[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 598 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 598
To provide for a portion of the economic recovery package relating to
revenue measures, unemployment, and health.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 16, 2009
Mr. Rangel (for himself, Mr. Stark, and Mr. McDermott) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committees on Energy and Commerce, Science and
Technology, Education and Labor, and Financial Services, for a period
to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To provide for a portion of the economic recovery package relating to
revenue measures, unemployment, and health.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
TITLE I--TAX PROVISIONS
SECTION 1000. SHORT TITLE, ETC.
(a) Short Title.--This title may be cited as the ``American
Recovery and Reinvestment Tax Act of 2009''.
(b) Reference.--Except as otherwise expressly provided, whenever in
this title an amendment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference shall be
considered to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this title is as
follows:
Sec. 1000. Short title, etc.
Subtitle A--Making Work Pay
Sec. 1001. Making work pay credit.
Subtitle B--Additional Tax Relief for Families With Children
Sec. 1101. Temporary increase in earned income tax credit.
Sec. 1102. Temporary increase of refundable portion of child credit.
Subtitle C--American Opportunity Tax Credit
Sec. 1201. American opportunity tax credit.
Subtitle D--Housing Incentives
Sec. 1301. Waiver of requirement to repay first-time homebuyer credit.
Sec. 1302. Coordination of low-income housing credit and low-income
housing grants.
Subtitle E--Tax Incentives for Business
Part I--Temporary Investment Incentives
Sec. 1401. Special allowance for certain property acquired during 2009.
Sec. 1402. Temporary increase in limitations on expensing of certain
depreciable business assets.
Part II--5-Year Carryback of Operating Losses
Sec. 1411. 5-year carryback of operating losses.
Sec. 1412. Exception for TARP recipients.
Part III--Incentives for New Jobs
Sec. 1421. Incentives to hire unemployed veterans and disconnected
youth.
Part IV--Clarification of Regulations Related to Limitations on Certain
Built-In Losses Following an Ownership Change
Sec. 1431. Clarification of regulations related to limitations on
certain built-in losses following an
ownership change.
Subtitle F--Fiscal Relief for State and Local Governments
Part I--Improved Marketability for Tax-Exempt Bonds
Sec. 1501. De minimis safe harbor exception for tax-exempt interest
expense of financial institutions.
Sec. 1502. Modification of small issuer exception to tax-exempt
interest expense allocation rules for
financial institutions.
Sec. 1503. Temporary modification of alternative minimum tax
limitations on tax-exempt bonds.
Part II--Tax Credit Bonds for Schools
Sec. 1511. Qualified school construction bonds.
Sec. 1512. Extension and expansion of qualified zone academy bonds.
Part III--Taxable Bond Option for Governmental Bonds
Sec. 1521. Taxable bond option for governmental bonds.
Part IV--Recovery Zone Bonds
Sec. 1531. Recovery zone bonds.
Sec. 1532. Tribal economic development bonds.
Part V--Repeal of Withholding Tax on Government Contractors
Sec. 1541. Repeal of withholding tax on government contractors.
Subtitle G--Energy Incentives
Part I--Renewable Energy Incentives
Sec. 1601. Extension of credit for electricity produced from certain
renewable resources.
Sec. 1602. Election of investment credit in lieu of production credit.
Sec. 1603. Repeal of certain limitations on credit for renewable energy
property.
Sec. 1604. Coordination with renewable energy grants.
Part II--Increased Allocations of New Clean Renewable Energy Bonds and
Qualified Energy Conservation Bonds
Sec. 1611. Increased limitation on issuance of new clean renewable
energy bonds.
Sec. 1612. Increased limitation on issuance of qualified energy
conservation bonds.
Part III--Energy Conservation Incentives
Sec. 1621. Extension and modification of credit for nonbusiness energy
property.
Sec. 1622. Modification of credit for residential energy efficient
property.
Sec. 1623. Temporary increase in credit for alternative fuel vehicle
refueling property.
Part IV--Energy Research Incentives
Sec. 1631. Increased research credit for energy research.
Subtitle H--Other Provisions
Part I--Application of Certain Labor Standards to Projects Financed
With Certain Tax-Favored Bonds
Sec. 1701. Application of certain labor standards to projects financed
with certain tax-favored bonds.
Part II--Grants To Provide Financing for Low-Income Housing
Sec. 1711. Grants to States for low-income housing projects in lieu of
low-income housing credit allocations for
2009.
Part III--Grants for Specified Energy Property in Lieu of Tax Credits
Sec. 1721. Grants for specified energy property in lieu of tax credits.
Subtitle A--Making Work Pay
SEC. 1001. MAKING WORK PAY CREDIT.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
is amended by inserting after section 36 the following new section:
``SEC. 36A. MAKING WORK PAY CREDIT.
``(a) Allowance of Credit.--In the case of an eligible individual,
there shall be allowed as a credit against the tax imposed by this
subtitle for the taxable year an amount equal to the lesser of--
``(1) 6.2 percent of earned income of the taxpayer, or
``(2) $500 ($1,000 in the case of a joint return).
``(b) Limitation Based on Modified Adjusted Gross Income.--
``(1) In general.--The amount allowable as a credit under
subsection (a) (determined without regard to this paragraph)
for the taxable year shall be reduced (but not below zero) by 2
percent of so much of the taxpayer's modified adjusted gross
income as exceeds $75,000 ($150,000 in the case of a joint
return).
``(2) Modified adjusted gross income.--For purposes of
subparagraph (A), the term `modified adjusted gross income'
means the adjusted gross income of the taxpayer for the taxable
year increased by any amount excluded from gross income under
section 911, 931, or 933.
``(c) Definitions.--For purposes of this section--
``(1) Eligible individual.--The term `eligible individual'
means any individual other than--
``(A) any nonresident alien individual,
``(B) any individual with respect to whom a
deduction under section 151 is allowable to another
taxpayer for a taxable year beginning in the calendar
year in which the individual's taxable year begins, and
``(C) an estate or trust.
``(2) Earned income.--The term `earned income' has the
meaning given such term by section 32(c)(2), except that such
term shall not include net earnings from self-employment which
are not taken into account in computing taxable income. For
purposes of the preceding sentence, any amount excluded from
gross income by reason of section 112 shall be treated as
earned income which is taken into account in computing taxable
income for the taxable year.
``(d) Termination.--This section shall not apply to taxable years
beginning after December 31, 2010.''.
(b) Treatment of Possessions.--
(1) Payments to possessions.--
(A) Mirror code possession.--The Secretary of the
Treasury shall pay to each possession of the United
States with a mirror code tax system amounts equal to
the loss to that possession by reason of the amendments
made by this section with respect to taxable years
beginning in 2009 and 2010. Such amounts shall be
determined by the Secretary of the Treasury based on
information provided by the government of the
respective possession.
(B) Other possessions.--The Secretary of the
Treasury shall pay to each possession of the United
States which does not have a mirror code tax system
amounts estimated by the Secretary of the Treasury as
being equal to the aggregate benefits that would have
been provided to residents of such possession by reason
of the amendments made by this section for taxable
years beginning in 2009 and 2010 if a mirror code tax
system had been in effect in such possession. The
preceding sentence shall not apply with respect to any
possession of the United States unless such possession
has a plan, which has been approved by the Secretary of
the Treasury, under which such possession will promptly
distribute such payments to the residents of such
possession.
(2) Coordination with credit allowed against united states
income taxes.--No credit shall be allowed against United States
income taxes for any taxable year under section 36A of the
Internal Revenue Code of 1986 (as added by this section) to any
person--
(A) to whom a credit is allowed against taxes
imposed by the possession by reason of the amendments
made by this section for such taxable year, or
(B) who is eligible for a payment under a plan
described in paragraph (1)(B) with respect to such
taxable year.
(3) Definitions and special rules.--
(A) Possession of the united states.--For purposes
of this subsection, the term ``possession of the United
States'' includes the Commonwealth of Puerto Rico and
the Commonwealth of the Northern Mariana Islands.
(B) Mirror code tax system.--For purposes of this
subsection, the term ``mirror code tax system'' means,
with respect to any possession of the United States,
the income tax system of such possession if the income
tax liability of the residents of such possession under
such system is determined by reference to the income
tax laws of the United States as if such possession
were the United States.
(C) Treatment of payments.--For purposes of section
1324(b)(2) of title 31, United States Code, the
payments under this subsection shall be treated in the
same manner as a refund due from the credit allowed
under section 36A of the Internal Revenue Code of 1986
(as added by this section).
(c) Refunds Disregarded in the Administration of Federal Programs
and Federally Assisted Programs.--Any credit or refund allowed or made
to any individual by reason of section 36A of the Internal Revenue Code
of 1986 (as added by this section) or by reason of subsection (b) of
this section shall not be taken into account as income and shall not be
taken into account as resources for the month of receipt and the
following 2 months, for purposes of determining the eligibility of such
individual or any other individual for benefits or assistance, or the
amount or extent of benefits or assistance, under any Federal program
or under any State or local program financed in whole or in part with
Federal funds.
(d) Conforming Amendments.--
(1) Section 6211(b)(4)(A) is amended by inserting ``36A,''
after ``36,''.
(2) Section 1324(b)(2) of title 31, United States Code, is
amended by inserting ``36A,'' after ``36,''.
(3) The table of sections for subpart C of part IV of
subchapter A of chapter 1 is amended by inserting after the
item relating to section 36 the following new item:
``Sec. 36A. Making work pay credit.''.
(e) Effective Date.--This section shall apply to taxable years
beginning after December 31, 2008.
Subtitle B--Additional Tax Relief for Families With Children
SEC. 1101. TEMPORARY INCREASE IN EARNED INCOME TAX CREDIT.
(a) In General.--Subsection (b) of section 32 is amended by adding
at the end the following new paragraph:
``(3) Temporary increase.--In the case of any taxable year
beginning in 2009 or 2010--
``(A) Increased credit percentage for 3 or more
qualifying children.--In the case of a taxpayer with 3
or more qualifying children, the credit percentage is
45 percent.
``(B) Reduction of marriage penalty.--
``(i) In general.--The dollar amount in
effect under paragraph (2)(B) shall be $5,000.
``(ii) Inflation adjustment.--In the case
of any taxable year beginning in 2010, the
$5,000 amount in clause (i) shall be increased
by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost of living
adjustment determined under section
1(f)(3) for the calendar year in which
the taxable year begins determined by
substituting `calendar year 2008' for
`calendar year 1992' in subparagraph
(B) thereof.
``(iii) Rounding.--Subparagraph (A) of
subsection (j)(2) shall apply after taking into
account any increase under clause (ii).''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.
SEC. 1102. TEMPORARY INCREASE OF REFUNDABLE PORTION OF CHILD CREDIT.
(a) In General.--Paragraph (4) of section 24(d) is amended to read
as follows:
``(4) Special rule for 2009 and 2010.--Notwithstanding
paragraph (3), in the case of any taxable year beginning in
2009 or 2010, the dollar amount in effect for such taxable year
under paragraph (1)(B)(i) shall be zero.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.
Subtitle C--American Opportunity Tax Credit
SEC. 1201. AMERICAN OPPORTUNITY TAX CREDIT.
(a) In General.--Section 25A (relating to Hope scholarship credit)
is amended by redesignating subsection (i) as subsection (j) and by
inserting after subsection (h) the following new subsection:
``(i) American Opportunity Tax Credit.--In the case of any taxable
year beginning in 2009 or 2010--
``(1) Increase in credit.--The Hope Scholarship Credit
shall be an amount equal to the sum of--
``(A) 100 percent of so much of the qualified
tuition and related expenses paid by the taxpayer
during the taxable year (for education furnished to the
eligible student during any academic period beginning
in such taxable year) as does not exceed $2,000, plus
``(B) 25 percent of such expenses so paid as
exceeds $2,000 but does not exceed $4,000.
``(2) Credit allowed for first 4 years of post-secondary
education.--Subparagraphs (A) and (C) of subsection (b)(2)
shall be applied by substituting `4' for `2'.
``(3) Qualified tuition and related expenses to include
required course materials.--Subsection (f)(1)(A) shall be
applied by substituting `tuition, fees, and course materials'
for `tuition and fees'.
``(4) Increase in agi limits for hope scholarship credit.--
In lieu of applying subsection (d) with respect to the Hope
Scholarship Credit, such credit (determined without regard to
this paragraph) shall be reduced (but not below zero) by the
amount which bears the same ratio to such credit (as so
determined) as--
``(A) the excess of--
``(i) the taxpayer's modified adjusted
gross income (as defined in subsection (d)(3))
for such taxable year, over
``(ii) $80,000 ($160,000 in the case of a
joint return), bears to
``(B) $10,000 ($20,000 in the case of a joint
return).
``(5) Credit allowed against alternative minimum tax.--In
the case of a taxable year to which section 26(a)(2) does not
apply, so much of the credit allowed under subsection (a) as is
attributable to the Hope Scholarship Credit shall not exceed
the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section and sections 23, 25D,
and 30D) and section 27 for the taxable year.
Any reference in section 24, 25, 26, 25B, 904, or 1400C to a
credit allowed under this subsection shall be treated as a
reference to so much of the credit allowed under subsection (a)
as is attributable to the Hope Scholarship Credit.
``(6) Portion of credit made refundable.--40 percent of so
much of the credit allowed under subsection (a) as is
attributable to the Hope Scholarship Credit (determined after
application of paragraph (4) and without regard to this
paragraph and section 26(a)(2) or paragraph (5), as the case
may be) shall be treated as a credit allowable under subpart C
(and not allowed under subsection (a)). The preceding sentence
shall not apply to any taxpayer for any taxable year if such
taxpayer is a child to whom subsection (g) of section 1 applies
for such taxable year.''.
(b) Conforming Amendments.--
(1) Section 24(b)(3)(B) is amended by inserting ``25A(i),''
after ``23,''.
(2) Section 25(e)(1)(C)(ii) is amended by inserting
``25A(i),'' after ``24,''.
(3) Section 26(a)(1) is amended by inserting ``25A(i),''
after ``24,''.
(4) Section 25B(g)(2) is amended by inserting ``25A(i),''
after ``23,''.
(5) Section 904(i) is amended by inserting ``25A(i),''
after ``24,''.
(6) Section 1400C(d)(2) is amended by inserting ``25A(i),''
after ``24,''.
(7) Section 1324(b)(2) of title 31, United States Code, is
amended by inserting ``25A,'' before ``35''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.
(d) Application of EGTRRA Sunset.--The amendment made by subsection
(b)(1) shall be subject to title IX of the Economic Growth and Tax
Relief Reconciliation Act of 2001 in the same manner as the provision
of such Act to which such amendment relates.
(e) Treasury Studies Regarding Education Incentives.--
(1) Study regarding coordination with non-tax educational
incentives.--The Secretary of the Treasury, or the Secretary's
delegate, shall study how to coordinate the credit allowed
under section 25A of the Internal Revenue Code of 1986 with the
Federal Pell Grant program under section 401 of the Higher
Education Act of 1965.
(2) Study regarding imposition of community service
requirements.--The Secretary of the Treasury, or the
Secretary's delegate, shall study the feasibility of requiring
students to perform community service as a condition of taking
their tuition and related expenses into account under section
25A of the Internal Revenue Code of 1986.
(3) Report.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of the Treasury, or the
Secretary's delegate, shall report to Congress on the results
of the studies conducted under this paragraph.
Subtitle D--Housing Incentives
SEC. 1301. WAIVER OF REQUIREMENT TO REPAY FIRST-TIME HOMEBUYER CREDIT.
(a) In General.--Paragraph (4) of section 36(f) is amended by
adding at the end the following new subparagraph:
``(D) Waiver of recapture for purchases in 2009.--
In the case of any credit allowed with respect to the
purchase of a principal residence after December 31,
2008, and before July 1, 2009--
``(i) paragraph (1) shall not apply, and
``(ii) paragraph (2) shall apply only if
the disposition or cessation described in
paragraph (2) with respect to such residence
occurs during the 36-month period beginning on
the date of the purchase of such residence by
the taxpayer.''.
(b) Conforming Amendment.--Subsection (g) of section 36 is amended
by striking ``subsection (c)'' and inserting ``subsections (c) and
(f)(4)(D)''.
(c) Effective Date.--The amendments made by this section shall
apply to residences purchased after December 31, 2008.
SEC. 1302. COORDINATION OF LOW-INCOME HOUSING CREDIT AND LOW-INCOME
HOUSING GRANTS.
Subsection (i) of section 42 of the Internal Revenue Code of 1986
is amended by adding at the end the following new paragraph:
``(9) Coordination with low-income housing grants.--
``(A) Reduction in state housing credit ceiling for
low-income housing grants received in 2009.--For
purposes of this section, the amounts described in
clauses (i) through (iv) of subsection (h)(3)(C) with
respect to any State for 2009 shall each be reduced by
so much of such amount as is taken into account in
determining the amount of any grant to such State under
section 1711 of the American Recovery and Reinvestment
Tax Act of 2009.
``(B) Special rule for basis.--Basis of a qualified
low-income building shall not be reduced by the amount
of any grant described in subparagraph (A).''.
Subtitle E--Tax Incentives for Business
PART I--TEMPORARY INVESTMENT INCENTIVES
SEC. 1401. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED DURING 2009.
(a) In General.--Paragraph (2) of section 168(k) is amended--
(1) by striking ``January 1, 2010'' and inserting ``January
1, 2011'', and
(2) by striking ``January 1, 2009'' each place it appears
and inserting ``January 1, 2010''.
(b) Conforming Amendments.--
(1) The heading for subsection (k) of section 168 is
amended by striking ``January 1, 2009'' and inserting ``January
1, 2010''.
(2) The heading for clause (ii) of section 168(k)(2)(B) is
amended by striking ``pre-january 1, 2009'' and inserting
``pre-january 1, 2010''.
(3) Subparagraph (D) of section 168(k)(4) is amended--
(A) by striking ``and'' at the end of clause (i),
(B) by redesignating clause (ii) as clause (v), and
(C) by inserting after clause (i) the following new
clauses:
``(ii) `April 1, 2008' shall be substituted
for `January 1, 2008' in subparagraph
(A)(iii)(I) thereof,
``(iii) `January 1, 2009' shall be
substituted for `January 1, 2010' each place it
appears,
``(iv) `January 1, 2010' shall be
substituted for `January 1, 2011' in
subparagraph (A)(iv) thereof, and''.
(4) Subparagraph (B) of section 168(l)(5) is amended by
striking ``January 1, 2009'' and inserting ``January 1, 2010''.
(5) Subparagraph (B) of section 1400N(d)(3) is amended by
striking ``January 1, 2009'' and inserting ``January 1, 2010''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to property placed
in service after December 31, 2008, in taxable years ending
after such date.
(2) Technical amendment.--Section 168(k)(4)(D)(ii) of the
Internal Revenue Code of 1986, as added by subsection
(b)(3)(C), shall apply to taxable years ending after March 31,
2008.
SEC. 1402. TEMPORARY INCREASE IN LIMITATIONS ON EXPENSING OF CERTAIN
DEPRECIABLE BUSINESS ASSETS.
(a) In General.--Paragraph (7) of section 179(b) is amended--
(1) by striking ``2008'' and inserting ``2008, or 2009'',
and
(2) by striking ``2008'' in the heading thereof and
inserting ``2008, and 2009''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.
PART II--5-YEAR CARRYBACK OF OPERATING LOSSES
SEC. 1411. 5-YEAR CARRYBACK OF OPERATING LOSSES.
(a) In General.--Subparagraph (H) of section 172(b)(1) is amended
to read as follows:
``(H) Carryback for 2008 and 2009 net operating
losses.--In the case of a net operating loss for any
taxable year ending during 2008 or 2009--
``(i) subparagraph (A)(i) shall be applied
by substituting `5' for `2',
``(ii) subparagraph (E)(ii) shall be
applied by substituting `4' for `2', and
``(iii) subparagraph (F) shall not
apply.''.
(b) Alternative Tax Net Operating Loss Deduction.--Subclause (I) of
section 56(d)(1)(A)(ii) is amended to read as follows:
``(I) the amount of such deduction
attributable to the sum of carrybacks
of net operating losses from taxable
years ending during 2001, 2002, 2008,
or 2009 and carryovers of net operating
losses to taxable years ending during
such calendar years, or''.
(c) Election To Carry Back a Fewer Number of Years.--Subsection (k)
of section 172 is amended by inserting ``or may elect to apply such
subsection by substituting a whole number less than 5 for `5' in such
subsection'' before the period at the end of the first sentence.
(d) Loss From Operations of Life Insurance Companies.--Subsection
(b) of section 810 is amended by adding at the end the following new
paragraph:
``(4) Carryback for 2008 and 2009 loss years.--In the case
of a loss from operations for any taxable year ending during
2008 or 2009, the taxpayer may elect to apply paragraph (1)(A)
by substituting any whole number less than 6 for `3'. Such
election shall be made in such manner as may be prescribed by
the Secretary and shall be made by the due date (including
extensions of time) for filing the taxpayer's return for the
taxable year of the loss from operations. Such election, once
made for any taxable year, shall be irrevocable for such
taxable year.''.
(e) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
net operating losses arising in taxable years ending after
December 31, 2007.
(2) Alternative tax net operating loss deduction.--The
amendment made by subsection (b) shall apply to taxable years
ending after 1997.
(3) Loss from operations of life insurance companies.--The
amendment made by subsection (d) shall apply to losses from
operations arising in taxable years ending after December 31,
2007.
(4) Transitional rule.--In the case of a net operating loss
(or, in the case of a life insurance company, a loss from
operations) for a taxable year ending during 2008--
(A) any election made under section 172(b)(3) or
810(b)(3) of the Internal Revenue Code of 1986 with
respect to such loss may (notwithstanding such section)
be revoked before the applicable date,
(B) any election made under section 172(k) or
810(b)(4) of such Code with respect to such loss shall
(notwithstanding such section) be treated as timely
made if made before the applicable date, and
(C) any application under section 6411(a) of such
Code with respect to such loss shall be treated as
timely filed if filed before the applicable date.
For purposes of this paragraph, the term ``applicable date''
means the date which is 60 days after the date of the enactment
of this Act.
SEC. 1412. EXCEPTION FOR TARP RECIPIENTS.
The amendments made by this part shall not apply to--
(1) any taxpayer if--
(A) the Federal Government acquires, at any time,
an equity interest in the taxpayer pursuant to the
Emergency Economic Stabilization Act of 2008, or
(B) the Federal Government acquires, at any time,
any warrant (or other right) to acquire any equity
interest with respect to the taxpayer pursuant to such
Act,
(2) the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation, and
(3) any taxpayer which at any time in 2008 or 2009 is a
member of the same affiliated group (as defined in section 1504
of the Internal Revenue Code of 1986, determined without regard
to subsection (b) thereof) as a taxpayer described in paragraph
(1) or (2).
PART III--INCENTIVES FOR NEW JOBS
SEC. 1421. INCENTIVES TO HIRE UNEMPLOYED VETERANS AND DISCONNECTED
YOUTH.
(a) In General.--Subsection (d) of section 51 is amended by adding
at the end the following new paragraph:
``(14) Credit allowed for unemployed veterans and
disconnected youth hired in 2009 or 2010.--
``(A) In general.--Any unemployed veteran or
disconnected youth who begins work for the employer
during 2009 or 2010 shall be treated as a member of a
targeted group for purposes of this subpart.
``(B) Definitions.--For purposes of this
paragraph--
``(i) Unemployed veteran.--The term
`unemployed veteran' means any veteran (as
defined in paragraph (3)(B), determined without
regard to clause (ii) thereof) who is certified
by the designated local agency as--
``(I) having been discharged or
released from active duty in the Armed
Forces during 2008, 2009, or 2010, and
``(II) being in receipt of
unemployment compensation under State
or Federal law for not less than 4
weeks during the 1-year period ending
on the hiring date.
``(ii) Disconnected youth.--The term
`disconnected youth' means any individual who
is certified by the designated local agency--
``(I) as having attained age 16 but
not age 25 on the hiring date,
``(II) as not regularly attending
any secondary, technical, or post-
secondary school during the 6-month
period preceding the hiring date,
``(III) as not regularly employed
during such 6-month period, and
``(IV) as not readily employable by
reason of lacking a sufficient number
of basic skills.''.
(b) Effective Date.--The amendments made by this section shall
apply to individuals who begin work for the employer after December 31,
2008.
PART IV--CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON CERTAIN
BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE
SEC. 1431. CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON
CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE.
(a) Findings.--Congress finds as follows:
(1) The delegation of authority to the Secretary of the
Treasury under section 382(m) of the Internal Revenue Code of
1986 does not authorize the Secretary to provide exemptions or
special rules that are restricted to particular industries or
classes of taxpayers.
(2) Internal Revenue Service Notice 2008-83 is inconsistent
with the congressional intent in enacting such section 382(m).
(3) The legal authority to prescribe Internal Revenue
Service Notice 2008-83 is doubtful.
(4) However, as taxpayers should generally be able to rely
on guidance issued by the Secretary of the Treasury legislation
is necessary to clarify the force and effect of Internal
Revenue Service Notice 2008-83 and restore the proper
application under the Internal Revenue Code of 1986 of the
limitation on built-in losses following an ownership change of
a bank.
(b) Determination of Force and Effect of Internal Revenue Service
Notice 2008-83 Exempting Banks From Limitation on Certain Built-In
Losses Following Ownership Change.--
(1) In general.--Internal Revenue Service Notice 2008-83--
(A) shall be deemed to have the force and effect of
law with respect to any ownership change (as defined in
section 382(g) of the Internal Revenue Code of 1986)
occurring on or before January 16, 2009, and
(B) shall have no force or effect with respect to
any ownership change after such date.
(2) Binding contracts.--Notwithstanding paragraph (1),
Internal Revenue Service Notice 2008-83 shall have the force
and effect of law with respect to any ownership change (as so
defined) which occurs after January 16, 2009 if such change--
(A) is pursuant to a written binding contract
entered into on or before such date, or
(B) was described on or before such date in a
public announcement or in a filing with the Securities
and Exchange Commision required by reason of such
ownership change.
Subtitle F--Fiscal Relief for State and Local Governments
PART I--IMPROVED MARKETABILITY FOR TAX-EXEMPT BONDS
SEC. 1501. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX-EXEMPT INTEREST
EXPENSE OF FINANCIAL INSTITUTIONS.
(a) In General.--Subsection (b) of section 265 is amended by adding
at the end the following new paragraph:
``(7) De minimis exception for bonds issued during 2009 or
2010.--
``(A) In general.--In applying paragraph (2)(A),
there shall not be taken into account tax-exempt
obligations issued during 2009 or 2010.
``(B) Limitation.--The amount of tax-exempt
obligations not taken into account by reason of
subparagraph (A) shall not exceed 2 percent of the
amount determined under paragraph (2)(B).
``(C) Refundings.--For purposes of this paragraph,
a refunding bond (whether a current or advance
refunding) shall be treated as issued on the date of
the issuance of the refunded bond (or in the case of a
series of refundings, the original bond).''.
(b) Treatment as Financial Institution Preference Item.--Clause
(iv) of section 291(e)(1)(B) is amended by adding at the end the
following: ``That portion of any obligation not taken into account
under paragraph (2)(A) of section 265(b) by reason of paragraph (7) of
such section shall be treated for purposes of this section as having
been acquired on August 7, 1986.''.
(c) Effective Date.--The amendments made by this section shall
apply to obligations issued after December 31, 2008.
SEC. 1502. MODIFICATION OF SMALL ISSUER EXCEPTION TO TAX-EXEMPT
INTEREST EXPENSE ALLOCATION RULES FOR FINANCIAL
INSTITUTIONS.
(a) In General.--Paragraph (3) of section 265(b) (relating to
exception for certain tax-exempt obligations) is amended by adding at
the end the following new subparagraph:
``(G) Special rules for obligations issued during
2009 and 2010.--
``(i) Increase in limitation.--In the case
of obligations issued during 2009 or 2010,
subparagraphs (C)(i), (D)(i), and (D)(iii)(II)
shall each be applied by substituting
`$30,000,000' for `$10,000,000'.
``(ii) Special rule for pooled
financings.--In the case of a pooled financing
issue issued during 2009 or 2010--
``(I) subparagraph (F) shall not
apply, and
``(II) any obligation issued as a
part of such issue shall be treated as
a qualified tax-exempt obligation if
the requirements of this paragraph are
met with respect to each qualified
portion of the issue (determined by
treating each qualified portion as a
separate issue).
``(iii) Pooled financing issue.--For
purposes of this subparagraph, the term `pooled
financing issue' means any issue the proceeds
of which are used directly or indirectly to
make or finance loans to 2 or more ultimate
borrowers all of whom are qualified borrowers.
``(iv) Qualified portion.--For purposes of
this subparagraph, the term `qualified portion'
means that portion of the proceeds which are
used with respect to each qualified borrower
under the issue.
``(v) Qualified borrower.--For purposes of
this subparagraph, the term `qualified
borrower' means a borrower which is a State or
political subdivision thereof or an
organization described in section 501(c)(3) and
exempt from taxation under section 501(a).''.
(b) Effective Date.--The amendments made by this section shall
apply to obligations issued after December 31, 2008.
SEC. 1503. TEMPORARY MODIFICATION OF ALTERNATIVE MINIMUM TAX
LIMITATIONS ON TAX-EXEMPT BONDS.
(a) Interest on Private Activity Bonds Issued During 2009 and 2010
Not Treated as Tax Preference Item.--Subparagraph (C) of section
57(a)(5) is amended by adding at the end a new clause:
``(vi) Exception for bonds issued in 2009
and 2010.--For purposes of clause (i), the term
`private activity bond' shall not include any
bond issued after December 31, 2008, and before
January 1, 2011. For purposes of the preceding
sentence, a refunding bond (whether a current
or advance refunding) shall be treated as
issued on the date of the issuance of the
refunded bond (or in the case of a series of
refundings, the original bond).''.
(b) No Adjustment to Adjusted Current Earnings for Interest on Tax-
Exempt Bonds Issued After 2008.--Subparagraph (B) of section 56(g)(4)
is amended by adding at the end the following new clause:
``(iv) Tax exempt interest on bonds issued
in 2009 and 2010.--Clause (i) shall not apply
in the case of any interest on a bond issued
after December 31, 2008, and before January 1,
2011. For purposes of the preceding sentence, a
refunding bond (whether a current or advance
refunding) shall be treated as issued on the
date of the issuance of the refunded bond (or
in the case of a series of refundings, the
original bond).''.
(c) Effective Date.--The amendments made by this section shall
apply to obligations issued after December 31, 2008.
PART II--TAX CREDIT BONDS FOR SCHOOLS
SEC. 1511. QUALIFIED SCHOOL CONSTRUCTION BONDS.
(a) In General.--Subpart I of part IV of subchapter A of chapter 1
is amended by adding at the end the following new section:
``SEC. 54F. QUALIFIED SCHOOL CONSTRUCTION BONDS.
``(a) Qualified School Construction Bond.--For purposes of this
subchapter, the term `qualified school construction bond' means any
bond issued as part of an issue if--
``(1) 100 percent of the available project proceeds of such
issue are to be used for the construction, rehabilitation, or
repair of a public school facility or for the acquisition of
land on which such a facility is to be constructed with part of
the proceeds of such issue,
``(2) the bond is issued by a State or local government
within the jurisdiction of which such school is located, and
``(3) the issuer designates such bond for purposes of this
section.
``(b) Limitation on Amount of Bonds Designated.--The maximum
aggregate face amount of bonds issued during any calendar year which
may be designated under subsection (a) by any issuer shall not exceed
the sum of--
``(1) the limitation amount allocated under subsection (d)
for such calendar year to such issuer, and
``(2) if such issuer is a large local educational agency
(as defined in subsection (e)(4)) or is issuing on behalf of
such an agency, the limitation amount allocated under
subsection (e) for such calendar year to such agency.
``(c) National Limitation on Amount of Bonds Designated.--There is
a national qualified school construction bond limitation for each
calendar year. Such limitation is--
``(1) $10,000,000,000 for 2009,
``(2) $10,000,000,000 for 2010, and
``(3) except as provided in subsection (f), zero after
2010.
``(d) 60 Percent of Limitation Allocated Among States.--
``(1) In general.--60 percent of the limitation applicable
under subsection (c) for any calendar year shall be allocated
by the Secretary among the States in proportion to the
respective numbers of children in each State who have attained
age 5 but not age 18 for the most recent fiscal year ending
before such calendar year. The limitation amount allocated to a
State under the preceding sentence shall be allocated by the
State to issuers within such State.
``(2) Minimum allocations to states.--
``(A) In general.--The Secretary shall adjust the
allocations under this subsection for any calendar year
for each State to the extent necessary to ensure that
the sum of--
``(i) the amount allocated to such State
under this subsection for such year, and
``(ii) the aggregate amounts allocated
under subsection (e) to large local educational
agencies in such State for such year,
is not less than an amount equal to such State's
adjusted minimum percentage of the amount to be
allocated under paragraph (1) for the calendar year.
``(B) Adjusted minimum percentage.--A State's
adjusted minimum percentage for any calendar year is
the product of--
``(i) the minimum percentage described in
section 1124(d) of the Elementary and Secondary
Education Act of 1965 (20 U.S.C. 6334(d)) for
such State for the most recent fiscal year
ending before such calendar year, multiplied by
``(ii) 1.68.
``(3) Allocations to certain possessions.--The amount to be
allocated under paragraph (1) to any possession of the United
States other than Puerto Rico shall be the amount which would
have been allocated if all allocations under paragraph (1) were
made on the basis of respective populations of individuals
below the poverty line (as defined by the Office of Management
and Budget). In making other allocations, the amount to be
allocated under paragraph (1) shall be reduced by the aggregate
amount allocated under this paragraph to possessions of the
United States.
``(4) Allocations for indian schools.--In addition to the
amounts otherwise allocated under this subsection, $200,000,000
for calendar year 2009, and $200,000,000 for calendar year
2010, shall be allocated by the Secretary of the Interior for
purposes of the construction, rehabilitation, and repair of
schools funded by the Bureau of Indian Affairs. In the case of
amounts allocated under the preceding sentence, Indian tribal
governments (as defined in section 7701(a)(40)) shall be
treated as qualified issuers for purposes of this subchapter.
``(e) 40 Percent of Limitation Allocated Among Largest School
Districts.--
``(1) In general.--40 percent of the limitation applicable
under subsection (c) for any calendar year shall be allocated
under paragraph (2) by the Secretary among local educational
agencies which are large local educational agencies for such
year.
``(2) Allocation formula.--The amount to be allocated under
paragraph (1) for any calendar year shall be allocated among
large local educational agencies in proportion to the
respective amounts each such agency received for Basic Grants
under subpart 2 of part A of title I of the Elementary and
Secondary Education Act of 1965 (20 U.S.C. 6331 et seq.) for
the most recent fiscal year ending before such calendar year.
``(3) Allocation of unused limitation to state.--The amount
allocated under this subsection to a large local educational
agency for any calendar year may be reallocated by such agency
to the State in which such agency is located for such calendar
year. Any amount reallocated to a State under the preceding
sentence may be allocated as provided in subsection (d)(1).
``(4) Large local educational agency.--For purposes of this
section, the term `large local educational agency' means, with
respect to a calendar year, any local educational agency if
such agency is--
``(A) among the 100 local educational agencies with
the largest numbers of children aged 5 through 17 from
families living below the poverty level, as determined
by the Secretary using the most recent data available
from the Department of Commerce that are satisfactory
to the Secretary, or
``(B) 1 of not more than 25 local educational
agencies (other than those described in subparagraph
(A)) that the Secretary of Education determines (based
on the most recent data available satisfactory to the
Secretary) are in particular need of assistance, based
on a low level of resources for school construction, a
high level of enrollment growth, or such other factors
as the Secretary deems appropriate.
``(f) Carryover of Unused Limitation.--If for any calendar year--
``(1) the amount allocated under subsection (d) to any
State, exceeds
``(2) the amount of bonds issued during such year which are
designated under subsection (a) pursuant to such allocation,
the limitation amount under such subsection for such State for the
following calendar year shall be increased by the amount of such
excess. A similar rule shall apply to the amounts allocated under
subsection (d)(4) or (e).''.
(b) Conforming Amendments.--
(1) Paragraph (1) of section 54A(d) is amended by striking
``or'' at the end of subparagraph (C), by inserting ``or'' at
the end of subparagraph (D), and by inserting after
subparagraph (D) the following new subparagraph:
``(E) a qualified school construction bond,''.
(2) Subparagraph (C) of section 54A(d)(2) is amended by
striking ``and'' at the end of clause (iii), by striking the
period at the end of clause (iv) and inserting ``, and'', and
by adding at the end the following new clause:
``(v) in the case of a qualified school
construction bond, a purpose specified in
section 54F(a)(1).''.
(3) The table of sections for subpart I of part IV of
subchapter A of chapter 1 is amended by adding at the end the
following new item:
``Sec. 54F. Qualified school construction bonds.''.
(c) Effective Date.--The amendments made by this section shall
apply to obligations issued after December 31, 2008.
SEC. 1512. EXTENSION AND EXPANSION OF QUALIFIED ZONE ACADEMY BONDS.
(a) In General.--Section 54E(c)(1) is amended by striking ``and
2009'' and inserting ``and $1,400,000,000 for 2009 and 2010''.
(b) Effective Date.--The amendment made by this section shall apply
to obligations issued after December 31, 2008.
PART III--TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS
SEC. 1521. TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS.
(a) In General.--Part IV of subchapter A of chapter 1 is amended by
adding at the end the following new subpart:
``Subpart J--Taxable Bond Option for Governmental Bonds
``Sec. 54AA. Taxable bond option for governmental bonds.
``SEC. 54AA. TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS.
``(a) In General.--If a taxpayer holds a taxable governmental bond
on one or more interest payment dates of the bond during any taxable
year, there shall be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to the sum of the
credits determined under subsection (b) with respect to such dates.
``(b) Amount of Credit.--The amount of the credit determined under
this subsection with respect to any interest payment date for a taxable
governmental bond is 35 percent of the amount of interest payable by
the issuer with respect to such date.
``(c) Limitation Based on Amount of Tax.--
``(1) In general.--The credit allowed under subsection (a)
for any taxable year shall not exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
part (other than subpart C and this subpart).
``(2) Carryover of unused credit.--If the credit allowable
under subsection (a) exceeds the limitation imposed by
paragraph (1) for such taxable year, such excess shall be
carried to the succeeding taxable year and added to the credit
allowable under subsection (a) for such taxable year
(determined before the application of paragraph (1) for such
succeeding taxable year).
``(d) Taxable Governmental Bond.--
``(1) In general.--For purposes of this section, the term
`taxable governmental bond' means any obligation (other than a
private activity bond) if--
``(A) the interest on such obligation would (but
for this section) be excludable from gross income under
section 103, and
``(B) the issuer makes an irrevocable election to
have this section apply.
``(2) Applicable rules.--For purposes of applying paragraph
(1)--
``(A) a taxable governmental bond shall not be
treated as federally guaranteed by reason of the credit
allowed under subsection (a) or section 6431,
``(B) the yield on a taxable governmental bond
shall be determined without regard to the credit
allowed under subsection (a), and
``(C) a bond shall not be treated as a taxable
governmental bond if the issue price has more than a de
minimis amount (determined under rules similar to the
rules of section 1273(a)(3)) of premium over the stated
principal amount of the bond.
``(e) Interest Payment Date.--For purposes of this section, the
term `interest payment date' means any date on which the holder of
record of the taxable governmental bond is entitled to a payment of
interest under such bond.
``(f) Special Rules.--
``(1) Interest on taxable governmental bonds includible in
gross income for federal income tax purposes.--For purposes of
this title, interest on any taxable governmental bond shall be
includible in gross income.
``(2) Application of certain rules.--Rules similar to the
rules of subsections (f), (g), (h), and (i) of section 54A
shall apply for purposes of the credit allowed under subsection
(a).
``(g) Special Rule for Qualified Bonds Issued Before 2011.--In the
case of a qualified bond issued before January 1, 2011--
``(1) Issuer allowed refundable credit.--In lieu of any
credit allowed under this section with respect to such bond,
the issuer of such bond shall be allowed a credit as provided
in section 6431.
``(2) Qualified bond.--For purposes of this subsection, the
term `qualified bond' means any taxable governmental bond
issued as part of an issue if--
``(A) 100 percent of the available project proceeds
(as defined in section 54A) of such issue are to be
used for capital expenditures, and
``(B) the issuer makes an irrevocable election to
have this subsection apply.''.
(b) Credit for Qualified Bonds Issued Before 2011.--Subchapter B of
chapter 65 is amended by adding at the end the following new section:
``SEC. 6431. CREDIT FOR QUALIFIED BONDS ALLOWED TO ISSUER.
``(a) In General.--In the case of a qualified bond issued before
January 1, 2011, the issuer of such bond shall be allowed a credit with
respect to each interest payment under such bond which shall be payable
by the Secretary as provided in subsection (b).
``(b) Payment of Credit.--The Secretary shall pay
(contemporaneously with each interest payment date under such bond) to
the issuer of such bond (or to any person who makes such interest
payments on behalf of the issuer) 35 percent of the interest payable
under such bond on such date.
``(c) Application of Arbitrage Rules.--For purposes of section 148,
the yield on a qualified bond shall be reduced by the credit allowed
under this section.
``(d) Interest Payment Date.--For purposes of this subsection, the
term `interest payment date' means each date on which interest is
payable by the issuer under the terms of the bond.
``(e) Qualified Bond.--For purposes of this subsection, the term
`qualified bond' has the meaning given such term in section 54AA(h).''.
(c) Conforming Amendments.--
(1) Section 1324(b)(2) of title 31, United States Code, is
amended by striking ``or 6428'' and inserting ``6428, or
6431,''.
(2) Section 54A(c)(1)(B) is amended by striking ``subpart
C'' and inserting ``subparts C and J''.
(3) Sections 54(c)(2), 1397E(c)(2), and 1400N(l)(3)(B) are
each amended by striking ``and I'' and inserting ``, I, and
J''.
(4) Section 6401(b)(1) is amended by striking ``and I'' and
inserting ``I, and J''.
(5) The table of subparts for part IV of subchapter A of
chapter 1 is amended by adding at the end the following new
item:
``Subpart J. Taxable bond option for governmental bonds.''.
(6) The table of section for subchapter B of chapter 65 is
amended by adding at the end the following new item:
``Sec. 6431. Credit for qualified bonds allowed to issuer on advance
basis.''.
(d) Transitional Coordination With State Law.--Except as otherwise
provided by a State after the date of the enactment of this Act, the
interest on any taxable governmental bond (as defined in section 54AA
of the Internal Revenue Code of 1986, as added by this section) and the
amount of any credit determined under such section with respect to such
bond shall be treated for purposes of the income tax laws of such State
as being exempt from Federal income tax.
(e) Effective Date.--The amendments made by this section shall
apply to obligations issued after the date of the enactment of this
Act.
PART IV--RECOVERY ZONE BONDS
SEC. 1531. RECOVERY ZONE BONDS.
(a) In General.--Subchapter Y of chapter 1 is amended by adding at
the end the following new part:
``PART III--RECOVERY ZONE BONDS
``Sec. 1400U-1. Allocation of recovery zone bonds.
``Sec. 1400U-2. Recovery zone economic development bonds.
``Sec. 1400U-3. Recovery zone facility bonds.
``SEC. 1400U-1. ALLOCATION OF RECOVERY ZONE BONDS.
``(a) Allocations.--
``(1) In general.--The Secretary shall allocate the
national recovery zone economic development bond limitation and
the national recovery zone facility bond limitation among the
States in the proportion that each such State's 2008 State
employment decline bears to the aggregate of the 2008 State
employment declines for all of the States.
``(2) 2008 state employment decline.--For purposes of this
subsection, the term `2008 State employment decline' means,
with respect to any State, the excess (if any) of--
``(A) the number of individuals employed in such
State determined for December 2007, over
``(B) the number of individuals employed in such
State determined for December 2008.
``(3) Allocations by states.--
``(A) In general.--Each State with respect to which
an allocation is made under paragraph (1) shall
reallocate such allocation among the counties and large
municipalities in such State in the proportion the each
such county's or municipality's 2008 employment decline
bears to the aggregate of the 2008 employment declines
for all the counties and municipalities in such State.
``(B) Large municipalities.--For purposes of
subparagraph (A), the term `large municipality' means a
municipality with a population of more than 100,000.
``(C) Determination of local employment declines.--
For purposes of this paragraph, the employment decline
of any municipality or county shall be determined in
the same manner as determining the State employment
decline under paragraph (2), except that in the case of
a municipality any portion of which is in a county,
such portion shall be treated as part of such
municipality and not part of such county.
``(4) National limitations.--
``(A) Recovery zone economic development bonds.--
There is a national recovery zone economic development
bond limitation of $10,000,000,000.
``(B) Recovery zone facility bonds.--There is a
national recovery zone facility bond limitation of
$15,000,000,000.
``(b) Recovery Zone.--For purposes of this part, the term `recovery
zone' means--
``(1) any area designated by the issuer as having
significant poverty, unemployment, or rate of home
foreclosures, and
``(2) any area for which a designation as an empowerment
zone or renewal community is in effect.
``SEC. 1400U-2. RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS.
``(a) In General.--In the case of a recovery zone economic
development bond--
``(1) such bond shall be treated as a qualified bond for
purposes of section 6431, and
``(2) subsection (b) of such section shall be applied by
substituting `40 percent' for `35 percent'.
``(b) Recovery Zone Economic Development Bond.--
``(1) In general.--For purposes of this section, the term
`recovery zone economic development bond' means any taxable
governmental bond (as defined in section 54AA(d)) issued before
January 1, 2011, as part of issue if--
``(A) 100 percent of the available project proceeds
(as defined in section 54A) of such issue are to be
used for one or more qualified economic development
purposes, and
``(B) the issuer designates such bond for purposes
of this section.
``(2) Limitation on amount of bonds designated.--The
maximum aggregate face amount of bonds which may be designated
by any issuer under paragraph (1) shall not exceed the amount
of the recovery zone economic development bond limitation
allocated to such issuer under section 1400U-1.
``(c) Qualified Economic Development Purpose.--For purposes of this
section, the term `qualified economic development purpose' means
expenditures for purposes of promoting development or other economic
activity in a recovery zone, including--
``(1) capital expenditures paid or incurred with respect to
property located in such zone,
``(2) expenditures for public infrastructure and
construction of public facilities, and
``(3) expenditures for job training and educational
programs.
``SEC. 1400U-3. RECOVERY ZONE FACILITY BONDS.
``(a) In General.--For purposes of part IV of subchapter B
(relating to tax exemption requirements for State and local bonds), the
term `exempt facility bond' includes any recovery zone facility bond.
``(b) Recovery Zone Facility Bond.--
``(1) In general.--For purposes of this section, the term
`recovery zone facility bond' means any bond issued as part of
an issue if--
``(A) 95 percent or more of the net proceeds (as
defined in section 150(a)(3)) of such issue are to be
used for recovery zone property,
``(B) such bond is issued before January 1, 2011,
and
``(C) the issuer designates such bond for purposes
of this section.
``(2) Limitation on amount of bonds designated.--The
maximum aggregate face amount of bonds which may be designated
by any issuer under paragraph (1) shall not exceed the amount
of recovery zone facility bond limitation allocated to such
issuer under section 1400U-1.
``(c) Recovery Zone Property.--For purposes of this section--
``(1) In general.--The term `recovery zone property' means
any property to which section 168 applies (or would apply but
for section 179) if--
``(A) such property was acquired by the taxpayer by
purchase (as defined in section 179(d)(2)) after the
date on which the designation of the recovery zone took
effect,
``(B) the original use of which in the recovery
zone commences with the taxpayer, and
``(C) substantially all of the use of which is in
the recovery zone and is in the active conduct of a
qualified business by the taxpayer in such zone.
``(2) Qualified business.--The term `qualified business'
means any trade or business except that--
``(A) the rental to others of real property located
in a recovery zone shall be treated as a qualified
business only if the property is not residential rental
property (as defined in section 168(e)(2)), and
``(B) such term shall not include any trade or
business consisting of the operation of any facility
described in section 144(c)(6)(B).
``(3) Special rules for substantial renovations and sale-
leaseback.--Rules similar to the rules of subsections (a)(2)
and (b) of section 1397D shall apply for purposes of this
subsection.
``(d) Nonapplication of Certain Rules.--Sections 146 (relating to
volume cap) and 147(d) (relating to acquisition of existing property
not permitted) shall not apply to any recovery zone facility bond.''.
(b) Clerical Amendment.--The table of parts for subchapter Y of
chapter 1 of such Code is amended by adding at the end the following
new item:
``Part III. Recovery Zone Bonds.''.
(c) Effective Date.--The amendments made by this section shall
apply to obligations issued after the date of the enactment of this
Act.
SEC. 1532. TRIBAL ECONOMIC DEVELOPMENT BONDS.
(a) In General.--Section 7871 is amended by adding at the end the
following new subsection:
``(f) Tribal Economic Development Bonds.--
``(1) Allocation of limitation.--
``(A) In general.--The Secretary shall allocate the
national tribal economic development bond limitation
among the Indian tribal governments in such manner as
the Secretary, in consultation with the Secretary of
the Interior, determines appropriate.
``(B) National limitation.--There is a national
tribal economic development bond limitation of
$2,000,000,000.
``(2) Bonds treated as exempt from tax.--In the case of a
tribal economic development bond--
``(A) notwithstanding subsection (c), such bond
shall be treated for purposes of this title in the same
manner as if such bond were issued by a State, and
``(B) section 146 shall not apply.
``(3) Tribal economic development bond.--
``(A) In general.--For purposes of this section,
the term `tribal economic development bond' means any
bond issued by an Indian tribal government--
``(i) the interest on which is not exempt
from tax under section 103 by reason of
subsection (c) (determined without regard to
this subsection) but would be so exempt if
issued by a State or local government, and
``(ii) which is designated by the Indian
tribal government as a tribal economic
development bond for purposes of this
subsection.
``(B) Exceptions.--The term tribal economic
development bond shall not include any bond issued as
part of an issue if any portion of the proceeds of such
issue are used to finance--
``(i) any portion of a building in which
class II or class III gaming (as defined in
section 4 of the Indian Gaming Regulatory Act)
is conducted or housed or any other property
actually used in the conduct of such gaming, or
``(ii) any facility located outside the
Indian reservation (as defined in section
168(j)(6)).
``(C) Limitation on amount of bonds designated.--
The maximum aggregate face amount of bonds which may be
designated by any Indian tribal government under
subparagraph (A) shall not exceed the amount of
national tribal economic development bond limitation
allocated to such government under paragraph (1).''.
(b) Study.--The Secretary of the Treasury, or the Secretary's
delegate, shall conduct a study of the effects of the amendment made by
subsection (a). Not later than 1 year after the date of the enactment
of this Act, the Secretary of the Treasury, or the Secretary's
delegate, shall report to Congress on the results of the studies
conducted under this paragraph, including the Secretary's
recommendations regarding such amendment.
(c) Effective Date.--The amendment made by subsection (a) shall
apply to obligations issued after the date of the enactment of this
Act.
PART V--REPEAL OF WITHHOLDING TAX ON GOVERNMENT CONTRACTORS
SEC. 1541. REPEAL OF WITHHOLDING TAX ON GOVERNMENT CONTRACTORS.
Section 3402 is amended by striking subsection (t).
Subtitle G--Energy Incentives
PART I--RENEWABLE ENERGY INCENTIVES
SEC. 1601. EXTENSION OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN
RENEWABLE RESOURCES.
(a) In General.--Subsection (d) of section 45 is amended--
(1) by striking ``2010'' in paragraph (1) and inserting
``2013'',
(2) by striking ``2011'' each place it appears in
paragraphs (2), (3), (4), (6), (7), and (9) and inserting
``2014'', and
(3) by striking ``2012'' in paragraph (11)(B) and inserting
``2014''.
(b) Technical Amendment.--Paragraph (5) of section 45(d) is amended
by striking ``and before'' and all that follows and inserting ``and
before October 3, 2008.''.
(c) Effective Date.--
(1) In general.--The amendments made by subsection (a)
shall apply to property placed in service after the date of the
enactment of this Act.
(2) Technical amendment.--The amendment made by subsection
(b) shall take effect as if included in section 102 of the
Energy Improvement and Extension Act of 2008.
SEC. 1602. ELECTION OF INVESTMENT CREDIT IN LIEU OF PRODUCTION CREDIT.
(a) In General.--Subsection (a) of section 48 is amended by adding
at the end the following new paragraph:
``(5) Election to treat qualified facilities as energy
property.--
``(A) In general.--In the case of any qualified
investment credit facility placed in service in 2009 or
2010--
``(i) such facility shall be treated as
energy property for purposes of this section,
and
``(ii) the energy percentage with respect
to such property shall be 30 percent.
``(B) Denial of production credit.--No credit shall
be allowed under section 45 for any taxable year with
respect to any qualified investment credit facility.
``(C) Qualified investment credit facility.--For
purposes of this paragraph, the term `qualified
investment credit facility' means any facility
described in paragraph (1), (2), (3), (4), (6), (7),
(9), or (11) of section 45(d) if no credit has been
allowed under section 45 with respect to such facility
and the taxpayer makes an irrevocable election to have
this paragraph apply to such facility.''.
(b) Effective Date.--The amendments made by this section shall
apply to facilities placed in service after December 31, 2008.
SEC. 1603. REPEAL OF CERTAIN LIMITATIONS ON CREDIT FOR RENEWABLE ENERGY
PROPERTY.
(a) Repeal of Limitation on Credit for Qualified Small Wind Energy
Property.--Paragraph (4) of section 48(c) is amended by striking
subparagraph (B) and by redesignating subparagraphs (C) and (D) as
subparagraphs (B) and (C).
(b) Repeal of Limitation on Property Financed by Subsidized Energy
Financing.--
(1) In general.--Subsection (a) of section 48 is amended by
striking paragraph (4).
(2) Conforming amendments.--
(A) Section 25C(e)(1) is amended by striking ``(8),
and (9)'' and inserting ``and (8)''.
(B) Section 25D(e) is amended by striking paragraph
(9).
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2),the
amendment made by this section shall apply to periods after
December 31, 2008, under rules similar to the rules of section
48(m) of the Internal Revenue Code of 1986 (as in effect on the
day before the date of the enactment of the Revenue
Reconciliation Act of 1990).
(2) Conforming amendments.--The amendments made by
subsection (b)(2) shall apply to taxable years beginning after
December 31, 2008.
SEC. 1604. COORDINATION WITH RENEWABLE ENERGY GRANTS.
Section 48 is amended by adding at the end the following new
subsection:
``(d) Coordination With Department of Energy Grants.--In the case
of any property with respect to which the Secretary of Energy makes a
grant under section 1721 of the American Recovery and Reinvestment Tax
Act of 2009--
``(1) Denial of production and investment credits.--No
credit shall be determined under this section or section 45
with respect to such property for the taxable year in which
such grant is made or any subsequent taxable year.
``(2) Recapture of credits for progress expenditures made
before grant.--If a credit was determined under this section
with respect to such property for any taxable year ending
before such grant is made--
``(A) the tax imposed under subtitle A on the
taxpayer for the taxable year in which such grant is
made shall be increased by so much of such credit as
was allowed under section 38,
``(B) the general business carryforwards under
section 39 shall be adjusted so as to recapture the
portion of such credit which was not so allowed, and
``(C) the amount of such grant shall be determined
without regard to any reduction in the basis of such
property by reason of such credit.
``(3) Treatment of grants.--Any such grant shall--
``(A) not be includible in the gross income of the
taxpayer, but
``(B) shall be taken into account in determining
the basis of the property to which such grant relates,
except that the basis of such property shall be reduced
under section 50(c) in the same manner as a credit
allowed under subsection (a).''.
PART II--INCREASED ALLOCATIONS OF NEW CLEAN RENEWABLE ENERGY BONDS AND
QUALIFIED ENERGY CONSERVATION BONDS
SEC. 1611. INCREASED LIMITATION ON ISSUANCE OF NEW CLEAN RENEWABLE
ENERGY BONDS.
Subsection (c) of section 54C is amended by adding at the end the
following new paragraph:
``(4) Additional limitation.--The national new clean
renewable energy bond limitation shall be increased by
$1,600,000,000. Such increase shall be allocated by the
Secretary consistent with the rules of paragraphs (2) and
(3).''.
SEC. 1612. INCREASED LIMITATION ON ISSUANCE OF QUALIFIED ENERGY
CONSERVATION BONDS.
Subsection (e) of section 54D is amended by adding at the end the
following new paragraph:
``(4) Additional limitation.--The national qualified energy
conservation bond limitation shall be increased by
$2,400,000,000. Such increase shall be allocated by the
Secretary consistent with the rules of paragraphs (1), (2), and
(3).''.
PART III--ENERGY CONSERVATION INCENTIVES
SEC. 1621. EXTENSION AND MODIFICATION OF CREDIT FOR NONBUSINESS ENERGY
PROPERTY.
(a) In General.--Section 25C is amended by striking subsections (a)
and (b) and inserting the following new subsections:
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to 30 percent of the sum of--
``(1) the amount paid or incurred by the taxpayer during
such taxable year for qualified energy efficiency improvements,
and
``(2) the amount of the residential energy property
expenditures paid or incurred by the taxpayer during such
taxable year.
``(b) Limitation.--The aggregate amount of the credits allowed
under this section for taxable years beginning in 2009 and 2010 with
respect to any taxpayer shall not exceed $1,500.''.
(b) Extension.--Section 25C(g)(2) is amended by striking ``December
31, 2009'' and inserting ``December 31, 2010''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.
SEC. 1622. MODIFICATION OF CREDIT FOR RESIDENTIAL ENERGY EFFICIENT
PROPERTY.
(a) Removal of Credit Limitation for Property Placed in Service.--
(1) In general.--Paragraph (1) of section 25D(b) is amended
to read as follows:
``(1) Maximum credit for fuel cells.--In the case of any
qualified fuel cell property expenditure, the credit allowed
under subsection (a) (determined without regard to subsection
(c)) for any taxable year shall not exceed $500 with respect to
each half kilowatt of capacity of the qualified fuel cell
property (as defined in section 48(c)(1)) to which such
expenditure relates.''.
(2) Conforming amendment.--Paragraph (4) of section 25D(e)
is amended--
(A) by striking all that precedes subparagraph (B)
and inserting the following:
``(4) Fuel cell expenditure limitations in case of joint
occupancy.--In the case of any dwelling unit with respect to
which qualified fuel cell property expenditures are made and
which is jointly occupied and used during any calendar year as
a residence by two or more individuals the following rules
shall apply:
``(A) Maximum expenditures for fuel cells.--The
maximum amount of such expenditures which may be taken
into account under subsection (a) by all such
individuals with respect to such dwelling unit during
such calendar year shall be $1,667 in the case of each
half kilowatt of capacity of qualified fuel cell
property (as defined in section 48(c)(1)) with respect
to which such expenditures relate.'', and
(B) by striking subparagraph (C).
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.
SEC. 1623. TEMPORARY INCREASE IN CREDIT FOR ALTERNATIVE FUEL VEHICLE
REFUELING PROPERTY.
(a) In General.--Section 30C(e) is amended by adding at the end the
following new paragraph:
``(6) Special rule for property placed in service during
2009 and 2010.--In the case of property placed in service in
taxable years beginning after December 31, 2008, and before
January 1, 2011--
``(A) in the case of any such property which does
not relate to hydrogen--
``(i) subsection (a) shall be applied by
substituting `50 percent' for `30 percent',
``(ii) subsection (b)(1) shall be applied
by substituting `$50,000' for `$30,000', and
``(iii) subsection (b)(2) shall be applied
by substituting `$2,000' for `$1,000', and
``(B) in the case of any such property which
relates to hydrogen, subsection (b) shall be applied by
substituting `$200,000' for `$30,000'.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2008.
PART IV--ENERGY RESEARCH INCENTIVES
SEC. 1631. INCREASED RESEARCH CREDIT FOR ENERGY RESEARCH.
(a) In General.--Section 41 is amended by redesignating subsection
(h) as subsection (i) and by inserting after subsection (g) the
following new subsection:
``(h) Energy Research Credit.--In the case of any taxable year
beginning in 2009 or 2010--
``(1) In general.--The credit determined under subsection
(a)(1) shall be increased by 20 percent of the qualified energy
research expenses for the taxable year.
``(2) Qualified energy research expenses.--For purposes of
this subsection, the term `qualified energy research expenses'
means so much of the taxpayer's qualified research expenses as
are related to the fields of fuel cells and battery technology,
renewable energy, energy conservation technology, efficient
transmission and distribution of electricity, and carbon
capture and sequestration.
``(3) Coordination with other research credits.--
``(A) Incremental credit.--The amount of qualified
energy research expenses taken into account under
subsection (a)(1)(A) shall not exceed the base amount.
``(B) Alternative simplified credit.--For purposes
of subsection (c)(5), the amount of qualified energy
research expenses taken into account for the taxable
year for which the credit is being determined shall not
exceed--
``(i) in the case of subsection (c)(5)(A),
50 percent of the average qualified research
expenses for the 3 taxable years preceding the
taxable year for which the credit is being
determined, and
``(ii) in the case of subsection
(c)(5)(B)(ii), zero.
``(C) Basic research and energy research consortium
payments.--Any amount taken into account under
paragraph (1) shall not be taken into account under
paragraph (2) or (3) of subsection (a).''.
(b) Conforming Amendment.--Subparagraph (B) of section 41(i)(1)(B),
as redesignated by subsection (a), is amended by inserting ``(in the
case of the increase in the credit determined under subsection (h),
December 31, 2010)'' after ``December 31, 2009''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.
Subtitle H--Other Provisions
PART I--APPLICATION OF CERTAIN LABOR STANDARDS TO PROJECTS FINANCED
WITH CERTAIN TAX-FAVORED BONDS
SEC. 1701. APPLICATION OF CERTAIN LABOR STANDARDS TO PROJECTS FINANCED
WITH CERTAIN TAX-FAVORED BONDS.
Subchapter IV of chapter 31 of the title 40, United States Code,
shall apply to projects financed with the proceeds of--
(1) any qualified clean renewable energy bond (as defined
in section 54C of the Internal Revenue Code of 1986) issued
after the date of the enactment of this Act,
(2) any qualified energy conservation bond (as defined in
section 54D of the Internal Revenue Code of 1986) issued after
the date of the enactment of this Act,
(3) any qualified zone academy bond (as defined in section
54E of the Internal Revenue Code of 1986) issued after the date
of the enactment of this Act,
(4) any qualified school construction bond (as defined in
section 54F of the Internal Revenue Code of 1986), and
(5) any recovery zone economic development bond (as defined
in section 1400U-2 of the Internal Revenue Code of 1986).
PART II--GRANTS TO PROVIDE FINANCING FOR LOW-INCOME HOUSING
SEC. 1711. GRANTS TO STATES FOR LOW-INCOME HOUSING PROJECTS IN LIEU OF
LOW-INCOME HOUSING CREDIT ALLOCATIONS FOR 2009.
(a) In General.--The Secretary of the Treasury shall make a grant
to the housing credit agency of each State in an amount equal to such
State's low-income housing grant election amount.
(b) Low-Income Housing Grant Election Amount.--For purposes of this
section, the term ``low-income housing grant election amount'' means,
with respect to any State, such amount as the State may elect which
does not exceed 85 percent of the product of--
(1) the sum of--
(A) 100 percent of the State housing credit ceiling
for 2009 which is attributable to amounts described in
clauses (i) and (iii) of section 42(h)(3)(C) of the
Internal Revenue Code of 1986, and
(B) 40 percent of the State housing credit ceiling
for 2009 which is attributable to amounts described in
clauses (ii) and (iv) of such section, multiplied by
(2) 10.
(c) Subawards for Low-Income Buildings.--
(1) In general.--A State housing credit agency receiving a
grant under this section shall use such grant to make subawards
to finance the construction or acquisition and rehabilitation
of qualified low-income buildings. A subaward under this
section may be made to finance a qualified low-income building
with or without an allocation under section 42 of the Internal
Revenue Code of 1986, except that a State housing credit agency
may make subawards to finance qualified low-income buildings
without an allocation only if it makes a determination that
such use will increase the total funds available to the State
to build and rehabilitate affordable housing. In complying with
such determination requirement, a State housing credit agency
shall establish a process in which applicants that are
allocated credits are required to demonstrate good faith
efforts to obtain investment commitments for such credits
before the agency makes such subawards.
(2) Subawards subject to same requirements as low-income
housing credit allocations.--Any such subaward with respect to
any qualified low-income building shall be made in the same
manner and shall be subject to the same limitations (including
rent, income, and use restrictions on such building) as an
allocation of housing credit dollar amount allocated by such
State housing credit agency under section 42 of the Internal
Revenue Code of 1986, except that such subawards shall not be
limited by, or otherwise affect (except as provided in
subsection (h)(3)(J) of such section), the State housing credit
ceiling applicable to such agency.
(3) Compliance and asset management.--The State housing
credit agency shall perform asset management functions to
ensure compliance with section 42 of the Internal Revenue Code
of 1986 and the long-term viability of buildings funded by any
subaward under this section. The State housing credit agency
may collect reasonable fees from a subaward recipient to cover
expenses associated with the performance of its duties under
this paragraph. The State housing credit agency may retain an
agent or other private contractor to satisfy the requirements
of this paragraph.
(4) Recapture.--The State housing credit agency shall
impose conditions or restrictions, including a requirement
providing for recapture, on any subaward under this section so
as to assure that the building with respect to which such
subaward is made remains a qualified low-income building during
the compliance period. Any such recapture shall be payable to
the Secretary of the Treasury for deposit in the general fund
of the Treasury and may be enforced by means of liens or such
other methods as the Secretary of the Treasury determines
appropriate.
(d) Return of Unused Grant Funds.--Any grant funds not used to make
subawards under this section before January 1, 2011, shall be returned
to the Secretary of the Treasury on such date. Any subawards returned
to the State housing credit agency on or after such date shall be
promptly returned to the Secretary of the Treasury. Any amounts
returned to the Secretary of the Treasury under this subsection shall
be deposited in the general fund of the Treasury.
(e) Definitions.--Any term used in this section which is also used
in section 42 of the Internal Revenue Code of 1986 shall have the same
meaning for purposes of this section as when used in such section 42.
Any reference in this section to the Secretary of the Treasury shall be
treated as including the Secretary's delegate.
(f) Appropriations.--There is hereby appropriated to the Secretary
of the Treasury such sums as may be necessary to carry out this
section.
PART III--GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX CREDITS
SEC. 1721. GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX CREDITS.
(a) In General.--Upon application, the Secretary of Energy shall,
within 60 days of the application and subject to the requirements of
this section, provide a grant to each person who places in service
specified energy property during 2009 or 2010 to reimburse such person
for a portion of the expense of such facility as provided in subsection
(b).
(b) Grant Amount.--
(1) In general.--The amount of the grant under subsection
(a) with respect to any specified energy property shall be the
applicable percentage of the basis of such facility.
(2) Applicable percentage.--For purposes of paragraph (1),
the term ``applicable percentage'' means--
(A) 30 percent in the case of any property
described in paragraphs (1) through (4) of subsection
(c), and
(B) 10 percent in the case of any other property.
(3) Dollar limitations.--In the case of property described
in paragraph (2), (6), or (7) of subsection (c), the amount of
any grant under this section with respect to such property
shall not exceed the limitation described in section
48(c)(1)(B), 48(c)(2)(B), or 48(c)(3)(B) of the Internal
Revenue Code of 1986, respectively, with respect to such
property.
(c) Specified Energy Property.--For purposes of this section, the
term ``specified energy property'' means any of the following:
(1) Qualified facilities.--Any facility described in
paragraph (1), (2), (3), (4), (6), (7), (9), or (11) of section
45(d) of the Internal Revenue Code of 1986.
(2) Qualified fuel cell property.--Any qualified fuel cell
property (as defined in section 48(c)(1) of such Code).
(3) Solar property.--Any property described in clause (i)
or (ii) of section 48(a)(3)(A) of such Code.
(4) Qualified small wind energy property.--Any qualified
small wind energy property (as defined in section 48(c)(4) of
such Code).
(5) Geothermal property.--Any property described in clause
(iii) of section 48(a)(3)(A) of such Code.
(6) Qualified microturbine property.--Any qualified
microturbine property (as defined in section 48(c)(2) of such
Code).
(7) Combined heat and power system property.--Any combined
heat and power system property (as defined in section 48(c)(3)
of such Code).
(8) Geothermal heatpump property.--Any property described
in clause (vii) of section 48(a)(3)(A) of such Code.
(d) Application of Certain Rules.--In making grants under this
section, the Secretary of Energy shall apply rules similar to the rules
of section 50 of the Internal Revenue Code of 1986. In applying such
rules, if the facility is disposed of, or otherwise ceases to be a
qualified renewable energy facility, the Secretary of Energy shall
provide for the recapture of the appropriate percentage of the grant
amount in such manner as the Secretary of Energy determines
appropriate.
(e) Exception for Certain Non-Taxpayers.--The Secretary of Energy
shall not make any grant under this section to any Federal, State, or
local government (or any political subdivision, agency, or
instrumentality thereof) or any organization described in section
501(c) of the Internal Revenue Code of 1986 and exempt from tax under
section 501(a) of such Code.
(f) Definitions.--Terms used in this section which are also used in
section 45 or 48 of the Internal Revenue Code of 1986 shall have the
same meaning for purposes of this section as when used in such section
45 or 48. Any reference in this section to the Secretary of the
Treasury shall be treated as including the Secretary's delegate.
(g) Coordination Between Departments of Treasury and Energy.--The
Secretary of the Treasury shall provide the Secretary of Energy with
such technical assistance as the Secretary of Energy may require in
carrying out this section. The Secretary of Energy shall provide the
Secretary of the Treasury with such information as the Secretary of the
Treasury may require in carrying out the amendment made by section
1604.
(h) Appropriations.--There is hereby appropriated to the Secretary
of Energy such sums as may be necessary to carry out this section.
(i) Termination.--The Secretary of Energy shall not make any grant
to any person under this section unless the application of such person
for such grant is received before October 1, 2011.
TITLE II--ASSISTANCE FOR UNEMPLOYED WORKERS AND STRUGGLING FAMILIES
SEC. 2000. SHORT TITLE, ETC.
(a) Short Title.--This title may be cited as the ``Assistance for
Unemployed Workers and Struggling Families Act''.
(b) Table of Contents.--The table of contents for this title is as
follows:
Sec. 2000. Short title, etc.
Subtitle A--Unemployment Insurance
Sec. 2001. Extension of emergency unemployment compensation program.
Sec. 2002. Increase in unemployment compensation benefits.
Sec. 2003. Special transfers for unemployment compensation
modernization.
Subtitle B--Assistance for Vulnerable Individuals
Sec. 2101. Emergency fund for TANF program.
Sec. 2102. One-time emergency SSI payment.
Sec. 2103. Temporary resumption of prior child support law.
Subtitle A--Unemployment Insurance
SEC. 2001. EXTENSION OF EMERGENCY UNEMPLOYMENT COMPENSATION PROGRAM.
(a) In General.--Section 4007 of the Supplemental Appropriations
Act, 2008 (Public Law 110-252; 26 U.S.C. 3304 note), as amended by
section 4 of the Unemployment Compensation Extension Act of 2008
(Public Law 110-449; 122 Stat. 5015), is amended--
(1) by striking ``March 31, 2009'' each place it appears
and inserting ``December 31, 2009'';
(2) in the heading for subsection (b)(2), by striking
``march 31, 2009'' and inserting ``december 31, 2009''; and
(3) in subsection (b)(3), by striking ``August 27, 2009''
and inserting ``May 31, 2010''.
(b) Financing Provisions.--Section 4004 of such Act is amended by
adding at the end the following:
``(e) Transfer of Funds.--Notwithstanding any other provision of
law, the Secretary of the Treasury shall transfer from the general fund
of the Treasury (from funds not otherwise appropriated)--
``(1) to the extended unemployment compensation account (as
established by section 905 of the Social Security Act) such
sums as the Secretary of Labor estimates to be necessary to
make payments to States under this title by reason of the
amendments made by section 2001(a) of the Assistance for
Unemployed Workers and Struggling Families Act; and
``(2) to the employment security administration account (as
established by section 901 of the Social Security Act) such
sums as the Secretary of Labor estimates to be necessary for
purposes of assisting States in meeting administrative costs by
reason of the amendments referred to in paragraph (1).
There are appropriated from the general fund of the Treasury, without
fiscal year limitation, the sums referred to in the preceding sentence
and such sums shall not be required to be repaid.''.
SEC. 2002. INCREASE IN UNEMPLOYMENT COMPENSATION BENEFITS.
(a) Federal-State Agreements.--Any State which desires to do so may
enter into and participate in an agreement under this section with the
Secretary of Labor (hereinafter in this section referred to as the
``Secretary''). Any State which is a party to an agreement under this
section may, upon providing 30 days' written notice to the Secretary,
terminate such agreement.
(b) Provisions of Agreement.--
(1) Additional compensation.--Any agreement under this
section shall provide that the State agency of the State will
make payments of regular compensation to individuals in amounts
and to the extent that they would be determined if the State
law of the State were applied, with respect to any week for
which the individual is (disregarding this section) otherwise
entitled under the State law to receive regular compensation,
as if such State law had been modified in a manner such that
the amount of regular compensation (including dependents'
allowances) payable for any week shall be equal to the amount
determined under the State law (before the application of this
paragraph) plus an additional $25.
(2) Allowable methods of payment.--Any additional
compensation provided for in accordance with paragraph (1)
shall be payable either--
(A) as an amount which is paid at the same time and
in the same manner as any regular compensation
otherwise payable for the week involved; or
(B) at the option of the State, by payments which
are made separately from, but on the same weekly basis
as, any regular compensation otherwise payable.
(c) Nonreduction Rule.--An agreement under this section shall not
apply (or shall cease to apply) with respect to a State upon a
determination by the Secretary that the method governing the
computation of regular compensation under the State law of that State
has been modified in a manner such that--
(1) the average weekly benefit amount of regular
compensation which will be payable during the period of the
agreement (determined disregarding any additional amounts
attributable to the modification described in subsection
(b)(1)) will be less than
(2) the average weekly benefit amount of regular
compensation which would otherwise have been payable during
such period under the State law, as in effect on December 31,
2008.
(d) Payments to States.--
(1) In general.--
(A) Full reimbursement.--There shall be paid to
each State which has entered into an agreement under
this section an amount equal to 100 percent of--
(i) the total amount of additional
compensation (as described in subsection
(b)(1)) paid to individuals by the State
pursuant to such agreement; and
(ii) any additional administrative expenses
incurred by the State by reason of such
agreement (as determined by the Secretary).
(B) Terms of payments.--Sums payable to any State
by reason of such State's having an agreement under
this section shall be payable, either in advance or by
way of reimbursement (as determined by the Secretary),
in such amounts as the Secretary estimates the State
will be entitled to receive under this section for each
calendar month, reduced or increased, as the case may
be, by any amount by which the Secretary finds that his
estimates for any prior calendar month were greater or
less than the amounts which should have been paid to
the State. Such estimates may be made on the basis of
such statistical, sampling, or other method as may be
agreed upon by the Secretary and the State agency of
the State involved.
(2) Certifications.--The Secretary shall from time to time
certify to the Secretary of the Treasury for payment to each
State the sums payable to such State under this section.
(3) Appropriation.--There are appropriated from the general
fund of the Treasury, without fiscal year limitation, such sums
as may be necessary for purposes of this subsection.
(e) Applicability.--
(1) In general.--An agreement entered into under this
section shall apply to weeks of unemployment--
(A) beginning after the date on which such
agreement is entered into; and
(B) ending before January 1, 2010.
(2) Transition rule for individuals remaining entitled to
regular compensation as of january 1, 2010.--In the case of any
individual who, as of the date specified in paragraph (1)(B),
has not yet exhausted all rights to regular compensation under
the State law of a State with respect to a benefit year that
began before such date, additional compensation (as described
in subsection (b)(1)) shall continue to be payable to such
individual for any week beginning on or after such date for
which the individual is otherwise eligible for regular
compensation with respect to such benefit year.
(3) Termination.--Notwithstanding any other provision of
this subsection, no additional compensation (as described in
subsection (b)(1)) shall be payable for any week beginning
after June 30, 2010.
(f) Fraud and Overpayments.--The provisions of section 4005 of the
Supplemental Appropriations Act, 2008 (Public Law 110-252; 122 Stat.
2356) shall apply with respect to additional compensation (as described
in subsection (b)(1)) to the same extent and in the same manner as in
the case of emergency unemployment compensation.
(g) Application to Other Unemployment Benefits.--
(1) In general.--Each agreement under this section shall
include provisions to provide that the purposes of the
preceding provisions of this section shall be applied with
respect to unemployment benefits described in subsection (h)(3)
to the same extent and in the same manner as if those benefits
were regular compensation.
(2) Eligibility and termination rules.--Additional
compensation (as described in subsection (b)(1))--
(A) shall not be payable, pursuant to this
subsection, with respect to any unemployment benefits
described in subsection (h)(3) for any week beginning
on or after the date specified in subsection (e)(1)(B),
except in the case of an individual who was eligible to
receive additional compensation (as so described) in
connection with any regular compensation or any
unemployment benefits described in subsection (h)(3)
for any period of unemployment ending before such date;
and
(B) shall in no event be payable for any week
beginning after the date specified in subsection
(e)(3).
(h) Definitions.--For purposes of this section--
(1) the terms ``compensation'', ``regular compensation'',
``benefit year'', ``State'', ``State agency'', ``State law'',
and ``week'' have the respective meanings given such terms
under section 205 of the Federal-State Extended Unemployment
Compensation Act of 1970 (26 U.S.C. 3304 note);
(2) the term ``emergency unemployment compensation'' means
emergency unemployment compensation under title IV of the
Supplemental Appropriations Act, 2008 (Public Law 110-252; 122
Stat. 2353); and
(3) any reference to unemployment benefits described in
this paragraph shall be considered to refer to--
(A) extended compensation (as defined by section
205 of the Federal-State Extended Unemployment
Compensation Act of 1970); and
(B) unemployment compensation (as defined by
section 85(b) of the Internal Revenue Code of 1986)
provided under any program administered by a State
under an agreement with the Secretary.
SEC. 2003. SPECIAL TRANSFERS FOR UNEMPLOYMENT COMPENSATION
MODERNIZATION.
(a) In General.--Section 903 of the Social Security Act (42 U.S.C.
1103) is amended by adding at the end the following:
``Special Transfers in Fiscal Years 2009, 2010, and 2011 for
Modernization
``(f)(1)(A) In addition to any other amounts, the Secretary of
Labor shall provide for the making of unemployment compensation
modernization incentive payments (hereinafter `incentive payments') to
the accounts of the States in the Unemployment Trust Fund, by transfer
from amounts reserved for that purpose in the Federal unemployment
account, in accordance with succeeding provisions of this subsection.
``(B) The maximum incentive payment allowable under this subsection
with respect to any State shall, as determined by the Secretary of
Labor, be equal to the amount obtained by multiplying $7,000,000,000 by
the same ratio as would apply under subsection (a)(2)(B) for purposes
of determining such State's share of any excess amount (as described in
subsection (a)(1)) that would have been subject to transfer to State
accounts, as of October 1, 2008, under the provisions of subsection
(a).
``(C) Of the maximum incentive payment determined under
subparagraph (B) with respect to a State--
``(i) one-third shall be transferred to the account of such
State upon a certification under paragraph (4)(B) that the
State law of such State meets the requirements of paragraph
(2); and
``(ii) the remainder shall be transferred to the account of
such State upon a certification under paragraph (4)(B) that the
State law of such State meets the requirements of paragraph
(3).
``(2) The State law of a State meets the requirements of this
paragraph if such State law--
``(A) uses a base period that includes the most recently
completed calendar quarter before the start of the benefit year
for purposes of determining eligibility for unemployment
compensation; or
``(B) provides that, in the case of an individual who would
not otherwise be eligible for unemployment compensation under
the State law because of the use of a base period that does not
include the most recently completed calendar quarter before the
start of the benefit year, eligibility shall be determined
using a base period that includes such calendar quarter.
``(3) The State law of a State meets the requirements of this
paragraph if such State law includes provisions to carry out at least 2
of the following subparagraphs:
``(A) An individual shall not be denied regular
unemployment compensation under any State law provisions
relating to availability for work, active search for work, or
refusal to accept work, solely because such individual is
seeking only part-time (and not full-time) work, except that
the State law provisions carrying out this subparagraph may
exclude an individual if a majority of the weeks of work in
such individual's base period do not include part-time work.
``(B) An individual shall not be disqualified from regular
unemployment compensation for separating from employment if
that separation is for any compelling family reason. For
purposes of this subparagraph, the term `compelling family
reason' means the following:
``(i) Domestic violence, verified by such
reasonable and confidential documentation as the State
law may require, which causes the individual reasonably
to believe that such individual's continued employment
would jeopardize the safety of the individual or of any
member of the individual's immediate family (as defined
by the Secretary of Labor).
``(ii) The illness or disability of a member of the
individual's immediate family (as defined by the
Secretary of Labor).
``(iii) The need for the individual to accompany
such individual's spouse--
``(I) to a place from which it is
impractical for such individual to commute; and
``(II) due to a change in location of the
spouse's employment.
``(C) Weekly unemployment compensation is payable under
this subparagraph to any individual who is unemployed (as
determined under the State unemployment compensation law), has
exhausted all rights to regular unemployment compensation under
the State law, and is enrolled and making satisfactory progress
in a State-approved training program or in a job training
program authorized under the Workforce Investment Act of 1998.
Such programs shall prepare individuals who have been separated
from a declining occupation, or who have been involuntarily and
indefinitely separated from employment as a result of a
permanent reduction of operations at the individual's place of
employment, for entry into a high-demand occupation. The amount
of unemployment compensation payable under this subparagraph to
an individual for a week of unemployment shall be equal to the
individual's average weekly benefit amount (including
dependents' allowances) for the most recent benefit year, and
the total amount of unemployment compensation payable under
this subparagraph to any individual shall be equal to at least
26 times the individual's average weekly benefit amount
(including dependents' allowances) for the most recent benefit
year.
``(D) Dependents' allowances are provided, in the case of
any individual who is entitled to receive regular unemployment
compensation and who has any dependents (as defined by State
law), in an amount equal to at least $15 per dependent per
week, subject to any aggregate limitation on such allowances
which the State law may establish (but which aggregate
limitation on the total allowance for dependents paid to an
individual may not be less than $50 for each week of
unemployment or 50 percent of the individual's weekly benefit
amount for the benefit year, whichever is less).
``(4)(A) Any State seeking an incentive payment under this
subsection shall submit an application therefor at such time, in such
manner, and complete with such information as the Secretary of Labor
may within 60 days after the date of the enactment of this subsection
prescribe (whether by regulation or otherwise), including information
relating to compliance with the requirements of paragraph (2) or (3),
as well as how the State intends to use the incentive payment to
improve or strengthen the State's unemployment compensation program.
The Secretary of Labor shall, within 30 days after receiving a complete
application, notify the State agency of the State of the Secretary's
findings with respect to the requirements of paragraph (2) or (3) (or
both).
``(B)(i) If the Secretary of Labor finds that the State law
provisions (disregarding any State law provisions which are not then
currently in effect as permanent law or which are subject to
discontinuation) meet the requirements of paragraph (2) or (3), as the
case may be, the Secretary of Labor shall thereupon make a
certification to that effect to the Secretary of the Treasury, together
with a certification as to the amount of the incentive payment to be
transferred to the State account pursuant to that finding. The
Secretary of the Treasury shall make the appropriate transfer within 7
days after receiving such certification.
``(ii) For purposes of clause (i), State law provisions which are
to take effect within 12 months after the date of their certification
under this subparagraph shall be considered to be in effect as of the
date of such certification.
``(C)(i) No certification of compliance with the requirements of
paragraph (2) or (3) may be made with respect to any State whose State
law is not otherwise eligible for certification under section 303 or
approvable under section 3304 of the Federal Unemployment Tax Act.
``(ii) No certification of compliance with the requirements of
paragraph (3) may be made with respect to any State whose State law is
not in compliance with the requirements of paragraph (2).
``(iii) No application under subparagraph (A) may be considered if
submitted before the date of the enactment of this subsection or after
the latest date necessary (as specified by the Secretary of Labor) to
ensure that all incentive payments under this subsection are made
before October 1, 2011.
``(5)(A) Except as provided in subparagraph (B), any amount
transferred to the account of a State under this subsection may be used
by such State only in the payment of cash benefits to individuals with
respect to their unemployment (including for dependents' allowances and
for unemployment compensation under paragraph (3)(C)), exclusive of
expenses of administration.
``(B) A State may, subject to the same conditions as set forth in
subsection (c)(2) (excluding subparagraph (B) thereof, and deeming the
reference to `subsections (a) and (b)' in subparagraph (D) thereof to
include this subsection), use any amount transferred to the account of
such State under this subsection for the administration of its
unemployment compensation law and public employment offices.
``(6) Out of any money in the Federal unemployment account not
otherwise appropriated, the Secretary of the Treasury shall reserve
$7,000,000,000 for incentive payments under this subsection. Any amount
so reserved shall not be taken into account for purposes of any
determination under section 902, 910, or 1203 of the amount in the
Federal unemployment account as of any given time. Any amount so
reserved for which the Secretary of the Treasury has not received a
certification under paragraph (4)(B) by the deadline described in
paragraph (4)(C)(iii) shall, upon the close of fiscal year 2011, become
unrestricted as to use as part of the Federal unemployment account.
``(7) For purposes of this subsection, the terms `benefit year',
`base period', and `week' have the respective meanings given such terms
under section 205 of the Federal-State Extended Unemployment
Compensation Act of 1970 (26 U.S.C. 3304 note).
``Special Transfer in Fiscal Year 2009 for Administration
``(g)(1) In addition to any other amounts, the Secretary of the
Treasury shall transfer from the employment security administration
account to the account of each State in the Unemployment Trust Fund,
within 30 days after the date of the enactment of this subsection, the
amount determined with respect to such State under paragraph (2).
``(2) The amount to be transferred under this subsection to a State
account shall (as determined by the Secretary of Labor and certified by
such Secretary to the Secretary of the Treasury) be equal to the amount
obtained by multiplying $500,000,000 by the same ratio as determined
under subsection (f)(1)(B) with respect to such State.
``(3) Any amount transferred to the account of a State as a result
of the enactment of this subsection may be used by the State agency of
such State only in the payment of expenses incurred by it for--
``(A) the administration of the provisions of its State law
carrying out the purposes of subsection (f)(2) or any
subparagraph of subsection (f)(3);
``(B) improved outreach to individuals who might be
eligible for regular unemployment compensation by virtue of any
provisions of the State law which are described in subparagraph
(A);
``(C) the improvement of unemployment benefit and
unemployment tax operations, including responding to increased
demand for unemployment compensation; and
``(D) staff-assisted reemployment services for unemployment
compensation claimants.''.
(b) Regulations.--The Secretary of Labor may prescribe any
regulations, operating instructions, or other guidance necessary to
carry out the amendment made by subsection (a).
Subtitle B--Assistance for Vulnerable Individuals
SEC. 2101. EMERGENCY FUND FOR TANF PROGRAM.
(a) In General.--Section 403 of the Social Security Act (42 U.S.C.
603) is amended by adding at the end the following:
``(c) Emergency Fund.--
``(1) Establishment.--There is established in the Treasury
of the United States a fund which shall be known as the
`Emergency Contingency Fund for State Temporary Assistance for
Needy Families Programs' (in this subsection referred to as the
`Emergency Fund').
``(2) Deposits into fund.--Out of any money in the Treasury
of the United States not otherwise appropriated, there are
appropriated such sums as are necessary for payment to the
Emergency Fund.
``(3) Grants.--
``(A) Grant related to caseload increases.--
``(i) In general.--For each calendar
quarter in fiscal year 2009 or 2010, the
Secretary shall make a grant from the Emergency
Fund to each State that--
``(I) requests a grant under this
subparagraph for the quarter; and
``(II) meets the requirement of
clause (ii) for the quarter.
``(ii) Caseload increase requirement.--A
State meets the requirement of this clause for
a quarter if the average monthly assistance
caseload of the State for the quarter exceeds
the average monthly assistance caseload of the
State for the corresponding quarter in the
emergency fund base year of the State.
``(iii) Amount of grant.--Subject to
paragraph (5), the amount of the grant to be
made to a State under this subparagraph for a
quarter shall be 80 percent of the amount (if
any) by which the total expenditures of the
State for basic assistance (as defined by the
Secretary) in the quarter, whether under the
State program funded under this part or as
qualified State expenditures, exceeds the total
expenditures of the State for such assistance
for the corresponding quarter in the emergency
fund base year of the State.
``(B) Grant related to increased expenditures for
non-recurrent short-term benefits.--
``(i) In general.--For each calendar
quarter in fiscal year 2009 or 2010, the
Secretary shall make a grant from the Emergency
Fund to each State that--
``(I) requests a grant under this
subparagraph for the quarter; and
``(II) meets the requirement of
clause (ii) for the quarter.
``(ii) Non-recurrent short-term expenditure
requirement.--A State meets the requirement of
this clause for a quarter if the total
expenditures of the State for non-recurrent
short-term benefits in the quarter, whether
under the State program funded under this part
or as qualified State expenditures, exceeds the
total such expenditures of the State for non-
recurrent short-term benefits in the
corresponding quarter in the emergency fund
base year of the State.
``(iii) Amount of grant.--Subject to
paragraph (5), the amount of the grant to be
made to a State under this subparagraph for a
quarter shall be an amount equal to 80 percent
of the excess described in clause (ii).
``(C) Grant related to increased expenditures for
subsidized employment.--
``(i) In general.--For each calendar
quarter in fiscal year 2009 or 2010, the
Secretary shall make a grant from the Emergency
Fund to each State that--
``(I) requests a grant under this
subparagraph for the quarter; and
``(II) meets the requirement of
clause (ii) for the quarter.
``(ii) Subsidized employment expenditure
requirement.--A State meets the requirement of
this clause for a quarter if the total
expenditures of the State for subsidized
employment in the quarter, whether under the
State program funded under this part or as
qualified State expenditures, exceeds the total
of such expenditures of the State in the
corresponding quarter in the emergency fund
base year of the State.
``(iii) Amount of grant.--Subject to
paragraph (5), the amount of the grant to be
made to a State under this subparagraph for a
quarter shall be an amount equal to 80 percent
of the excess described in clause (ii).
``(4) Authority to make necessary adjustments to data and
collect needed data.--In determining the size of the caseload
of a State and the expenditures of a State for basic
assistance, non-recurrent short-term benefits, and subsidized
employment, during any period for which the State requests
funds under this subsection, and during the emergency fund base
year of the State, the Secretary may make appropriate
adjustments to the data to ensure that the data reflect
expenditures under the State program funded under this part and
qualified State expenditures. The Secretary may develop a
mechanism for collecting expenditure data, including procedures
which allow States to make reasonable estimates, and may set
deadlines for making revisions to the data.
``(5) Limitation.--The total amount payable to a single
State under subsection (b) and this subsection for a fiscal
year shall not exceed 25 percent of the State family assistance
grant.
``(6) Limitations on use of funds.--A State to which an
amount is paid under this subsection may use the amount only as
authorized by section 404.
``(7) Timing of implementation.--The Secretary shall
implement this subsection as quickly as reasonably possible,
pursuant to appropriate guidance to States.
``(8) Definitions.--In this subsection:
``(A) Average monthly assistance caseload.--The
term `average monthly assistance caseload' means, with
respect to a State and a quarter, the number of
families receiving assistance during the quarter under
the State program funded under this part or as
qualified State expenditures, subject to adjustment
under paragraph (4).
``(B) Emergency fund base year.--
``(i) In general.--The term `emergency fund
base year' means, with respect to a State and a
category described in clause (ii), whichever of
fiscal year 2007 or 2008 is the fiscal year in
which the amount described by the category with
respect to the State is the lesser.
``(ii) Categories described.--The
categories described in this clause are the
following:
``(I) The average monthly
assistance caseload of the State.
``(II) The total expenditures of
the State for non-recurrent short-term
benefits, whether under the State
program funded under this part or as
qualified State expenditures.
``(III) The total expenditures of
the State for subsidized employment,
whether under the State program funded
under this part or as qualified State
expenditures.
``(C) Qualified state expenditures.--The term
`qualified State expenditures' has the meaning given
the term in section 409(a)(7).''.
(b) Temporary Modification of Caseload Reduction Credit.--Section
407(b)(3)(A)(i) of such Act (42 U.S.C. 607(b)(3)(A)(i)) is amended by
inserting ``(or if the immediately preceding fiscal year is fiscal year
2009 or 2010, then, at State option, during the emergency fund base
year of the State with respect to the average monthly assistance
caseload of the State (within the meaning of section 403(c)(8)(B)))''
before ``under the State''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 2102. ONE-TIME EMERGENCY SSI PAYMENT.
(a) Payment Authority.--
(1) In general.--At the earliest practicable date in
calendar year 2009 but not later than 90 days after the date of
the enactment of this section, the Commissioner of Social
Security shall make a one-time payment, subject to subsection
(b)(2) of this section, to each individual who is determined by
the Commissioner in calendar year 2009 to be an individual
who--
(A) is entitled to a cash benefit under the
supplemental security income program under title XVI of
the Social Security Act (other than pursuant to section
1611(e)(1)(B) of such Act) for at least 1 day in the
calendar month in which the first payment under this
section is to be made; or
(B)(i) was entitled to such a cash benefit (other
than pursuant to section 1611(e)(1)(B) of such Act) for
at least 1 day in the 2-month period preceding that
calendar month; and
(ii) whose entitlement to that benefit ceased in
that 2-month period solely because the income of the
individual (and the income of the spouse, if any, of
the individual) exceeded the applicable income limit
described in paragraph (1)(A) or (2)(A) of section
1611(a) of such Act.
(2) Amount of payment.--Subject to subsection (b)(1) of
this section, the amount of the payment shall be--
(A) in the case of an individual eligible for a
payment under this section who does not have a spouse
eligible for such a payment, an amount equal to the
average of the cash benefits payable in the aggregate
under section 1611 or 1619(a) of the Social Security
Act to eligible individuals who do not have an eligible
spouse, for the most recent month for which data on
payment of the benefits are available, as determined by
the Commissioner of Social Security; or
(B) in the case of an individual eligible for a
payment under this section who has a spouse eligible
for such a payment, an amount equal to the average of
the cash benefits payable in the aggregate under
section 1611 or 1619(a) of the Social Security Act to
eligible individuals who have an eligible spouse, for
the most recent month for which data on payment of the
benefits are available, as so determined.
(b) Administrative Provisions.--
(1) Authority to withhold payment to recover prior
overpayment of ssi benefits.--The Commissioner of Social
Security may withhold part or all of a payment otherwise
required to be made under subsection (a) of this section to an
individual, in order to recover a prior overpayment of benefits
to the individual under the supplemental security income
program under title XVI of the Social Security Act, subject to
the limitations of section 1631(b) of such Act.
(2) Authority to make payments over the course of 2
months.--The Commissioner of Social Security may provide for
payments under this section to be made over the course of 2
calendar months as may be necessary for the effective and
efficient administration of this section.
(3) Payment to be disregarded in determining underpayments
under the ssi program.--A payment under subsection (a) shall be
disregarded in determining whether there has been an
underpayment of benefits under the supplemental security income
program under title XVI of the Social Security Act.
(4) Nonassignment.--The provisions of section 207 of the
Social Security Act shall apply with respect to payments under
this section to the same extent as they apply in the case of
title II of such Act.
(c) Payments To Be Disregarded for Purposes of All Federal and
Federally Assisted Programs.--A payment under subsection (a) shall not
be regarded as income to the recipient, and shall not be regarded as a
resource of the recipient for the month of receipt and the following 6
months, for purposes of determining the eligibility of any individual
for benefits or assistance, or the amount or extent of benefits or
assistance, under any Federal program or under any State or local
program financed in whole or in part with Federal funds.
(d) Appropriation.--Out of any sums in the Treasury of the United
States not otherwise appropriated, there are appropriated such sums as
may be necessary to carry out this section.
SEC. 2103. TEMPORARY RESUMPTION OF PRIOR CHILD SUPPORT LAW.
During the period that begins with October 1, 2008, and ends with
September 30, 2010, section 455(a)(1) of the Social Security Act shall
be applied and administered as if the phrase ``from amounts paid to the
State under section 458 or'' did not appear in such section.
TITLE III--HEALTH INSURANCE ASSISTANCE FOR THE UNEMPLOYED
SEC. 3001. SHORT TITLE AND TABLE OF CONTENTS OF TITLE.
(a) Short Title of Title.--This title may be cited as the ``Health
Insurance Assistance for the Unemployed Act of 2009''.
(b) Table of Contents of Title.--The table of contents of this
title is as follows:
Sec. 3001. Short title and table of contents of title.
Sec. 3002. Premium assistance for COBRA benefits and extension of COBRA
benefits for older or long-term employees.
Sec. 3003. Temporary optional Medicaid coverage for the unemployed.
SEC. 3002. PREMIUM ASSISTANCE FOR COBRA BENEFITS AND EXTENSION OF COBRA
BENEFITS FOR OLDER OR LONG-TERM EMPLOYEES.
(a) Premium Assistance for COBRA Continuation Coverage for
Individuals and Their Families.--
(1) Provision of premium assistance.--
(A) Reduction of premiums payable.--In the case of
any premium for a period of coverage beginning on or
after the date of the enactment of this Act for COBRA
continuation coverage with respect to any assistance
eligible individual, such individual shall be treated
for purposes of any COBRA continuation provision as
having paid the amount of such premium if such
individual pays 35 percent of the amount of such
premium (as determined without regard to this
subsection).
(B) Premium reimbursement.--For provisions
providing the balance of such premium, see section 6431
of the Internal Revenue Code of 1986, as added by
paragraph (12).
(2) Limitation of period of premium assistance.--
(A) In general.--Paragraph (1)(A) shall not apply
with respect to any assistance eligible individual for
months of coverage beginning on or after the earlier
of--
(i) the first date that such individual is
eligible for coverage under any other group
health plan (other than coverage consisting of
only dental, vision, counseling, or referral
services (or a combination thereof), coverage
under a health reimbursement arrangement or a
health flexible spending arrangement, or
coverage of treatment that is furnished in an
on-site medical facility maintained by the
employer and that consists primarily of first-
aid services, prevention and wellness care, or
similar care (or a combination thereof)) or is
eligible for benefits under title XVIII of the
Social Security Act.
(ii) the earliest of--
(I) the date which is 12 months
after the first day of first month that
paragraph (1)(A) applies with respect
to such individual,
(II) the date following the
expiration of the maximum period of
continuation coverage required under
the applicable COBRA continuation
coverage provision, or
(III) the date following the
expiration of the period of
continuation coverage allowed under
paragraph (4)(B)(ii).
(B) Timing of eligibility for additional
coverage.--For purposes of subparagraph (A)(i), an
individual shall not be treated as eligible for
coverage under a group health plan before the first
date on which such individual could be covered under
such plan.
(C) Notification requirement.--An assistance
eligible individual shall notify in writing the group
health plan with respect to which paragraph (1)(A)
applies if such paragraph ceases to apply by reason of
subparagraph (A)(i). Such notice shall be provided to
the group health plan in such time and manner as may be
specified by the Secretary of Labor.
(3) Assistance eligible individual.--For purposes of this
section, the term ``assistance eligible individual'' means any
qualified beneficiary if--
(A) at any time during the period that begins with
September 1, 2008, and ends with December 31, 2009,
such qualified beneficiary is eligible for COBRA
continuation coverage,
(B) such qualified beneficiary elects such
coverage, and
(C) the qualifying event with respect to the COBRA
continuation coverage consists of the involuntary
termination of the covered employee's employment and
occurred during such period.
(4) Extension of election period and effect on coverage.--
(A) In general.--Notwithstanding section 605(a) of
the Employee Retirement Income Security Act of 1974,
section 4980B(f)(5)(A) of the Internal Revenue Code of
1986, section 2205(a) of the Public Health Service Act,
and section 8905a(c)(2) of title 5, United States Code,
in the case of an individual who is a qualified
beneficiary described in paragraph (3)(A) as of the
date of the enactment of this Act and has not made the
election referred to in paragraph (3)(B) as of such
date, such individual may elect the COBRA continuation
coverage under the COBRA continuation coverage
provisions containing such sections during the 60-day
period commencing with the date on which the
notification required under paragraph (7)(C) is
provided to such individual.
(B) Commencement of coverage; no reach-back.--Any
COBRA continuation coverage elected by a qualified
beneficiary during an extended election period under
subparagraph (A)--
(i) shall commence on the date of the
enactment of this Act, and
(ii) shall not extend beyond the period of
COBRA continuation coverage that would have
been required under the applicable COBRA
continuation coverage provision if the coverage
had been elected as required under such
provision.
(C) Preexisting conditions.--With respect to a
qualified beneficiary who elects COBRA continuation
coverage pursuant to subparagraph (A), the period--
(i) beginning on the date of the qualifying
event, and
(ii) ending with the day before the date of
the enactment of this Act,
shall be disregarded for purposes of determining the
63-day periods referred to in section 701)(2) of the
Employee Retirement Income Security Act of 1974,
section 9801(c)(2) of the Internal Revenue Code of
1986, and section 2701(c)(2) of the Public Health
Service Act.
(5) Expedited review of denials of premium assistance.--In
any case in which an individual requests treatment as an
assistance eligible individual and is denied such treatment by
the group health plan by reason of such individual's
ineligibility for COBRA continuation coverage, the Secretary of
Labor (or the Secretary of Health and Human services in
connection with COBRA continuation coverage which is provided
other than pursuant to part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974), in
consultation with the Secretary of the Treasury, shall provide
for expedited review of such denial. An individual shall be
entitled to such review upon application to such Secretary in
such form and manner as shall be provided by such Secretary.
Such Secretary shall make a determination regarding such
individual's eligibility within 10 business days after receipt
of such individual's application for review under this
paragraph.
(6) Disregard of subsidies for purposes of federal and
state programs.--Notwithstanding any other provision of law,
any premium reduction with respect to an assistance eligible
individual under this subsection shall not be considered income
or resources in determining eligibility for, or the amount of
assistance or benefits provided under, any other public benefit
provided under Federal law or the law of any State or political
subdivision thereof.
(7) Notices to individuals.--
(A) General notice.--
(i) In general.--In the case of notices
provided under section 606(4) of the Employee
Retirement Income Security Act of 1974 (29
U.S.C. 1166(4)), section 4980B(f)(6)(D) of the
Internal Revenue Code of 1986, section 2206(4)
of the Public Health Service Act (42 U.S.C.
300bb-6(4)), or section 8905a(f)(2)(A) of title
5, United States Code, with respect to
individuals who, during the period described in
paragraph (3)(A), become entitled to elect
COBRA continuation coverage, such notices shall
include an additional notification to the
recipient of the availability of premium
reduction with respect to such coverage under
this subsection.
(ii) Alternative notice.--In the case of
COBRA continuation coverage to which the notice
provision under such sections does not apply,
the Secretary of Labor, in consultation with
the Secretary of the Treasury and the Secretary
of Health and Human Services, shall, in
coordination with administrators of the group
health plans (or other entities) that provide
or administer the COBRA continuation coverage
involved, provide rules requiring the provision
of such notice.
(iii) Form.--The requirement of the
additional notification under this subparagraph
may be met by amendment of existing notice
forms or by inclusion of a separate document
with the notice otherwise required.
(B) Specific requirements.--Each additional
notification under subparagraph (A) shall include--
(i) the forms necessary for establishing
eligibility for premium reduction under this
subsection,
(ii) the name, address, and telephone
number necessary to contact the plan
administrator and any other person maintaining
relevant information in connection with such
premium reduction,
(iii) a description of the extended
election period provided for in paragraph
(4)(A),
(iv) a description of the obligation of the
qualified beneficiary under paragraph (2)(C) to
notify the plan providing continuation coverage
of eligibility for subsequent coverage under
another group health plan or eligibility for
benefits under title XVIII of the Social
Security Act and the penalty provided for
failure to so notify the plan, and
(v) a description, displayed in a prominent
manner, of the qualified beneficiary's right to
a reduced premium and any conditions on
entitlement to the reduced premium.
(C) Notice relating to retroactive coverage.--In
the case of an individual described in paragraph (3)(A)
who has elected COBRA continuation coverage as of the
date of enactment of this Act or an individual
described in paragraph (4)(A), the administrator of the
group health plan (or other entity) involved shall
provide (within 60 days after the date of enactment of
this Act) for the additional notification required to
be provided under subparagraph (A).
(D) Model notices.--Not later than 30 days after
the date of enactment of this Act, the Secretary of the
Labor, in consultation with the Secretary of the
Treasury and the Secretary of Health and Human
Services, shall prescribe models for the additional
notification required under this paragraph.
(8) Safeguards.--The Secretary of the Treasury shall
provide such rules, procedures, regulations, and other guidance
as may be necessary and appropriate to prevent fraud and abuse
under this subsection.
(9) Outreach.--The Secretary of Labor, in consultation with
the Secretary of the Treasury and the Secretary of Health and
Human Services, shall provide outreach consisting of public
education and enrollment assistance relating to premium
reduction provided under this subsection. Such outreach shall
target employers, group health plan administrators, public
assistance programs, States, insurers, and other entities as
determined appropriate by such Secretaries. Such outreach shall
include an initial focus on those individuals electing
continuation coverage who are referred to in paragraph (7)(C).
Information on such premium reduction, including enrollment,
shall also be made available on website of the Departments of
Labor, Treasury, and Health and Human Services.
(10) Definitions.--For purposes of this subsection--
(A) Administrator.--The term ``administrator'' has
the meaning given such term in section 3(16) of the
Employee Retirement Income Security Act of 1974.
(B) COBRA continuation coverage.--The term ``COBRA
continuation coverage'' means continuation coverage
provided pursuant to part 6 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974
(other than under section 609), title XXII of the
Public Health Service Act, section 4980B of the
Internal Revenue Code of 1986 (other than subsection
(f)(1) of such section insofar as it relates to
pediatric vaccines), or section 8905a of title 5,
United States Code, or under a State program that
provides continuation coverage comparable to such
continuation coverage. Such term does not include
coverage under a health flexible spending arrangement.
(C) COBRA continuation provision.--The term ``COBRA
continuation provision'' means the provisions of law
described in subparagraph (B).
(D) Covered employee.--The term ``covered
employee'' has the meaning given such term in section
607(2) of the Employee Retirement Income Security Act
of 1974.
(E) Qualified beneficiary.--The term ``qualified
beneficiary'' has the meaning given such term in
section 607(3) of the Employee Retirement Income
Security Act of 1974.
(F) Group health plan.--The term ``group health
plan'' has the meaning given such term in section
607(1) of the Employee Retirement Income Security Act
of 1974.
(G) State.--The term ``State'' includes the
District of Columbia, the Commonwealth of Puerto Rico,
the Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands.
(11) Reports.--
(A) Interim report.--The Secretary of the Treasury
shall submit an interim report to the Committee on
Education and Labor, the Committee on Ways and Means,
and the Committee on Energy and Commerce of the House
of Representatives and the Committee on Health,
Education, Labor, and Pensions and the Committee on
Finance of the Senate regarding the premium reduction
provided under this subsection that includes--
(i) the number of individuals provided such
assistance as of the date of the report; and
(ii) the total amount of expenditures
incurred (with administrative expenditures
noted separately) in connection with such
assistance as of the date of the report.
(B) Final report.--As soon as practicable after the
last period of COBRA continuation coverage for which
premium reduction is provided under this section, the
Secretary of the Treasury shall submit a final report
to each Committee referred to in subparagraph (A) that
includes--
(i) the number of individuals provided
premium reduction under this section;
(ii) the average dollar amount (monthly and
annually) of premium reductions provided to
such individuals; and
(iii) the total amount of expenditures
incurred (with administrative expenditures
noted separately) in connection with premium
reduction under this section.
(12) COBRA premium assistance.--
(A) In general.--Subchapter B of chapter 65 of the
Internal Revenue Code of 1986 is amended by adding at
the end the following new section:
``SEC. 6431. COBRA PREMIUM ASSISTANCE.
``(a) In General.--The entity to whom premiums are payable under
COBRA continuation coverage shall be reimbursed for the amount of
premiums not paid by plan beneficiaries by reason of section 3002(a) of
the Health Insurance Assistance for the Unemployed Act of 2009. Such
amount shall be treated as a credit against the requirement of such
entity to make deposits of payroll taxes. To the extent that such
amount exceeds the amount of such taxes, the Secretary shall pay to
such entity the amount of such excess. No payment may be made under
this subsection to an entity with respect to any assistance eligible
individual until after such entity has received the reduced premium
from such individual required under section 3002(a)(1)(A) of such Act.
``(b) Payroll Taxes.--For purposes of this section, the term
`payroll taxes' means--
``(1) amounts required to be deducted and withheld for the
payroll period under section 3401 (relating to wage
withholding),
``(2) amounts required to be deducted for the payroll
period under section 3102 (relating to FICA employee taxes),
and
``(3) amounts of the taxes imposed for the payroll period
under section 3111 (relating to FICA employer taxes).
``(c) Treatment of Credit.--Except as otherwise provided by the
Secretary, the credit described in subsection (a) shall be applied as
though the employer had paid to the Secretary, on the day that the
qualified beneficiary's premium payment is received, an amount equal to
such credit.
``(d) Treatment of Payment.--For purposes of section 1324(b)(2) of
title 31, United States Code, any payment under this subsection shall
be treated in the same manner as a refund of the credit under section
35.
``(e) Reporting.--
``(1) In general.--Each entity entitled to reimbursement
under subsection (a) for any period shall submit such reports
as the Secretary may require, including--
``(A) an attestation of involuntary termination of
employment for each covered employee on the basis of
whose termination entitlement to reimbursement is
claimed under subsection (a), and
``(B) a report of the amount of payroll taxes
offset under subsection (a) for the reporting period
and the estimated offsets of such taxes for the
subsequent reporting period in connection with
reimbursements under subsection (a).
``(2) Timing of reports relating to amount of payroll
taxes.--Reports required under paragraph (1)(B) shall be
submitted at the same time as deposits of taxes imposed by
chapters 21, 22, and 24 or at such time as is specified by the
Secretary.
``(f) Regulations.--The Secretary may issue such regulations or
other guidance as may be necessary or appropriate to carry out this
section, including the requirement to report information or the
establishment of other methods for verifying the correct amounts of
payments and credits under this section.''.
(B) Social security trust funds held harmless.--In
determining any amount transferred or appropriated to
any fund under the Social Security Act, section 6431 of
the Internal Revenue Code of 1986 shall not be taken
into account.
(C) Clerical amendment.--The table of sections for
subchapter B of chapter 65 of the Internal Revenue Code
of 1986 is amended by adding at the end the following
new item:
``Sec. 6431. COBRA premium assistance.''.
(D) Effective date.--The amendments made by this
paragraph shall apply to premiums to which subsection
(a)(1)(A) applies.
(13) Penalty for failure to notify health plan of cessation
of eligibility for premium assistance.--
(A) In general.--Part I of subchapter B of chapter
68 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new section:
``SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH PLAN OF CESSATION OF
ELIGIBILITY FOR COBRA PREMIUM ASSISTANCE.
``(a) In General.--Any person required to notify a group health
plan under section 3002(a)(2)(C)) of the Health Insurance Assistance
for the Unemployed Act of 2009 who fails to make such a notification at
such time and in such manner as the Secretary of Labor may require
shall pay a penalty of 110 percent of the premium reduction provided
under such section after termination of eligibility under such
subsection.
``(b) Reasonable Cause Exception.--No penalty shall be imposed
under subsection (a) with respect to any failure if it is shown that
such failure is due to reasonable cause and not to willful neglect.''.
(B) Clerical amendment.--The table of sections of
part I of subchapter B of chapter 68 of such Code is
amended by adding at the end the following new item:
``Sec. 6720C. Penalty for failure to notify health plan of cessation of
eligibility for COBRA premium
assistance.''.
(C) Effective date.--The amendments made by this
paragraph shall apply to failures occurring after the
date of the enactment of this Act.
(14) Coordination with hctc.--
(A) In general.--Subsection (g) of section 35 of
the Internal Revenue Code of 1986 is amended by
redesignating paragraph (9) as paragraph (10) and
inserting after paragraph (8) the following new
paragraph:
``(9) COBRA premium assistance.--In the case of an
assistance eligible individual who receives premium reduction
for COBRA continuation coverage under section 3002(a) of the
Health Insurance Assistance for the Unemployed Act of 2009 for
any month during the taxable year, such individual shall not be
treated as an eligible individual, a certified individual, or a
qualifying family member for purposes of this section or
section 7527 with respect to such month.''.
(B) Effective date.--The amendment made by
subparagraph (A) shall apply to taxable years ending
after the date of the enactment of this Act.
(15) Exclusion of cobra premium assistance from gross
income.--
(A) In general.--Part III of subchapter B of
chapter 1 of the Internal Revenue Code of 1986 is
amended by inserting after section 139B the following
new section:
``SEC. 139C. COBRA PREMIUM ASSISTANCE.
``In the case of an assistance eligible individual (as defined in
section 3002 of the Health Insurance Assistance for the Unemployed Act
of 2009), gross income does not include any premium reduction provided
under subsection (a) of such section.''.
(B) Clerical amendment.--The table of sections for
part III of subchapter B of chapter 1 of such Code is
amended by inserting after the item relating to section
139B the following new item:
``Sec. 139C. COBRA premium assistance.''.
(C) Effective date.--The amendments made by this
paragraph shall apply to taxable years ending after the
date of the enactment of this Act.
(b) Extension of COBRA Benefits for Older or Long-Term Employees.--
(1) ERISA amendment.--Section 602(2)(A) of the Employee
Retirement Income Security Act of 1974 is amended by adding at
the end the following new clauses:
``(x) Special rule for older or long-term
employees generally.--In the case of a
qualifying event described in section 603(2)
with respect to a covered employee who (as of
such qualifying event) has attained age 55 or
has completed 10 or more years of service with
the entity that is the employer at the time of
the qualifying event, clauses (i) and (ii)
shall not apply.
``(xi) Year of service.--For purposes of
this subparagraph, the term `year of service'
shall have the meaning provided in section
202(a)(3).''.
(2) IRC amendment.--Clause (i) of section 4980B(f)(2)(B) of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new subclauses:
``(X) Special rule for older or
long-term employees generally.--In the
case of a qualifying event described in
paragraph (3)(B) with respect to a
covered employee who (as of such
qualifying event) has attained age 55
or has completed 10 or more years of
service with the entity that is the
employer at the time of the qualifying
event, subclauses (I) and (II) shall
not apply.
``(XI) Year of service.--For
purposes of this clause, the term `year
of service' shall have the meaning
provided in section 202(a)(3) of the
Employee Retirement Income Security Act
of 1974.''.
(3) PHSA amendment.--Section 2202(2)(A) of the Public
Health Service Act is amended by adding at the end the
following new clauses:
``(viii) Special rule for older or long-
term employees generally.--In the case of a
qualifying event described in section 2203(2)
with respect to a covered employee who (as of
such qualifying event) has attained age 55 or
has completed 10 or more years of service with
the entity that is the employer at the time of
the qualifying event, clauses (i) and (ii)
shall not apply.
``(ix) Year of service.--For purposes of
this subparagraph, the term `year of service'
shall have the meaning provided in section
202(a)(3) of the Employee Retirement Income
Security Act of 1974.''.
(4) Effective date of amendments.--The amendments made by
this subsection shall apply to periods of coverage which would
(without regard to the amendments made by this section) end on
or after the date of the enactment of this Act.
SEC. 3003. TEMPORARY OPTIONAL MEDICAID COVERAGE FOR THE UNEMPLOYED.
(a) In General.--Section 1902 of the Social Security Act (42 U.S.C.
1396b) is amended--
(1) in subsection (a)(10)(A)(ii)--
(A) by striking ``or'' at the end of subclause
(XVIII);
(B) by adding ``or'' at the end of subclause (XIX);
and
(C) by adding at the end the following new
subclause
``(XX) who are described in
subsection (dd)(1) (relating to certain
unemployed individuals and their
families);''; and
(2) by adding at the end the following new subsection:
``(dd)(1) Individuals described in this paragraph are--
``(A) individuals who--
``(i) are within one or more of the categories
described in paragraph (2), as elected under the State
plan; and
``(ii) meet the applicable requirements of
paragraph (3); and
``(B) individuals who--
``(i) are the spouse, or dependent child under 19
years of age, of an individual described in
subparagraph (A); and
``(ii) meet the requirement of paragraph (3)(B).
``(2) The categories of individuals described in this paragraph are
each of the following:
``(A) Individuals who are receiving unemployment
compensation benefits.
``(B) Individuals who were receiving, but have exhausted,
unemployment compensation benefits on or after July 1, 2008.
``(C) Individuals who are involuntarily unemployed and were
involuntarily separated from employment on or after September
1, 2008, and before January 1, 2011, whose family gross income
does not exceed a percentage specified by the State (not to
exceed 200 percent) of the income official poverty line (as
defined by the Office of Management and Budget, and revised
annually in accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable to a family of
the size involved, and who, but for subsection
(a)(10)(A)(ii)(XX), are not eligible for medical assistance
under this title or health assistance under title XXI.
``(D) Individuals who are involuntarily unemployed and were
involuntarily separated from employment on or after September
1, 2008, and before January 1, 2011, who are members of
households participating in the supplemental nutrition
assistance program established under the Food and Nutrition Act
of 2008 (7 U.S.C. 2011 et seq), and who, but for subsection
(a)(10)(A)(ii)(XX), are not eligible for medical assistance
under this title or health assistance under title XXI.
A State plan may elect one or more of the categories described in this
paragraph but may not elect the category described in subparagraph (B)
unless the State plan also elects the category described in
subparagraph (A).
``(3) The requirements of this paragraph with respect to an
individual are the following:
``(A) In the case of individuals within a category
described in subparagraph (A) or (B) of paragraph (2), the
individual was involuntarily separated from employment on or
after September 1, 2008, and before January 1, 2011, or meets
such comparable requirement as the Secretary specifies through
rule, guidance, or otherwise in the case of an individual who
was an independent contractor.
``(B) The individual is not otherwise covered under
creditable coverage, as defined in section 2701(c) of the
Public Health Service Act (42 U.S.C. 300gg(c)), but applied
without regard to paragraph (1)(F) of such section and without
regard to coverage provided by reason of the application of
subsection (a)(10)(A)(ii)(XX).
``(4)(A) No income or resources test shall be applied with respect
to any category of individuals described in subparagraph (A), (B), or
(D) of paragraph (2) who are eligible for medical assistance only by
reason of the application of subsection (a)(10)(A)(ii)(XX).
``(B) Nothing in this subsection shall be construed to prevent a
State from imposing a resource test for the category of individuals
described in paragraph (2)(C)).
``(C) In the case of individuals provided medical assistance by
reason of the application of subsection (a)(10)(A)(ii)(XX), the
requirements of subsections (i)(22) and (x) shall not apply.''.
(b) 100 Percent Federal Matching Rate.--
(1) FMAP for time-limited period.--The third sentence of
section 1905(b) of such Act (42 U.S.C. 1396d(b)) is amended by
inserting before the period at the end the following: ``and for
items and services furnished on or after the date of enactment
of this Act and before January 1, 2011, to individuals who are
eligible for medical assistance only by reason of the
application of section 1902(a)(10)(A)(ii)(XX)''.
(2) Certain enrollment-related administrative costs.--
Notwithstanding any other provision of law, for purposes of
applying section 1903(a) of the Social Security Act (42 U.S.C.
1396b(a)), with respect to expenditures incurred on or after
the date of the enactment of this Act and before January 1,
2011, for costs of administration (including outreach and the
modification and operation of eligibility information systems)
attributable to eligibility determination and enrollment of
individuals who are eligible for medical assistance only by
reason of the application of section 1902(a)(10)(A)(ii)(XX) of
such Act, as added by subsection (a)(1), the Federal matching
percentage shall be 100 percent instead of the matching
percentage otherwise applicable.
(c) Conforming Amendments.--(1) Section 1903(f)(4) of such Act (42
U.S.C. 1396c(f)(4)) is amended by inserting ``1902(a)(10)(A)(ii)(XX),
or'' after ``1902(a)(10)(A)(ii)(XIX),''.
(2) Section 1905(a) of such Act (42 U.S.C. 1396d(a)) is amended, in
the matter preceding paragraph (1)--
(A) by striking ``or'' at the end of clause (xii);
(B) by adding ``or'' at the end of clause (xiii); and
(C) by inserting after clause (xiii) the following new
clause:
``(xiv) individuals described in section
1902(dd)(1),''.
TITLE IV--HEALTH INFORMATION TECHNOLOGY
SEC. 4001. SHORT TITLE; TABLE OF CONTENTS OF TITLE.
(a) Short Title.--This title may be cited as the ``Health
Information Technology for Economic and Clinical Health Act'' or the
``HITECH Act''.
(b) Table of Contents of Title.--The table of contents of this
title is as follows:
Sec. 4001. Short title; table of contents of title.
Subtitle A--Promotion of Health Information Technology
Part I--Improving Health Care Quality, Safety, and Efficiency
Sec. 4101. ONCHIT; standards development and adoption.
``TITLE XXX--HEALTH INFORMATION TECHNOLOGY AND QUALITY
``Sec. 3000. Definitions.
``Subtitle A--Promotion of Health Information Technology
``Sec. 3001. Office of the National Coordinator for Health
Information Technology.
``Sec. 3002. HIT Policy Committee.
``Sec. 3003. HIT Standards Committee.
``Sec. 3004. Process for adoption of endorsed recommendations;
adoption of initial set of standards,
implementation specifications, and
certification criteria.
``Sec. 3005. Application and use of adopted standards and
implementation specifications by Federal
agencies.
``Sec. 3006. Voluntary application and use of adopted standards
and implementation specifications by
private entities.
``Sec. 3007. Federal health information technology.
``Sec. 3008. Transitions.
``Sec. 3009. Relation to HIPAA privacy and security law.
``Sec. 3010. Authorization for appropriations.
Sec. 4102. Technical amendment.
Part II--Application and Use of Adopted Health Information Technology
Standards; Reports
Sec. 4111. Coordination of Federal activities with adopted standards
and implementation specifications.
Sec. 4112. Application to private entities.
Sec. 4113. Study and reports.
Subtitle B--Testing of Health Information Technology
Sec. 4201. National Institute for Standards and Technology testing.
Sec. 4202. Research and development programs.
Subtitle C--Incentives for the Use of Health Information Technology
Part I--Grants and Loans Funding
Sec. 4301. Grant, loan, and demonstration programs.
``Subtitle B--Incentives for the Use of Health Information Technology
``Sec. 3011. Immediate funding to strengthen the health
information technology infrastructure.
``Sec. 3012. Health information technology implementation
assistance.
``Sec. 3013. State grants to promote health information
technology.
``Sec. 3014. Competitive grants to States and Indian tribes for
the development of loan programs to
facilitate the widespread adoption of
certified EHR technology.
``Sec. 3015. Demonstration program to integrate information
technology into clinical education.
``Sec. 3016. Information technology professionals on health
care.
``Sec. 3017. General grant and loan provisions.
``Sec. 3018. Authorization for appropriations.
Part II--Medicare Program
Sec. 4311. Incentives for eligible professionals.
Sec. 4312. Incentives for hospitals.
Sec. 4313. Treatment of payments and savings; implementation funding.
Sec. 4314. Study on application of HIT payment incentives for providers
not receiving other incentive payments.
Part III--Medicaid Funding
Sec. 4321. Medicaid provider HIT adoption and operation payments;
implementation funding.
Subtitle D--Privacy
Sec. 4400. Definitions.
Part I--Improved Privacy Provisions and Security Provisions
Sec. 4401. Application of security provisions and penalties to business
associates of covered entities; annual
guidance on security provisions.
Sec. 4402. Notification in the case of breach.
Sec. 4403. Education on Health Information Privacy.
Sec. 4404. Application of privacy provisions and penalties to business
associates of covered entities.
Sec. 4405. Restrictions on certain disclosures and sales of health
information; accounting of certain
protected health information disclosures;
access to certain information in electronic
format.
Sec. 4406. Conditions on certain contacts as part of health care
operations.
Sec. 4407. Temporary breach notification requirement for vendors of
personal health records and other non-HIPAA
covered entities.
Sec. 4408. Business associate contracts required for certain entities.
Sec. 4409. Clarification of application of wrongful disclosures
criminal penalties.
Sec. 4410. Improved enforcement.
Sec. 4411. Audits.
Part II--Relationship to Other Laws; Regulatory References; Effective
Date; Reports
Sec. 4421. Relationship to other laws.
Sec. 4422. Regulatory references.
Sec. 4423. Effective date.
Sec. 4424. Studies, reports, guidance.
Subtitle E--Miscellaneous Medicare Provisions
Sec. 4501. Moratoria on certain Medicare regulations.
Sec. 4502. Long-term care hospital technical corrections.
Subtitle A--Promotion of Health Information Technology
PART I--IMPROVING HEALTH CARE QUALITY, SAFETY, AND EFFICIENCY
SEC. 4101. ONCHIT; STANDARDS DEVELOPMENT AND ADOPTION.
The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by
adding at the end the following:
``TITLE XXX--HEALTH INFORMATION TECHNOLOGY AND QUALITY
``SEC. 3000. DEFINITIONS.
``In this title:
``(1) Certified ehr technology.--The term `certified EHR
technology' means a qualified electronic health record that is
certified pursuant to section 3001(c)(5) as meeting standards
adopted under section 3004 that are applicable to the type of
record involved (as determined by the Secretary, such as an
ambulatory electronic health record for office-based physicians
or an inpatient hospital electronic health record for
hospitals).
``(2) Enterprise integration.--The term `enterprise
integration' means the electronic linkage of health care
providers, health plans, the government, and other interested
parties, to enable the electronic exchange and use of health
information among all the components in the health care
infrastructure in accordance with applicable law, and such term
includes related application protocols and other related
standards.
``(3) Health care provider.--The term `health care
provider' means a hospital, skilled nursing facility, nursing
facility, home health entity or other long-term care facility,
health care clinic, Federally qualified health center, group
practice (as defined in section 1877(h)(4) of the Social
Security Act), a pharmacist, a pharmacy, a laboratory, a
physician (as defined in section 1861(r) of the Social Security
Act), a practitioner (as described in section 1842(b)(18)(C) of
the Social Security Act), a provider operated by, or under
contract with, the Indian Health Service or by an Indian tribe
(as defined in the Indian Self-Determination and Education
Assistance Act), tribal organization, or urban Indian
organization (as defined in section 4 of the Indian Health Care
Improvement Act), a rural health clinic, a covered entity under
section 340B, and any other category of facility or clinician
determined appropriate by the Secretary.
``(4) Health information.--The term `health information'
has the meaning given such term in section 1171(4) of the
Social Security Act.
``(5) Health information technology.--The term `health
information technology' means hardware, software, integrated
technologies and related licenses, intellectual property,
upgrades, and packaged solutions sold as services that are
specifically designed for use by health care entities for the
electronic creation, maintenance, or exchange of health
information.
``(6) Health plan.--The term `health plan' has the meaning
given such term in section 1171(5) of the Social Security Act.
``(7) HIT policy committee.--The term `HIT Policy
Committee' means such Committee established under section
3002(a).
``(8) HIT standards committee.--The term `HIT Standards
Committee' means such Committee established under section
3003(a).
``(9) Individually identifiable health information.--The
term `individually identifiable health information' has the
meaning given such term in section 1171(6) of the Social
Security Act.
``(10) Laboratory.--The term `laboratory' has the meaning
given such term in section 353(a).
``(11) National coordinator.--The term `National
Coordinator' means the head of the Office of the National
Coordinator for Health Information Technology established under
section 3001(a).
``(12) Pharmacist.--The term `pharmacist' has the meaning
given such term in section 804(2) of the Federal Food, Drug,
and Cosmetic Act.
``(13) Qualified electronic health record.--The term
`qualified electronic health record' means an electronic record
of health-related information on an individual that--
``(A) includes patient demographic and clinical
health information, such as medical history and problem
lists; and
``(B) has the capacity--
``(i) to provide clinical decision support;
``(ii) to support physician order entry;
``(iii) to capture and query information
relevant to health care quality; and
``(iv) to exchange electronic health
information with, and integrate such
information from other sources.
``(14) State.--The term `State' means each of the several
States, the District of Columbia, Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Northern Mariana
Islands.
``Subtitle A--Promotion of Health Information Technology
``SEC. 3001. OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH INFORMATION
TECHNOLOGY.
``(a) Establishment.--There is established within the Department of
Health and Human Services an Office of the National Coordinator for
Health Information Technology (referred to in this section as the
`Office'). The Office shall be headed by a National Coordinator who
shall be appointed by the Secretary and shall report directly to the
Secretary.
``(b) Purpose.--The National Coordinator shall perform the duties
under subsection (c) in a manner consistent with the development of a
nationwide health information technology infrastructure that allows for
the electronic use and exchange of information and that--
``(1) ensures that each patient's health information is
secure and protected, in accordance with applicable law;
``(2) improves health care quality, reduces medical errors,
and advances the delivery of patient-centered medical care;
``(3) reduces health care costs resulting from
inefficiency, medical errors, inappropriate care, duplicative
care, and incomplete information;
``(4) provides appropriate information to help guide
medical decisions at the time and place of care;
``(5) ensures the inclusion of meaningful public input in
such development of such infrastructure;
``(6) improves the coordination of care and information
among hospitals, laboratories, physician offices, and other
entities through an effective infrastructure for the secure and
authorized exchange of health care information;
``(7) improves public health activities and facilitates the
early identification and rapid response to public health
threats and emergencies, including bioterror events and
infectious disease outbreaks;
``(8) facilitates health and clinical research and health
care quality;
``(9) promotes prevention of chronic diseases;
``(10) promotes a more effective marketplace, greater
competition, greater systems analysis, increased consumer
choice, and improved outcomes in health care services; and
``(11) improves efforts to reduce health disparities.
``(c) Duties of the National Coordinator.--
``(1) Standards.--The National Coordinator shall review and
determine whether to endorse each standard, implementation
specification, and certification criterion for the electronic
exchange and use of health information that is recommended by
the HIT Standards Committee under section 3003 for purposes of
adoption under section 3004. The Coordinator shall make such
determination, and report to the Secretary such determination,
not later than 45 days after the date the recommendation is
received by the Coordinator.
``(2) HIT policy coordination.--
``(A) In general.--The National Coordinator shall
coordinate health information technology policy and
programs of the Department with those of other relevant
executive branch agencies with a goal of avoiding
duplication of efforts and of helping to ensure that
each agency undertakes health information technology
activities primarily within the areas of its greatest
expertise and technical capability and in a manner
towards a coordinated national goal.
``(B) HIT policy and standards committees.--The
National Coordinator shall be a leading member in the
establishment and operations of the HIT Policy
Committee and the HIT Standards Committee and shall
serve as a liaison among those two Committees and the
Federal Government.
``(3) Strategic plan.--
``(A) In general.--The National Coordinator shall,
in consultation with other appropriate Federal agencies
(including the National Institute of Standards and
Technology), update the Federal Health IT Strategic
Plan (developed as of June 3, 2008) to include specific
objectives, milestones, and metrics with respect to the
following:
``(i) The electronic exchange and use of
health information and the enterprise
integration of such information.
``(ii) The utilization of an electronic
health record for each person in the United
States by 2014.
``(iii) The incorporation of privacy and
security protections for the electronic
exchange of an individual's individually
identifiable health information.
``(iv) Ensuring security methods to ensure
appropriate authorization and electronic
authentication of health information and
specifying technologies or methodologies for
rendering health information unusable,
unreadable, or indecipherable.
``(v) Specifying a framework for
coordination and flow of recommendations and
policies under this subtitle among the
Secretary, the National Coordinator, the HIT
Policy Committee, the HIT Standards Committee,
and other health information exchanges and
other relevant entities.
``(vi) Methods to foster the public
understanding of health information technology.
``(vii) Strategies to enhance the use of
health information technology in improving the
quality of health care, reducing medical
errors, reducing health disparities, improving
public health, and improving the continuity of
care among health care settings.
``(B) Collaboration.--The strategic plan shall be
updated through collaboration of public and private
entities.
``(C) Measurable outcome goals.--The strategic plan
update shall include measurable outcome goals.
``(D) Publication.--The National Coordinator shall
republish the strategic plan, including all updates.
``(4) Website.--The National Coordinator shall maintain and
frequently update an Internet website on which there is posted
information on the work, schedules, reports, recommendations,
and other information to ensure transparency in promotion of a
nationwide health information technology infrastructure.
``(5) Certification.--
``(A) In general.--The National Coordinator, in
consultation with the Director of the National
Institute of Standards and Technology, shall develop a
program (either directly or by contract) for the
voluntary certification of health information
technology as being in compliance with applicable
certification criteria adopted under this subtitle.
Such program shall include testing of the technology in
accordance with section 4201(b) of the HITECH Act.
``(B) Certification criteria described.--In this
title, the term `certification criteria' means, with
respect to standards and implementation specifications
for health information technology, criteria to
establish that the technology meets such standards and
implementation specifications.
``(6) Reports and publications.--
``(A) Report on additional funding or authority
needed.--Not later than 12 months after the date of the
enactment of this title, the National Coordinator shall
submit to the appropriate committees of jurisdiction of
the House of Representatives and the Senate a report on
any additional funding or authority the Coordinator or
the HIT Policy Committee or HIT Standards Committee
requires to evaluate and develop standards,
implementation specifications, and certification
criteria, or to achieve full participation of
stakeholders in the adoption of a nationwide health
information technology infrastructure that allows for
the electronic use and exchange of health information.
``(B) Implementation report.--The National
Coordinator shall prepare a report that identifies
lessons learned from major public and private health
care systems in their implementation of health
information technology, including information on
whether the technologies and practices developed by
such systems may be applicable to and usable in whole
or in part by other health care providers.
``(C) Assessment of impact of hit on communities
with health disparities and uninsured, underinsured,
and medically underserved areas.--The National
Coordinator shall assess and publish the impact of
health information technology in communities with
health disparities and in areas with a high proportion
of individuals who are uninsured, underinsured, and
medically underserved individuals (including urban and
rural areas) and identify practices to increase the
adoption of such technology by health care providers in
such communities.
``(D) Evaluation of benefits and costs of the
electronic use and exchange of health information.--The
National Coordinator shall evaluate and publish
evidence on the benefits and costs of the electronic
use and exchange of health information and assess to
whom these benefits and costs accrue.
``(E) Resource requirements.--The National
Coordinator shall estimate and publish resources
required annually to reach the goal of utilization of
an electronic health record for each person in the
United States by 2014, including the required level of
Federal funding, expectations for regional, State, and
private investment, and the expected contributions by
volunteers to activities for the utilization of such
records.
``(7) Assistance.--The National Coordinator may provide
financial assistance to consumer advocacy groups and not-for-
profit entities that work in the public interest for purposes
of defraying the cost to such groups and entities to
participate under, whether in whole or in part, the National
Technology Transfer Act of 1995 (15 U.S.C. 272 note).
``(8) Governance for nationwide health information
network.--The National Coordinator shall establish a governance
mechanism for the nationwide health information network.
``(d) Detail of Federal Employees.--
``(1) In general.--Upon the request of the National
Coordinator, the head of any Federal agency is authorized to
detail, with or without reimbursement from the Office, any of
the personnel of such agency to the Office to assist it in
carrying out its duties under this section.
``(2) Effect of detail.--Any detail of personnel under
paragraph (1) shall--
``(A) not interrupt or otherwise affect the civil
service status or privileges of the Federal employee;
and
``(B) be in addition to any other staff of the
Department employed by the National Coordinator.
``(3) Acceptance of detailees.--Notwithstanding any other
provision of law, the Office may accept detailed personnel from
other Federal agencies without regard to whether the agency
described under paragraph (1) is reimbursed.
``(e) Chief Privacy Officer of the Office of the National
Coordinator.--Not later than 12 months after the date of the enactment
of this title, the Secretary shall appoint a Chief Privacy Officer of
the Office of the National Coordinator, whose duty it shall be to
advise the National Coordinator on privacy, security, and data
stewardship of electronic health information and to coordinate with
other Federal agencies (and similar privacy officers in such agencies),
with State and regional efforts, and with foreign countries with regard
to the privacy, security, and data stewardship of electronic
individually identifiable health information.
``SEC. 3002. HIT POLICY COMMITTEE.
``(a) Establishment.--There is established a HIT Policy Committee
to make policy recommendations to the National Coordinator relating to
the implementation of a nationwide health information technology
infrastructure, including implementation of the strategic plan
described in section 3001(c)(3).
``(b) Duties.--
``(1) Recommendations on health information technology
infrastructure.--The HIT Policy Committee shall recommend a
policy framework for the development and adoption of a
nationwide health information technology infrastructure that
permits the electronic exchange and use of health information
as is consistent with the strategic plan under section
3001(c)(3) and that includes the recommendations under
paragraph (2). The Committee shall update such recommendations
and make new recommendations as appropriate.
``(2) Specific areas of standard development.--
``(A) In general.--The HIT Policy Committee shall
recommend the areas in which standards, implementation
specifications, and certification criteria are needed
for the electronic exchange and use of health
information for purposes of adoption under section 3004
and shall recommend an order of priority for the
development, harmonization, and recognition of such
standards, specifications, and certification criteria
among the areas so recommended. Such standards and
implementation specifications shall include named
standards, architectures, and software schemes for the
authentication and security of individually
identifiable health information and other information
as needed to ensure the reproducible development of
common solutions across disparate entities.
``(B) Areas required for consideration.--For
purposes of subparagraph (A), the HIT Policy Committee
shall make recommendations for at least the following
areas:
``(i) Technologies that protect the privacy
of health information and promote security in a
qualified electronic health record, including
for the segmentation and protection from
disclosure of specific and sensitive
individually identifiable health information
with the goal of minimizing the reluctance of
patients to seek care (or disclose information
about a condition) because of privacy concerns,
in accordance with applicable law, and for the
use and disclosure of limited data sets of such
information.
``(ii) A nationwide health information
technology infrastructure that allows for the
electronic use and accurate exchange of health
information.
``(iii) The utilization of a certified
electronic health record for each person in the
United States by 2014.
``(iv) Technologies that as a part of a
qualified electronic health record allow for an
accounting of disclosures made by a covered
entity (as defined for purposes of regulations
promulgated under section 264(c) of the Health
Insurance Portability and Accountability Act of
1996) for purposes of treatment, payment, and
health care operations (as such terms are
defined for purposes of such regulations).
``(v) The use of certified electronic
health records to improve the quality of health
care, such as by promoting the coordination of
health care and improving continuity of health
care among health care providers, by reducing
medical errors, by improving population health,
and by advancing research and education.
``(C) Other areas for consideration.--In making
recommendations under subparagraph (A), the HIT Policy
Committee may consider the following additional areas:
``(i) The appropriate uses of a nationwide
health information infrastructure, including
for purposes of--
``(I) the collection of quality
data and public reporting;
``(II) biosurveillance and public
health;
``(III) medical and clinical
research; and
``(IV) drug safety.
``(ii) Self-service technologies that
facilitate the use and exchange of patient
information and reduce wait times.
``(iii) Telemedicine technologies, in order
to reduce travel requirements for patients in
remote areas.
``(iv) Technologies that facilitate home
health care and the monitoring of patients
recuperating at home.
``(v) Technologies that help reduce medical
errors.
``(vi) Technologies that facilitate the
continuity of care among health settings.
``(vii) Technologies that meet the needs of
diverse populations.
``(viii) Any other technology that the HIT
Policy Committee finds to be among the
technologies with the greatest potential to
improve the quality and efficiency of health
care.
``(3) Forum.--The HIT Policy Committee shall serve as a
forum for broad stakeholder input with specific expertise in
policies relating to the matters described in paragraphs (1)
and (2).
``(c) Membership and Operations.--
``(1) In general.--The National Coordinator shall provide
leadership in the establishment and operations of the HIT
Policy Committee.
``(2) Membership.--The membership of the HIT Policy
Committee shall at least reflect providers, ancillary
healthcare workers, consumers, purchasers, health plans,
technology vendors, researchers, relevant Federal agencies, and
individuals with technical expertise on health care quality,
privacy and security, and on the electronic exchange and use of
health information.
``(3) Consideration.--The National Coordinator shall ensure
that the relevant recommendations and comments from the
National Committee on Vital and Health Statistics are
considered in the development of policies.
``(d) Application of FACA.--The Federal Advisory Committee Act (5
U.S.C. App.), other than section 14 of such Act, shall apply to the HIT
Policy Committee.
``(e) Publication.--The Secretary shall provide for publication in
the Federal Register and the posting on the Internet website of the
Office of the National Coordinator for Health Information Technology of
all policy recommendations made by the HIT Policy Committee under this
section.
``SEC. 3003. HIT STANDARDS COMMITTEE.
``(a) Establishment.--There is established a committee to be known
as the HIT Standards Committee to recommend to the National Coordinator
standards, implementation specifications, and certification criteria
for the electronic exchange and use of health information for purposes
of adoption under section 3004, consistent with the implementation of
the strategic plan described in section 3001(c)(3) and beginning with
the areas listed in section 3002(b)(2)(B) in accordance with policies
developed by the HIT Policy Committee.
``(b) Duties.--
``(1) Standard development.--
``(A) In general.--The HIT Standards Committee
shall recommend to the National Coordinator standards,
implementation specifications, and certification
criteria described in subsection (a) that have been
developed, harmonized, or recognized by the HIT
Standards Committee. The HIT Standards Committee shall
update such recommendations and make new
recommendations as appropriate, including in response
to a notification sent under section 3004(b)(2). Such
recommendations shall be consistent with the latest
recommendations made by the HIT Policy Committee.
``(B) Pilot testing of standards and implementation
specifications.--In the development, harmonization, or
recognition of standards and implementation
specifications, the HIT Standards Committee shall, as
appropriate, provide for the testing of such standards
and specifications by the National Institute for
Standards and Technology under section 4201 of the
HITECH Act.
``(C) Consistency.--The standards, implementation
specifications, and certification criteria recommended
under this subsection shall be consistent with the
standards for information transactions and data
elements adopted pursuant to section 1173 of the Social
Security Act.
``(2) Forum.--The HIT Standards Committee shall serve as a
forum for the participation of a broad range of stakeholders to
provide input on the development, harmonization, and
recognition of standards, implementation specifications, and
certification criteria necessary for the development and
adoption of a nationwide health information technology
infrastructure that allows for the electronic use and exchange
of health information.
``(3) Schedule.--Not later than 90 days after the date of
the enactment of this title, the HIT Standards Committee shall
develop a schedule for the assessment of policy recommendations
developed by the HIT Policy Committee under section 3002. The
HIT Standards Committee shall update such schedule annually.
The Secretary shall publish such schedule in the Federal
Register.
``(4) Public input.--The HIT Standards Committee shall
conduct open public meetings and develop a process to allow for
public comment on the schedule described in paragraph (3) and
recommendations described in this subsection. Under such
process comments shall be submitted in a timely manner after
the date of publication of a recommendation under this
subsection.
``(c) Membership and Operations.--
``(1) In general.--The National Coordinator shall provide
leadership in the establishment and operations of the HIT
Standards Committee.
``(2) Membership.--The membership of the HIT Standards
Committee shall at least reflect providers, ancillary
healthcare workers, consumers, purchasers, health plans,
technology vendors, researchers, relevant Federal agencies, and
individuals with technical expertise on health care quality,
privacy and security, and on the electronic exchange and use of
health information.
``(3) Consideration.--The National Coordinator shall ensure
that the relevant recommendations and comments from the
National Committee on Vital and Health Statistics are
considered in the development of standards.
``(4) Assistance.--For the purposes of carrying out this
section, the Secretary may provide or ensure that financial
assistance is provided by the HIT Standards Committee to defray
in whole or in part any membership fees or dues charged by such
Committee to those consumer advocacy groups and not for profit
entities that work in the public interest as a part of their
mission.
``(d) Application of FACA.--The Federal Advisory Committee Act (5
U.S.C. App.), other than section 14, shall apply to the HIT Standards
Committee.
``(e) Publication.--The Secretary shall provide for publication in
the Federal Register and the posting on the Internet website of the
Office of the National Coordinator for Health Information Technology of
all recommendations made by the HIT Standards Committee under this
section.
``SEC. 3004. PROCESS FOR ADOPTION OF ENDORSED RECOMMENDATIONS; ADOPTION
OF INITIAL SET OF STANDARDS, IMPLEMENTATION
SPECIFICATIONS, AND CERTIFICATION CRITERIA.
``(a) Process for Adoption of Endorsed Recommendations.--
``(1) Review of endorsed standards, implementation
specifications, and certification criteria.--Not later than 90
days after the date of receipt of standards, implementation
specifications, or certification criteria endorsed under
section 3001(c), the Secretary, in consultation with
representatives of other relevant Federal agencies, shall
jointly review such standards, implementation specifications,
or certification criteria and shall determine whether or not to
propose adoption of such standards, implementation
specifications, or certification criteria.
``(2) Determination to adopt standards, implementation
specifications, and certification criteria.--If the Secretary
determines--
``(A) to propose adoption of any grouping of such
standards, implementation specifications, or
certification criteria, the Secretary shall, by
regulation, determine whether or not to adopt such
grouping of standards, implementation specifications,
or certification criteria; or
``(B) not to propose adoption of any grouping of
standards, implementation specifications, or
certification criteria, the Secretary shall notify the
National Coordinator and the HIT Standards Committee in
writing of such determination and the reasons for not
proposing the adoption of such recommendation.
``(3) Publication.--The Secretary shall provide for
publication in the Federal Register of all determinations made
by the Secretary under paragraph (1).
``(b) Adoption of Initial Set of Standards, Implementation
Specifications, and Certification Criteria.--
``(1) In general.--Not later than December 31, 2009, the
Secretary shall, through the rulemaking process described in
section 3003, adopt an initial set of standards, implementation
specifications, and certification criteria for the areas
required for consideration under section 3002(b)(2)(B).
``(2) Application of current standards, implementation
specifications, and certification criteria.--The standards,
implementation specifications, and certification criteria
adopted before the date of the enactment of this title through
the process existing through the Office of the National
Coordinator for Health Information Technology may be applied
towards meeting the requirement of paragraph (1).
``SEC. 3005. APPLICATION AND USE OF ADOPTED STANDARDS AND
IMPLEMENTATION SPECIFICATIONS BY FEDERAL AGENCIES.
``For requirements relating to the application and use by Federal
agencies of the standards and implementation specifications adopted
under section 3004, see section 4111 of the HITECH Act.
``SEC. 3006. VOLUNTARY APPLICATION AND USE OF ADOPTED STANDARDS AND
IMPLEMENTATION SPECIFICATIONS BY PRIVATE ENTITIES.
``(a) In General.--Except as provided under section 4112 of the
HITECH Act, any standard or implementation specification adopted under
section 3004 shall be voluntary with respect to private entities.
``(b) Rule of Construction.--Nothing in this subtitle shall be
construed to require that a private entity that enters into a contract
with the Federal Government apply or use the standards and
implementation specifications adopted under section 3004 with respect
to activities not related to the contract.
``SEC. 3007. FEDERAL HEALTH INFORMATION TECHNOLOGY.
``(a) In General.--The National Coordinator shall support the
development, routine updating and provision of qualified EHR technology
(as defined in section 3000) consistent with subsections (b) and (c)
unless the Secretary determines that the needs and demands of providers
are being substantially and adequately met through the marketplace.
``(b) Certification.--In making such EHR technology publicly
available, the National Coordinator shall ensure that the qualified EHR
technology described in subsection (a) is certified under the program
developed under section 3001(c)(3) to be in compliance with applicable
standards adopted under section 3003(a).
``(c) Authorization to Charge a Nominal Fee.--The National
Coordinator may impose a nominal fee for the adoption by a health care
provider of the health information technology system developed or
approved under subsection (a) and (b). Such fee shall take into account
the financial circumstances of smaller providers, low income providers,
and providers located in rural or other medically underserved areas.
``(d) Rule of Construction.--Nothing in this section shall be
construed to require that a private or government entity adopt or use
the technology provided under this section.
``SEC. 3008. TRANSITIONS.
``(a) ONCHIT.--To the extent consistent with section 3001, all
functions, personnel, assets, liabilities, and administrative actions
applicable to the National Coordinator for Health Information
Technology appointed under Executive Order 13335 or the Office of such
National Coordinator on the date before the date of the enactment of
this title shall be transferred to the National Coordinator appointed
under section 3001(a) and the Office of such National Coordinator as of
the date of the enactment of this title.
``(b) AHIC.--
``(1) To the extent consistent with sections 3002 and 3003,
all functions, personnel, assets, and liabilities applicable to
the AHIC Successor, Inc. doing business as the National eHealth
Collaborative as of the day before the date of the enactment of
this title shall be transferred to the HIT Policy Committee or
the HIT Standards Committee, established under section 3002(a)
or 3003(a), as appropriate, as of the date of the enactment of
this title.
``(2) In carrying out section 3003(b)(1)(A), until
recommendations are made by the HIT Policy Committee,
recommendations of the HIT Standards Committee shall be
consistent with the most recent recommendations made by such
AHIC Successor, Inc.
``(c) Rules of Construction.--
``(1) ONCHIT.--Nothing in section 3001 or subsection (a)
shall be construed as requiring the creation of a new entity to
the extent that the Office of the National Coordinator for
Health Information Technology established pursuant to Executive
Order 13335 is consistent with the provisions of section 3001.
``(2) AHIC.--Nothing in sections 3002 or 3003 or subsection
(b) shall be construed as prohibiting the AHIC Successor, Inc.
doing business as the National eHealth Collaborative from
modifying its charter, duties, membership, and any other
structure or function required to be consistent with section
3002 and 3003 in a manner that would permit the Secretary to
choose to recognize such Community as the HIT Policy Committee
or the HIT Standards Committee.
``SEC. 3009. RELATION TO HIPAA PRIVACY AND SECURITY LAW.
``(a) In General.--With respect to the relation of this title to
HIPAA privacy and security law:
``(1) This title may not be construed as having any effect
on the authorities of the Secretary under HIPAA privacy and
security law.
``(2) The purposes of this title include ensuring that the
health information technology standards and implementation
specifications adopted under section 3004 take into account the
requirements of HIPAA privacy and security law.
``(b) Definition.--For purposes of this section, the term `HIPAA
privacy and security law' means--
``(1) the provisions of part C of title XI of the Social
Security Act, section 264 of the Health Insurance Portability
and Accountability Act of 1996, and subtitle D of title IV of
the HITECH Act; and
``(2) regulations under such provisions.
``SEC. 3010. AUTHORIZATION FOR APPROPRIATIONS.
``There is authorized to be appropriated to the Office of the
National Coordinator for Health Information Technology to carry out
this subtitle $250,000,000 for fiscal year 2009.''.
SEC. 4102. TECHNICAL AMENDMENT.
Section 1171(5) of the Social Security Act (42 U.S.C. 1320d) is
amended by striking ``or C'' and inserting ``C, or D''.
PART II--APPLICATION AND USE OF ADOPTED HEALTH INFORMATION TECHNOLOGY
STANDARDS; REPORTS
SEC. 4111. COORDINATION OF FEDERAL ACTIVITIES WITH ADOPTED STANDARDS
AND IMPLEMENTATION SPECIFICATIONS.
(a) Spending on Health Information Technology Systems.--As each
agency (as defined in the Executive Order issued on August 22, 2006,
relating to promoting quality and efficient health care in Federal
Government administered or sponsored health care programs) implements,
acquires, or upgrades health information technology systems used for
the direct exchange of individually identifiable health information
between agencies and with non-Federal entities, it shall utilize, where
available, health information technology systems and products that meet
standards and implementation specifications adopted under section
3004(b) of the Public Health Service Act, as added by section 4101.
(b) Federal Information Collection Activities.--With respect to a
standard or implementation specification adopted under section 3004(b)
of the Public Health Service Act, as added by section 4101, the
President shall take measures to ensure that Federal activities
involving the broad collection and submission of health information are
consistent with such standard or implementation specification,
respectively, within three years after the date of such adoption.
(c) Application of Definitions.--The definitions contained in
section 3000 of the Public Health Service Act, as added by section
4101, shall apply for purposes of this part.
SEC. 4112. APPLICATION TO PRIVATE ENTITIES.
Each agency (as defined in such Executive Order issued on August
22, 2006, relating to promoting quality and efficient health care in
Federal Government administered or sponsored health care programs)
shall require in contracts or agreements with health care providers,
health plans, or health insurance issuers that as each provider, plan,
or issuer implements, acquires, or upgrades health information
technology systems, it shall utilize, where available, health
information technology systems and products that meet standards and
implementation specifications adopted under section 3004(b) of the
Public Health Service Act, as added by section 4101.
SEC. 4113. STUDY AND REPORTS.
(a) Report on Adoption of Nationwide System.--Not later than 2
years after the date of the enactment of this Act and annually
thereafter, the Secretary of Health and Human Services shall submit to
the appropriate committees of jurisdiction of the House of
Representatives and the Senate a report that--
(1) describes the specific actions that have been taken by
the Federal Government and private entities to facilitate the
adoption of a nationwide system for the electronic use and
exchange of health information;
(2) describes barriers to the adoption of such a nationwide
system; and
(3) contains recommendations to achieve full implementation
of such a nationwide system.
(b) Reimbursement Incentive Study and Report.--
(1) Study.--The Secretary of Health and Human Services
shall carry out, or contract with a private entity to carry
out, a study that examines methods to create efficient
reimbursement incentives for improving health care quality in
federally qualified health centers, rural health clinics, and
free clinics.
(2) Report.--Not later than 2 years after the date of the
enactment of this Act, the Secretary of Health and Human
Services shall submit to the appropriate committees of
jurisdiction of the House of Representatives and the Senate a
report on the study carried out under paragraph (1).
(c) Aging Services Technology Study and Report.--
(1) In general.--The Secretary of Health and Human Services
shall carry out, or contract with a private entity to carry
out, a study of matters relating to the potential use of new
aging services technology to assist seniors, individuals with
disabilities, and their caregivers throughout the aging
process.
(2) Matters to be studied.--The study under paragraph (1)
shall include--
(A) an evaluation of--
(i) methods for identifying current,
emerging, and future health technology that can
be used to meet the needs of seniors and
individuals with disabilities and their
caregivers across all aging services settings,
as specified by the Secretary;
(ii) methods for fostering scientific
innovation with respect to aging services
technology within the business and academic
communities; and
(iii) developments in aging services
technology in other countries that may be
applied in the United States; and
(B) identification of--
(i) barriers to innovation in aging
services technology and devising strategies for
removing such barriers; and
(ii) barriers to the adoption of aging
services technology by health care providers
and consumers and devising strategies to
removing such barriers.
(3) Report.--Not later than 24 months after the date of the
enactment of this Act, the Secretary shall submit to the
appropriate committees of jurisdiction of the House of
Representatives and of the Senate a report on the study carried
out under paragraph (1).
(4) Definitions.--For purposes of this subsection:
(A) Aging services technology.--The term ``aging
services technology'' means health technology that
meets the health care needs of seniors, individuals
with disabilities, and the caregivers of such seniors
and individuals.
(B) Senior.--The term ``senior'' has such meaning
as specified by the Secretary.
Subtitle B--Testing of Health Information Technology
SEC. 4201. NATIONAL INSTITUTE FOR STANDARDS AND TECHNOLOGY TESTING.
(a) Pilot Testing of Standards and Implementation Specifications.--
In coordination with the HIT Standards Committee established under
section 3003 of the Public Health Service Act, as added by section
4101, with respect to the development of standards and implementation
specifications under such section, the Director of the National
Institute for Standards and Technology shall test such standards and
implementation specifications, as appropriate, in order to assure the
efficient implementation and use of such standards and implementation
specifications.
(b) Voluntary Testing Program.--In coordination with the HIT
Standards Committee established under section 3003 of the Public Health
Service Act, as added by section 4101, with respect to the development
of standards and implementation specifications under such section, the
Director of the National Institute of Standards and Technology shall
support the establishment of a conformance testing infrastructure,
including the development of technical test beds. The development of
this conformance testing infrastructure may include a program to
accredit independent, non-Federal laboratories to perform testing.
SEC. 4202. RESEARCH AND DEVELOPMENT PROGRAMS.
(a) Health Care Information Enterprise Integration Research
Centers.--
(1) In general.--The Director of the National Institute of
Standards and Technology, in consultation with the Director of
the National Science Foundation and other appropriate Federal
agencies, shall establish a program of assistance to
institutions of higher education (or consortia thereof which
may include nonprofit entities and Federal Government
laboratories) to establish multidisciplinary Centers for Health
Care Information Enterprise Integration.
(2) Review; competition.--Grants shall be awarded under
this subsection on a merit-reviewed, competitive basis.
(3) Purpose.--The purposes of the Centers described in
paragraph (1) shall be--
(A) to generate innovative approaches to health
care information enterprise integration by conducting
cutting-edge, multidisciplinary research on the systems
challenges to health care delivery; and
(B) the development and use of health information
technologies and other complementary fields.
(4) Research areas.--Research areas may include--
(A) interfaces between human information and
communications technology systems;
(B) voice-recognition systems;
(C) software that improves interoperability and
connectivity among health information systems;
(D) software dependability in systems critical to
health care delivery;
(E) measurement of the impact of information
technologies on the quality and productivity of health
care;
(F) health information enterprise management;
(G) health information technology security and
integrity; and
(H) relevant health information technology to
reduce medical errors.
(5) Applications.--An institution of higher education (or a
consortium thereof) seeking funding under this subsection shall
submit an application to the Director of the National Institute
of Standards and Technology at such time, in such manner, and
containing such information as the Director may require. The
application shall include, at a minimum, a description of--
(A) the research projects that will be undertaken
by the Center established pursuant to assistance under
paragraph (1) and the respective contributions of the
participating entities;
(B) how the Center will promote active
collaboration among scientists and engineers from
different disciplines, such as information technology,
biologic sciences, management, social sciences, and
other appropriate disciplines;
(C) technology transfer activities to demonstrate
and diffuse the research results, technologies, and
knowledge; and
(D) how the Center will contribute to the education
and training of researchers and other professionals in
fields relevant to health information enterprise
integration.
(b) National Information Technology Research and Development
Program.--The National High-Performance Computing Program established
by section 101 of the High-Performance Computing Act of 1991 (15 U.S.C.
5511) shall coordinate Federal research and development programs
related to the development and deployment of health information
technology, including activities related to--
(1) computer infrastructure;
(2) data security;
(3) development of large-scale, distributed, reliable
computing systems;
(4) wired, wireless, and hybrid high-speed networking;
(5) development of software and software-intensive systems;
(6) human-computer interaction and information management
technologies; and
(7) the social and economic implications of information
technology.
Subtitle C--Incentives for the Use of Health Information Technology
PART I--GRANTS AND LOANS FUNDING
SEC. 4301. GRANT, LOAN, AND DEMONSTRATION PROGRAMS.
Title XXX of the Public Health Service Act, as added by section
4101, is amended by adding at the end the following new subtitle:
``Subtitle B--Incentives for the Use of Health Information Technology
``SEC. 3011. IMMEDIATE FUNDING TO STRENGTHEN THE HEALTH INFORMATION
TECHNOLOGY INFRASTRUCTURE.
``(a) In General.--The Secretary of Health and Human Services
shall, using amounts appropriated under section 3018, invest in the
infrastructure necessary to allow for and promote the electronic
exchange and use of health information for each individual in the
United States consistent with the goals outlined in the strategic plan
developed by the National Coordinator (and as available) under section
3001. To the greatest extent practicable, the Secretary shall ensure
that any funds so appropriated shall be used for the acquisition of
health information technology that meets standards and certification
criteria adopted before the date of the enactment of this title until
such date as the standards are adopted under section 3004. The
Secretary shall invest funds through the different agencies with
expertise in such goals, such as the Office of the National Coordinator
for Health Information Technology, the Health Resources and Services
Administration, the Agency for Healthcare Research and Quality, the
Centers of Medicare & Medicaid Services, the Centers for Disease
Control and Prevention, and the Indian Health Service to support the
following:
``(1) Health information technology architecture that will
support the nationwide electronic exchange and use of health
information in a secure, private, and accurate manner,
including connecting health information exchanges, and which
may include updating and implementing the infrastructure
necessary within different agencies of the Department of Health
and Human Services to support the electronic use and exchange
of health information.
``(2) Development and adoption of appropriate certified
electronic health records for categories of providers not
eligible for support under title XVIII or XIX of the Social
Security Act for the adoption of such records.
``(3) Training on and dissemination of information on best
practices to integrate health information technology, including
electronic health records, into a provider's delivery of care,
consistent with best practices learned from the Health
Information Technology Research Center developed under section
302, including community health centers receiving assistance
under section 330 of the Public Health Service Act, covered
entities under section 340B of such Act, and providers
participating in one or more of the programs under titles
XVIII, XIX, and XXI of the Social Security Act (relating to
Medicare, Medicaid, and the State Children's Health Insurance
Program).
``(4) Infrastructure and tools for the promotion of
telemedicine, including coordination among Federal agencies in
the promotion of telemedicine.
``(5) Promotion of the interoperability of clinical data
repositories or registries.
``(6) Promotion of technologies and best practices that
enhance the protection of health information by all holders of
individually identifiable health information.
``(7) Improve and expand the use of health information
technology by public health departments.
``(8) Provide $300 million to support regional or sub-
national efforts towards health information exchange.
``(b) Coordination.--The Secretary shall ensure funds under this
section are used in a coordinated manner with other health information
promotion activities.
``(c) Additional Use of Funds.--In addition to using funds as
provided in subsection (a), the Secretary may use amounts appropriated
under section 3018 to carry out activities that are provided for under
laws in effect on the date of the enactment of this title.
``SEC. 3012. HEALTH INFORMATION TECHNOLOGY IMPLEMENTATION ASSISTANCE.
``(a) Health Information Technology Extension Program.--To assist
health care providers to adopt, implement, and effectively use
certified EHR technology that allows for the electronic exchange and
use of health information, the Secretary, acting through the Office of
the National Coordinator, shall establish a health information
technology extension program to provide health information technology
assistance services to be carried out through the Department of Health
and Human Services. The National Coordinator shall consult with other
Federal agencies with demonstrated experience and expertise in
information technology services, such as the National Institute of
Standards and Technology, in developing and implementing this program.
``(b) Health Information Technology Research Center.--
``(1) In general.--The Secretary shall create a Health
Information Technology Research Center (in this section
referred to as the `Center') to provide technical assistance
and develop or recognize best practices to support and
accelerate efforts to adopt, implement, and effectively utilize
health information technology that allows for the electronic
exchange and use of information in compliance with standards,
implementation specifications, and certification criteria
adopted under section 3004(b).
``(2) Input.--The Center shall incorporate input from--
``(A) other Federal agencies with demonstrated
experience and expertise in information technology
services such as the National Institute of Standards
and Technology;
``(B) users of health information technology, such
as providers and their support and clerical staff and
others involved in the care and care coordination of
patients, from the health care and health information
technology industry; and
``(C) others as appropriate.
``(3) Purposes.--The purposes of the Center are to--
``(A) provide a forum for the exchange of knowledge
and experience;
``(B) accelerate the transfer of lessons learned
from existing public and private sector initiatives,
including those currently receiving Federal financial
support;
``(C) assemble, analyze, and widely disseminate
evidence and experience related to the adoption,
implementation, and effective use of health information
technology that allows for the electronic exchange and
use of information including through the regional
centers described in subsection (c);
``(D) provide technical assistance for the
establishment and evaluation of regional and local
health information networks to facilitate the
electronic exchange of information across health care
settings and improve the quality of health care;
``(E) provide technical assistance for the
development and dissemination of solutions to barriers
to the exchange of electronic health information; and
``(F) learn about effective strategies to adopt and
utilize health information technology in medically
underserved communities.
``(c) Health Information Technology Regional Extension Centers.--
``(1) In general.--The Secretary shall provide assistance
for the creation and support of regional centers (in this
subsection referred to as `regional centers') to provide
technical assistance and disseminate best practices and other
information learned from the Center to support and accelerate
efforts to adopt, implement, and effectively utilize health
information technology that allows for the electronic exchange
and use of information in compliance with standards,
implementation specifications, and certification criteria
adopted under section 3004. Activities conducted under this
subsection shall be consistent with the strategic plan
developed by the National Coordinator, (and, as available)
under section 3001.
``(2) Affiliation.--Regional centers shall be affiliated
with any U.S.-based nonprofit institution or organization, or
group thereof, that applies and is awarded financial assistance
under this section. Individual awards shall be decided on the
basis of merit.
``(3) Objective.--The objective of the regional centers is
to enhance and promote the adoption of health information
technology through--
``(A) assistance with the implementation, effective
use, upgrading, and ongoing maintenance of health
information technology, including electronic health
records, to healthcare providers nationwide;
``(B) broad participation of individuals from
industry, universities, and State governments;
``(C) active dissemination of best practices and
research on the implementation, effective use,
upgrading, and ongoing maintenance of health
information technology, including electronic health
records, to health care providers in order to improve
the quality of healthcare and protect the privacy and
security of health information;
``(D) participation, to the extent practicable, in
health information exchanges; and
``(E) utilization, when appropriate, of the
expertise and capability that exists in Federal
agencies other than the Department; and
``(F) integration of health information technology,
including electronic health records, into the initial
and ongoing training of health professionals and others
in the healthcare industry that would be instrumental
to improving the quality of healthcare through the
smooth and accurate electronic use and exchange of
health information.
``(4) Regional assistance.--Each regional center shall aim
to provide assistance and education to all providers in a
region, but shall prioritize any direct assistance first to the
following:
``(A) Public or not-for-profit hospitals or
critical access hospitals.
``(B) Federally qualified health centers (as
defined in section 1861(aa)(4) of the Social Security
Act).
``(C) Entities that are located in rural and other
areas that serve uninsured, underinsured, and medically
underserved individuals (regardless of whether such
area is urban or rural).
``(D) Individual or small group practices (or a
consortium thereof) that are primarily focused on
primary care.
``(5) Financial support.--The Secretary may provide
financial support to any regional center created under this
subsection for a period not to exceed four years. The Secretary
may not provide more than 50 percent of the capital and annual
operating and maintenance funds required to create and maintain
such a center, except in an instance of national economic
conditions which would render this cost-share requirement
detrimental to the program and upon notification to Congress as
to the justification to waive the cost-share requirement.
``(6) Notice of program description and availability of
funds.--The Secretary shall publish in the Federal Register,
not later than 90 days after the date of the enactment of this
Act, a draft description of the program for establishing
regional centers under this subsection. Such description shall
include the following:
``(A) A detailed explanation of the program and the
programs goals.
``(B) Procedures to be followed by the applicants.
``(C) Criteria for determining qualified
applicants.
``(D) Maximum support levels expected to be
available to centers under the program.
``(7) Application review.--The Secretary shall subject each
application under this subsection to merit review. In making a
decision whether to approve such application and provide
financial support, the Secretary shall consider at a minimum
the merits of the application, including those portions of the
application regarding--
``(A) the ability of the applicant to provide
assistance under this subsection and utilization of
health information technology appropriate to the needs
of particular categories of health care providers;
``(B) the types of service to be provided to health
care providers;
``(C) geographical diversity and extent of service
area; and
``(D) the percentage of funding and amount of in-
kind commitment from other sources.
``(8) Biennial evaluation.--Each regional center which
receives financial assistance under this subsection shall be
evaluated biennially by an evaluation panel appointed by the
Secretary. Each evaluation panel shall be composed of private
experts, none of whom shall be connected with the center
involved, and of Federal officials. Each evaluation panel shall
measure the involved center's performance against the objective
specified in paragraph (3). The Secretary shall not continue to
provide funding to a regional center unless its evaluation is
overall positive.
``(9) Continuing support.--After the second year of
assistance under this subsection a regional center may receive
additional support under this subsection if it has received
positive evaluations and a finding by the Secretary that
continuation of Federal funding to the center was in the best
interest of provision of health information technology
extension services.
``SEC. 3013. STATE GRANTS TO PROMOTE HEALTH INFORMATION TECHNOLOGY.
``(a) In General.--The Secretary, acting through the National
Coordinator, shall establish a program in accordance with this section
to facilitate and expand the electronic movement and use of health
information among organizations according to nationally recognized
standards.
``(b) Planning Grants.--The Secretary may award a grant to a State
or qualified State-designated entity (as described in subsection (d))
that submits an application to the Secretary at such time, in such
manner, and containing such information as the Secretary may specify,
for the purpose of planning activities described in subsection (b).
``(c) Implementation Grants.--The Secretary may award a grant to a
State or qualified State-designated entity that--
``(1) has submitted, and the Secretary has approved, a plan
described in subsection (c) (regardless of whether such plan
was prepared using amounts awarded under paragraph (1)); and
``(2) submits an application at such time, in such manner,
and containing such information as the Secretary may specify.
``(d) Use of Funds.--Amounts received under a grant under
subsection (a)(3) shall be used to conduct activities to facilitate and
expand the electronic movement and use of health information among
organizations according to nationally recognized standards through
activities that include--
``(1) enhancing broad and varied participation in the
authorized and secure nationwide electronic use and exchange of
health information;
``(2) identifying State or local resources available
towards a nationwide effort to promote health information
technology;
``(3) complementing other Federal grants, programs, and
efforts towards the promotion of health information technology;
``(4) providing technical assistance for the development
and dissemination of solutions to barriers to the exchange of
electronic health information;
``(5) promoting effective strategies to adopt and utilize
health information technology in medically underserved
communities;
``(6) assisting patients in utilizing health information
technology;
``(7) encouraging clinicians to work with Health
Information Technology Regional Extension Centers as described
in section 3012, to the extent they are available and valuable;
``(8) supporting public health agencies' authorized use of
and access to electronic health information;
``(9) promoting the use of electronic health records for
quality improvement including through quality measures
reporting; and
``(10) such other activities as the Secretary may specify.
``(e) Plan.--
``(1) In general.--A plan described in this subsection is a
plan that describes the activities to be carried out by a State
or by the qualified State-designated entity within such State
to facilitate and expand the electronic movement and use of
health information among organizations according to nationally
recognized standards and implementation specifications.
``(2) Required elements.--A plan described in paragraph (1)
shall--
``(A) be pursued in the public interest;
``(B) be consistent with the strategic plan
developed by the National Coordinator, (and, as
available) under section 3001;
``(C) include a description of the ways the State
or qualified State-designated entity will carry out the
activities described in subsection (b); and
``(D) contain such elements as the Secretary may
require.
``(f) Qualified State-Designated Entity.--For purposes of this
section, to be a qualified State-designated entity, with respect to a
State, an entity shall--
``(1) be designated by the State as eligible to receive
awards under this section;
``(2) be a not-for-profit entity with broad stakeholder
representation on its governing board;
``(3) demonstrate that one of its principal goals is to use
information technology to improve health care quality and
efficiency through the authorized and secure electronic
exchange and use of health information;
``(4) adopt nondiscrimination and conflict of interest
policies that demonstrate a commitment to open, fair, and
nondiscriminatory participation by stakeholders; and
``(5) conform to such other requirements as the Secretary
may establish.
``(g) Required Consultation.--In carrying out activities described
in subsections (a)(2) and (a)(3), a State or qualified State-designated
entity shall consult with and consider the recommendations of--
``(1) health care providers (including providers that
provide services to low income and underserved populations);
``(2) health plans;
``(3) patient or consumer organizations that represent the
population to be served;
``(4) health information technology vendors;
``(5) health care purchasers and employers;
``(6) public health agencies;
``(7) health professions schools, universities and
colleges;
``(8) clinical researchers;
``(9) other users of health information technology such as
the support and clerical staff of providers and others involved
in the care and care coordination of patients; and
``(10) such other entities, as may be determined
appropriate by the Secretary.
``(h) Continuous Improvement.--The Secretary shall annually
evaluate the activities conducted under this section and shall, in
awarding grants under this section, implement the lessons learned from
such evaluation in a manner so that awards made subsequent to each such
evaluation are made in a manner that, in the determination of the
Secretary, will lead towards the greatest improvement in quality of
care, decrease in costs, and the most effective authorized and secure
electronic exchange of health information.
``(i) Required Match.--
``(1) In general.--For a fiscal year (beginning with fiscal
year 2011), the Secretary may not make a grant under subsection
(a) to a State unless the State agrees to make available non-
Federal contributions (which may include in-kind contributions)
toward the costs of a grant awarded under subsection (a)(3) in
an amount equal to--
``(A) for fiscal year 2011, not less than $1 for
each $10 of Federal funds provided under the grant;
``(B) for fiscal year 2012, not less than $1 for
each $7 of Federal funds provided under the grant; and
``(C) for fiscal year 2013 and each subsequent
fiscal year, not less than $1 for each $3 of Federal
funds provided under the grant.
``(2) Authority to require state match for fiscal years
before fiscal year 2011.--For any fiscal year during the grant
program under this section before fiscal year 2011, the
Secretary may determine the extent to which there shall be
required a non-Federal contribution from a State receiving a
grant under this section.
``SEC. 3014. COMPETITIVE GRANTS TO STATES AND INDIAN TRIBES FOR THE
DEVELOPMENT OF LOAN PROGRAMS TO FACILITATE THE WIDESPREAD
ADOPTION OF CERTIFIED EHR TECHNOLOGY.
``(a) In General.--The National Coordinator may award competitive
grants to eligible entities for the establishment of programs for loans
to health care providers to conduct the activities described in
subsection (e).
``(b) Eligible Entity Defined.--For purposes of this subsection,
the term `eligible entity' means a State or Indian tribe (as defined in
the Indian Self-Determination and Education Assistance Act) that--
``(1) submits to the National Coordinator an application at
such time, in such manner, and containing such information as
the National Coordinator may require;
``(2) submits to the National Coordinator a strategic plan
in accordance with subsection (d) and provides to the National
Coordinator assurances that the entity will update such plan
annually in accordance with such subsection;
``(3) provides assurances to the National Coordinator that
the entity will establish a Loan Fund in accordance with
subsection (c);
``(4) provides assurances to the National Coordinator that
the entity will not provide a loan from the Loan Fund to a
health care provider unless the provider agrees to--
``(A) submit reports on quality measures adopted by
the Federal Government (by not later than 90 days after
the date on which such measures are adopted), to--
``(i) the Director of the Centers for
Medicare & Medicaid Services (or his or her
designee), in the case of an entity
participating in the Medicare program under
title XVIII of the Social Security Act or the
Medicaid program under title XIX of such Act;
or
``(ii) the Secretary in the case of other
entities;
``(B) demonstrate to the satisfaction of the
Secretary (through criteria established by the
Secretary) that any certified EHR technology purchased,
improved, or otherwise financially supported under a
loan under this section is used to exchange health
information in a manner that, in accordance with law
and standards (as adopted under section 3005)
applicable to the exchange of information, improves the
quality of health care, such as promoting care
coordination; and
``(C) comply with such other requirements as the
entity or the Secretary may require;
``(D) include a plan on how health care providers
involved intend to maintain and support the certified
EHR technology over time;
``(E) include a plan on how the health care
providers involved intend to maintain and support the
certified EHR technology that would be purchased with
such loan, including the type of resources expected to
be involved and any such other information as the State
or Indian tribe, respectively, may require; and
``(5) agrees to provide matching funds in accordance with
subsection (i).
``(c) Establishment of Fund.--For purposes of subsection (b)(3), an
eligible entity shall establish a certified EHR technology loan fund
(referred to in this subsection as a `Loan Fund') and comply with the
other requirements contained in this section. A grant to an eligible
entity under this section shall be deposited in the Loan Fund
established by the eligible entity. No funds authorized by other
provisions of this title to be used for other purposes specified in
this title shall be deposited in any Loan Fund.
``(d) Strategic Plan.--
``(1) In general.--For purposes of subsection (b)(2), a
strategic plan of an eligible entity under this subsection
shall identify the intended uses of amounts available to the
Loan Fund of such entity.
``(2) Contents.--A strategic plan under paragraph (1), with
respect to a Loan Fund of an eligible entity, shall include for
a year the following:
``(A) A list of the projects to be assisted through
the Loan Fund during such year.
``(B) A description of the criteria and methods
established for the distribution of funds from the Loan
Fund during the year.
``(C) A description of the financial status of the
Loan Fund as of the date of submission of the plan.
``(D) The short-term and long-term goals of the
Loan Fund.
``(e) Use of Funds.--Amounts deposited in a Loan Fund, including
loan repayments and interest earned on such amounts, shall be used only
for awarding loans or loan guarantees, making reimbursements described
in subsection (g)(4)(A), or as a source of reserve and security for
leveraged loans, the proceeds of which are deposited in the Loan Fund
established under subsection (a). Loans under this section may be used
by a health care provider to--
``(1) facilitate the purchase of certified EHR technology;
``(2) enhance the utilization of certified EHR technology;
``(3) train personnel in the use of such technology; or
``(4) improve the secure electronic exchange of health
information.
``(f) Types of Assistance.--Except as otherwise limited by
applicable State law, amounts deposited into a Loan Fund under this
subsection may only be used for the following:
``(1) To award loans that comply with the following:
``(A) The interest rate for each loan shall not
exceed the market interest rate.
``(B) The principal and interest payments on each
loan shall commence not later than 1 year after the
date the loan was awarded, and each loan shall be fully
amortized not later than 10 years after the date of the
loan.
``(C) The Loan Fund shall be credited with all
payments of principal and interest on each loan awarded
from the Loan Fund.
``(2) To guarantee, or purchase insurance for, a local
obligation (all of the proceeds of which finance a project
eligible for assistance under this subsection) if the guarantee
or purchase would improve credit market access or reduce the
interest rate applicable to the obligation involved.
``(3) As a source of revenue or security for the payment of
principal and interest on revenue or general obligation bonds
issued by the eligible entity if the proceeds of the sale of
the bonds will be deposited into the Loan Fund.
``(4) To earn interest on the amounts deposited into the
Loan Fund.
``(5) To make reimbursements described in subsection
(g)(4)(A).
``(g) Administration of Loan Funds.--
``(1) Combined financial administration.--An eligible
entity may (as a convenience and to avoid unnecessary
administrative costs) combine, in accordance with applicable
State law, the financial administration of a Loan Fund
established under this subsection with the financial
administration of any other revolving fund established by the
entity if otherwise not prohibited by the law under which the
Loan Fund was established.
``(2) Cost of administering fund.--Each eligible entity may
annually use not to exceed 4 percent of the funds provided to
the entity under a grant under this subsection to pay the
reasonable costs of the administration of the programs under
this section, including the recovery of reasonable costs
expended to establish a Loan Fund which are incurred after the
date of the enactment of this title.
``(3) Guidance and regulations.--The National Coordinator
shall publish guidance and promulgate regulations as may be
necessary to carry out the provisions of this section,
including--
``(A) provisions to ensure that each eligible
entity commits and expends funds allotted to the entity
under this subsection as efficiently as possible in
accordance with this title and applicable State laws;
and
``(B) guidance to prevent waste, fraud, and abuse.
``(4) Private sector contributions.--
``(A) In general.--A Loan Fund established under
this subsection may accept contributions from private
sector entities, except that such entities may not
specify the recipient or recipients of any loan issued
under this subsection. An eligible entity may agree to
reimburse a private sector entity for any contribution
made under this subparagraph, except that the amount of
such reimbursement may not be greater than the
principal amount of the contribution made.
``(B) Availability of information.--An eligible
entity shall make publicly available the identity of,
and amount contributed by, any private sector entity
under subparagraph (A) and may issue letters of
commendation or make other awards (that have no
financial value) to any such entity.
``(h) Matching Requirements.--
``(1) In general.--The National Coordinator may not make a
grant under subsection (a) to an eligible entity unless the
entity agrees to make available (directly or through donations
from public or private entities) non-Federal contributions in
cash to the costs of carrying out the activities for which the
grant is awarded in an amount equal to not less than $1 for
each $5 of Federal funds provided under the grant.
``(2) Determination of amount of non-federal
contribution.--In determining the amount of non-Federal
contributions that an eligible entity has provided pursuant to
subparagraph (A), the National Coordinator may not include any
amounts provided to the entity by the Federal Government.
``(i) Effective Date.--The Secretary may not make an award under
this section prior to January 1, 2010.
``SEC. 3015. DEMONSTRATION PROGRAM TO INTEGRATE INFORMATION TECHNOLOGY
INTO CLINICAL EDUCATION.
``(a) In General.--The Secretary may award grants under this
section to carry out demonstration projects to develop academic
curricula integrating certified EHR technology in the clinical
education of health professionals. Such awards shall be made on a
competitive basis and pursuant to peer review.
``(b) Eligibility.--To be eligible to receive a grant under
subsection (a), an entity shall--
``(1) submit to the Secretary an application at such time,
in such manner, and containing such information as the
Secretary may require;
``(2) submit to the Secretary a strategic plan for
integrating certified EHR technology in the clinical education
of health professionals to reduce medical errors and enhance
health care quality;
``(3) be--
``(A) a school of medicine, osteopathic medicine,
dentistry, or pharmacy, a graduate program in
behavioral or mental health, or any other graduate
health professions school;
``(B) a graduate school of nursing or physician
assistant studies;
``(C) a consortium of two or more schools described
in subparagraph (A) or (B); or
``(D) an institution with a graduate medical
education program in medicine, osteopathic medicine,
dentistry, pharmacy, nursing, or physician assistance
studies.
``(4) provide for the collection of data regarding the
effectiveness of the demonstration project to be funded under
the grant in improving the safety of patients, the efficiency
of health care delivery, and in increasing the likelihood that
graduates of the grantee will adopt and incorporate certified
EHR technology, in the delivery of health care services; and
``(5) provide matching funds in accordance with subsection
(d).
``(c) Use of Funds.--
``(1) In general.--With respect to a grant under subsection
(a), an eligible entity shall--
``(A) use grant funds in collaboration with 2 or
more disciplines; and
``(B) use grant funds to integrate certified EHR
technology into community-based clinical education.
``(2) Limitation.--An eligible entity shall not use amounts
received under a grant under subsection (a) to purchase
hardware, software, or services.
``(d) Financial Support.--The Secretary may not provide more than
50 percent of the costs of any activity for which assistance is
provided under subsection (a), except in an instance of national
economic conditions which would render the cost-share requirement under
this subsection detrimental to the program and upon notification to
Congress as to the justification to waive the cost-share requirement.
``(e) Evaluation.--The Secretary shall take such action as may be
necessary to evaluate the projects funded under this section and
publish, make available, and disseminate the results of such
evaluations on as wide a basis as is practicable.
``(f) Reports.--Not later than 1 year after the date of enactment
of this title, and annually thereafter, the Secretary shall submit to
the Committee on Health, Education, Labor, and Pensions and the
Committee on Finance of the Senate, and the Committee on Energy and
Commerce of the House of Representatives a report that--
``(1) describes the specific projects established under
this section; and
``(2) contains recommendations for Congress based on the
evaluation conducted under subsection (e).
``SEC. 3016. INFORMATION TECHNOLOGY PROFESSIONALS ON HEALTH CARE.
``(a) In General.--The Secretary, in consultation with the Director
of the National Science Foundation, shall provide assistance to
institutions of higher education (or consortia thereof) to establish or
expand medical health informatics education programs, including
certification, undergraduate, and masters degree programs, for both
health care and information technology students to ensure the rapid and
effective utilization and development of health information
technologies (in the United States health care infrastructure).
``(b) Activities.--Activities for which assistance may be provided
under subsection (a) may include the following:
``(1) Developing and revising curricula in medical health
informatics and related disciplines.
``(2) Recruiting and retaining students to the program
involved.
``(3) Acquiring equipment necessary for student instruction
in these programs, including the installation of testbed
networks for student use.
``(4) Establishing or enhancing bridge programs in the
health informatics fields between community colleges and
universities.
``(c) Priority.--In providing assistance under subsection (a), the
Secretary shall give preference to the following:
``(1) Existing education and training programs.
``(2) Programs designed to be completed in less than six
months.
``(d) Financial Support.--The Secretary may not provide more than
50 percent of the costs of any activity for which assistance is
provided under subsection (a), except in an instance of national
economic conditions which would render the cost-share requirement under
this subsection detrimental to the program and upon notification to
Congress as to the justification to waive the cost-share requirement.
``SEC. 3017. GENERAL GRANT AND LOAN PROVISIONS.
``(a) Reports.--The Secretary may require that an entity receiving
assistance under this title shall submit to the Secretary, not later
than the date that is 1 year after the date of receipt of such
assistance, a report that includes--
``(1) an analysis of the effectiveness of the activities
for which the entity receives such assistance, as compared to
the goals for such activities; and
``(2) an analysis of the impact of the project on health
care quality and safety.
``(b) Requirement To Improve Quality of Care and Decrease in
Costs.--The National Coordinator shall annually evaluate the activities
conducted under this title and shall, in awarding grants, implement the
lessons learned from such evaluation in a manner so that awards made
subsequent to each such evaluation are made in a manner that, in the
determination of the National Coordinator, will result in the greatest
improvement in the quality and efficiency of health care.
``SEC. 3018. AUTHORIZATION FOR APPROPRIATIONS.
``For the purposes of carrying out this subtitle, there is
authorized to be appropriated such sums as may be necessary for each of
the fiscal years 2009 through 2013. Amounts so appropriated shall
remain available until expended.''.
PART II--MEDICARE PROGRAM
SEC. 4311. INCENTIVES FOR ELIGIBLE PROFESSIONALS.
(a) Incentive Payments.--Section 1848 of the Social Security Act
(42 U.S.C. 1395w-4) is amended by adding at the end the following new
subsection:
``(o) Incentives for Adoption and Meaningful Use of Certified EHR
Technology.--
``(1) Incentive payments.--
``(A) In general.--Subject to the succeeding
subparagraphs of this paragraph, with respect to
covered professional services furnished by an eligible
professional during a payment year (as defined in
subparagraph (E)), if the eligible professional is a
meaningful EHR user (as determined under paragraph (2))
for the reporting period with respect to such year, in
addition to the amount otherwise paid under this part,
there also shall be paid to the eligible professional
(or to an employer or facility in the cases described
in clause (A) of section 1842(b)(6)), from the Federal
Supplementary Medical Insurance Trust Fund established
under section 1841 an amount equal to 75 percent of the
Secretary's estimate (based on claims submitted not
later than 2 months after the end of the payment year)
of the allowed charges under this part for all such
covered professional services furnished by the eligible
professional during such year.
``(B) Limitations on amounts of incentive
payments.--
``(i) In general.--In no case shall the
amount of the incentive payment provided under
this paragraph for an eligible professional for
a payment year exceed the applicable amount
specified under this subparagraph with respect
to such eligible professional and such year.
``(ii) Amount.--Subject to clause (iii),
the applicable amount specified in this
subparagraph for an eligible professional is as
follows:
``(I) For the first payment year
for such professional, $15,000.
``(II) For the second payment year
for such professional, $12,000.
``(III) For the third payment year
for such professional, $8,000.
``(IV) For the fourth payment year
for such professional, $4,000.
``(V) For the fifth payment year
for such professional, $2,000.
``(VI) For any succeeding payment
year for such professional, $0.
``(iii) Phase down for eligible
professionals first adopting ehr after 2013.--
If the first payment year for an eligible
professional is after 2013, then the amount
specified in this subparagraph for a payment
year for such professional is the same as the
amount specified in clause (ii) for such
payment year for an eligible professional whose
first payment year is 2013. If the first
payment year for an eligible professional is
after 2015 then the applicable amount specified
in this subparagraph for such professional for
such year and any subsequent year shall be $0.
``(C) Non-application to hospital-based eligible
professionals.--
``(i) In general.--No incentive payment may
be made under this paragraph in the case of a
hospital-based eligible professional.
``(ii) Hospital-based eligible
professional.--For purposes of clause (i), the
term `hospital-based eligible professional'
means, with respect to covered professional
services furnished by an eligible professional
during the reporting period for a payment year,
an eligible professional, such as a
pathologist, anesthesiologist, or emergency
physician, who furnishes substantially all of
such services in a hospital setting (whether
inpatient or outpatient) and through the use of
the facilities and equipment, including
computer equipment, of the hospital.
``(D) Payment.--
``(i) Form of payment.--The payment under
this paragraph may be in the form of a single
consolidated payment or in the form of such
periodic installments as the Secretary may
specify.
``(ii) Coordination of application of
limitation for professionals in different
practices.--In the case of an eligible
professional furnishing covered professional
services in more than one practice (as
specified by the Secretary), the Secretary
shall establish rules to coordinate the
incentive payments, including the application
of the limitation on amounts of such incentive
payments under this paragraph, among such
practices.
``(iii) Coordination with medicaid.--The
Secretary shall seek, to the maximum extent
practicable, to avoid duplicative requirements
from Federal and State Governments to
demonstrate meaningful use of certified EHR
technology under this title and title XIX. In
doing so, the Secretary may deem satisfaction
of State requirements for such meaningful use
for a payment year under title XIX to be
sufficient to qualify as meaningful use under
this subsection and subsection (a)(7) and vice
versa. The Secretary may also adjust the
reporting periods under such title and such
subsections in order to carry out this clause.
``(E) Payment year defined.--
``(i) In general.--For purposes of this
subsection, the term `payment year' means a
year beginning with 2011.
``(ii) First, second, etc. payment year.--
The term `first payment year' means, with
respect to covered professional services
furnished by an eligible professional, the
first year for which an incentive payment is
made for such services under this subsection.
The terms `second payment year', `third payment
year', `fourth payment year', and `fifth
payment year' mean, with respect to covered
professional services furnished by such
eligible professional, each successive year
immediately following the first payment year
for such professional.
``(2) Meaningful ehr user.--
``(A) In general.--For purposes of paragraph (1),
an eligible professional shall be treated as a
meaningful EHR user for a reporting period for a
payment year (or, for purposes of subsection (a)(7),
for a reporting period under such subsection for a
year) if each of the following requirements is met:
``(i) Meaningful use of certified ehr
technology.--The eligible professional
demonstrates to the satisfaction of the
Secretary, in accordance with subparagraph
(C)(i), that during such period the
professional is using certified EHR technology
in a meaningful manner, which shall include the
use of electronic prescribing as determined to
be appropriate by the Secretary.
``(ii) Information exchange.--The eligible
professional demonstrates to the satisfaction
of the Secretary, in accordance with
subparagraph (C)(i), that during such period
such certified EHR technology is connected in a
manner that provides, in accordance with law
and standards applicable to the exchange of
information, for the electronic exchange of
health information to improve the quality of
health care, such as promoting care
coordination.
``(iii) Reporting on measures using ehr.--
Subject to subparagraph (B)(ii) and using such
certified EHR technology, the eligible
professional submits information for such
period, in a form and manner specified by the
Secretary, on such clinical quality measures
and such other measures as selected by the
Secretary under subparagraph (B)(i).
The Secretary may provide for the use of alternative
means for meeting the requirements of clauses (i),
(ii), and (iii) in the case of an eligible professional
furnishing covered professional services in a group
practice (as defined by the Secretary). The Secretary
shall seek to improve the use of electronic health
records and health care quality over time by requiring
more stringent measures of meaningful use selected
under this paragraph.
``(B) Reporting on measures.--
``(i) Selection.--The Secretary shall
select measures for purposes of subparagraph
(A)(iii) but only consistent with the
following:
``(I) The Secretary shall provide
preference to clinical quality measures
that have been endorsed by the entity
with a contract with the Secretary
under section 1890(a).
``(II) Prior to any measure being
selected under this subparagraph, the
Secretary shall publish in the Federal
Register such measure and provide for a
period of public comment on such
measure.
``(III) The Secretary shall, to the
extent practicable, select the same
measures for purposes of subparagraph
(A)(iii) as are selected for quality
purposes under title XIX.
``(ii) Limitation.--The Secretary may not
require the electronic reporting of information
on clinical quality measures under subparagraph
(A)(iii) unless the Secretary has the capacity
to accept the information electronically, which
may be on a pilot basis.
``(iii) Coordination of reporting of
information.--In selecting such measures, and
in establishing the form and manner for
reporting measures under subparagraph (A)(iii),
the Secretary shall seek to avoid redundant or
duplicative reporting otherwise required,
including reporting under subsection (k)(2)(C).
``(C) Demonstration of meaningful use of certified
ehr technology and information exchange.--
``(i) In general.--A professional may
satisfy the demonstration requirement of
clauses (i) and (ii) of subparagraph (A)
through means specified by the Secretary, which
may include--
``(I) an attestation;
``(II) the submission of claims
with appropriate coding (such as a code
indicating that a patient encounter was
documented using certified EHR
technology);
``(III) a survey response;
``(IV) reporting under subparagraph
(A)(iii); and
``(V) other means specified by the
Secretary.
``(ii) Use of part d data.--Notwithstanding
sections 1860D-15(d)(2)(B) and 1860D-15(f)(2),
the Secretary may use data regarding drug
claims submitted for purposes of section 1860D-
15 that are necessary for purposes of
subparagraph (A).
``(3) Application.--
``(A) Physician reporting system rules.--Paragraphs
(5), (6), and (8) of subsection (k) shall apply for
purposes of this subsection in the same manner as they
apply for purposes of such subsection.
``(B) Coordination with other payments.--The
provisions of this subsection shall not be taken into
account in applying the provisions of subsection (m) of
this section and of section 1833(m) and any payment
under such provisions shall not be taken into account
in computing allowable charges under this subsection.
``(C) Limitations on review.--There shall be no
administrative or judicial review under section 1869,
section 1878, or otherwise of the determination of any
incentive payment under this subsection and the payment
adjustment under subsection (a)(7), including the
determination of a meaningful EHR user under paragraph
(2), a limitation under paragraph (1)(B), and the
exception under subsection (a)(7)(B).
``(D) Posting on website.--The Secretary shall post
on the Internet website of the Centers for Medicare &
Medicaid Services, in an easily understandable format,
a list of the names, business addresses, and business
phone numbers of the eligible professionals who are
meaningful EHR users and, as determined appropriate by
the Secretary, of group practices receiving incentive
payments under paragraph (1).
``(4) Certified ehr technology defined.--For purposes of
this section, the term `certified EHR technology' means a
qualified electronic health record (as defined in 3000(13) of
the Public Health Service Act) that is certified pursuant to
section 3001(c)(5) of such Act as meeting standards adopted
under section 3004 of such Act that are applicable to the type
of record involved (as determined by the Secretary, such as an
ambulatory electronic health record for office-based physicians
or an inpatient hospital electronic health record for
hospitals).
``(5) Definitions.--For purposes of this subsection:
``(A) Covered professional services.--The term
`covered professional services' has the meaning given
such term in subsection (k)(3).
``(B) Eligible professional.--The term `eligible
professional' means a physician, as defined in section
1861(r).
``(C) Reporting period.--The term `reporting
period' means any period (or periods), with respect to
a payment year, as specified by the Secretary.''.
(b) Incentive Payment Adjustment.--Section 1848(a) of the Social
Security Act (42 U.S.C. 1395w-4(a)) is amended by adding at the end the
following new paragraph:
``(7) Incentives for meaningful use of certified ehr
technology.--
``(A) Adjustment.--
``(i) In general.--Subject to subparagraphs
(B) and (D), with respect to covered
professional services furnished by an eligible
professional during 2016 or any subsequent
payment year, if the eligible professional is
not a meaningful EHR user (as determined under
subsection (o)(2)) for a reporting period for
the year, the fee schedule amount for such
services furnished by such professional during
the year (including the fee schedule amount for
purposes of determining a payment based on such
amount) shall be equal to the applicable
percent of the fee schedule amount that would
otherwise apply to such services under this
subsection (determined after application of
paragraph (3) but without regard to this
paragraph).
``(ii) Applicable percent.--Subject to
clause (iii), for purposes of clause (i), the
term `applicable percent' means--
``(I) for 2016, 99 percent;
``(II) for 2017, 98 percent; and
``(III) for 2018 and each
subsequent year, 97 percent.
``(iii) Authority to decrease applicable
percentage for 2019 and subsequent years.--For
2019 and each subsequent year, if the Secretary
finds that the proportion of eligible
professionals who are meaningful EHR users (as
determined under subsection (o)(2)) is less
than 75 percent, the applicable percent shall
be decreased by 1 percentage point from the
applicable percent in the preceding year, but
in no case shall the applicable percent be less
than 95 percent.
``(B) Significant hardship exception.--The
Secretary may, on a case-by-case basis, exempt an
eligible professional from the application of the
payment adjustment under subparagraph (A) if the
Secretary determines, subject to annual renewal, that
compliance with the requirement for being a meaningful
EHR user would result in a significant hardship, such
as in the case of an eligible professional who
practices in a rural area without sufficient Internet
access. In no case may an eligible professional be
granted an exemption under this subparagraph for more
than 5 years.
``(C) Application of physician reporting system
rules.--Paragraphs (5), (6), and (8) of subsection (k)
shall apply for purposes of this paragraph in the same
manner as they apply for purposes of such subsection.
``(D) Non-application to hospital-based eligible
professionals.--No payment adjustment may be made under
subparagraph (A) in the case of hospital-based eligible
professionals (as defined in subsection (o)(1)(C)(ii)).
``(E) Definitions.--For purposes of this paragraph:
``(i) Covered professional services.--The
term `covered professional services' has the
meaning given such term in subsection (k)(3).
``(ii) Eligible professional.--The term
`eligible professional' means a physician, as
defined in section 1861(r).
``(iii) Reporting period.--The term
`reporting period' means, with respect to a
year, a period specified by the Secretary.''.
(c) Application to Certain HMO-Affiliated Eligible Professionals.--
Section 1853 of the Social Security Act (42 U.S.C. 1395w-23) is amended
by adding at the end the following new subsection:
``(l) Application of Eligible Professional Incentives for Certain
MA Organizations for Adoption and Meaningful Use of Certified EHR
Technology.--
``(1) In general.--Subject to paragraphs (3) and (4), in
the case of a qualifying MA organization, the provisions of
sections 1848(o) and 1848(a)(7) shall apply with respect to
eligible professionals described in paragraph (2) of the
organization who the organization attests under paragraph (6)
to be meaningful EHR users in a similar manner as they apply to
eligible professionals under such sections. Incentive payments
under paragraph (3) shall be made to and payment adjustments
under paragraph (4) shall apply to such qualifying
organizations.
``(2) Eligible professional described.--With respect to a
qualifying MA organization, an eligible professional described
in this paragraph is an eligible professional (as defined for
purposes of section 1848(o)) who--
``(A)(i) is employed by the organization, or
``(ii)(I) is employed by, or is a partner of, an
entity that through contract with the organization
furnishes at least 80 percent of the entity's patient
care services to enrollees of such organization; and
``(II) furnishes at least 75 percent of the
professional services of the eligible professional to
enrollees of the organization; and
``(B) furnishes, on average, at least 20 hours per
week of patient care services.
``(3) Eligible professional incentive payments.--
``(A) In general.--In applying section 1848(o)
under paragraph (1), instead of the additional payment
amount under section 1848(o)(1)(A) and subject to
subparagraph (B), the Secretary may substitute an
amount determined by the Secretary to the extent
feasible and practical to be similar to the estimated
amount in the aggregate that would be payable if
payment for services furnished by such professionals
was payable under part B instead of this part.
``(B) Avoiding duplication of payments.--
``(i) In general.--If an individual is an
eligible professional described in paragraph
(2) and also is eligible for the maximum
incentive payment under section 1848(o)(1)(A)
for the same payment period, the payment
incentive shall be made only under such section
and not under this subsection.
``(ii) Methods.--In the case of an
individual who is an eligible professional
described in paragraph (2) and also is eligible
for an incentive payment under section
1848(o)(1)(A) but is not described in clause
(i) for the same payment period, the Secretary
shall develop a process--
``(I) to ensure that duplicate
payments are not made with respect to
an eligible professional both under
this subsection and under section
1848(o)(1)(A); and
``(II) to collect data from
Medicare Advantage organizations to
ensure against such duplicate payments.
``(C) Fixed schedule for application of limitation
on incentive payments for all eligible professionals.--
In applying section 1848(o)(1)(B)(ii) under
subparagraph (A), in accordance with rules specified by
the Secretary, a qualifying MA organization shall
specify a year (not earlier than 2011) that shall be
treated as the first payment year for all eligible
professionals with respect to such organization.
``(4) Payment adjustment.--
``(A) In general.--In applying section 1848(a)(7)
under paragraph (1), instead of the payment adjustment
being an applicable percent of the fee schedule amount
for a year under such section, subject to subparagraph
(D), the payment adjustment under paragraph (1) shall
be equal to the percent specified in subparagraph (B)
for such year of the payment amount otherwise provided
under this section for such year.
``(B) Specified percent.--The percent specified
under this subparagraph for a year is 100 percent minus
a number of percentage points equal to the product of--
``(i) the number of percentage points by
which the applicable percent (under section
1848(a)(7)(A)(ii)) for the year is less than
100 percent; and
``(ii) the Medicare physician expenditure
proportion specified in subparagraph (C) for
the year.
``(C) Medicare physician expenditure proportion.--
The Medicare physician expenditure proportion under
this subparagraph for a year is the Secretary's
estimate of the proportion, of the expenditures under
parts A and B that are not attributable to this part,
that are attributable to expenditures for physicians'
services.
``(D) Application of payment adjustment.--In the
case that a qualifying MA organization attests that not
all eligible professionals are meaningful EHR users
with respect to a year, the Secretary shall apply the
payment adjustment under this paragraph based on the
proportion of such eligible professionals that are not
meaningful EHR users for such year.
``(5) Qualifying ma organization defined.--In this
subsection and subsection (m), the term `qualifying MA
organization' means a Medicare Advantage organization that is
organized as a health maintenance organization (as defined in
section 2791(b)(3) of the Public Health Service Act).
``(6) Meaningful ehr user attestation.--For purposes of
this subsection and subsection (m), a qualifying MA
organization shall submit an attestation, in a form and manner
specified by the Secretary which may include the submission of
such attestation as part of submission of the initial bid under
section 1854(a)(1)(A)(iv), identifying--
``(A) whether each eligible professional described
in paragraph (2), with respect to such organization is
a meaningful EHR user (as defined in section
1848(o)(3)) for a year specified by the Secretary; and
``(B) whether each eligible hospital described in
subsection (m)(1), with respect to such organization,
is a meaningful EHR user (as defined in section
1886(n)(3)) for an applicable period specified by the
Secretary.''.
(d) Conforming Amendments.--Section 1853 of the Social Security Act
(42 U.S.C. 1395w-23) is amended--
(1) in subsection (a)(1)(A), by striking ``and (i)'' and
inserting ``(i), and (l)'';
(2) in subsection (c)--
(A) in paragraph (1)(D)(i), by striking ``section
1886(h)'' and inserting ``sections 1848(o) and
1886(h)''; and
(B) in paragraph (6)(A), by inserting after ``under
part B,'' the following: ``excluding expenditures
attributable to subsections (a)(7) and (o) of section
1848,''; and
(3) in subsection (f), by inserting ``and for payments
under subsection (l)'' after ``with the organization''.
(e) Conforming Amendments to e-Prescribing.--
(1) Section 1848(a)(5)(A) of the Social Security Act (42
U.S.C. 1395w-4(a)(5)(A)) is amended--
(A) in clause (i), by striking ``or any subsequent
year'' and inserting ``, 2013, 2014, or 2015''; and
(B) in clause (ii), by striking ``and each
subsequent year'' and inserting ``and 2015''.
(2) Section 1848(m)(2) of such Act (42 U.S.C. 1395w-
4(m)(2)) is amended--
(A) in subparagraph (A), by striking ``For 2009''
and inserting ``Subject to subparagraph (D), for
2009''; and
(B) by adding at the end the following new
subparagraph:
``(D) Limitation with respect to ehr incentive
payments.--The provisions of this paragraph shall not
apply to an eligible professional (or, in the case of a
group practice under paragraph (3)(C), to the group
practice) if, for the reporting period the eligible
professional (or group practice) receives an incentive
payment under subsection (o)(1)(A) with respect to a
certified EHR technology (as defined in subsection
(o)(6)(A)) that has the capability of electronic
prescribing.''.
SEC. 4312. INCENTIVES FOR HOSPITALS.
(a) Incentive Payment.--Section 1886 of the Social Security Act (42
U.S.C. 1395ww) is amended by adding at the end the following new
subsection:
``(n) Incentives for Adoption and Meaningful Use of Certified EHR
Technology.--
``(1) In general.--Subject to the succeeding provisions of
this subsection, with respect to inpatient hospital services
furnished by an eligible hospital during a payment year (as
defined in paragraph (2)(G)), if the eligible hospital is a
meaningful EHR user (as determined under paragraph (3)) for the
reporting period with respect to such year, in addition to the
amount otherwise paid under this section, there also shall be
paid to the eligible hospital, from the Federal Hospital
Insurance Trust Fund established under section 1817, an amount
equal to the applicable amount specified in paragraph (2)(A)
for the hospital for such payment year.
``(2) Payment amount.--
``(A) In general.--Subject to the succeeding
subparagraphs of this paragraph, the applicable amount
specified in this subparagraph for an eligible hospital
for a payment year is equal to the product of the
following:
``(i) Initial amount.--The sum of--
``(I) the base amount specified in
subparagraph (B); plus
``(II) the discharge related amount
specified in subparagraph (C) for a 12-
month period selected by the Secretary
with respect to such payment year.
``(ii) Medicare share.--The Medicare share
as specified in subparagraph (D) for the
hospital for a period selected by the Secretary
with respect to such payment year.
``(iii) Transition factor.--The transition
factor specified in subparagraph (E) for the
hospital for the payment year.
``(B) Base amount.--The base amount specified in
this subparagraph is $2,000,000.
``(C) Discharge related amount.--The discharge
related amount specified in this subparagraph for a 12-
month period selected by the Secretary shall be
determined as the sum of the amount, based upon total
discharges (regardless of any source of payment) for
the period, for each discharge up to the 23,000th
discharge as follows:
``(i) For the 1,150th through the 9,200th
discharge, $200.
``(ii) For the 9,201st through the 13,800th
discharge, 50 percent of the amount specified
in clause (i).
``(iii) For the 13,801st through the
23,000th discharge, 30 percent of the amount
specified in clause (i).
``(D) Medicare share.--The Medicare share specified
under this subparagraph for a hospital for a period
selected by the Secretary for a payment year is equal
to the fraction--
``(i) the numerator of which is the sum
(for such period and with respect to the
hospital) of--
``(I) the number of inpatient-bed-
days (as established by the Secretary)
which are attributable to individuals
with respect to whom payment may be
made under part A; and
``(II) the number of inpatient-bed-
days (as so established) which are
attributable to individuals who are
enrolled with a Medicare Advantage
organization under part C; and
``(ii) the denominator of which is the
product of--
``(I) the total number of
inpatient-bed-days with respect to the
hospital during such period; and
``(II) the total amount of the
hospital's charges during such period,
not including any charges that are
attributable to charity care (as such
term is used for purposes of hospital
cost reporting under this title),
divided by the total amount of the
hospital's charges during such period.
Insofar as the Secretary determines that data are not
available on charity care necessary to calculate the
portion of the formula specified in clause (ii)(II),
the Secretary shall use data on uncompensated care and
may adjust such data so as to be an appropriate proxy
for charity care including a downward adjustment to
eliminate bad debt data from uncompensated care data.
In the absence of the data necessary, with respect to a
hospital, for the Secretary to compute the amount
described in clause (ii)(II), the amount under such
clause shall be deemed to be 1. In the absence of data,
with respect to a hospital, necessary to compute the
amount described in clause (i)(II), the amount under
such clause shall be deemed to be 0.
``(E) Transition factor specified.--
``(i) In general.--Subject to clause (ii),
the transition factor specified in this
subparagraph for an eligible hospital for a
payment year is as follows:
``(I) For the first payment year
for such hospital, 1.
``(II) For the second payment year
for such hospital, \3/4\.
``(III) For the third payment year
for such hospital, \1/2\.
``(IV) For the fourth payment year
for such hospital, \1/4\.
``(V) For any succeeding payment
year for such hospital, 0.
``(ii) Phase down for eligible hospitals
first adopting ehr after 2013.--If the first
payment year for an eligible hospital is after
2013, then the transition factor specified in
this subparagraph for a payment year for such
hospital is the same as the amount specified in
clause (i) for such payment year for an
eligible hospital for which the first payment
year is 2013. If the first payment year for an
eligible hospital is after 2015 then the
transition factor specified in this
subparagraph for such hospital and for such
year and any subsequent year shall be 0.
``(F) Form of payment.--The payment under this
subsection for a payment year may be in the form of a
single consolidated payment or in the form of such
periodic installments as the Secretary may specify.
``(G) Payment year defined.--
``(i) In general.--For purposes of this
subsection, the term `payment year' means a
fiscal year beginning with fiscal year 2011.
``(ii) First, second, etc. payment year.--
The term `first payment year' means, with
respect to inpatient hospital services
furnished by an eligible hospital, the first
fiscal year for which an incentive payment is
made for such services under this subsection.
The terms `second payment year', `third payment
year', and `fourth payment year' mean, with
respect to an eligible hospital, each
successive year immediately following the first
payment year for that hospital.
``(3) Meaningful ehr user.--
``(A) In general.--For purposes of paragraph (1),
an eligible hospital shall be treated as a meaningful
EHR user for a reporting period for a payment year (or,
for purposes of subsection (b)(3)(B)(ix), for a
reporting period under such subsection for a fiscal
year) if the following requirements are met:
``(i) Meaningful use of certified ehr
technology.--The eligible hospital demonstrates
to the satisfaction of the Secretary, in
accordance with subparagraph (C)(i), that
during such period the hospital is using
certified EHR technology in a meaningful
manner.
``(ii) Information exchange.--The eligible
hospital demonstrates to the satisfaction of
the Secretary, in accordance with subparagraph
(C)(i), that during such period such certified
EHR technology is connected in a manner that
provides, in accordance with law and standards
applicable to the exchange of information, for
the electronic exchange of health information
to improve the quality of health care, such as
promoting care coordination.
``(iii) Reporting on measures using ehr.--
Subject to subparagraph (B)(ii) and using such
certified EHR technology, the eligible hospital
submits information for such period, in a form
and manner specified by the Secretary, on such
clinical quality measures and such other
measures as selected by the Secretary under
subparagraph (B)(i).
The Secretary shall seek to improve the use of
electronic health records and health care quality over
time by requiring more stringent measures of meaningful
use selected under this paragraph.
``(B) Reporting on measures.--
``(i) Selection.--The Secretary may select
measures for purposes of subparagraph (A)(iii)
but only consistent with the following:
``(I) The Secretary shall provide
preference to clinical quality measures
that have been selected for purposes of
applying subsection (b)(3)(B)(viii) or
that have been endorsed by the entity
with a contract with the Secretary
under section 1890(a).
``(II) Prior to any measure (other
than a clinical quality measure that
has been selected for purposes of
applying subsection (b)(3)(B)(viii))
being selected under this subparagraph,
the Secretary shall publish in the
Federal Register such measure and
provide for a period of public comment
on such measure.
``(ii) Limitations.--The Secretary may not
require the electronic reporting of information
on clinical quality measures under subparagraph
(A)(iii) unless the Secretary has the capacity
to accept the information electronically, which
may be on a pilot basis.
``(iii) Coordination of reporting of
information.--In selecting such measures, and
in establishing the form and manner for
reporting measures under subparagraph (A)(iii),
the Secretary shall seek to avoid redundant or
duplicative reporting with reporting otherwise
required, including reporting under subsection
(b)(3)(B)(viii).
``(C) Demonstration of meaningful use of certified
ehr technology and information exchange.--
``(i) In general.--A hospital may satisfy
the demonstration requirement of clauses (i)
and (ii) of subparagraph (A) through means
specified by the Secretary, which may include--
``(I) an attestation;
``(II) the submission of claims
with appropriate coding (such as a code
indicating that inpatient care was
documented using certified EHR
technology);
``(III) a survey response;
``(IV) reporting under subparagraph
(A)(iii); and
``(V) other means specified by the
Secretary.
``(ii) Use of part d data.--Notwithstanding
sections 1860D-15(d)(2)(B) and 1860D-15(f)(2),
the Secretary may use data regarding drug
claims submitted for purposes of section 1860D-
15 that are necessary for purposes of
subparagraph (A).
``(4) Application.--
``(A) Limitations on review.--There shall be no
administrative or judicial review under section 1869,
section 1878, or otherwise of the determination of any
incentive payment under this subsection and the payment
adjustment under subsection (b)(3)(B)(ix), including
the determination of a meaningful EHR user under
paragraph (3), determination of measures applicable to
services furnished by eligible hospitals under this
subsection, and the exception under subsection
(b)(3)(B)(ix)(II).
``(B) Posting on website.--The Secretary shall post
on the Internet website of the Centers for Medicare &
Medicaid Services, in an easily understandable format,
a list of the names of the eligible hospitals that are
meaningful EHR users under this subsection or
subsection (b)(3)(B)(ix) and other relevant data as
determined appropriate by the Secretary. The Secretary
shall ensure that a hospital has the opportunity to
review the other relevant data that are to be made
public with respect to the hospital prior to such data
being made public.
``(5) Certified ehr technology defined.--The term
`certified EHR technology' has the meaning given such term in
section 1848(o)(4).
``(6) Definitions.--For purposes of this subsection:
``(A) Eligible hospital.--The term `eligible
hospital' means a subsection (d) hospital.
``(B) Reporting period.--The term `reporting
period' means any period (or periods), with respect to
a payment year, as specified by the Secretary.''.
(b) Incentive Market Basket Adjustment.--Section 1886(b)(3)(B) of
the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)) is amended--
(1) in clause (viii)(I), by inserting ``(or, beginning with
fiscal year 2016, by one-quarter)'' after ``2.0 percentage
points''; and
(2) by adding at the end the following new clause:
``(ix)(I) For purposes of clause (i) for fiscal year 2016 and each
subsequent fiscal year, in the case of an eligible hospital (as defined
in subsection (n)(6)(A)) that is not a meaningful EHR user (as defined
in subsection (n)(3)) for the reporting period for such fiscal year,
three-quarters of the applicable percentage increase otherwise
applicable under clause (i) for such fiscal year shall be reduced by
33\1/3\ percent for fiscal year 2016, 66\2/3\ percent for fiscal year
2017, and 100 percent for fiscal year 2018 and each subsequent fiscal
year. Such reduction shall apply only with respect to the fiscal year
involved and the Secretary shall not take into account such reduction
in computing the applicable percentage increase under clause (i) for a
subsequent fiscal year.
``(II) The Secretary may, on a case-by-case basis, exempt a
subsection (d) hospital from the application of subclause (I) with
respect to a fiscal year if the Secretary determines, subject to annual
renewal, that requiring such hospital to be a meaningful EHR user
during such fiscal year would result in a significant hardship, such as
in the case of a hospital in a rural area without sufficient Internet
access. In no case may a hospital be granted an exemption under this
subclause for more than 5 years.
``(III) For fiscal year 2016 and each subsequent fiscal year, a
State in which hospitals are paid for services under section 1814(b)(3)
shall adjust the payments to each subsection (d) hospital in the State
that is not a meaningful EHR user (as defined in subsection (n)(3)) in
a manner that is designed to result in an aggregate reduction in
payments to hospitals in the State that is equivalent to the aggregate
reduction that would have occurred if payments had been reduced to each
subsection (d) hospital in the State in a manner comparable to the
reduction under the previous provisions of this clause. The State shall
report to the Secretary the methodology it will use to make the payment
adjustment under the previous sentence.
``(IV) For purposes of this clause, the term `reporting period'
means, with respect to a fiscal year, any period (or periods), with
respect to the fiscal year, as specified by the Secretary.''.
(c) Application to Certain HMO-Affiliated Eligible Hospitals.--
Section 1853 of the Social Security Act (42 U.S.C. 1395w-23), as
amended by section 311(c), is further amended by adding at the end the
following new subsection:
``(m) Application of Eligible Hospital Incentives for Certain MA
Organizations for Adoption and Meaningful Use of Certified EHR
Technology.--
``(1) Application.--Subject to paragraphs (3) and (4), in
the case of a qualifying MA organization, the provisions of
sections 1886(n) and 1886(b)(3)(B)(ix) shall apply with respect
to eligible hospitals described in paragraph (2) of the
organization which the organization attests under subsection
(l)(6) to be meaningful EHR users in a similar manner as they
apply to eligible hospitals under such sections. Incentive
payments under paragraph (3) shall be made to and payment
adjustments under paragraph (4) shall apply to such qualifying
organizations.
``(2) Eligible hospital described.--With respect to a
qualifying MA organization, an eligible hospital described in
this paragraph is an eligible hospital that is under common
corporate governance with such organization and serves
individuals enrolled under an MA plan offered by such
organization.
``(3) Eligible hospital incentive payments.--
``(A) In general.--In applying section 1886(n)(2)
under paragraph (1), instead of the additional payment
amount under section 1886(n)(2), there shall be
substituted an amount determined by the Secretary to be
similar to the estimated amount in the aggregate that
would be payable if payment for services furnished by
such hospitals was payable under part A instead of this
part. In implementing the previous sentence, the
Secretary--
``(i) shall, insofar as data to determine
the discharge related amount under section
1886(n)(2)(C) for an eligible hospital are not
available to the Secretary, use such
alternative data and methodology to estimate
such discharge related amount as the Secretary
determines appropriate; and
``(ii) shall, insofar as data to determine
the medicare share described in section
1886(n)(2)(D) for an eligible hospital are not
available to the Secretary, use such
alternative data and methodology to estimate
such share, which data and methodology may
include use of the inpatient bed days (or
discharges) with respect to an eligible
hospital during the appropriate period which
are attributable to both individuals for whom
payment may be made under part A or individuals
enrolled in an MA plan under a Medicare
Advantage organization under this part as a
proportion of the total number of patient-bed-
days (or discharges) with respect to such
hospital during such period.
``(B) Avoiding duplication of payments.--
``(i) In general.--In the case of a
hospital that for a payment year is an eligible
hospital described in paragraph (2), is an
eligible hospital under section 1886(n), and
for which at least one-third of their
discharges (or bed-days) of Medicare patients
for the year are covered under part A, payment
for the payment year shall be made only under
section 1886(n) and not under this subsection.
``(ii) Methods.--In the case of a hospital
that is an eligible hospital described in
paragraph (2) and also is eligible for an
incentive payment under section 1886(n) but is
not described in clause (i) for the same
payment period, the Secretary shall develop a
process--
``(I) to ensure that duplicate
payments are not made with respect to
an eligible hospital both under this
subsection and under section 1886(n);
and
``(II) to collect data from
Medicare Advantage organizations to
ensure against such duplicate payments.
``(4) Payment adjustment.--
``(A) Subject to paragraph (3), in the case of a
qualifying MA organization (as defined in section
1853(l)(5)), if, according to the attestation of the
organization submitted under subsection (l)(6) for an
applicable period, one or more eligible hospitals (as
defined in section 1886(n)(6)(A)) that are under common
corporate governance with such organization and that
serve individuals enrolled under a plan offered by such
organization are not meaningful EHR users (as defined
in section 1886(n)(3)) with respect to a period, the
payment amount payable under this section for such
organization for such period shall be the percent
specified in subparagraph (B) for such period of the
payment amount otherwise provided under this section
for such period.
``(B) Specified percent.--The percent specified
under this subparagraph for a year is 100 percent minus
a number of percentage points equal to the product of--
``(i) the number of the percentage point
reduction effected under section
1886(b)(3)(B)(ix)(I) for the period; and
``(ii) the Medicare hospital expenditure
proportion specified in subparagraph (C) for
the year.
``(C) Medicare hospital expenditure proportion.--
The Medicare hospital expenditure proportion under this
subparagraph for a year is the Secretary's estimate of
the proportion, of the expenditures under parts A and B
that are not attributable to this part, that are
attributable to expenditures for inpatient hospital
services.
``(D) Application of payment adjustment.--In the
case that a qualifying MA organization attests that not
all eligible hospitals are meaningful EHR users with
respect to an applicable period, the Secretary shall
apply the payment adjustment under this paragraph based
on a methodology specified by the Secretary, taking
into account the proportion of such eligible hospitals,
or discharges from such hospitals, that are not
meaningful EHR users for such period.''.
(d) Conforming Amendments.--
(1) Section 1814(b) of the Social Security Act (42 U.S.C.
1395f(b)) is amended--
(A) in paragraph (3), in the matter preceding
subparagraph (A), by inserting ``, subject to section
1886(d)(3)(B)(ix)(III),'' after ``then''; and
(B) by adding at the end the following: ``For
purposes of applying paragraph (3), there shall be
taken into account incentive payments, and payment
adjustments under subsection (b)(3)(B)(ix) or (n) of
section 1886.''.
(2) Section 1851(i)(1) of the Social Security Act (42
U.S.C. 1395w-21(i)(1)) is amended by striking ``and
1886(h)(3)(D)'' and inserting ``1886(h)(3)(D), and 1853(m)''.
(3) Section 1853 of the Social Security Act (42 U.S.C.
1395w-23), as amended by section 4311(d)(1), is amended--
(A) in subsection (c)--
(i) in paragraph (1)(D)(i), by striking
``1848(o)'' and inserting ``, 1848(o), and
1886(n)''; and
(ii) in paragraph (6)(A), by inserting
``and subsections (b)(3)(B)(ix) and (n) of
section 1886'' after ``section 1848''; and
(B) in subsection (f), by inserting ``and
subsection (m)'' after ``under subsection (l)''.
SEC. 4313. TREATMENT OF PAYMENTS AND SAVINGS; IMPLEMENTATION FUNDING.
(a) Premium Hold Harmless.--
(1) In general.--Section 1839(a)(1) of the Social Security
Act (42 U.S.C. 1395r(a)(1)) is amended by adding at the end the
following: ``In applying this paragraph there shall not be
taken into account additional payments under section 1848(o)
and section 1853(l)(3) and the Government contribution under
section 1844(a)(3).''.
(2) Payment.--Section 1844(a) of such Act (42 U.S.C.
1395w(a)) is amended--
(A) in paragraph (2), by striking the period at the
end and inserting ``; plus''; and
(B) by adding at the end the following new
paragraph:
``(3) a Government contribution equal to the amount of
payment incentives payable under sections 1848(o) and
1853(l)(3).''.
(b) Medicare Improvement Fund.--Section 1898 of the Social Security
Act (42 U.S.C. 1395iii), as added by section 7002(a) of the
Supplemental Appropriations Act, 2008 (Public Law 110-252) and as
amended by section 188(a)(2) of the Medicare Improvements for Patients
and Providers Act of 2008 (Public Law 110-275; 122 Stat. 2589) and by
section 6 of the QI Program Supplemental Funding Act of 2008, is
amended--
(1) in subsection (a)--
(A) by inserting ``medicare'' before ``fee-for-
service''; and
(B) by inserting before the period at the end the
following: ``including, but not limited to, an increase
in the conversion factor under section 1848(d) to
address, in whole or in part, any projected shortfall
in the conversion factor for 2014 relative to the
conversion factor for 2008 and adjustments to payments
for items and services furnished by providers of
services and suppliers under such original medicare
fee-for-service program''; and
(2) in subsection (b)--
(A) in paragraph (1), by striking ``during fiscal
year 2014,'' and all that follows and inserting the
following: ``during--
``(A) fiscal year 2014, $22,290,000,000; and
``(B) fiscal year 2020 and each subsequent fiscal
year, the Secretary's estimate, as of July 1 of the
fiscal year, of the aggregate reduction in expenditures
under this title during the preceding fiscal year
directly resulting from the reduction in payment
amounts under sections 1848(a)(7), 1853(l)(4),
1853(m)(4), and 1886(b)(3)(B)(ix).''; and
(B) by adding at the end the following new
paragraph:
``(4) No effect on payments in subsequent years.--In the
case that expenditures from the Fund are applied to, or
otherwise affect, a payment rate for an item or service under
this title for a year, the payment rate for such item or
service shall be computed for a subsequent year as if such
application or effect had never occurred.''.
(c) Implementation Funding.--In addition to funds otherwise
available, out of any funds in the Treasury not otherwise appropriated,
there are appropriated to the Secretary of Health and Human Services
for the Center for Medicare & Medicaid Services Program Management
Account, $60,000,000 for each of fiscal years 2009 through 2015 and
$30,000,000 for each succeeding fiscal year through fiscal year 2019,
which shall be available for purposes of carrying out the provisions of
(and amendments made by) this part. Amounts appropriated under this
subsection for a fiscal year shall be available until expended.
SEC. 4314. STUDY ON APPLICATION OF HIT PAYMENT INCENTIVES FOR PROVIDERS
NOT RECEIVING OTHER INCENTIVE PAYMENTS.
(a) Study.--
(1) In general.--The Secretary of Health and Human Services
shall conduct a study to determine the extent to which and
manner in which payment incentives (such as under title XVIII
or XIX of the Social Security Act) and other funding for
purposes of implementing and using qualified health information
technology should be made available to health care providers
who are receiving minimal or no payment incentives or other
funding under this Act, under title XVIII or XIX of the Social
Security Act, or otherwise, for such purposes.
(2) Details of study.--Such study shall include an
examination of--
(A) the adoption rates of qualified health
information technology by such health care providers;
(B) the clinical utility of such technology by such
health care providers;
(C) whether the services furnished by such health
care providers are appropriate for or would benefit
from the use of such technology;
(D) the extent to which such health care providers
work in settings that might otherwise receive an
incentive payment or other funding under this Act,
title XVIII or XIX of the Social Security Act, or
otherwise;
(E) the potential costs and the potential benefits
of making payment incentives and other funding
available to such health care providers; and
(F) any other issues the Secretary deems to be
appropriate.
(b) Report.--Not later than June 30, 2010, the Secretary shall
submit to Congress a report on the findings and conclusions of the
study conducted under subsection (a).
PART III--MEDICAID FUNDING
SEC. 4321. MEDICAID PROVIDER HIT ADOPTION AND OPERATION PAYMENTS;
IMPLEMENTATION FUNDING.
(a) In General.--Section 1903 of the Social Security Act (42 U.S.C.
1396b) is amended--
(1) in subsection (a)(3)--
(A) by striking ``and'' at the end of subparagraph
(D);
(B) by striking ``plus'' at the end of subparagraph
(E) and inserting ``and''; and
(C) by adding at the end the following new
subparagraph:
``(F)(i) 100 percent of so much of the sums
expended during such quarter as are attributable to
payments for certified EHR technology (and support
services including maintenance and training that is
for, or is necessary for the adoption and operation of,
such technology) by Medicaid providers described in
subsection (t)(1); and
``(ii) 90 percent of so much of the sums expended
during such quarter as are attributable to payments for
reasonable administrative expenses related to the
administration of payments described in clause (i) if
the State meets the condition described in subsection
(t)(9); plus''; and
(2) by inserting after subsection (s) the following new
subsection:
``(t)(1) For purposes of subsection (a)(3)(F), the payments for
certified EHR technology (and support services including maintenance
that is for, or is necessary for the operation of, such technology) by
Medicaid providers described in this paragraph are payments made by the
State in accordance with this subsection of 85 percent of the net
allowable costs of Medicaid providers (as defined in paragraph (2)) for
such technology (and support services).
``(2) In this subsection and subsection (a)(3)(F), the term
`Medicaid provider' means--
``(A) an eligible professional (as defined in paragraph
(3)(B)) who is not hospital-based and has at least 30 percent
of the professional's patient volume (as estimated in
accordance with standards established by the Secretary)
attributable to individuals who are receiving medical
assistance under this title; and
``(B)(i) a children's hospital;
``(ii) an acute-care hospital that is not described in
clause (i) and that has at least 10 percent of the hospital's
patient volume (as estimated in accordance with standards
established by the Secretary) attributable to individuals who
are receiving medical assistance under this title; or
``(iii) a Federally-qualified health center or rural health
clinic that has at least 30 percent of the center's or clinic's
patient volume (as estimated in accordance with standards
established by the Secretary) attributable to individuals who
are receiving medical assistance under this title.
A professional shall not qualify as a Medicaid provider under this
subsection unless the professional has waived, in a manner specified by
the Secretary, any right to payment under section 1848(o) with respect
to the adoption or support of certified EHR technology by the
professional. In applying clauses (ii) and (iii) of subparagraph (B),
the standards established by the Secretary for patient volume shall
include individuals enrolled in a Medicaid managed care plan (under
section 1903(m) or section 1932).
``(3) In this subsection and subsection (a)(3)(F):
``(A) The term `certified EHR technology' means a qualified
electronic health record (as defined in 3000(13) of the Public
Health Service Act) that is certified pursuant to section
3001(c)(5) of such Act as meeting standards adopted under
section 3004 of such Act that are applicable to the type of
record involved (as determined by the Secretary, such as an
ambulatory electronic health record for office-based physicians
or an inpatient hospital electronic health record for
hospitals).
``(B) The term `eligible professional' means a physician as
defined in paragraphs (1) and (2) of section 1861(r), and
includes a nurse mid-wife and a nurse practitioner.
``(C) The term `hospital-based' means, with respect to an
eligible professional, a professional (such as a pathologist,
anesthesiologist, or emergency physician) who furnishes
substantially all of the individual's professional services in
a hospital setting (whether inpatient or outpatient) and
through the use of the facilities and equipment, including
computer equipment, of the hospital.
``(4)(A) The term `allowable costs' means, with respect to
certified EHR technology of a Medicaid provider, costs of such
technology (and support services including maintenance and training
that is for, or is necessary for the adoption and operation of, such
technology) as determined by the Secretary to be reasonable.
``(B) The term `net allowable costs' means allowable costs reduced
by any payment that is made to the provider involved from any other
source that is directly attributable to payment for certified EHR
technology or services described in subparagraph (A).
``(C) In no case shall--
``(i) the aggregate allowable costs under this subsection
(covering one or more years) with respect to a Medicaid
provider described in paragraph (2)(A) for purchase and initial
implementation of certified EHR technology (and services
described in subparagraph (A)) exceed $25,000 or include costs
over a period of longer than 5 years;
``(ii) for costs not described in clause (i) relating to
the operation, maintenance, or use of certified EHR technology,
the annual allowable costs under this subsection with respect
to such a Medicaid provider for costs not described in clause
(i) for any year exceed $10,000;
``(iii) payment described in paragraph (1) for costs
described in clause (ii) be made with respect to such a
Medicaid provider over a period of more than 5 years;
``(iv) the aggregate allowable costs under this subsection
with respect to such a Medicaid provider for all costs exceed
$75,000; or
``(v) the allowable costs, whether for purchase and initial
implementation, maintenance, or otherwise, for a Medicaid
provider described in paragraph (2)(B) exceed such aggregate or
annual limitation as the Secretary shall establish, based on an
amount determined by the Secretary as being adequate to adopt
and maintain certified EHR technology, consistent with
paragraph (6).
``(5) Payments described in paragraph (1) are not in accordance
with this subsection unless the following requirements are met:
``(A) The State provides assurances satisfactory to the
Secretary that amounts received under subsection (a)(3)(F) with
respect to costs of a Medicaid provider are paid directly to
such provider without any deduction or rebate.
``(B) Such Medicaid provider is responsible for payment of
the costs described in such paragraph that are not provided
under this title.
``(C) With respect to payments to such Medicaid provider
for costs other than costs related to the initial adoption of
certified EHR technology, the Medicaid provider demonstrates
meaningful use of certified EHR technology through a means that
is approved by the State and acceptable to the Secretary, and
that may be based upon the methodologies applied under section
1848(o) or 1886(n).
``(D) To the extent specified by the Secretary, the
certified EHR technology is compatible with State or Federal
administrative management systems.
``(6)(A) In no case shall the payments described in paragraph (1),
with respect to a hospital, exceed in the aggregate the product of--
``(i) the overall hospital HIT amount for the hospital
computed under subparagraph (B); and
``(ii) the Medicaid share for such hospital computed under
subparagraph (C).
``(B) For purposes of this paragraph, the overall hospital HIT
amount, with respect to a hospital, is the sum of the applicable
amounts specified in section 1886(n)(2)(A) for such hospital for the
first 4 payment years (as estimated by the Secretary) determined as if
the Medicare share specified in clause (ii) of such section were 1. The
Secretary shall publish in the Federal Register the overall hospital
HIT amount for each hospital eligible for payments under this
subsection. In computing amounts under clause (ii) for payment years
after the first payment year, the Secretary shall assume that in
subsequent payment years discharges increase at an annual rate of 2
percent per year.
``(C) The Medicaid share computed under this subparagraph, for a
hospital for a period specified by the Secretary, shall be calculated
in the same manner as the Medicare share under section 1886(n)(2)(D)
for such a hospital and period, except that there shall be substituted
for the numerator under clause (i) of such section the amount that is
equal to the number of inpatient-bed-days (as established by the
Secretary) which are attributable to individuals who are receiving
medical assistance under this title and who are not described in
section 1886(n)(2)(D)(i). In computing inpatient-bed-days under the
previous sentence, the Secretary shall take into account inpatient-bed-
days attributable to inpatient-bed-days that are paid for individuals
enrolled in a Medicaid managed care plan (under section 1903(m) or
section 1932).
``(7) With respect to health care providers other than hospitals,
the Secretary shall ensure coordination of the different programs for
payment of such health care providers for adoption or use of health
information technology (including certified EHR technology), as well as
payments for such health care providers provided under this title or
title XVIII, to assure no duplication of funding.
``(8) In carrying out paragraph (5)(C), the State and Secretary
shall seek, to the maximum extent practicable, to avoid duplicative
requirements from Federal and State Governments to demonstrate
meaningful use of certified EHR technology under this title and title
XVIII. In doing so, the Secretary may deem satisfaction of requirements
for such meaningful use for a payment year under title XVIII to be
sufficient to qualify as meaningful use under this subsection. The
Secretary may also specify the reporting periods under this subsection
in order to carry out this paragraph.
``(9) In order to be provided Federal financial participation under
subsection (a)(3)(F)(ii), a State must demonstrate to the satisfaction
of the Secretary, that the State--
``(A) is using the funds provided for the purposes of
administering payments under this subsection, including
tracking of meaningful use by Medicaid providers;
``(B) conducting adequate oversight of the program under
this subsection, including routine tracking of meaningful use
attestations and reporting mechanisms; and
``(C) be pursuing initiatives to encourage the adoption of
certified EHR technology to promote health care quality and the
exchange of health care information under this title, subject
to applicable laws and regulations governing such exchange.
``(10) The Secretary shall periodically submit reports to the
Committee on Energy and Commerce of the House of Representatives and
the Committee on Finance of the Senate on status, progress, and
oversight of payments under paragraph (1).''.
(b) Implementation Funding.--In addition to funds otherwise
available, out of any funds in the Treasury not otherwise appropriated,
there are appropriated to the Secretary of Health and Human Services
for the Center for Medicare & Medicaid Services Program Management
Account, $40,000,000 for each of fiscal years 2009 through 2015 and
$20,000,000 for each succeeding fiscal year through fiscal year 2019,
which shall be available for purposes of carrying out the provisions of
(and the amendments made by) this part. Amounts appropriated under this
subsection for a fiscal year shall be available until expended.
Subtitle D--Privacy
SEC. 4400. DEFINITIONS.
In this subtitle, except as specified otherwise:
(1) Breach.--The term ``breach'' means the unauthorized
acquisition, access, use, or disclosure of protected health
information which compromises the security, privacy, or
integrity of protected health information maintained by or on
behalf of a person. Such term does not include any
unintentional acquisition, access, use, or disclosure of such
information by an employee or agent of the covered entity or
business associate involved if such acquisition, access, use,
or disclosure, respectively, was made in good faith and within
the course and scope of the employment or other contractual
relationship of such employee or agent, respectively, with the
covered entity or business associate and if such information is
not further acquired, accessed, used, or disclosed by such
employee or agent.
(2) Business associate.--The term ``business associate''
has the meaning given such term in section 160.103 of title 45,
Code of Federal Regulations.
(3) Covered entity.--The term ``covered entity'' has the
meaning given such term in section 160.103 of title 45, Code of
Federal Regulations.
(4) Disclose.--The terms ``disclose'' and ``disclosure''
have the meaning given the term ``disclosure'' in section
160.103 of title 45, Code of Federal Regulations.
(5) Electronic health record.--The term ``electronic health
record'' means an electronic record of health-related
information on an individual that is created, gathered,
managed, and consulted by authorized health care clinicians and
staff.
(6) Health care operations.--The term ``health care
operation'' has the meaning given such term in section 164.501
of title 45, Code of Federal Regulations.
(7) Health care provider.--The term ``health care
provider'' has the meaning given such term in section 160.103
of title 45, Code of Federal Regulations.
(8) Health plan.--The term ``health plan'' has the meaning
given such term in section 1171(5) of the Social Security Act.
(9) National coordinator.--The term ``National
Coordinator'' means the head of the Office of the National
Coordinator for Health Information Technology established under
section 3001(a) of the Public Health Service Act, as added by
section 4101.
(10) Payment.--The term ``payment'' has the meaning given
such term in section 164.501 of title 45, Code of Federal
Regulations.
(11) Personal health record.--The term ``personal health
record'' means an electronic record of individually
identifiable health information on an individual that can be
drawn from multiple sources and that is managed, shared, and
controlled by or for the individual.
(12) Protected health information.--The term ``protected
health information'' has the meaning given such term in section
160.103 of title 45, Code of Federal Regulations.
(13) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(14) Security.--The term ``security'' has the meaning given
such term in section 164.304 of title 45, Code of Federal
Regulations.
(15) State.--The term ``State'' means each of the several
States, the District of Columbia, Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Northern Mariana
Islands.
(16) Treatment.--The term ``treatment'' has the meaning
given such term in section 164.501 of title 45, Code of Federal
Regulations.
(17) Use.--The term ``use'' has the meaning given such term
in section 160.103 of title 45, Code of Federal Regulations.
(18) Vendor of personal health records.--The term ``vendor
of personal health records'' means an entity, other than a
covered entity (as defined in paragraph (3)), that offers or
maintains a personal health record.
PART I--IMPROVED PRIVACY PROVISIONS AND SECURITY PROVISIONS
SEC. 4401. APPLICATION OF SECURITY PROVISIONS AND PENALTIES TO BUSINESS
ASSOCIATES OF COVERED ENTITIES; ANNUAL GUIDANCE ON
SECURITY PROVISIONS.
(a) Application of Security Provisions.--Sections 164.308, 164.310,
164.312, and 164.316 of title 45, Code of Federal Regulations, shall
apply to a business associate of a covered entity in the same manner
that such sections apply to the covered entity. The additional
requirements of this title that relate to security and that are made
applicable with respect to covered entities shall also be applicable to
such a business associate and shall be incorporated into the business
associate agreement between the business associate and the covered
entity.
(b) Application of Civil and Criminal Penalties.--In the case of a
business associate that violates any security provision specified in
subsection (a), sections 1176 and 1177 of the Social Security Act (42
U.S.C. 1320d-5, 1320d-6) shall apply to the business associate with
respect to such violation in the same manner such sections apply to a
covered entity that violates such security provision.
(c) Annual Guidance.--For the first year beginning after the date
of the enactment of this Act and annually thereafter, the Secretary of
Health and Human Services shall, in consultation with industry
stakeholders, annually issue guidance on the most effective and
appropriate technical safeguards for use in carrying out the sections
referred to in subsection (a) and the security standards in subpart C
of part 164 of title 45, Code of Federal Regulations, as such
provisions are in effect as of the date before the enactment of this
Act.
SEC. 4402. NOTIFICATION IN THE CASE OF BREACH.
(a) In General.--A covered entity that accesses, maintains,
retains, modifies, records, stores, destroys, or otherwise holds, uses,
or discloses unsecured protected health information (as defined in
subsection (h)(1)) shall, in the case of a breach of such information
that is discovered by the covered entity, notify each individual whose
unsecured protected health information has been, or is reasonably
believed by the covered entity to have been, accessed, acquired, or
disclosed as a result of such breach.
(b) Notification of Covered Entity by Business Associate.--A
business associate of a covered entity that accesses, maintains,
retains, modifies, records, stores, destroys, or otherwise holds, uses,
or discloses unsecured protected health information shall, following
the discovery of a breach of such information, notify the covered
entity of such breach. Such notice shall include the identification of
each individual whose unsecured protected health information has been,
or is reasonably believed by the business associate to have been,
accessed, acquired, or disclosed during such breach.
(c) Breaches Treated as Discovered.--For purposes of this section,
a breach shall be treated as discovered by a covered entity or by a
business associate as of the first day on which such breach is known to
such entity or associate, respectively, (including any person, other
than the individual committing the breach, that is an employee,
officer, or other agent of such entity or associate, respectively) or
should reasonably have been known to such entity or associate (or
person) to have occurred.
(d) Timeliness of Notification.--
(1) In general.--Subject to subsection (g), all
notifications required under this section shall be made without
unreasonable delay and in no case later than 60 calendar days
after the discovery of a breach by the covered entity involved
(or business associate involved in the case of a notification
required under subsection (b)).
(2) Burden of proof.--The covered entity involved (or
business associate involved in the case of a notification
required under subsection (b)), shall have the burden of
demonstrating that all notifications were made as required
under this part, including evidence demonstrating the necessity
of any delay.
(e) Methods of Notice.--
(1) Individual notice.--Notice required under this section
to be provided to an individual, with respect to a breach,
shall be provided promptly and in the following form:
(A) Written notification by first-class mail to the
individual (or the next of kin of the individual if the
individual is deceased) at the last known address of
the individual or the next of kin, respectively, or, if
specified as a preference by the individual, by
electronic mail. The notification may be provided in
one or more mailings as information is available.
(B) In the case in which there is insufficient, or
out-of-date contact information (including a phone
number, e-mail address, or any other form of
appropriate communication) that precludes direct
written (or, if specified by the individual under
subparagraph (A), electronic) notification to the
individual, a substitute form of notice shall be
provided, including, in the case that there are 10 or
more individuals for which there is insufficient or
out-of-date contact information, a conspicuous posting
for a period determined by the Secretary on the home
page of the website of the covered entity involved or
notice in major print or broadcast media, including
major media in geographic areas where the individuals
affected by the breach likely reside. Such a notice in
media or web posting will include a toll-free phone
number where an individual can learn whether or not the
individual's unsecured protected health information is
possibly included in the breach.
(C) In any case deemed by the covered entity
involved to require urgency because of possible
imminent misuse of unsecured protected health
information, the covered entity, in addition to notice
provided under subparagraph (A), may provide
information to individuals by telephone or other means,
as appropriate.
(2) Media notice.--Notice shall be provided to prominent
media outlets serving a State or jurisdiction, following the
discovery of a breach described in subsection (a), if the
unsecured protected health information of more than 500
residents of such State or jurisdiction is, or is reasonably
believed to have been, accessed, acquired, or disclosed during
such breach.
(3) Notice to secretary.--Notice shall be provided to the
Secretary by covered entities of unsecured protected health
information that has been acquired or disclosed in a breach. If
the breach was with respect to 500 or more individuals than
such notice must be provided immediately. If the breach was
with respect to less than 500 individuals, the covered entity
involved may maintain a log of any such breach occurring and
annually submit such a log to the Secretary documenting such
breaches occuring during the year involved.
(4) Posting on hhs public website.--The Secretary shall
make available to the public on the Internet website of the
Department of Health and Human Services a list that identifies
each covered entity involved in a breach described in
subsection (a) in which the unsecured protected health
information of more than 500 individuals is acquired or
disclosed.
(f) Content of Notification.--Regardless of the method by which
notice is provided to individuals under this section, notice of a
breach shall include, to the extent possible, the following:
(1) A brief description of what happened, including the
date of the breach and the date of the discovery of the breach,
if known.
(2) A description of the types of unsecured protected
health information that were involved in the breach (such as
full name, Social Security number, date of birth, home address,
account number, or disability code).
(3) The steps individuals should take to protect themselves
from potential harm resulting from the breach.
(4) A brief description of what the covered entity involved
is doing to investigate the breach, to mitigate losses, and to
protect against any further breaches.
(5) Contact procedures for individuals to ask questions or
learn additional information, which shall include a toll-free
telephone number, an e-mail address, website, or postal
address.
(g) Delay of Notification Authorized for Law Enforcement
Purposes.--If a law enforcement official determines that a
notification, notice, or posting required under this section would
impede a criminal investigation or cause damage to national security,
such notification, notice, or posting shall be delayed in the same
manner as provided under section 164.528(a)(2) of title 45, Code of
Federal Regulations, in the case of a disclosure covered under such
section.
(h) Unsecured Protected Health Information.--
(1) Definition.--
(A) In general.--Subject to subparagraph (B), for
purposes of this section, the term ``unsecured
protected health information'' means protected health
information that is not secured through the use of a
technology or methodology specified by the Secretary in
the guidance issued under paragraph (2).
(B) Exception in case timely guidance not issued.--
In the case that the Secretary does not issue guidance
under paragraph (2) by the date specified in such
paragraph, for purposes of this section, the term
``unsecured protected health information'' shall mean
protected health information that is not secured by a
technology standard that renders protected health
information unusable, unreadable, or indecipherable to
unauthorized individuals and is developed or endorsed
by a standards developing organization that is
accredited by the American National Standards
Institute.
(2) Guidance.--For purposes of paragraph (1) and section
407(f)(3), not later than the date that is 60 days after the
date of the enactment of this Act, the Secretary shall, after
consultation with stakeholders, issue (and annually update)
guidance specifying the technologies and methodologies that
render protected health information unusable, unreadable, or
indecipherable to unauthorized individuals.
(i) Report to Congress on Breaches.--
(1) In general.--Not later than 12 months after the date of
the enactment of this Act and annually thereafter, the
Secretary shall prepare and submit to the Committee on Finance
and the Committee on Health, Education, Labor, and Pensions of
the Senate and the Committee on Ways and Means and the
Committee on Energy and Commerce of the House of
Representatives a report containing the information described
in paragraph (2) regarding breaches for which notice was
provided to the Secretary under subsection (e)(3).
(2) Information.--The information described in this
paragraph regarding breaches specified in paragraph (1) shall
include--
(A) the number and nature of such breaches; and
(B) actions taken in response to such breaches.
(j) Regulations; Effective Date.--To carry out this section, the
Secretary of Health and Human Services shall promulgate interim final
regulations by not later than the date that is 180 days after the date
of the enactment of this title. The provisions of this section shall
apply to breaches that are discovered on or after the date that is 30
days after the date of publication of such interim final regulations.
SEC. 4403. EDUCATION ON HEALTH INFORMATION PRIVACY.
(a) Regional Office Privacy Advisors.--Not later than 6 months
after the date of the enactment of this Act, the Secretary shall
designate an individual in each regional office of the Department of
Health and Human Services to offer guidance and education to covered
entities, business associates, and individuals on their rights and
responsibilities related to Federal privacy and security requirements
for protected health information.
(b) Education Initiative on Uses of Health Information.--Not later
than 12 months after the date of the enactment of this Act, the Office
for Civil Rights within the Department of Health and Human Services
shall develop and maintain a multi-faceted national education
initiative to enhance public transparency regarding the uses of
protected health information, including programs to educate individuals
about the potential uses of their protected health information, the
effects of such uses, and the rights of individuals with respect to
such uses. Such programs shall be conducted in a variety of languages
and present information in a clear and understandable manner.
SEC. 4404. APPLICATION OF PRIVACY PROVISIONS AND PENALTIES TO BUSINESS
ASSOCIATES OF COVERED ENTITIES.
(a) Application of Contract Requirements.--In the case of a
business associate of a covered entity that obtains or creates
protected health information pursuant to a written contract (or other
written arrangement) described in section 164.502(e)(2) of title 45,
Code of Federal Regulations, with such covered entity, the business
associate may use and disclose such protected health information only
if such use or disclosure, respectively, is in compliance with each
applicable requirement of section 164.504(e) of such title. The
additional requirements of this subtitle that relate to privacy and
that are made applicable with respect to covered entities shall also be
applicable to such a business associate and shall be incorporated into
the business associate agreement between the business associate and the
covered entity.
(b) Application of Knowledge Elements Associated With Contracts.--
Section 164.504(e)(1)(ii) of title 45, Code of Federal Regulations,
shall apply to a business associate described in subsection (a), with
respect to compliance with such subsection, in the same manner that
such section applies to a covered entity, with respect to compliance
with the standards in sections 164.502(e) and 164.504(e) of such title,
except that in applying such section 164.504(e)(1)(ii) each reference
to the business associate, with respect to a contract, shall be treated
as a reference to the covered entity involved in such contract.
(c) Application of Civil and Criminal Penalties.--In the case of a
business associate that violates any provision of subsection (a) or
(b), the provisions of sections 1176 and 1177 of the Social Security
Act (42 U.S.C. 1320d-5, 1320d-6) shall apply to the business associate
with respect to such violation in the same manner as such provisions
apply to a person who violates a provision of part C of title XI of
such Act.
SEC. 4405. RESTRICTIONS ON CERTAIN DISCLOSURES AND SALES OF HEALTH
INFORMATION; ACCOUNTING OF CERTAIN PROTECTED HEALTH
INFORMATION DISCLOSURES; ACCESS TO CERTAIN INFORMATION IN
ELECTRONIC FORMAT.
(a) Requested Restrictions on Certain Disclosures of Health
Information.--In the case that an individual requests under paragraph
(a)(1)(i)(A) of section 164.522 of title 45, Code of Federal
Regulations, that a covered entity restrict the disclosure of the
protected health information of the individual, notwithstanding
paragraph (a)(1)(ii) of such section, the covered entity must comply
with the requested restriction if--
(1) except as otherwise required by law, the disclosure is
to a health plan for purposes of carrying out payment or health
care operations (and is not for purposes of carrying out
treatment); and
(2) the protected health information pertains solely to a
health care item or service for which the health care provider
involved has been paid out of pocket in full.
(b) Disclosures Required To Be Limited to the Limited Data Set or
the Minimum Necessary.--
(1) In general.--
(A) In general.--Subject to subparagraph (B), a
covered entity shall be treated as being in compliance
with section 164.502(b)(1) of title 45, Code of Federal
Regulations, with respect to the use, disclosure, or
request of protected health information described in
such section, only if the covered entity limits such
protected health information, to the extent
practicable, to the limited data set (as defined in
section 164.514(e)(2) of such title) or, if needed by
such entity, to the minimum necessary to accomplish the
intended purpose of such use, disclosure, or request,
respectively.
(B) Guidance.--Not later than 18 months after the
date of the enactment of this section, the Secretary
shall issue guidance on what constitutes ``minimum
necessary'' for purposes of subpart E of part 164 of
title 45, Code of Federal Regulation. In issuing such
guidance the Secretary shall take into consideration
the guidance under section 4424(c).
(C) Sunset.--Subparagraph (A) shall not apply on
and after the effective date on which the Secretary
issues the guidance under subparagraph (B).
(2) Determination of minimum necessary.--For purposes of
paragraph (1), in the case of the disclosure of protected
health information, the covered entity or business associate
disclosing such information shall determine what constitutes
the minimum necessary to accomplish the intended purpose of
such disclosure.
(3) Application of exceptions.--The exceptions described in
section 164.502(b)(2) of title 45, Code of Federal Regulations,
shall apply to the requirement under paragraph (1) as of the
effective date described in section 4423 in the same manner
that such exceptions apply to section 164.502(b)(1) of such
title before such date.
(4) Rule of construction.--Nothing in this subsection shall
be construed as affecting the use, disclosure, or request of
protected health information that has been de-identified.
(c) Accounting of Certain Protected Health Information Disclosures
Required if Covered Entity Uses Electronic Health Record.--
(1) In general.--In applying section 164.528 of title 45,
Code of Federal Regulations, in the case that a covered entity
uses or maintains an electronic health record with respect to
protected health information--
(A) the exception under paragraph (a)(1)(i) of such
section shall not apply to disclosures through an
electronic health record made by such entity of such
information; and
(B) an individual shall have a right to receive an
accounting of disclosures described in such paragraph
of such information made by such covered entity during
only the three years prior to the date on which the
accounting is requested.
(2) Regulations.--The Secretary shall promulgate
regulations on what information shall be collected about each
disclosure referred to in paragraph (1)(A) not later than 18
months after the date on which the Secretary adopts standards
on accounting for disclosure described in the section
3002(b)(2)(B)(iv) of the Public Health Service Act, as added by
section 4101. Such regulations shall only require such
information to be collected through an electronic health record
in a manner that takes into account the interests of
individuals in learning the circumstances under which their
protected health information is being disclosed and takes into
account the administrative burden of accounting for such
disclosures.
(3) Construction.--Nothing in this subsection shall be
construed as requiring a covered entity to account for
disclosures of protected health information that are not made
by such covered entity or by a business associate acting on
behalf of the covered entity.
(4) Effective date.--
(A) Current users of electronic records.--In the
case of a covered entity insofar as it acquired an
electronic health record as of January 1, 2009,
paragraph (1) shall apply to disclosures, with respect
to protected health information, made by the covered
entity from such a record on and after January 1, 2014.
(B) Others.--In the case of a covered entity
insofar as it acquires an electronic health record
after January 1, 2009, paragraph (1) shall apply to
disclosures, with respect to protected health
information, made by the covered entity from such
record on and after the later of the following:
(i) January 1, 2011; or
(ii) the date that it acquires an
electronic health record.
(d) Review of Health Care Operations.--Not later than 18 months
after the date of the enactment of this title, the Secretary shall
promulgate regulations to eliminate from the definition of health care
operations under section 164.501 of title 45, Code of Federal
Regulations, those activities that can reasonably and efficiently be
conducted through the use of information that is de-identified (in
accordance with the requirements of section 164.514(b) of such title)
or that should require a valid authorization for use or disclosure. In
promulgating such regulations, the Secretary may choose to narrow or
clarify activities that the Secretary chooses to retain in the
definition of health care operations and the Secretary shall take into
account the report under section 424(d). In such regulations the
Secretary shall specify the date on which such regulations shall apply
to disclosures made by a covered entity, but in no case would such date
be sooner than the date that is 24 months after the date of the
enactment of this section.
(e) Prohibition on Sale of Electronic Health Records or Protected
Health Information Obtained From Electronic Health Records.--
(1) In general.--Except as provided in paragraph (2), a
covered entity or business associate shall not directly or
indirectly receive remuneration in exchange for any protected
health information of an individual unless the covered entity
obtained from the individual, in accordance with section
164.508 of title 45, Code of Federal Regulations, a valid
authorization that includes, in accordance with such section, a
specification of whether the protected health information can
be further exchanged for remuneration by the entity receiving
protected health information of that individual.
(2) Exceptions.--Paragraph (1) shall not apply in the
following cases:
(A) The purpose of the exchange is for research or
public health activities (as described in sections
164.501, 164.512(i), and 164.512(b) of title 45, Code
of Federal Regulations) and the price charged reflects
the costs of preparation and transmittal of the data
for such purpose.
(B) The purpose of the exchange is for the
treatment of the individual and the price charges
reflects not more than the costs of preparation and
transmittal of the data for such purpose.
(C) The purpose of the exchange is the health care
operation specifically described in subparagraph (iv)
of paragraph (6) of the definition of health care
operations in section 164.501 of title 45, Code of
Federal Regulations.
(D) The purpose of the exchange is for remuneration
that is provided by a covered entity to a business
associate for activities involving the exchange of
protected health information that the business
associate undertakes on behalf of and at the specific
request of the covered entity pursuant to a business
associate agreement.
(E) The purpose of the exchange is to provide an
individual with a copy of the individual's protected
health information pursuant to section 164.524 of title
45, Code of Federal Regulations.
(F) The purpose of the exchange is otherwise
determined by the Secretary in regulations to be
similarly necessary and appropriate as the exceptions
provided in subparagraphs (A) through (E).
(3) Regulations.--The Secretary shall promulgate
regulations to carry out paragraph (this subsection, including
exceptions described in paragraph (2), not later than 18 months
after the date of the enactment of this title.
(4) Effective date.--Paragraph (1) shall apply to exchanges
occurring on or after the date that is 6 months after the date
of the promulgation of final regulations implementing this
subsection.
(f) Access to Certain Information in Electronic Format.--In
applying section 164.524 of title 45, Code of Federal Regulations, in
the case that a covered entity uses or maintains an electronic health
record with respect to protected health information of an individual--
(1) the individual shall have a right to obtain from such
covered entity a copy of such information in an electronic
format; and
(2) notwithstanding paragraph (c)(4) of such section, any
fee that the covered entity may impose for providing such
individual with a copy of such information (or a summary or
explanation of such information) if such copy (or summary or
explanation) is in an electronic form shall not be greater than
the entity's labor costs in responding to the request for the
copy (or summary or explanation).
SEC. 4406. CONDITIONS ON CERTAIN CONTACTS AS PART OF HEALTH CARE
OPERATIONS.
(a) Marketing.--
(1) In general.--A communication by a covered entity or
business associate that is about a product or service and that
encourages recipients of the communication to purchase or use
the product or service shall not be considered a health care
operation for purposes of subpart E of part 164 of title 45,
Code of Federal Regulations, unless the communication is made
as described in subparagraph (i), (ii), or (iii) of paragraph
(1) of the definition of marketing in section 164.501 of such
title.
(2) Payment for certain communications.--A covered entity
or business associate may not receive direct or indirect
payment in exchange for making any communication described in
subparagraph (i), (ii), or (iii) of paragraph (1) of the
definition of marketing in section 164.501 of title 45, Code of
Federal Regulations, except--
(A) a business associate of a covered entity may
receive payment from the covered entity for making any
such communication on behalf of the covered entity that
is consistent with the written contract (or other
written arrangement) described in section 164.502(e)(2)
of such title between such business associate and
covered entity; and
(B) a covered entity may receive payment in
exchange for making any such communication if the
entity obtains from the recipient of the communication,
in accordance with section 164.508 of title 45, Code of
Federal Regulations, a valid authorization (as
described in paragraph (b) of such section) with
respect to such communication.
(b) Fundraising.--Fundraising for the benefit of a covered entity
shall not be considered a health care operation for purposes of section
164.501 of title 45, Code of Federal Regulations.
(c) Effective Date.--This section shall apply to contracting
occurring on or after the effective date specified under section 4423.
SEC. 4407. TEMPORARY BREACH NOTIFICATION REQUIREMENT FOR VENDORS OF
PERSONAL HEALTH RECORDS AND OTHER NON-HIPAA COVERED
ENTITIES.
(a) In General.--In accordance with subsection (c), each vendor of
personal health records, following the discovery of a breach of
security of unsecured PHR identifiable health information that is in a
personal health record maintained or offered by such vendor, and each
entity described in clause (ii) or (iii) of section 4424(b)(1)(A),
following the discovery of a breach of security of such information
that is obtained through a product or service provided by such entity,
shall--
(1) notify each individual who is a citizen or resident of
the United States whose unsecured PHR identifiable health
information was acquired by an unauthorized person as a result
of such a breach of security; and
(2) notify the Federal Trade Commission.
(b) Notification by Third Party Service Providers.--A third party
service provider that provides services to a vendor of personal health
records or to an entity described in clause (ii) or (iii) of section
4424(b)(1)(A) in connection with the offering or maintenance of a
personal health record or a related product or service and that
accesses, maintains, retains, modifies, records, stores, destroys, or
otherwise holds, uses, or discloses unsecured PHR identifiable health
information in such a record as a result of such services shall,
following the discovery of a breach of security of such information,
notify such vendor or entity, respectively, of such breach. Such notice
shall include the identification of each individual whose unsecured PHR
identifiable health information has been, or is reasonably believed to
have been, accessed, acquired, or disclosed during such breach.
(c) Application of Requirements for Timeliness, Method, and Content
of Notifications.--Subsections (c), (d), (e), and (f) of section 402
shall apply to a notification required under subsection (a) and a
vendor of personal health records, an entity described in subsection
(a) and a third party service provider described in subsection (b),
with respect to a breach of security under subsection (a) of unsecured
PHR identifiable health information in such records maintained or
offered by such vendor, in a manner specified by the Federal Trade
Commission.
(d) Notification of the Secretary.--Upon receipt of a notification
of a breach of security under subsection (a)(2), the Federal Trade
Commission shall notify the Secretary of such breach.
(e) Enforcement.--A violation of subsection (a) or (b) shall be
treated as an unfair and deceptive act or practice in violation of a
regulation under section 18(a)(1)(B) of the Federal Trade Commission
Act (15 U.S.C. 57a(a)(1)(B)) regarding unfair or deceptive acts or
practices.
(f) Definitions.--For purposes of this section:
(1) Breach of security.--The term ``breach of security''
means, with respect to unsecured PHR identifiable health
information of an individual in a personal health record,
acquisition of such information without the authorization of
the individual.
(2) PHR identifiable health information.--The term ``PHR
identifiable health information'' means individually
identifiable health information, as defined in section 1171(6)
of the Social Security Act (42 U.S.C. 1320d(6)), and includes,
with respect to an individual, information--
(A) that is provided by or on behalf of the
individual; and
(B) that identifies the individual or with respect
to which there is a reasonable basis to believe that
the information can be used to identify the individual.
(3) Unsecured phr identifiable health information.--
(A) In general.--Subject to subparagraph (B), the
term ``unsecured PHR identifiable health information''
means PHR identifiable health information that is not
protected through the use of a technology or
methodology specified by the Secretary in the guidance
issued under section 4402(h)(2).
(B) Exception in case timely guidance not issued.--
In the case that the Secretary does not issue guidance
under section 4402(h)(2) by the date specified in such
section, for purposes of this section, the term
``unsecured PHR identifiable health information'' shall
mean PHR identifiable health information that is not
secured by a technology standard that renders protected
health information unusable, unreadable, or
indecipherable to unauthorized individuals and that is
developed or endorsed by a standards developing
organization that is accredited by the American
National Standards Institute.
(g) Regulations; Effective Date; Sunset.--
(1) Regulations; effective date.--To carry out this
section, the Secretary of Health and Human Services shall
promulgate interim final regulations by not later than the date
that is 180 days after the date of the enactment of this
section. The provisions of this section shall apply to breaches
of security that are discovered on or after the date that is 30
days after the date of publication of such interim final
regulations.
(2) Sunset.--The provisions of this section shall not apply
to breaches of security occurring on or after the earlier of
the following the dates:
(A) The date on which a standard relating to
requirements for entities that are not covered entities
that includes requirements relating to breach
notification has been promulgated by the Secretary.
(B) The date on which a standard relating to
requirements for entities that are not covered entities
that includes requirements relating to breach
notification has been promulgated by the Federal Trade
Commission and has taken effect.
SEC. 4408. BUSINESS ASSOCIATE CONTRACTS REQUIRED FOR CERTAIN ENTITIES.
Each organization, with respect to a covered entity, that provides
data transmission of protected health information to such entity (or
its business associate) and that requires access on a routine basis to
such protected health information, such as a Health Information
Exchange Organization, Regional Health Information Organization, E-
prescribing Gateway, or each vendor that contracts with a covered
entity to allow that covered entity to offer a personal health record
to patients as part of its electronic health record, is required to
enter into a written contract (or other written arrangement) described
in section 164.502(e)(2) of title 45, Code of Federal Regulations and a
written contract (or other arrangement) described in section 164.308(b)
of such title, with such entity and shall be treated as a business
associate of the covered entity for purposes of the provisions of this
subtitle and subparts C and E of part 164 of title 45, Code of Federal
Regulations, as such provisions are in effect as of the date of
enactment of this title.
SEC. 4409. CLARIFICATION OF APPLICATION OF WRONGFUL DISCLOSURES
CRIMINAL PENALTIES.
Section 1177(a) of the Social Security Act (42 U.S.C. 1320d-6(a))
is amended by adding at the end the following new sentence: ``For
purposes of the previous sentence, a person (including an employee or
other individual) shall be considered to have obtained or disclosed
individually identifiable health information in violation of this part
if the information is maintained by a covered entity (as defined in the
HIPAA privacy regulation described in section 1180(b)(3)) and the
individual obtained or disclosed such information without
authorization.''.
SEC. 4410. IMPROVED ENFORCEMENT.
(a) In General.--Section 1176 of the Social Security Act (42 U.S.C.
1320d-5) is amended--
(1) in subsection (b)(1), by striking ``the act constitutes
an offense punishable under section 1177'' and inserting ``a
penalty has been imposed under section 1177 with respect to
such act''; and
(2) by adding at the end the following new subsection:
``(c) Noncompliance Due to Willful Neglect.--
``(1) In general.--A violation of a provision of this part
due to willful neglect is a violation for which the Secretary
is required to impose a penalty under subsection (a)(1).
``(2) Required investigation.--For purposes of paragraph
(1), the Secretary shall formally investigate any complaint of
a violation of a provision of this part if a preliminary
investigation of the facts of the complaint indicate such a
possible violation due to willful neglect.''.
(b) Effective Date; Regulations.--
(1) The amendments made by subsection (a) shall apply to
penalties imposed on or after the date that is 24 months after
the date of the enactment of this title.
(2) Not later than 18 months after the date of the
enactment of this title, the Secretary of Health and Human
Services shall promulgate regulations to implement such
amendments.
(c) Distribution of Certain Civil Monetary Penalties Collected.--
(1) In general.--Subject to the regulation promulgated
pursuant to paragraph (3), any civil monetary penalty or
monetary settlement collected with respect to an offense
punishable under this subtitle or section 1176 of the Social
Security Act (42 U.S.C. 1320d-5) insofar as such section
relates to privacy or security shall be transferred to the
Office of Civil Rights of the Department of Health and Human
Services to be used for purposes of enforcing the provisions of
this subtitle and subparts C and E of part 164 of title 45,
Code of Federal Regulations, as such provisions are in effect
as of the date of enactment of this Act.
(2) GAO report.--Not later than 18 months after the date of
the enactment of this title, the Comptroller General shall
submit to the Secretary a report including recommendations for
a methodology under which an individual who is harmed by an act
that constitutes an offense referred to in paragraph (1) may
receive a percentage of any civil monetary penalty or monetary
settlement collected with respect to such offense.
(3) Establishment of methodology to distribute percentage
of cmps collected to harmed individuals.--Not later than 3
years after the date of the enactment of this title, the
Secretary shall establish by regulation and based on the
recommendations submitted under paragraph (2), a methodology
under which an individual who is harmed by an act that
constitutes an offense referred to in paragraph (1) may receive
a percentage of any civil monetary penalty or monetary
settlement collected with respect to such offense.
(4) Application of methodology.--The methodology under
paragraph (3) shall be applied with respect to civil monetary
penalties or monetary settlements imposed on or after the
effective date of the regulation.
(d) Tiered Increase in Amount of Civil Monetary Penalties.--
(1) In general.--Section 1176(a)(1) of the Social Security
Act (42 U.S.C. 1320d-5(a)(1)) is amended by striking ``who
violates a provision of this part a penalty of not more than''
and all that follows and inserting the following: ``who
violates a provision of this part--
``(A) in the case of a violation of such provision
in which it is established that the person did not know
(and by exercising reasonable diligence would not have
known) that such person violated such provision, a
penalty for each such violation of an amount that is at
least the amount described in paragraph (3)(A) but not
to exceed the amount described in paragraph (3)(D);
``(B) in the case of a violation of such provision
in which it is established that the violation was due
to reasonable cause and not to willful neglect, a
penalty for each such violation of an amount that is at
least the amount described in paragraph (3)(B) but not
to exceed the amount described in paragraph (3)(D); and
``(C) in the case of a violation of such provision
in which it is established that the violation was due
to willful neglect--
``(i) if the violation is corrected as
described in subsection (b)(3)(A), a penalty in
an amount that is at least the amount described
in paragraph (3)(C) but not to exceed the
amount described in paragraph (3)(D); and
``(ii) if the violation is not corrected as
described in such subsection, a penalty in an
amount that is at least the amount described in
paragraph (3)(D).
In determining the amount of a penalty under this
section for a violation, the Secretary shall base such
determination on the nature and extent of the violation
and the nature and extent of the harm resulting from
such violation.''.
(2) Tiers of penalties described.--Section 1176(a) of such
Act (42 U.S.C. 1320d-5(a)) is further amended by adding at the
end the following new paragraph:
``(3) Tiers of penalties described.--For purposes of
paragraph (1), with respect to a violation by a person of a
provision of this part--
``(A) the amount described in this subparagraph is
$100 for each such violation, except that the total
amount imposed on the person for all such violations of
an identical requirement or prohibition during a
calendar year may not exceed $25,000;
``(B) the amount described in this subparagraph is
$1,000 for each such violation, except that the total
amount imposed on the person for all such violations of
an identical requirement or prohibition during a
calendar year may not exceed $100,000;
``(C) the amount described in this subparagraph is
$10,000 for each such violation, except that the total
amount imposed on the person for all such violations of
an identical requirement or prohibition during a
calendar year may not exceed $250,000; and
``(D) the amount described in this subparagraph is
$50,000 for each such violation, except that the total
amount imposed on the person for all such violations of
an identical requirement or prohibition during a
calendar year may not exceed $1,500,000.''.
(3) Conforming amendments.--Section 1176(b) of such Act (42
U.S.C. 1320d-5(b)) is amended--
(A) by striking paragraph (2) and redesignating
paragraphs (3) and (4) as paragraphs (2) and (3),
respectively; and
(B) in paragraph (2), as so redesignated--
(i) in subparagraph (A), by striking ``in
subparagraph (B), a penalty may not be imposed
under subsection (a) if'' and all that follows
through ``the failure to comply is corrected''
and inserting ``in subparagraph (B) or
subsection (a)(1)(C), a penalty may not be
imposed under subsection (a) if the failure to
comply is corrected''; and
(ii) in subparagraph (B), by striking
``(A)(ii)'' and inserting ``(A)'' each place it
appears.
(4) Effective date.--The amendments made by this subsection
shall apply to violations occurring after the date of the
enactment of this title.
(e) Enforcement Through State Attorneys General.--
(1) In general.--Section 1176 of the Social Security Act
(42 U.S.C. 1320d-5) is amended by adding at the end the
following new subsection:
``(c) Enforcement by State Attorneys General.--
``(1) Civil action.--Except as provided in subsection (b),
in any case in which the attorney general of a State has reason
to believe that an interest of one or more of the residents of
that State has been or is threatened or adversely affected by
any person who violates a provision of this part, the attorney
general of the State, as parens patriae, may bring a civil
action on behalf of such residents of the State in a district
court of the United States of appropriate jurisdiction--
``(A) to enjoin further such violation by the
defendant; or
``(B) to obtain damages on behalf of such residents
of the State, in an amount equal to the amount
determined under paragraph (2).
``(2) Statutory damages.--
``(A) In general.--For purposes of paragraph
(1)(B), the amount determined under this paragraph is
the amount calculated by multiplying the number of
violations by up to $100. For purposes of the preceding
sentence, in the case of a continuing violation, the
number of violations shall be determined consistent
with the HIPAA privacy regulations (as defined in
section 1180(b)(3)) for violations of subsection (a).
``(B) Limitation.--The total amount of damages
imposed on the person for all violations of an
identical requirement or prohibition during a calendar
year may not exceed $25,000.
``(C) Reduction of damages.--In assessing damages
under subparagraph (A), the court may consider the
factors the Secretary may consider in determining the
amount of a civil money penalty under subsection (a)
under the HIPAA privacy regulations.
``(3) Attorney fees.--In the case of any successful action
under paragraph (1), the court, in its discretion, may award
the costs of the action and reasonable attorney fees to the
State.
``(4) Notice to secretary.--The State shall serve prior
written notice of any action under paragraph (1) upon the
Secretary and provide the Secretary with a copy of its
complaint, except in any case in which such prior notice is not
feasible, in which case the State shall serve such notice
immediately upon instituting such action. The Secretary shall
have the right--
``(A) to intervene in the action;
``(B) upon so intervening, to be heard on all
matters arising therein; and
``(C) to file petitions for appeal.
``(5) Construction.--For purposes of bringing any civil
action under paragraph (1), nothing in this section shall be
construed to prevent an attorney general of a State from
exercising the powers conferred on the attorney general by the
laws of that State.
``(6) Venue; service of process.--
``(A) Venue.--Any action brought under paragraph
(1) may be brought in the district court of the United
States that meets applicable requirements relating to
venue under section 1391 of title 28, United States
Code.
``(B) Service of process.--In an action brought
under paragraph (1), process may be served in any
district in which the defendant--
``(i) is an inhabitant; or
``(ii) maintains a physical place of
business.
``(7) Limitation on state action while federal action is
pending.--If the Secretary has instituted an action against a
person under subsection (a) with respect to a specific
violation of this part, no State attorney general may bring an
action under this subsection against the person with respect to
such violation during the pendency of that action.
``(8) Application of cmp statute of limitation.--A civil
action may not be instituted with respect to a violation of
this part unless an action to impose a civil money penalty may
be instituted under subsection (a) with respect to such
violation consistent with the second sentence of section
1128A(c)(1).''.
(2) Conforming amendments.--Subsection (b) of such section,
as amended by subsection (d)(3), is amended--
(A) in paragraph (1), by striking ``A penalty may
not be imposed under subsection (a)'' and inserting
``No penalty may be imposed under subsection (a) and no
damages obtained under subsection (c)'';
(B) in paragraph (2)(A)--
(i) in the matter before clause (i), by
striking ``a penalty may not be imposed under
subsection (a)'' and inserting ``no penalty may
be imposed under subsection (a) and no damages
obtained under subsection (c)''; and
(ii) in clause (ii), by inserting ``or
damages'' after ``the penalty'';
(C) in paragraph (2)(B)(i), by striking ``The
period'' and inserting ``With respect to the imposition
of a penalty by the Secretary under subsection (a), the
period''; and
(D) in paragraph (3), by inserting ``and any
damages under subsection (c)'' after ``any penalty
under subsection (a)''.
(3) Effective date.--The amendments made by this subsection
shall apply to violations occurring after the date of the
enactment of this Act.
(f) Allowing Continued Use of Corrective Action.--Such section is
further amended by adding at the end the following new subsection:
``(d) Allowing Continued Use of Corrective Action.--Nothing in this
section shall be construed as preventing the Office of Civil Rights of
the Department of Health and Human Services from continuing, in its
discretion, to use corrective action without a penalty in cases where
the person did not know (and by exercising reasonable diligence would
not have known) of the violation involved.''.
SEC. 4411. AUDITS.
The Secretary shall provide for periodic audits to ensure that
covered entities and business associates that are subject to the
requirements of this subtitle and subparts C and E of part 164 of title
45, Code of Federal Regulations, as such provisions are in effect as of
the date of enactment of this Act, comply with such requirements.
PART II--RELATIONSHIP TO OTHER LAWS; REGULATORY REFERENCES; EFFECTIVE
DATE; REPORTS
SEC. 4421. RELATIONSHIP TO OTHER LAWS.
(a) Application of HIPAA State Preemption.--Section 1178 of the
Social Security Act (42 U.S.C. 1320d-7) shall apply to a provision or
requirement under this subtitle in the same manner that such section
applies to a provision or requirement under part C of title XI of such
Act or a standard or implementation specification adopted or
established under sections 1172 through 1174 of such Act.
(b) Health Insurance Portability and Accountability Act.--The
standards governing the privacy and security of individually
identifiable health information promulgated by the Secretary under
sections 262(a) and 264 of the Health Insurance Portability and
Accountability Act of 1996 shall remain in effect to the extent that
they are consistent with this subtitle. The Secretary shall by rule
amend such Federal regulations as required to make such regulations
consistent with this subtitle.
SEC. 4422. REGULATORY REFERENCES.
Each reference in this subtitle to a provision of the Code of
Federal Regulations refers to such provision as in effect on the date
of the enactment of this title (or to the most recent update of such
provision).
SEC. 4423. EFFECTIVE DATE.
Except as otherwise specifically provided, the provisions of part I
shall take effect on the date that is 12 months after the date of the
enactment of this title.
SEC. 4424. STUDIES, REPORTS, GUIDANCE.
(a) Report on Compliance.--
(1) In general.--For the first year beginning after the
date of the enactment of this Act and annually thereafter, the
Secretary shall prepare and submit to the Committee on Health,
Education, Labor, and Pensions of the Senate and the Committee
on Ways and Means and the Committee on Energy and Commerce of
the House of Representatives a report concerning complaints of
alleged violations of law, including the provisions of this
subtitle as well as the provisions of subparts C and E of part
164 of title 45, Code of Federal Regulations, (as such
provisions are in effect as of the date of enactment of this
Act) relating to privacy and security of health information
that are received by the Secretary during the year for which
the report is being prepared. Each such report shall include,
with respect to such complaints received during the year--
(A) the number of such complaints;
(B) the number of such complaints resolved
informally, a summary of the types of such complaints
so resolved, and the number of covered entities that
received technical assistance from the Secretary during
such year in order to achieve compliance with such
provisions and the types of such technical assistance
provided;
(C) the number of such complaints that have
resulted in the imposition of civil monetary penalties
or have been resolved through monetary settlements,
including the nature of the complaints involved and the
amount paid in each penalty or settlement;
(D) the number of compliance reviews conducted and
the outcome of each such review;
(E) the number of subpoenas or inquiries issued;
(F) the Secretary's plan for improving compliance
with and enforcement of such provisions for the
following year; and
(G) the number of audits performed and a summary of
audit findings pursuant to section 4411.
(2) Availability to public.--Each report under paragraph
(1) shall be made available to the public on the Internet
website of the Department of Health and Human Services.
(b) Study and Report on Application of Privacy and Security
Requirements to Non-HIPAA Covered Entities.--
(1) Study.--Not later than one year after the date of the
enactment of this title, the Secretary, in consultation with
the Federal Trade Commission, shall conduct a study, and submit
a report under paragraph (2), on privacy and security
requirements for entities that are not covered entities or
business associates as of the date of the enactment of this
title, including--
(A) requirements relating to security, privacy, and
notification in the case of a breach of security or
privacy (including the applicability of an exemption to
notification in the case of individually identifiable
health information that has been rendered unusable,
unreadable, or indecipherable through technologies or
methodologies recognized by appropriate professional
organization or standard setting bodies to provide
effective security for the information) that should be
applied to--
(i) vendors of personal health records;
(ii) entities that offer products or
services through the website of a vendor of
personal health records;
(iii) entities that are not covered
entities and that offer products or services
through the s of covered entities that offer
individuals personal health records;
(iv) entities that are not covered entities
and that access information in a personal
health record or send information to a personal
health record; and
(v) third party service providers used by a
vendor or entity described in clause (i), (ii),
(iii), or (iv) to assist in providing personal
health record products or services;
(B) a determination of which Federal Government
agency is best equipped to enforce such requirements
recommended to be applied to such vendors, entities,
and service providers under subparagraph (A); and
(C) a timeframe for implementing regulations based
on such findings.
(2) Report.--The Secretary shall submit to the Committee on
Finance, the Committee on Health, Education, Labor, and
Pensions, and the Committee on Commerce of the Senate and the
Committee on Ways and Means and the Committee on Energy and
Commerce of the House of Representatives a report on the
findings of the study under paragraph (1) and shall include in
such report recommendations on the privacy and security
requirements described in such paragraph.
(c) Guidance on Implementation Specification To De-Identify
Protected Health Information.--Not later than 12 months after the date
of the enactment of this title, the Secretary shall, in consultation
with stakeholders, issue guidance on how best to implement the
requirements for the de-identification of protected health information
under section 164.514(b) of title 45, Code of Federal Regulations.
(d) GAO Report on Treatment Disclosures.--Not later than one year
after the date of the enactment of this title, the Comptroller General
of the United States shall submit to the Committee on Health,
Education, Labor, and Pensions of the Senate and the Committee on Ways
and Means and the Committee on Energy and Commerce of the House of
Representatives a report on the best practices related to the
disclosure among health care providers of protected health information
of an individual for purposes of treatment of such individual. Such
report shall include an examination of the best practices implemented
by States and by other entities, such as health information exchanges
and regional health information organizations, an examination of the
extent to which such best practices are successful with respect to the
quality of the resulting health care provided to the individual and
with respect to the ability of the health care provider to manage such
best practices, and an examination of the use of electronic informed
consent for disclosing protected health information for treatment,
payment, and health care operations.
Subtitle E--Miscellaneous Medicare Provisions
SEC. 4501. MORATORIA ON CERTAIN MEDICARE REGULATIONS.
(a) Delay in Phase Out of Medicare Hospice Budget Neutrality
Adjustment Factor During Fiscal Year 2009.--Notwithstanding any other
provision of law, including the final rule published on August 8, 2008,
73 Federal Register 46464 et seq., relating to Medicare Program;
Hospice Wage Index for Fiscal Year 2009, the Secretary of Health and
Human Services shall not phase out or eliminate the budget neutrality
adjustment factor in the Medicare hospice wage index before October 1,
2009, and the Secretary shall recompute and apply the final Medicare
hospice wage index for fiscal year 2009 as if there had been no
reduction in the budget neutrality adjustment factor.
(b) Non-Application of Phased-Out Indirect Medical Education (IME)
Adjustment Factor for Fiscal Year 2009.--
(1) In general.--Section 412.322 of title 42, Code of
Federal Regulations, shall be applied without regard to
paragraph (c) of such section, and the Secretary of Health and
Human Services shall recompute payments for discharges
occurring on or after October 1, 2008, as if such paragraph had
never been in effect.
(2) No effect on subsequent years.--Nothing in paragraph
(1) shall be construed as having any effect on the application
of paragraph (d) of section 412.322 of title 42, Code of
Federal Regulations.
(c) Funding for Implementation.--In addition to funds otherwise
available, for purposes of implementing the provisions of subsections
(a) and (b), including costs incurred in reprocessing claims in
carrying out such provisions, the Secretary of Health and Human
Services shall provide for the transfer from the Federal Hospital
Insurance Trust Fund established under section 1817 of the Social
Security Act (42 U.S.C. 1395i) to the Centers for Medicare & Medicaid
Services Program Management Account of $2,000,000 for fiscal year 2009.
SEC. 4502. LONG-TERM CARE HOSPITAL TECHNICAL CORRECTIONS.
(a) Payment.--Subsection (c) of section 114 of the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-173) is
amended--
(1) in paragraph (1)--
(A) by amending the heading to read as follows:
``Delay in application of 25 percent patient threshold
payment adjustment'';
(B) by striking ``the date of the enactment of this
Act'' and inserting ``July 1, 2007,''; and
(C) in subparagraph (A), by inserting ``or to a
long-term care hospital, or satellite facility, that as
of December 29, 2007, was co-located with an entity
that is a provider-based, off-campus location of a
subsection (d) hospital which did not provide services
payable under section 1886(d) of the Social Security
Act at the off-campus location'' after ``freestanding
long-term care hospitals''; and
(2) in paragraph (2)--
(A) in subparagraph (B)(ii), by inserting ``or that
is described in section 412.22(h)(3)(i) of such title''
before the period; and
(B) in subparagraph (C), by striking ``the date of
the enactment of this Act'' and inserting ``October 1,
2007 (or July 1, 2007, in the case of a satellite
facility described in section 412.22(h)(3)(i) of title
42, Code of Federal Regulations)''.
(b) Moratorium.--Subsection (d)(3)(A) of such section is amended by
striking ``if the hospital or facility'' and inserting ``if the
hospital or facility obtained a certificate of need for an increase in
beds that is in a State for which such certificate of need is required
and that was issued on or after April 1, 2005, and before December 29,
2007, or if the hospital or facility''.
(c) Effective Date.--The amendments made by this section shall be
effective and apply as if included in the enactment of the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-173).
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