(A) In general.--The aggregate number of workweeks of 
        leave to which both that husband and wife may be entitled under 
        subsection (a) may be limited to 26 workweeks during the single 
        12-month period described in subsection (a)(3) if the leave 
        is--
                ``(i) leave under subsection (a)(3); or
                ``(ii) a combination of leave under subsection (a)(3) 
            and leave described in paragraph (1).
            ``(B) Both limitations applicable.--If the leave taken by 
        the husband and wife includes leave described in paragraph (1), 
        the limitation in paragraph (1) shall apply to the leave 
        described in paragraph (1).''.
            (E) Certification.--Section 103 of such Act (29 U.S.C. 
        2613) is amended by adding at the end the following:
    ``(f) Certification for Servicemember Family Leave.--An employer 
may require that a request for leave under section 102(a)(3) be 
supported by a certification issued at such time and in such manner as 
the Secretary may by regulation prescribe.''.
            (F) Failure to return.--Section 104(c) of such Act (29 
        U.S.C. 2614(c)) is amended--
                (i) in paragraph (2)(B)(i), by inserting ``or under 
            section 102(a)(3)'' before the semicolon; and
                (ii) in paragraph (3)(A)--

                    (I) in clause (i), by striking ``or'' at the end;
                    (II) in clause (ii), by striking the period and 
                inserting ``; or''; and
                    (III) by adding at the end the following:

                ``(iii) a certification issued by the health care 
            provider of the servicemember being cared for by the 
            employee, in the case of an employee unable to return to 
            work because of a condition specified in section 
            102(a)(3).''.
            (G) Enforcement.--Section 107 of such Act (29 U.S.C. 2617) 
        is amended, in subsection (a)(1)(A)(i)(II), by inserting ``(or 
        26 weeks, in a case involving leave under section 102(a)(3))'' 
        after ``12 weeks''.
            (H) Instructional employees.--Section 108 of such Act (29 
        U.S.C. 2618) is amended, in subsections (c)(1), (d)(2), and 
        (d)(3), by inserting ``or under section 102(a)(3)'' after 
        ``section 102(a)(1)''.
    (c) Servicemember Family Leave for Civil Service Employees.--
        (1) Definitions.--Section 6381 of title 5, United States Code, 
    is amended--
            (A) in paragraph (5), by striking ``and'' at the end;
            (B) in paragraph (6), by striking the period and inserting 
        ``; and''; and
            (C) by adding at the end the following:
        ``(7) the term `active duty' means duty under a call or order 
    to active duty under a provision of law referred to in section 
    101(a)(13)(B) of title 10, United States Code;
        ``(8) the term `covered servicemember' means a member of the 
    Armed Forces, including a member of the National Guard or a 
    Reserve, who is undergoing medical treatment, recuperation, or 
    therapy, is otherwise in medical hold or medical holdover status, 
    or is otherwise on the temporary disability retired list, for a 
    serious injury or illness;
        ``(9) the term `medical hold or medical holdover status' 
    means--
            ``(A) the status of a member of the Armed Forces, including 
        a member of the National Guard or a Reserve, assigned or 
        attached to a military hospital for medical care; and
            ``(B) the status of a member of a reserve component of the 
        Armed Forces who is separated, whether pre-deployment or post-
        deployment, from the member's unit while in need of health care 
        based on a medical condition identified while the member is on 
        active duty in the Armed Forces;
        ``(10) the term `next of kin', used with respect to an 
    individual, means the nearest blood relative of that individual; 
    and
        ``(11) the term `serious injury or illness', in the case of a 
    member of the Armed Forces, means an injury or illness incurred by 
    the member in line of duty on active duty in the Armed Forces that 
    may render the member medically unfit to perform the duties of the 
    member's office, grade, rank, or rating.''.
        (2) Entitlement to leave.--Section 6382(a) of such title is 
    amended by adding at the end the following:
        ``(3) Subject to section 6383, an employee who is the spouse, 
    son, daughter, parent, or next of kin of a covered servicemember 
    shall be entitled to a total of 26 administrative workweeks of 
    leave during a 12-month period to care for the servicemember. The 
    leave described in this paragraph shall only be available during a 
    single 12-month period.
        ``(4) During the single 12-month period described in paragraph 
    (3), an employee shall be entitled to a combined total of 26 
    administrative workweeks of leave under paragraphs (1) and (3). 
    Nothing in this paragraph shall be construed to limit the 
    availability of leave under paragraph (1) during any other 12-month 
    period.''.
        (3) Requirements relating to leave.--
            (A) Schedule.--Section 6382(b) of such title is amended--
                (i) in paragraph (1), in the second sentence--

                    (I) by striking ``section 6383(b)(5)'' and 
                inserting ``subsection (b)(5) or (f) (as appropriate) 
                of section 6383''; and
                    (II) by inserting ``or under subsection (a)(3)'' 
                after ``subsection (a)(1)''; and

                (ii) in paragraph (2), by inserting ``or under 
            subsection (a)(3)'' after ``subsection (a)(1)''.
            (B) Substitution of paid leave.--Section 6382(d) of such 
        title is amended by adding at the end the following: ``An 
        employee may elect to substitute for leave under subsection 
        (a)(3) any of the employee's accrued or accumulated annual or 
        sick leave under subchapter I for any part of the 26-week 
        period of leave under such subsection.''.
            (C) Notice.--Section 6382(e) of such title is amended by 
        inserting ``or under subsection (a)(3)'' after ``subsection 
        (a)(1)''.
            (D) Certification.--Section 6383 of such title is amended 
        by adding at the end the following:
    ``(f) An employing agency may require that a request for leave 
under section 6382(a)(3) be supported by a certification issued at such 
time and in such manner as the Office of Personnel Management may by 
regulation prescribe.''.
    SEC. 622. MILITARY FAMILY JOB PROTECTION.
    (a) Short Title.--This section may be cited as the ``Military 
Family Job Protection Act''.
    (b) Prohibition on Discrimination in Employment Against Certain 
Family Members Caring for Recovering Members of the Armed Forces.--A 
family member of a recovering servicemember described in subsection (c) 
shall not be denied retention in employment, promotion, or any benefit 
of employment by an employer on the basis of the family member's 
absence from employment as described in that subsection, for a period 
of not more than 52 workweeks.
    (c) Covered Family Members.--A family member described in this 
subsection is a family member of a recovering servicemember who is--
        (1) on invitational orders while caring for the recovering 
    servicemember;
        (2) a non-medical attendee caring for the recovering 
    servicemember; or
        (3) receiving per diem payments from the Department of Defense 
    while caring for the recovering servicemember.
    (d) Treatment of Actions.--An employer shall be considered to have 
engaged in an action prohibited by subsection (b) with respect to a 
person described in that subsection if the absence from employment of 
the person as described in that subsection is a motivating factor in 
the employer's action, unless the employer can prove that the action 
would have been taken in the absence of the absence of employment of 
the person.
    (e) Definitions.--In this section:
        (1) Benefit of employment.--The term ``benefit of employment'' 
    has the meaning given such term in section 4303 of title 38, United 
    States Code.
        (2) Caring for.--The term ``caring for'', used with respect to 
    a recovering servicemember, means providing personal, medical, or 
    convalescent care to the recovering servicemember, under 
    circumstances that substantially interfere with an employee's 
    ability to work.
        (3) Employer.--The term ``employer'' has the meaning given such 
    term in section 4303 of title 38, United States Code, except that 
    the term does not include any person who is not considered to be an 
    employer under title I of the Family and Medical Leave Act of 1993 
    (29 U.S.C. 2611 et seq.) because the person does not meet the 
    requirements of section 101(4)(A)(i) of such Act (29 U.S.C. 
    2611(4)(A)(i)).
        (4) Family member.--The term ``family member'', with respect to 
    a recovering servicemember, has the meaning given that term in 
    section 411h(b) of title 37, United States Code.
        (5) Recovering servicemember.--The term ``recovering 
    servicemember'' means a member of the Armed Forces, including a 
    member of the National Guard or a Reserve, who is undergoing 
    medical treatment, recuperation, or therapy, or is otherwise in 
    medical hold or medical holdover status, for an injury, illness, or 
    disease incurred or aggravated while on active duty in the Armed 
    Forces.
    SEC. 623. OUTREACH REGARDING HEALTH INSURANCE OPTIONS AVAILABLE TO 
      CHILDREN.
    (a) Definitions.--In this section--
        (1) the terms ``Administration'' and ``Administrator'' means 
    the Small Business Administration and the Administrator thereof, 
    respectively;
        (2) the term ``certified development company'' means a 
    development company participating in the program under title V of 
    the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.);
        (3) the term ``Medicaid program'' means the program established 
    under title XIX of the Social Security Act (42 U.S.C. 1396 et 
    seq.);
        (4) the term ``Service Corps of Retired Executives'' means the 
    Service Corps of Retired Executives authorized by section 8(b)(1) 
    of the Small Business Act (15 U.S.C. 637(b)(1));
        (5) the term ``small business concern'' has the meaning given 
    that term in section 3 of the Small Business Act (15 U.S.C. 632);
        (6) the term ``small business development center'' means a 
    small business development center described in section 21 of the 
    Small Business Act (15 U.S.C. 648);
        (7) the term ``State'' has the meaning given that term for 
    purposes of title XXI of the Social Security Act (42 U.S.C. 1397aa 
    et seq.);
        (8) the term ``State Children's Health Insurance Program'' 
    means the State Children's Health Insurance Program established 
    under title XXI of the Social Security Act (42 U.S.C. 1397aa et 
    seq.);
        (9) the term ``task force'' means the task force established 
    under subsection (b)(1); and
        (10) the term ``women's business center'' means a women's 
    business center described in section 29 of the Small Business Act 
    (15 U.S.C. 656).
    (b) Establishment of Task Force.--
        (1) Establishment.--There is established a task force to 
    conduct a nationwide campaign of education and outreach for small 
    business concerns regarding the availability of coverage for 
    children through private insurance options, the Medicaid program, 
    and the State Children's Health Insurance Program.
        (2) Membership.--The task force shall consist of the 
    Administrator, the Secretary of Health and Human Services, the 
    Secretary of Labor, and the Secretary of the Treasury.
        (3) Responsibilities.--The campaign conducted under this 
    subsection shall include--
            (A) efforts to educate the owners of small business 
        concerns about the value of health coverage for children;
            (B) information regarding options available to the owners 
        and employees of small business concerns to make insurance more 
        affordable, including Federal and State tax deductions and 
        credits for health care-related expenses and health insurance 
        expenses and Federal tax exclusion for health insurance options 
        available under employer-sponsored cafeteria plans under 
        section 125 of the Internal Revenue Code of 1986;
            (C) efforts to educate the owners of small business 
        concerns about assistance available through public programs; 
        and
            (D) efforts to educate the owners and employees of small 
        business concerns regarding the availability of the hotline 
        operated as part of the Insure Kids Now program of the 
        Department of Health and Human Services.
        (4) Implementation.--In carrying out this subsection, the task 
    force may--
            (A) use any business partner of the Administration, 
        including--
                (i) a small business development center;
                (ii) a certified development company;
                (iii) a women's business center; and
                (iv) the Service Corps of Retired Executives;
            (B) enter into--
                (i) a memorandum of understanding with a chamber of 
            commerce; and
                (ii) a partnership with any appropriate small business 
            concern or health advocacy group; and
            (C) designate outreach programs at regional offices of the 
        Department of Health and Human Services to work with district 
        offices of the Administration.
        (5) Website.--The Administrator shall ensure that links to 
    information on the eligibility and enrollment requirements for the 
    Medicaid program and State Children's Health Insurance Program of 
    each State are prominently displayed on the website of the 
    Administration.
        (6) Report.--
            (A) In general.--Not later than 2 years after the date of 
        enactment of this Act, and every 2 years thereafter, the 
        Administrator shall submit to the Committee on Small Business 
        and Entrepreneurship of the Senate and the Committee on Small 
        Business of the House of Representatives a report on the status 
        of the nationwide campaign conducted under paragraph (1).
            (B) Contents.--Each report submitted under subparagraph (A) 
        shall include a status update on all efforts made to educate 
        owners and employees of small business concerns on options for 
        providing health insurance for children through public and 
        private alternatives.
    SEC. 624. SENSE OF SENATE REGARDING ACCESS TO AFFORDABLE AND 
      MEANINGFUL HEALTH INSURANCE COVERAGE.
    (a) Findings.--The Senate finds the following:
        (1) There are approximately 45 million Americans currently 
    without health insurance.
        (2) More than half of uninsured workers are employed by 
    businesses with less than 25 employees or are self-employed.
        (3) Health insurance premiums continue to rise at more than 
    twice the rate of inflation for all consumer goods.
        (4) Individuals in the small group and individual health 
    insurance markets usually pay more for similar coverage than those 
    in the large group market.
        (5) The rapid growth in health insurance costs over the last 
    few years has forced many employers, particularly small employers, 
    to increase deductibles and co-pays or to drop coverage completely.
    (b) Sense of the Senate.--The Senate--
        (1) recognizes the necessity to improve affordability and 
    access to health insurance for all Americans;
        (2) acknowledges the value of building upon the existing 
    private health insurance market; and
        (3) affirms its intent to enact legislation this year that, 
    with appropriate protection for consumers, improves access to 
    affordable and meaningful health insurance coverage for employees 
    of small businesses and individuals by--
            (A) facilitating pooling mechanisms, including pooling 
        across State lines, and
            (B) providing assistance to small businesses and 
        individuals, including financial assistance and tax incentives, 
        for the purchase of private insurance coverage.

                     TITLE VII--REVENUE PROVISIONS

    SEC. 701. INCREASE IN EXCISE TAX RATE ON TOBACCO PRODUCTS.
    (a) Cigars.--Section 5701(a) of the Internal Revenue Code of 1986 
is amended--
        (1) by striking ``$1.828 cents per thousand ($1.594 cents per 
    thousand on cigars removed during 2000 or 2001)'' in paragraph (1) 
    and inserting ``$50.00 per thousand'',
        (2) by striking ``20.719 percent (18.063 percent on cigars 
    removed during 2000 or 2001)'' in paragraph (2) and inserting 
    ``52.988 percent'', and
        (3) by striking ``$48.75 per thousand ($42.50 per thousand on 
    cigars removed during 2000 or 2001)'' in paragraph (2) and 
    inserting ``$3.00 per cigar''.
    (b) Cigarettes.--Section 5701(b) of such Code is amended--
        (1) by striking ``$19.50 per thousand ($17 per thousand on 
    cigarettes removed during 2000 or 2001)'' in paragraph (1) and 
    inserting ``$50.00 per thousand'', and
        (2) by striking ``$40.95 per thousand ($35.70 per thousand on 
    cigarettes removed during 2000 or 2001)'' in paragraph (2) and 
    inserting ``$105.00 per thousand''.
    (c) Cigarette Papers.--Section 5701(c) of such Code is amended by 
striking ``1.22 cents (1.06 cents on cigarette papers removed during 
2000 or 2001)'' and inserting ``3.13 cents''.
    (d) Cigarette Tubes.--Section 5701(d) of such Code is amended by 
striking ``2.44 cents (2.13 cents on cigarette tubes removed during 
2000 or 2001)'' and inserting ``6.26 cents''.
    (e) Smokeless Tobacco.--Section 5701(e) of such Code is amended--
        (1) by striking ``58.5 cents (51 cents on snuff removed during 
    2000 or 2001)'' in paragraph (1) and inserting ``$1.50'', and
        (2) by striking ``19.5 cents (17 cents on chewing tobacco 
    removed during 2000 or 2001)'' in paragraph (2) and inserting ``50 
    cents''.
    (f) Pipe Tobacco.--Section 5701(f) of such Code is amended by 
striking ``$1.0969 cents (95.67 cents on pipe tobacco removed during 
2000 or 2001)'' and inserting ``$2.8126 cents''.
    (g) Roll-Your-Own Tobacco.--Section 5701(g) of such Code is amended 
by striking ``$1.0969 cents (95.67 cents on roll-your-own tobacco 
removed during 2000 or 2001)'' and inserting ``$8.8889 cents''.
    (h) Floor Stocks Taxes.--
        (1) Imposition of tax.--On tobacco products (other than cigars 
    described in section 5701(a)(2) of the Internal Revenue Code of 
    1986) and cigarette papers and tubes manufactured in or imported 
    into the United States which are removed before January 1, 2008, 
    and held on such date for sale by any person, there is hereby 
    imposed a tax in an amount equal to the excess of--
            (A) the tax which would be imposed under section 5701 of 
        such Code on the article if the article had been removed on 
        such date, over
            (B) the prior tax (if any) imposed under section 5701 of 
        such Code on such article.
        (2) Credit against tax.--Each person shall be allowed as a 
    credit against the taxes imposed by paragraph (1) an amount equal 
    to $500. Such credit shall not exceed the amount of taxes imposed 
    by paragraph (1) on January 1, 2008, for which such person is 
    liable.
        (3) Liability for tax and method of payment.--
            (A) Liability for tax.--A person holding tobacco products, 
        cigarette papers, or cigarette tubes on January 1, 2008, to 
        which any tax imposed by paragraph (1) applies shall be liable 
        for such tax.
            (B) Method of payment.--The tax imposed by paragraph (1) 
        shall be paid in such manner as the Secretary shall prescribe 
        by regulations.
            (C) Time for payment.--The tax imposed by paragraph (1) 
        shall be paid on or before April 1, 2008.
        (4) Articles in foreign trade zones.--Notwithstanding the Act 
    of June 18, 1934 (commonly known as the Foreign Trade Zone Act, 48 
    Stat. 998, 19 U.S.C. 81a et seq.) or any other provision of law, 
    any article which is located in a foreign trade zone on January 1, 
    2008, shall be subject to the tax imposed by paragraph (1) if--
            (A) internal revenue taxes have been determined, or customs 
        duties liquidated, with respect to such article before such 
        date pursuant to a request made under the 1st proviso of 
        section 3(a) of such Act, or
            (B) such article is held on such date under the supervision 
        of an officer of the United States Customs and Border 
        Protection of the Department of Homeland Security pursuant to 
        the 2d proviso of such section 3(a).
        (5) Definitions.--For purposes of this subsection--
            (A) In general.--Any term used in this subsection which is 
        also used in section 5702 of the Internal Revenue Code of 1986 
        shall have the same meaning as such term has in such section.
            (B) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury or the Secretary's delegate.
        (6) Controlled groups.--Rules similar to the rules of section 
    5061(e)(3) of such Code shall apply for purposes of this 
    subsection.
        (7) Other laws applicable.--All provisions of law, including 
    penalties, applicable with respect to the taxes imposed by section 
    5701 of such Code shall, insofar as applicable and not inconsistent 
    with the provisions of this subsection, apply to the floor stocks 
    taxes imposed by paragraph (1), to the same extent as if such taxes 
    were imposed by such section 5701. The Secretary may treat any 
    person who bore the ultimate burden of the tax imposed by paragraph 
    (1) as the person to whom a credit or refund under such provisions 
    may be allowed or made.
    (i) Effective Date.--The amendments made by this section shall 
apply to articles removed (as defined in section 5702(j) of the 
Internal Revenue Code of 1986) after December 31, 2007.
    SEC. 702. ADMINISTRATIVE IMPROVEMENTS.
    (a) Permit, Report, and Record Requirements for Manufacturers and 
Importers of Processed Tobacco.--
        (1) Permits.--
            (A) Application.--Section 5712 of the Internal Revenue Code 
        of 1986 is amended by inserting ``or processed tobacco'' after 
        ``tobacco products''.
            (B) Issuance.--Section 5713(a) of such Code is amended by 
        inserting ``or processed tobacco'' after ``tobacco products''.
        (2) Inventories and reports.--
            (A) Inventories.--Section 5721 of such Code is amended by 
        inserting ``, processed tobacco,'' after ``tobacco products''.
            (B) Reports.--Section 5722 of such Code is amended by 
        inserting ``, processed tobacco,'' after ``tobacco products''.
        (3) Records.--Section 5741 of such Code is amended by inserting 
    ``, processed tobacco,'' after ``tobacco products''.
        (4) Manufacturer of processed tobacco.--Section 5702 of such 
    Code is amended by adding at the end the following new subsection:
    ``(p) Manufacturer of Processed Tobacco.--
        ``(1) In general.--The term `manufacturer of processed tobacco' 
    means any person who processes any tobacco other than tobacco 
    products.
        ``(2) Processed tobacco.--The processing of tobacco shall not 
    include the farming or growing of tobacco or the handling of 
    tobacco solely for sale, shipment, or delivery to a manufacturer of 
    tobacco products or processed tobacco.''.
        (5) Conforming amendment.--Section 5702(k) of such Code is 
    amended by inserting ``, or any processed tobacco,'' after 
    ``nontaxpaid tobacco products or cigarette papers or tubes''.
        (6) Effective date.--The amendments made by this subsection 
    shall take effect on January 1, 2008.
    (b) Basis for Denial, Suspension, or Revocation of Permits.--
        (1) Denial.--Paragraph (3) of section 5712 of such Code is 
    amended to read as follows:
        ``(3) such person (including, in the case of a corporation, any 
    officer, director, or principal stockholder and, in the case of a 
    partnership, a partner)--
            ``(A) is, by reason of his business experience, financial 
        standing, or trade connections or by reason of previous or 
        current legal proceedings involving a felony violation of any 
        other provision of Federal criminal law relating to tobacco 
        products, cigarette paper, or cigarette tubes, not likely to 
        maintain operations in compliance with this chapter,
            ``(B) has been convicted of a felony violation of any 
        provision of Federal or State criminal law relating to tobacco 
        products, cigarette paper, or cigarette tubes, or
            ``(C) has failed to disclose any material information 
        required or made any material false statement in the 
        application therefor.''.
        (2) Suspension or revocation.--Subsection (b) of section 5713 
    of such Code is amended to read as follows:
    ``(b) Suspension or Revocation.--
        ``(1) Show cause hearing.--If the Secretary has reason to 
    believe that any person holding a permit--
            ``(A) has not in good faith complied with this chapter, or 
        with any other provision of this title involving intent to 
        defraud,
            ``(B) has violated the conditions of such permit,
            ``(C) has failed to disclose any material information 
        required or made any material false statement in the 
        application for such permit,
            ``(D) has failed to maintain his premises in such manner as 
        to protect the revenue,
            ``(E) is, by reason of previous or current legal 
        proceedings involving a felony violation of any other provision 
        of Federal criminal law relating to tobacco products, cigarette 
        paper, or cigarette tubes, not likely to maintain operations in 
        compliance with this chapter, or
            ``(F) has been convicted of a felony violation of any 
        provision of Federal or State criminal law relating to tobacco 
        products, cigarette paper, or cigarette tubes,
    the Secretary shall issue an order, stating the facts charged, 
    citing such person to show cause why his permit should not be 
    suspended or revoked.
        ``(2) Action following hearing.--If, after hearing, the 
    Secretary finds that such person has not shown cause why his permit 
    should not be suspended or revoked, such permit shall be suspended 
    for such period as the Secretary deems proper or shall be 
    revoked.''.
        (3) Effective date.--The amendments made by this subsection 
    shall take effect on the date of the enactment of this Act.
    (c) Application of Internal Revenue Code Statute of Limitations for 
Alcohol and Tobacco Excise Taxes.--
        (1) In general.--Section 514(a) of the Tariff Act of 1930 (19 
    U.S.C. 1514(a)) is amended by striking ``and section 520 (relating 
    to refunds)'' and inserting ``section 520 (relating to refunds), 
    and section 6501 of the Internal Revenue Code of 1986 (but only 
    with respect to taxes imposed under chapters 51 and 52 of such 
    Code)''.
        (2) Effective date.--The amendment made by this subsection 
    shall apply to articles imported after the date of the enactment of 
    this Act.
    (d) Expansion of Definition of Roll-Your-Own Tobacco.--
        (1) In general.--Section 5702(o) of the Internal Revenue Code 
    of 1986 is amended by inserting ``or cigars, or for use as wrappers 
    thereof'' before the period at the end.
        (2) Effective date.--The amendment made by this subsection 
    shall apply to articles removed (as defined in section 5702(j) of 
    the Internal Revenue Code of 1986) after December 31, 2007.
    (e) Time of Tax for Unlawfully Manufactured Tobacco Products.--
        (1) In general.--Section 5703(b)(2) of such Code is amended by 
    adding at the end the following new subparagraph:
            ``(F) Special rule for unlawfully manufactured tobacco 
        products.--In the case of any tobacco products, cigarette 
        paper, or cigarette tubes produced in the United States at any 
        place other than the premises of a manufacturer of tobacco 
        products, cigarette paper, or cigarette tubes that has filed 
        the bond and obtained the permit required under this chapter, 
        tax shall be due and payable immediately upon manufacture.''.
        (2) Effective date.--The amendment made by this subsection 
    shall take effect on the date of the enactment of this Act.
    SEC. 703. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.
    Subparagraph (B) of section 401(1) of the Tax Increase Prevention 
and Reconciliation Act of 2005 is amended by striking ``114.75 
percent'' and inserting ``113.75 percent''.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.