[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 629 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 629

To provide energy and commerce provisions of the American Recovery and 
                       Reinvestment Act of 2009.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 22, 2009

  Mr. Waxman introduced the following bill; which was referred to the 
Committee on Energy and Commerce, and in addition to the Committees on 
Ways and Means, Education and Labor, and Science and Technology, 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 energy and commerce provisions of the American Recovery and 
                       Reinvestment Act of 2009.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Energy and Commerce Recovery and 
Reinvestment Act''.

                   TITLE I--BROADBAND COMMUNICATIONS

SEC. 1001. INVENTORY OF BROADBAND SERVICE CAPABILITY AND AVAILABILITY.

    (a) Establishment.--To provide a comprehensive nationwide inventory 
of existing broadband service capability and availability, the National 
Telecommunications and Information Administration (``NTIA'') shall 
develop and maintain a broadband inventory map of the United States 
that identifies and depicts the geographic extent to which broadband 
service capability is deployed and available from a commercial provider 
or public provider throughout each State.
    (b) Public Availability and Interactivity.--Not later than 2 years 
after the date of enactment of this Act, the NTIA shall make the 
broadband inventory map developed and maintained pursuant to this 
section accessible by the public on a World Wide website of the NTIA in 
a form that is interactive and searchable.

SEC. 1002. WIRELESS AND BROADBAND DEPLOYMENT GRANT PROGRAMS.

    (a) Grants Authorized.--
            (1) In general.--The National Telecommunications and 
        Information Administration (``NTIA'') is authorized to carry 
        out a program to award grants to eligible entities for the non-
        recurring costs associated with the deployment of broadband 
        infrastructure in rural, suburban, and urban areas, in 
        accordance with the requirements of this section.
            (2) Program website.--The NTIA shall develop and maintain a 
        website to make publicly available information about the 
        program described in paragraph (1), including--
                    (A) each prioritization report submitted by a State 
                under subsection (b);
                    (B) a list of eligible entities that have applied 
                for a grant under this section, and the area or areas 
                the entity proposes to serve; and
                    (C) the status of each such application, whether 
                approved, denied, or pending.
    (b) State Priorities.--
            (1) Priorities report submission.--Not later than 75 days 
        after the date of enactment of this section, each State 
        intending to participate in the program under this section 
        shall submit to the NTIA a report indicating the geographic 
        areas of the State which--
                    (A) for the purposes of determining the need for 
                Wireless Deployment Grants under subsection (c), the 
                State considers to have the greatest priority for--
                            (i) wireless voice service in unserved 
                        areas; and
                            (ii) advanced wireless broadband service in 
                        underserved areas; and
                    (B) for the purposes of determining the need for 
                Broadband Deployment Grants under subsection (d), the 
                State considers to have the greatest priority for--
                            (i) basic broadband service in unserved 
                        areas; and
                            (ii) advanced broadband service in 
                        underserved areas.
            (2) Limitation.--The unserved and underserved areas 
        identified by a State in the report required by this subsection 
        shall not represent, in the aggregate, more than 20 percent of 
        the population or of the geographic area of such State.
    (c) Wireless Deployment Grants.--
            (1) Authorized activity.--The NTIA shall award Wireless 
        Deployment Grants in accordance with this subsection from 
        amounts authorized for Wireless Deployment Grants by this 
        subtitle to eligible entities to deploy necessary 
        infrastructure for the provision of wireless voice service or 
        advanced wireless broadband service to end users in designated 
        areas.
            (2) Grant distribution.--The NTIA shall seek to distribute 
        grants, to the extent possible, so that 25 percent of the 
        grants awarded under this subsection shall be awarded to 
        eligible entities for providing wireless voice service to 
        unserved areas and 75 percent of grants awarded under this 
        subsection shall be awarded to eligible entities for providing 
        advanced wireless broadband service to underserved areas.
    (d) Broadband Deployment Grants.--
            (1) Authorized activity.--The NTIA shall award Broadband 
        Deployment Grants in accordance with this subsection from 
        amounts authorized for Broadband Deployment Grants by this 
        subtitle to eligible entities to deploy necessary 
        infrastructure for the provision of basic broadband service or 
        advanced broadband service to end users in designated areas.
            (2) Grant distribution.--The NTIA shall seek to distribute 
        grants, to the extent possible, so that 25 percent of the 
        grants awarded under this subsection shall be awarded to 
        eligible entities for providing basic broadband service to 
        unserved areas and 75 percent of grants awarded under this 
        subsection shall be awarded to eligible entities for providing 
        advanced broadband service to underserved areas.
    (e) Grant Requirements.--The NTIA shall--
            (1) adopt rules to protect against unjust enrichment; and
            (2) ensure that grant recipients--
                    (A) meet buildout requirements;
                    (B) maximize use of the supported infrastructure by 
                the public;
                    (C) operate basic and advanced broadband service 
                networks on an open access basis;
                    (D) operate advanced wireless broadband service on 
                a wireless open access basis; and
                    (E) adhere to the principles contained in the 
                Federal Communications Commission's broadband policy 
                statement (FCC 05-151, adopted August 5, 2005).
    (f) Applications.--
            (1) Submission.--To be considered for a grant awarded under 
        subsection (c) or (d), an eligible entity shall submit to the 
        NTIA an application at such time, in such manner, and 
        containing such information and assurances as the NTIA may 
        require. Such an application shall include--
                    (A) a cost-study estimate for serving the 
                particular geographic area to be served by the entity;
                    (B) a proposed build-out schedule to residential 
                households and small businesses in the area;
                    (C) for applicants for Wireless Deployment Grants 
                under subsection (c), a build-out schedule for 
                geographic coverage of such areas; and
                    (D) any other requirements the NTIA deems 
                necessary.
            (2) Selection.--
                    (A) Notification.--The NTIA shall notify each 
                eligible entity that has submitted a complete 
                application whether the entity has been approved or 
                denied for a grant under this section in a timely 
                fashion.
                    (B) Grant distribution considerations.--In awarding 
                grants under this section, the NTIA shall, to the 
                extent practical--
                            (i) award not less than one grant in each 
                        State;
                            (ii) give substantial weight to whether an 
                        application is from an eligible entity to 
                        deploy infrastructure in an area that is an 
                        area--
                                    (I) identified by a State in a 
                                report submitted under subsection (b); 
                                or
                                    (II) in which the NTIA determines 
                                there will be a significant amount of 
                                public safety or emergency response use 
                                of the infrastructure; and
                            (iii) consider whether an application from 
                        an eligible entity to deploy infrastructure in 
                        an area--
                                    (I) will, if approved, increase the 
                                affordability of, or subscribership to, 
                                service to the greatest population of 
                                underserved users in the area;
                                    (II) will, if approved, enhance 
                                service for health care delivery, 
                                education, or children to the greatest 
                                population of underserved users in the 
                                area;
                                    (III) contains concrete plans for 
                                enhancing computer ownership or 
                                computer literacy in the area;
                                    (IV) is from a recipient of more 
                                than 20 percent matching grants from 
                                State, local, or private entities for 
                                service in the area and the extent of 
                                such commitment; and
                                    (V) will, if approved, result in 
                                unjust enrichment because the eligible 
                                entity has applied for, or intends to 
                                apply for, support for the non-
                                recurring costs through another Federal 
                                program for service in the area.
    (g) Coordination and Consultation.--The NTIA shall coordinate with 
the Federal Communications Commission and shall consult with other 
appropriate Federal agencies in implementing this section.
    (h) Report Required.--The NTIA shall submit an annual report to the 
Committee on Energy and Commerce of the House of Representatives and 
the Committee on Commerce, Science, and Transportation of the Senate 
for 5 years assessing the impact of the grants funded under this 
section on the basis of the objectives and criteria described in 
subsection (f)(2)(B)(iii).
    (i) Rulemaking Authority.--The NTIA shall have the authority to 
prescribe such rules as necessary to carry out the purposes of this 
section.
    (j) Definitions.--For the purpose of this section--
            (1) the term ``advanced broadband service'' means a service 
        delivering data to the end user transmitted at a speed of at 
        least 45 megabits per second downstream and at least 15 
        megabits per second upstream;
            (2) the term ``advanced wireless broadband service'' means 
        a wireless service delivering to the end user data transmitted 
        at a speed of at least 3 megabits per second downstream and at 
        least 1 megabit per second upstream over an end-to-end internet 
        protocol wireless network;
            (3) the term ``basic broadband service'' means a service 
        delivering data to the end user transmitted at a speed of at 
        least 5 megabits per second downstream and at least 1 megabit 
        per second upstream;
            (4) the term ``eligible entity'' means--
                    (A) a provider of wireless voice service, advanced 
                wireless broadband service, basic broadband service, or 
                advanced broadband service, including a satellite 
                carrier that provides any such service;
                    (B) a State or unit of local government, or agency 
                or instrumentality thereof, that is or intends to be a 
                provider of any such service; and
                    (C) any other entity, including construction 
                companies, tower companies, backhaul companies, or 
                other service providers, that the NTIA authorizes by 
                rule to participate in the programs under this section, 
                if such other entity is required to provide access to 
                the supported infrastructure on a neutral, reasonable 
                basis to maximize use;
            (5) the term ``State'' includes the District of Columbia 
        and the territories and possessions;
            (6) the term ``underserved area'' shall be defined by the 
        Federal Communications Commission not later than 45 days after 
        the date of enactment of this section;
            (7) the term ``unserved area'' shall be defined by the 
        Federal Communications Commission not later than 45 days after 
        the date of enactment of this section;
            (8) the term ``wireless voice service'' means the provision 
        of two-way, real-time, voice communications using a mobile 
        service;
            (9) the term ``open access'' shall be defined by the 
        Federal Communications Commission not later than 45 days after 
        the date of enactment of this section; and
            (10) the term ``wireless open access'' shall be defined by 
        the Federal Communications Commission not later than 45 days 
        after the date of enactment of this section.

                            TITLE II--ENERGY

                     Subtitle A--Energy Provisions

SEC. 2001. TECHNICAL CORRECTIONS TO THE ENERGY INDEPENDENCE AND 
              SECURITY ACT OF 2007.

    (a) Section 543(a) of the Energy Independence and Security Act of 
2007 (42 U.S.C. 17153(a)) is amended--
            (1) by redesignating paragraphs (2) through (4) as 
        paragraphs (3) through (5), respectively; and
            (2) by striking paragraph (1) and inserting the following:
            ``(1) 34 percent to eligible units of local government-
        alternative 1, in accordance with subsection (b);
            ``(2) 34 percent to eligible units of local government-
        alternative 2, in accordance with subsection (b);''.
    (b) Section 543(b) of the Energy Independence and Security Act of 
2007 (42 U.S.C. 17153(b)) is amended by striking ``subsection (a)(1)'' 
and inserting ``subsection (a)(1) or (2)''.
    (c) Section 548(a)(1) of the Energy Independence and Security Act 
of 2007 (42 U.S.C. 17158(a)(1)) is amending by striking ``; provided'' 
and all that follows through ``541(3)(B)''.

SEC. 2002. AMENDMENTS TO TITLE XIII OF THE ENERGY INDEPENDENCE AND 
              SECURITY ACT OF 2007.

    Title XIII of the Energy Independence and Security Act of 2007 (42 
U.S.C. 17381 and following) is amended as follows:
            (1) By amending subparagraph (A) of section 1304(b)(3) to 
        read as follows:
                    ``(A) In general.--In carrying out the initiative, 
                the Secretary shall provide financial support to smart 
                grid demonstration projects in urban, suburban, and 
                rural areas, including areas where electric system 
                assets are controlled by tax-exempt entities and areas 
                where electric system assets are controlled by 
                investor-owned utilities.''.
            (2) By amending subparagraph (C) of section 1304(b)(3) to 
        read as follows:
                    ``(C) Federal share of cost of technology 
                investments.--The Secretary shall provide to an 
                electric utility described in subparagraph (B) or to 
                other parties financial assistance for use in paying an 
                amount equal to not more than 50 percent of the cost of 
                qualifying advanced grid technology investments made by 
                the electric utility or other party to carry out a 
                demonstration project.''.
            (3) By inserting after section 1304(b)(3)(D) the following 
        new subparagraphs:
                    ``(E) Availability of data.--The Secretary shall 
                establish and maintain a smart grid information 
                clearinghouse in a timely manner which will make data 
                from smart grid demonstration projects and other 
                sources available to the public. As a condition of 
                receiving financial assistance under this subsection, a 
                utility or other participant in a smart grid 
                demonstration project shall provide such information as 
                the Secretary may require to become available through 
                the smart grid information clearinghouse in the form 
                and within the timeframes as directed by the Secretary. 
                The Secretary shall assure that business proprietary 
                information and individual customer information is not 
                included in the information made available through the 
                clearinghouse.
                    ``(F) Open internet-based protocols and 
                standards.--The Secretary shall require as a condition 
                of receiving funding under this subsection that 
                demonstration projects utilize open Internet-based 
                protocols and standards if available.''.
            (4) By amending paragraph (2) of section 1304(c) to read as 
        follows:
            ``(2) to carry out subsection (b), such sums as may be 
        necessary.''.
            (5) By amending subsection (a) of section 1306 by striking 
        ``reimbursement of one-fifth (20 percent)'' and inserting 
        ``grants of up to one-half (50 percent)''.
            (6) By striking the last sentence of subsection (b)(9) of 
        section 1306.
            (7) By striking ``are eligible for'' in subsection (c)(1) 
        of section 1306 and inserting ``utilize''.
            (8) By amending subsection (e) of section 1306 to read as 
        follows:
    ``(e) Procedures and Rules.--The Secretary shall--
            ``(1) establish within 60 days after the enactment of the 
        American Recovery and Reinvestment Act of 2009 procedures by 
        which applicants can obtain grants of not more than one-half of 
        their documented costs;
            ``(2) require as a condition of receiving a grant under 
        this section that grant recipients utilize open Internet-based 
        protocols and standards if available;
            ``(3) establish procedures to ensure that there is no 
        duplication or multiple payment or recovery for the same 
        investment or costs, that the grant goes to the party making 
        the actual expenditures for qualifying smart grid investments, 
        and that the grants made have significant effect in encouraging 
        and facilitating the development of a smart grid;
            ``(4) maintain public records of grants made, recipients, 
        and qualifying smart grid investments which have received 
        grants;
            ``(5) establish procedures to provide advance payment of 
        moneys up to the full amount of the grant award; and
            ``(6) have and exercise the discretion to deny grants for 
        investments that do not qualify in the reasonable judgment of 
        the Secretary.''.

SEC. 2003. RENEWABLE ENERGY AND ELECTRIC POWER TRANSMISSION LOAN 
              GUARANTEE PROGRAM.

    (a) Amendment.--Title XVII of the Energy Policy Act of 2005 (42 
U.S.C. 16511 et seq.) is amended by adding the following at the end:

``SEC. 1705. TEMPORARY PROGRAM FOR RAPID DEPLOYMENT OF RENEWABLE ENERGY 
              AND ELECTRIC POWER TRANSMISSION PROJECTS.

    ``(a) In General.--Notwithstanding section 1703, the Secretary may 
make guarantees under this section only for commercial technology 
projects under subsection (b) that will commence construction not later 
than September 30, 2011.
    ``(b) Categories.--Projects from only the following categories 
shall be eligible for support under this section:
            ``(1) Renewable energy systems that generate electricity.
            ``(2) Electric power transmission systems, including 
        upgrading and reconductoring projects.
    ``(c) Factors Relating to Electric Power Transmission Systems.--In 
determining to make guarantees to projects described in subsection 
(b)(2), the Secretary shall consider the following factors:
            ``(1) The viability of the project without guarantees.
            ``(2) The availability of other Federal and State 
        incentives.
            ``(3) The importance of the project in meeting reliability 
        needs.
            ``(4) The effect of the project in meeting a State or 
        region's environment (including climate change) and energy 
        goals.
    ``(d) Wage Rate Requirements.--The Secretary shall require that 
each recipient of support under this section provide reasonable 
assurance that all laborers and mechanics employed in the performance 
of the project for which the assistance is provided, including those 
employed by contractors or subcontractors, will be paid wages at rates 
not less than those prevailing on similar work in the locality as 
determined by the Secretary of Labor in accordance with subchapter IV 
of chapter 31 of part A of subtitle II of title 40, United States Code 
(commonly referred to as the `Davis-Bacon Act').
    ``(e) Sunset.--The authority to enter into guarantees under this 
section shall expire on September 30, 2011.''.
    (b) Table of Contents Amendment.--The table of contents for the 
Energy Policy Act of 2005 is amended by inserting after the item 
relating to section 1704 the following new item:

``Sec. 1705. Temporary program for rapid deployment of renewable energy 
                            and electric power transmission 
                            projects.''.

SEC. 2004. WEATHERIZATION ASSISTANCE PROGRAM AMENDMENTS.

    (a) Income Level.--Section 412(7) of the Energy Conservation and 
Production Act (42 U.S.C. 6862(7)) is amended by striking ``150 
percent'' both places it appears and inserting ``200 percent''.
    (b) Assistance Level Per Dwelling Unit.--Section 415(c)(1) of the 
Energy Conservation and Production Act (42 U.S.C. 6865(c)(1)) is 
amended by striking ``$2,500'' and inserting ``$5,000''.
    (c) Effective Use of Funds.--In providing funds made available by 
this Act for the Weatherization Assistance Program, the Secretary may 
encourage States to give priority to using such funds for the most 
cost-effective efficiency activities, which may include insulation of 
attics, if, in the Secretary's view, such use of funds would increase 
the effectiveness of the program.

SEC. 2005. RENEWABLE ELECTRICITY TRANSMISSION STUDY.

    In completing the 2009 National Electric Transmission Congestion 
Study, the Secretary of Energy shall include--
            (1) an analysis of the significant potential sources of 
        renewable energy that are constrained in accessing appropriate 
        market areas by lack of adequate transmission capacity;
            (2) an analysis of the reasons for failure to develop the 
        adequate transmission capacity;
            (3) recommendations for achieving adequate transmission 
        capacity; and
            (4) an explanation of assumptions and projections made in 
        the Study, including--
                    (A) assumptions and projections relating to energy 
                efficiency improvements in each load center;
                    (B) assumptions and projections regarding the 
                location and type of projected new generation capacity; 
                and
                    (C) assumptions and projections regarding projected 
                deployment of distributed generation infrastructure.

                Subtitle B--Additional Energy Provisions

SEC. 2101. ADDITIONAL STATE ENERGY GRANTS.

    (a) In General.--Amounts appropriated for the State Energy Program 
under American Recovery and Reinvestment Act of 2009 shall be available 
to the Secretary of Energy for making additional grants under part D of 
title III of the Energy Policy and Conservation Act (42 U.S.C. 6321 et 
seq.). The Secretary shall make grants under this section in excess of 
the base allocation established for a State under regulations issued 
pursuant to the authorization provided in section 365(f) of such Act 
only if the governor of the recipient State notifies the Secretary of 
Energy that the governor will seek, to the extent of his or her 
authority, to ensure that each of the following will occur:
            (1) The applicable State regulatory authority will 
        implement the following regulatory policies for each electric 
        and gas utility with respect to which the State regulatory 
        authority has ratemaking authority:
                    (A) Policies that ensure that a utility's recovery 
                of prudent fixed costs of service is timely and 
                independent of its retail sales, without in the process 
                shifting prudent costs from variable to fixed charges. 
                This cost shifting constraint shall not apply to rate 
                designs adopted prior to the date of enactment of this 
                Act.
                    (B) Cost recovery for prudent investments by 
                utilities in energy efficiency.
                    (C) An earnings opportunity for utilities 
                associated with cost-effective energy efficiency 
                savings.
            (2) The State, or the applicable units of local government 
        that have authority to adopt building codes, will implement the 
        following:
                    (A) A building energy code (or codes) for 
                residential buildings that meets or exceeds the most 
                recently published International Energy Conservation 
                Code, or achieves equivalent or greater energy savings.
                    (B) A building energy code (or codes) for 
                commercial buildings throughout the State that meets or 
                exceeds the ANSI/ASHRAE/IESNA Standard 90.1-2007, or 
                achieves equivalent or greater energy savings.
                    (C) A plan for the jurisdiction achieving 
                compliance with the building energy code or codes 
                described in subparagraphs (A) and (B) within 8 years 
                of the date of enactment of this Act in at least 90 
                percent of new and renovated residential and commercial 
                building space. Such plan shall include active training 
                and enforcement programs and measurement of the rate of 
                compliance each year.
    (b) State Match.--The State cost share requirement under the item 
relating to ``DEPARTMENT OF ENERGY; energy conservation'' in title II 
of the Department of the Interior and Related Agencies Appropriations 
Act, 1985 (42 U.S.C. 6323a; 98 Stat. 1861) shall not apply to 
assistance provided under this section.
    (c) Equipment and Materials for Energy Efficiency Measures.--No 
limitation on the percentage of funding that may be used for the 
purchase and installation of equipment and materials for energy 
efficiency measures under grants provided under part D of title III of 
the Energy Policy and Conservation Act (42 U.S.C. 6321 et seq.) shall 
apply to assistance provided under this section.

SEC. 2102. INAPPLICABILITY OF LIMITATION.

    The limitations in section 399A(f)(2), (3), and (4) of the Energy 
Policy and Conservation Act (42 U.S.C. 6371h-1(f)(2), (3), and (4)) 
shall not apply to grants funded with appropriations provided by this 
Act, except that such grant funds shall be available for not more than 
an amount equal to 80 percent of the costs of the project for which the 
grant is provided.

       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, or
                            (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)(i) Individuals who are receiving unemployment 
        compensation benefits; and
            ``(ii) individuals who were receiving, but have exhausted, 
        unemployment compensation benefits on or after July 1, 2008.
            ``(B) 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.
            ``(C) 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.
    ``(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) 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) or (C) 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)(B).
    ``(C) In the case of individuals described in paragraph (2)(A) or 
(2)(C), the requirements of subsections (i)(22) and (x) in section 1903 
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 EHR 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 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, an ambulatory surgical center described in 
        section 1833(i) of the Social Security Act, 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) Standards 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 AHIC Successor, Inc. 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 
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 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 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 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, as 
        defined in section 3000, 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 
        3012(b), including community health centers receiving 
        assistance under section 330, covered entities under section 
        340B, 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) Improvement and expansion of the use of health 
        information technology by public health departments.
            ``(8) Provision of $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.
            ``(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 United States-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;
                    ``(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 
        title, 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 (f)) 
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 (d).
    ``(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 (e) (regardless of whether such plan 
        was prepared using amounts awarded under subsection (b)); 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 (c) 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 (b) and (c), 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 this 
        section 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 (c) 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 Administrator 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 3004) 
                applicable to the exchange of information, improves the 
                quality of health care, such as promoting care 
                coordination;
                    ``(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; and
                    ``(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 (h).
    ``(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 (c). 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 
section 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 section 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 section 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 section 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 subtitle 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 subtitle 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.
                            ``(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 eligible 
                        professional described in paragraph (2) 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 eligible 
                        professional described in paragraph (2) who 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)(2)) 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)(4)) 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 each of 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 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 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 4311(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 EHR 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 certified EHR technology (as 
        defined in section 3000 of the Public Health Service Act) 
        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 certified EHR 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.
An eligible professional shall not qualify as a Medicaid provider under 
this subsection unless the eligible 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 Medicaid 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 EHR 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 EHR 
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 
EHR 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 the average annual rate 
of growth of the most recent 3 years for which discharge data are 
available 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) is conducting adequate oversight of the program under 
        this subsection, including routine tracking of meaningful use 
        attestations and reporting mechanisms; and
            ``(C) is 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, email 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 occurring 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.--
            (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; or
                    (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 websites 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.

                      TITLE V--MEDICAID PROVISIONS

SEC. 5000. TABLE OF CONTENTS OF TITLE.

    The table of contents of this title is as follows:

Sec. 5000. Table of contents of title.
Sec. 5001. Temporary increase of Medicaid FMAP.
Sec. 5002. Moratoria on certain regulations.
Sec. 5003. Transitional Medicaid assistance (TMA).
Sec. 5004. State eligibility option for family planning services.
Sec. 5005. Protections for Indians under Medicaid and CHIP.
Sec. 5006. Consultation on Medicaid and CHIP.
Sec. 5007. Temporary increase in DSH allotments during recession.

SEC. 5001. TEMPORARY INCREASE OF MEDICAID FMAP.

    (a) Permitting Maintenance of FMAP.--Subject to subsections (e), 
(f), and (g), if the FMAP determined without regard to this section for 
a State for--
            (1) fiscal year 2009 is less than the FMAP as so determined 
        for fiscal year 2008, the FMAP for the State for fiscal year 
        2008 shall be substituted for the State's FMAP for fiscal year 
        2009, before the application of this section;
            (2) fiscal year 2010 is less than the FMAP as so determined 
        for fiscal year 2008 or fiscal year 2009 (after the application 
        of paragraph (1)), the greater of such FMAP for the State for 
        fiscal year 2008 or fiscal year 2009 shall be substituted for 
        the State's FMAP for fiscal year 2010, before the application 
        of this section; and
            (3) fiscal year 2011 is less than the FMAP as so determined 
        for fiscal year 2008, fiscal year 2009 (after the application 
        of paragraph (1)), or fiscal year 2010 (after the application 
        of paragraph (2)), the greatest of such FMAP for the State for 
        fiscal year 2008, fiscal year 2009, or fiscal year 2010 shall 
        be substituted for the State's FMAP for fiscal year 2011, 
        before the application of this section, but only for the first 
        calendar quarter in fiscal year 2011.
    (b) General 4.9 Percentage Point Increase.--
            (1) In general.--Subject to subsections (e), (f), and (g) 
        and paragraph (2), for each State for calendar quarters during 
        the recession adjustment period (as defined in subsection 
        (h)(2)), the FMAP (after the application of subsection (a)) 
        shall be increased (without regard to any limitation otherwise 
        specified in section 1905(b) of the Social Security Act) by 4.9 
        percentage points.
            (2) Special election for territories.--In the case of a 
        State that is not one of the 50 States or the District of 
        Columbia, paragraph (1) shall only apply if the State makes a 
        one-time election, in a form and manner specified by the 
        Secretary and for the entire recession adjustment period, to 
        apply the increase in FMAP under paragraph (1) and a 10 percent 
        increase under subsection (d) instead of applying a 20 percent 
        increase under subsection (d).
    (c) Additional Adjustment To Reflect Increase in Unemployment.--
            (1) In general.--Subject to subsections (e), (f), and (g), 
        in the case of a State that is a high unemployment State (as 
        defined in paragraph (2)) for a calendar quarter during the 
        recession adjustment period, the FMAP (taking into account the 
        application of subsections (a) and (b)) for such quarter shall 
        be further increased by the high unemployment percentage point 
        adjustment specified in paragraph (3) for the State for the 
        quarter.
            (2) High unemployment state.--
                    (A) In general.--In this subsection, subject to 
                subparagraph (B), the term ``high unemployment State'' 
                means, with respect to a calendar quarter in the 
                recession adjustment period, a State that is 1 of the 
                50 States or the District of Columbia and for which the 
                State unemployment increase percentage (as computed 
                under paragraph (5)) for the quarter is not less than 
                1.5 percentage points.
                    (B) Maintenance of status.--If a State is a high 
                unemployment State for a calendar quarter, it shall 
                remain a high unemployment State for each subsequent 
                calendar quarter ending before July 1, 2010.
            (3) High unemployment percentage point adjustment.--
                    (A) In general.--The high unemployment percentage 
                point adjustment specified in this paragraph for a high 
                unemployment State for a quarter is equal to the 
                product of--
                            (i) the SMAP for such State and quarter 
                        (determined after the application of subsection 
                        (a) and before the application of subsection 
                        (b)); and
                            (ii) subject to subparagraph (B), the State 
                        unemployment reduction factor specified in 
                        paragraph (4) for the State and quarter.
                    (B) Maintenance of adjustment level for certain 
                quarters.--In no case shall the State unemployment 
                reduction factor applied under subparagraph (A)(ii) for 
                a State for a quarter (beginning on or after January 1, 
                2009, and ending before July 1, 2010) be less than the 
                State unemployment reduction factor applied to the 
                State for the previous quarter (taking into account the 
                application of this subparagraph).
            (4) State unemployment reduction factor.--In the case of a 
        high unemployment State for which the State unemployment 
        increase percentage (as computed under paragraph (5)) with 
        respect to a calendar quarter is--
                    (A) not less than 1.5, but is less than 2.5, 
                percentage points, the State unemployment reduction 
                factor for the State and quarter is 6 percent;
                    (B) not less than 2.5, but is less than 3.5, 
                percentage points, the State unemployment reduction 
                factor for the State and quarter is 12 percent; or
                    (C) not less than 3.5 percentage points, the State 
                unemployment reduction factor for the State and quarter 
                is 14 percent.
            (5) Computation of state unemployment increase 
        percentage.--
                    (A) In general.--In this subsection, the ``State 
                unemployment increase percentage'' for a State for a 
                calendar quarter is equal to the number of percentage 
                points (if any) by which--
                            (i) the average monthly unemployment rate 
                        for the State for months in the most recent 
                        previous 3-consecutive-month period for which 
                        data are available, subject to subparagraph 
                        (C); exceeds
                            (ii) the lowest average monthly 
                        unemployment rate for the State for any 3-
                        consecutive-month period preceding the period 
                        described in clause (i) and beginning on or 
                        after January 1, 2006.
                    (B) Average monthly unemployment rate defined.--In 
                this paragraph, the term ``average monthly unemployment 
                rate'' means the average of the monthly number 
                unemployed, divided by the average of the monthly 
                civilian labor force, seasonally adjusted, as 
                determined based on the most recent monthly 
                publications of the Bureau of Labor Statistics of the 
                Department of Labor.
                    (C) Special rule.--With respect to--
                            (i) the first 2 calendar quarters of the 
                        recession adjustment period, the most recent 
                        previous 3-consecutive-month period described 
                        in subparagraph (A)(i) shall be the 3-
                        consecutive-month period beginning with October 
                        2008; and
                            (ii) the last 2 calendar quarters of the 
                        recession adjustment period, the most recent 
                        previous 3-consecutive-month period described 
                        in such subparagraph shall be the 3-
                        consecutive-month period beginning with 
                        December 2009.
    (d)  Increase in Cap on Medicaid Payments to Territories.--Subject 
to subsections (f) and (g) , with respect to entire fiscal years 
occurring during the recession adjustment period and with respect to 
fiscal years only a portion of which occurs during such period (and in 
proportion to the portion of the fiscal year that occurs during such 
period), the amounts otherwise determined for Puerto Rico, the Virgin 
Islands, Guam, the Northern Mariana Islands, and American Samoa under 
subsections (f) and (g) of section 1108 of the Social Security Act (42 
U.S.C. 1308) shall each be increased by 20 percent (or, in the case of 
an election under subsection (b)(2), 10 percent).
    (e) Scope of Application.--The increases in the FMAP for a State 
under this section shall apply for purposes of title XIX of the Social 
Security Act and--
            (1) the increases applied under subsections (a), (b), and 
        (c) shall not apply with respect--
                    (A) to payments under parts A, B, and D of title IV 
                or title XXI of such Act (42 U.S.C. 601 et seq. and 
                1397aa et seq.);
                    (B) to payments under title XIX of such Act that 
                are based on the enhanced FMAP described in section 
                2105(b) of such Act (42 U.S.C. 1397ee(b)); and
                    (C) to payments for disproportionate share hospital 
                (DSH) payment adjustments under section 1923 of such 
                Act (42 U.S.C. 1396r-4); and
            (2) the increase provided under subsection (c) shall not 
        apply with respect to payments under part E of title IV of such 
        Act.
    (f) State Ineligibility and Limitation.--
            (1) In general.--Subject to paragraphs (2) and (3), a State 
        is not eligible for an increase in its FMAP under subsection 
        (a), (b), or (c), or an increase in a cap amount under 
        subsection (d), if eligibility standards, methodologies, or 
        procedures under its State plan under title XIX of the Social 
        Security Act (including any waiver under such title or under 
        section 1115 of such Act (42 U.S.C. 1315)) are more restrictive 
        than the eligibility standards, methodologies, or procedures, 
        respectively, under such plan (or waiver) as in effect on July 
        1, 2008.
            (2) State reinstatement of eligibility permitted.--Subject 
        to paragraph (3), a State that has restricted eligibility 
        standards, methodologies, or procedures under its State plan 
        under title XIX of the Social Security Act (including any 
        waiver under such title or under section 1115 of such Act (42 
        U.S.C. 1315)) after July 1, 2008, is no longer ineligible under 
        paragraph (1) beginning with the first calendar quarter in 
        which the State has reinstated eligibility standards, 
        methodologies, or procedures that are no more restrictive than 
        the eligibility standards, methodologies, or procedures, 
        respectively, under such plan (or waiver) as in effect on July 
        1, 2008.
            (3) Special rules.--A State shall not be ineligible under 
        paragraph (1)--
                    (A) before July 1, 2009, on the basis of a 
                restriction that was applied after July 1, 2008, and 
                before the date of the enactment of this Act; or
                    (B) on the basis of a restriction that was 
                effective under State law as of July 1, 2008, and would 
                have been in effect as of such date, but for a delay 
                (of not longer than 1 calendar quarter) in the approval 
                of a request for a new waiver under section 1115 of 
                such Act with respect to such restriction.
            (4) State's application toward rainy day fund.--A State is 
        not eligible for an increase in its FMAP under subsection (b) 
        or (c), or an increase in a cap amount under subsection (d), if 
        any amounts attributable (directly or indirectly) to such 
        increase are deposited or credited into any reserve or rainy 
        day fund of the State.
            (5) Rule of construction.--Nothing in paragraph (1) or (2) 
        shall be construed as affecting a State's flexibility with 
        respect to benefits offered under the State Medicaid program 
        under title XIX of the Social Security Act (42 U.S.C. 1396 et 
        seq.) (including any waiver under such title or under section 
        1115 of such Act (42 U.S.C. 1315)).
            (6) No waiver authority.--The Secretary may not waive the 
        application of this subsection or subsection (g) under section 
        1115 of the Social Security Act or otherwise.
    (g) Requirement for Certain States.--In the case of a State that 
requires political subdivisions within the State to contribute toward 
the non-Federal share of expenditures under the State Medicaid plan 
required under section 1902(a)(2) of the Social Security Act (42 U.S.C. 
1396a(a)(2)), the State is not eligible for an increase in its FMAP 
under subsection (a), (b), or (c), or an increase in a cap amount under 
subsection (d), if it requires that such political subdivisions pay a 
greater percentage of the non-Federal share of such expenditures for 
quarters during the recession adjustment period, than the percentage 
that would have been required by the State under such plan on September 
30, 2008, prior to application of this section.
    (h) Definitions.--In this section, except as otherwise provided:
            (1) FMAP.--The term ``FMAP'' means the Federal medical 
        assistance percentage, as defined in section 1905(b) of the 
        Social Security Act (42 U.S.C. 1396d(b)), as determined without 
        regard to this section except as otherwise specified.
            (2) Recession adjustment period.--The term ``recession 
        adjustment period'' means the period beginning on October 1, 
        2008, and ending on December 31, 2010.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (4) SMAP.--The term ``SMAP'' means, for a State, 100 
        percent minus the Federal medical assistance percentage.
            (5) State.--The term ``State'' has the meaning given such 
        term in section 1101(a)(1) of the Social Security Act (42 
        U.S.C. 1301(a)(1)) for purposes of title XIX of the Social 
        Security Act (42 U.S.C. 1396 et seq.).
    (i) Sunset.--This section shall not apply to items and services 
furnished after the end of the recession adjustment period.

SEC. 5002. MORATORIA ON CERTAIN REGULATIONS.

    (a) Extension of Moratoria on Certain Medicaid Regulations.--The 
following sections are each amended by striking ``April 1, 2009'' and 
inserting ``July 1, 2009'':
            (1) Section 7002(a)(1) of the U.S. Troop Readiness, 
        Veterans' Care, Katrina Recovery, and Iraq Accountability 
        Appropriations Act, 2007 (Public Law 110-28), as amended by 
        section 7001(a)(1) of the Supplemental Appropriations Act, 2008 
        (Public Law 110-252).
            (2) Section 206 of the Medicare, Medicaid, and SCHIP 
        Extension Act of 2007 (Public Law 110-173), as amended by 
        section 7001(a)(2) of the Supplemental Appropriations Act, 2008 
        (Public Law 110-252).
            (3) Section 7001(a)(3)(A) of the Supplemental 
        Appropriations Act, 2008 (Public Law 110-252).
    (b) Additional Medicaid Moratorium.--Notwithstanding any other 
provision of law, with respect to expenditures for services furnished 
during the period beginning on December 8, 2008 and ending on June 30, 
2009, the Secretary of Health and Human Services shall not take any 
action (through promulgation of regulation, issuance of regulatory 
guidance, use of Federal payment audit procedures, or other 
administrative action, policy, or practice, including a Medical 
Assistance Manual transmittal or letter to State Medicaid directors) to 
implement the final regulation relating to clarification of the 
definition of outpatient hospital facility services under the Medicaid 
program published on November 7, 2008 (73 Federal Register 66187).

SEC. 5003. TRANSITIONAL MEDICAID ASSISTANCE (TMA).

    (a) 18-Month Extension.--
            (1) In general.--Sections 1902(e)(1)(B) and 1925(f) of the 
        Social Security Act (42 U.S.C. 1396a(e)(1)(B), 1396r-6(f)) are 
        each amended by striking ``September 30, 2003'' and inserting 
        ``December 31, 2010''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect on July 1, 2009.
    (b) State Option of Initial 12-Month Eligibility.--Section 1925 of 
the Social Security Act (42 U.S.C. 1396r-6) is amended--
            (1) in subsection (a)(1), by inserting ``but subject to 
        paragraph (5)'' after ``Notwithstanding any other provision of 
        this title'';
            (2) by adding at the end of subsection (a) the following:
            ``(5) Option of 12-month initial eligibility period.--A 
        State may elect to treat any reference in this subsection to a 
        6-month period (or 6 months) as a reference to a 12-month 
        period (or 12 months). In the case of such an election, 
        subsection (b) shall not apply.''; and
            (3) in subsection (b)(1), by inserting ``but subject to 
        subsection (a)(5)'' after ``Notwithstanding any other provision 
        of this title''.
    (c) Removal of Requirement for Previous Receipt of Medical 
Assistance.--Section 1925(a)(1) of such Act (42 U.S.C. 1396r-6(a)(1)), 
as amended by subsection (b)(1), is further amended--
            (1) by inserting ``subparagraph (B) and'' before 
        ``paragraph (5)'';
            (2) by redesignating the matter after ``Requirement.--'' as 
        a subparagraph (A) with the heading ``In general.--'' and with 
        the same indentation as subparagraph (B) (as added by paragraph 
        (3)); and
            (3) by adding at the end the following:
                    ``(B) State option to waive requirement for 3 
                months before receipt of medical assistance.--A State 
                may, at its option, elect also to apply subparagraph 
                (A) in the case of a family that was receiving such aid 
                for fewer than three months or that had applied for and 
                was eligible for such aid for fewer than 3 months 
                during the 6 immediately preceding months described in 
                such subparagraph.''.
    (d) CMS Report on Enrollment and Participation Rates Under TMA.--
Section 1925 of such Act (42 U.S.C. 1396r-6), as amended by this 
section, is further amended by adding at the end the following new 
subsection:
    ``(g) Collection and Reporting of Participation Information.--
            ``(1) Collection of information from states.--Each State 
        shall collect and submit to the Secretary (and make publicly 
        available), in a format specified by the Secretary, information 
        on average monthly enrollment and average monthly participation 
        rates for adults and children under this section and of the 
        number and percentage of children who become ineligible for 
        medical assistance under this section whose medical assistance 
        is continued under another eligibility category or who are 
        enrolled under the State's child health plan under title XXI. 
        Such information shall be submitted at the same time and 
        frequency in which other enrollment information under this 
        title is submitted to the Secretary.
            ``(2) Annual reports to congress.--Using the information 
        submitted under paragraph (1), the Secretary shall submit to 
        Congress annual reports concerning enrollment and participation 
        rates described in such paragraph.''.
    (e) Effective Date.--The amendments made by subsections (b) through 
(d) shall take effect on July 1, 2009.

SEC. 5004. STATE ELIGIBILITY OPTION FOR FAMILY PLANNING SERVICES.

    (a) Coverage as Optional Categorically Needy Group.--
            (1) In general.--Section 1902(a)(10)(A)(ii) of the Social 
        Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)), as amended by 
        section 3003(a) of the Health Insurance Assistance for the 
        Unemployed Act of 2009, is amended--
                    (A) in subclause (XIX), by striking ``or'' at the 
                end;
                    (B) in subclause (XX), by adding ``or'' at the end; 
                and
                    (C) by adding at the end the following new 
                subclause:
            ``(XXI) who are described in subsection (ee) (relating to 
        individuals who meet certain income standards);''.
            (2) Group described.--Section 1902 of such Act (42 U.S.C. 
        1396a), as amended by section 3003(a) of the Health Insurance 
        Assistance for the Unemployed Act of 2009, is amended by adding 
        at the end the following new subsection:
    ``(ee)(1) Individuals described in this subsection are 
individuals--
                    ``(A) whose income does not exceed an income 
                eligibility level established by the State that does 
                not exceed the highest income eligibility level 
                established under the State plan under this title (or 
                under its State child health plan under title XXI) for 
                pregnant women; and
                    ``(B) who are not pregnant.
            ``(2) At the option of a State, individuals described in 
        this subsection may include individuals who, had individuals 
        applied on or before January 1, 2007, would have been made 
        eligible pursuant to the standards and processes imposed by 
        that State for benefits described in clause (XV) of the matter 
        following subparagraph (G) of section subsection (a)(10) 
        pursuant to a waiver granted under section 1115.
            ``(3) At the option of a State, for purposes of subsection 
        (a)(17)(B), in determining eligibility for services under this 
        subsection, the State may consider only the income of the 
        applicant or recipient.''.
            (3) Limitation on benefits.--Section 1902(a)(10) of the 
        Social Security Act (42 U.S.C. 1396a(a)(10)) is amended in the 
        matter following subparagraph (G)--
                    (A) by striking ``and (XIV)'' and inserting 
                ``(XIV)''; and
                    (B) by inserting ``, and (XV) the medical 
                assistance made available to an individual described in 
                subsection (ee) shall be limited to family planning 
                services and supplies described in section 
                1905(a)(4)(C) including medical diagnosis and treatment 
                services that are provided pursuant to a family 
                planning service in a family planning setting'' after 
                ``cervical cancer''.
            (4) Conforming amendments.--Section 1905(a) of the Social 
        Security Act (42 U.S.C. 1396d(a)), as amended by section 
        3003(c)(2) of the Health Insurance Assistance for the 
        Unemployed Act of 2009, is amended in the matter preceding 
        paragraph (1)--
                    (A) in clause (xiii), by striking ``or'' at the 
                end;
                    (B) in clause (xiv), by adding ``or'' at the end; 
                and
                    (C) by inserting after clause (xiii) the following:
                            ``(xv) individuals described in section 
                        1902(ee),''.
    (b) Presumptive Eligibility.--
            (1) In general.--Title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.) is amended by inserting after section 
        1920B the following:

         ``presumptive eligibility for family planning services

    ``Sec. 1920C.  (a) State Option.--State plan approved under section 
1902 may provide for making medical assistance available to an 
individual described in section 1902(ee) (relating to individuals who 
meet certain income eligibility standard) during a presumptive 
eligibility period. In the case of an individual described in section 
1902(ee), such medical assistance shall be limited to family planning 
services and supplies described in 1905(a)(4)(C) and, at the State's 
option, medical diagnosis and treatment services that are provided in 
conjunction with a family planning service in a family planning 
setting.
    ``(b) Definitions.--For purposes of this section:
            ``(1) Presumptive eligibility period.--The term 
        `presumptive eligibility period' means, with respect to an 
        individual described in subsection (a), the period that--
                    ``(A) begins with the date on which a qualified 
                entity determines, on the basis of preliminary 
                information, that the individual is described in 
                section 1902(ee); and
                    ``(B) ends with (and includes) the earlier of--
                            ``(i) the day on which a determination is 
                        made with respect to the eligibility of such 
                        individual for services under the State plan; 
                        or
                            ``(ii) in the case of such an individual 
                        who does not file an application by the last 
                        day of the month following the month during 
                        which the entity makes the determination 
                        referred to in subparagraph (A), such last day.
            ``(2) Qualified entity.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                term `qualified entity' means any entity that--
                            ``(i) is eligible for payments under a 
                        State plan approved under this title; and
                            ``(ii) is determined by the State agency to 
                        be capable of making determinations of the type 
                        described in paragraph (1)(A).
                    ``(B) Rule of construction.--Nothing in this 
                paragraph shall be construed as preventing a State from 
                limiting the classes of entities that may become 
                qualified entities in order to prevent fraud and abuse.
    ``(c) Administration.--
            ``(1) In general.--The State agency shall provide qualified 
        entities with--
                    ``(A) such forms as are necessary for an 
                application to be made by an individual described in 
                subsection (a) for medical assistance under the State 
                plan; and
                    ``(B) information on how to assist such individuals 
                in completing and filing such forms.
            ``(2) Notification requirements.--A qualified entity that 
        determines under subsection (b)(1)(A) that an individual 
        described in subsection (a) is presumptively eligible for 
        medical assistance under a State plan shall--
                    ``(A) notify the State agency of the determination 
                within 5 working days after the date on which 
                determination is made; and
                    ``(B) inform such individual at the time the 
                determination is made that an application for medical 
                assistance is required to be made by not later than the 
                last day of the month following the month during which 
                the determination is made.
            ``(3) Application for medical assistance.--In the case of 
        an individual described in subsection (a) who is determined by 
        a qualified entity to be presumptively eligible for medical 
        assistance under a State plan, the individual shall apply for 
        medical assistance by not later than the last day of the month 
        following the month during which the determination is made.
    ``(d) Payment.--Notwithstanding any other provision of law, medical 
assistance that--
            ``(1) is furnished to an individual described in subsection 
        (a)--
                    ``(A) during a presumptive eligibility period; and
                    ``(B) by a entity that is eligible for payments 
                under the State plan; and
            ``(2) is included in the care and services covered by the 
        State plan,
shall be treated as medical assistance provided by such plan for 
purposes of clause (4) of the first sentence of section 1905(b).''.
            (2) Conforming amendments.--
                    (A) Section 1902(a)(47) of the Social Security Act 
                (42 U.S.C. 1396a(a)(47)) is amended by inserting before 
                the semicolon at the end the following: ``and provide 
                for making medical assistance available to individuals 
                described in subsection (a) of section 1920C during a 
                presumptive eligibility period in accordance with such 
                section''.
                    (B) Section 1903(u)(1)(D)(v) of such Act (42 U.S.C. 
                1396b(u)(1)(D)(v)) is amended--
                            (i) by striking ``or for'' and inserting 
                        ``for''; and
                            (ii) by inserting before the period the 
                        following: ``, or for medical assistance 
                        provided to an individual described in 
                        subsection (a) of section 1920C during a 
                        presumptive eligibility period under such 
                        section''.
    (c) Clarification of Coverage of Family Planning Services and 
Supplies.--Section 1937(b) of the Social Security Act (42 U.S.C. 1396u-
7(b)) is amended by adding at the end the following:
            ``(5) Coverage of family planning services and supplies.--
        Notwithstanding the previous provisions of this section, a 
        State may not provide for medical assistance through enrollment 
        of an individual with benchmark coverage or benchmark-
        equivalent coverage under this section unless such coverage 
        includes for any individual described in section 1905(a)(4)(C), 
        medical assistance for family planning services and supplies in 
        accordance with such section.''.
    (d) Effective Date.--The amendments made by this section take 
effect on the date of the enactment of this Act and shall apply to 
items and services furnished on or after such date.

SEC. 5005. PROTECTIONS FOR INDIANS UNDER MEDICAID AND CHIP.

    (a) Premiums and Cost Sharing Protection Under Medicaid.--
            (1) In general.--Section 1916 of the Social Security Act 
        (42 U.S.C. 1396o) is amended--
                    (A) in subsection (a), in the matter preceding 
                paragraph (1), by striking ``and (i)'' and inserting 
                ``, (i), and (j)''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(j) No Premiums or Cost Sharing for Indians Furnished Items or 
Services Directly by Indian Health Programs or Through Referral Under 
Contract Health Services.--
            ``(1) No cost sharing for items or services furnished to 
        indians through indian health programs.--
                    ``(A) In general.--No enrollment fee, premium, or 
                similar charge, and no deduction, copayment, cost 
                sharing, or similar charge shall be imposed against an 
                Indian who is furnished an item or service directly by 
                the Indian Health Service, an Indian Tribe, Tribal 
                Organization, or Urban Indian Organization or through 
                referral under contract health services for which 
                payment may be made under this title.
                    ``(B) No reduction in amount of payment to indian 
                health providers.--Payment due under this title to the 
                Indian Health Service, an Indian Tribe, Tribal 
                Organization, or Urban Indian Organization, or a health 
                care provider through referral under contract health 
                services for the furnishing of an item or service to an 
                Indian who is eligible for assistance under such title, 
                may not be reduced by the amount of any enrollment fee, 
                premium, or similar charge, or any deduction, 
                copayment, cost sharing, or similar charge that would 
                be due from the Indian but for the operation of 
                subparagraph (A).
            ``(2) Rule of construction.--Nothing in this subsection 
        shall be construed as restricting the application of any other 
        limitations on the imposition of premiums or cost sharing that 
        may apply to an individual receiving medical assistance under 
        this title who is an Indian.''.
            (2) Conforming amendment.--Section 1916A(b)(3) of such Act 
        (42 U.S.C. 1396o-1(b)(3)) is amended--
                    (A) in subparagraph (A), by adding at the end the 
                following new clause:
                            ``(vi) An Indian who is furnished an item 
                        or service directly by the Indian Health 
                        Service, an Indian Tribe, Tribal Organization 
                        or Urban Indian Organization or through 
                        referral under contract health services.''; and
                    (B) in subparagraph (B), by adding at the end the 
                following new clause:
                            ``(ix) Items and services furnished to an 
                        Indian directly by the Indian Health Service, 
                        an Indian Tribe, Tribal Organization or Urban 
                        Indian Organization or through referral under 
                        contract health services.''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on October 1, 2009.
    (b) Treatment of Certain Property From Resources for Medicaid and 
CHIP Eligibility.--
            (1) Medicaid.--Section 1902 of the Social Security Act (42 
        U.S.C. 1396a), as amended by section 3003(a) of the Health 
        Insurance Assistance for the Unemployed Act of 2009 and section 
        5004, is amended by adding at the end the following new 
        subsection:
    ``(ff) Notwithstanding any other requirement of this title or any 
other provision of Federal or State law, a State shall disregard the 
following property from resources for purposes of determining the 
eligibility of an individual who is an Indian for medical assistance 
under this title:
            ``(1) Property, including real property and improvements, 
        that is held in trust, subject to Federal restrictions, or 
        otherwise under the supervision of the Secretary of the 
        Interior, located on a reservation, including any federally 
        recognized Indian Tribe's reservation, pueblo, or colony, 
        including former reservations in Oklahoma, Alaska Native 
        regions established by the Alaska Native Claims Settlement Act, 
        and Indian allotments on or near a reservation as designated 
        and approved by the Bureau of Indian Affairs of the Department 
        of the Interior.
            ``(2) For any federally recognized Tribe not described in 
        paragraph (1), property located within the most recent 
        boundaries of a prior Federal reservation.
            ``(3) Ownership interests in rents, leases, royalties, or 
        usage rights related to natural resources (including extraction 
        of natural resources or harvesting of timber, other plants and 
        plant products, animals, fish, and shellfish) resulting from 
        the exercise of federally protected rights.
            ``(4) Ownership interests in or usage rights to items not 
        covered by paragraphs (1) through (3) that have unique 
        religious, spiritual, traditional, or cultural significance or 
        rights that support subsistence or a traditional lifestyle 
        according to applicable tribal law or custom.''.
            (2) Application to chip.--Section 2107(e)(1) of such Act 
        (42 U.S.C. 1397gg(e)(1)) is amended by adding at the end the 
        following new subparagraph:
                    ``(E) Section 1902(ff) (relating to disregard of 
                certain property for purposes of making eligibility 
                determinations).''.
    (c) Continuation of Current Law Protections of Certain Indian 
Property From Medicaid Estate Recovery.--Section 1917(b)(3) of the 
Social Security Act (42 U.S.C. 1396p(b)(3)) is amended--
            (1) by inserting ``(A)'' after ``(3)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(B) The standards specified by the Secretary 
                under subparagraph (A) shall require that the 
                procedures established by the State agency under 
                subparagraph (A) exempt income, resources, and property 
                that are exempt from the application of this subsection 
                as of April 1, 2003, under manual instructions issued 
                to carry out this subsection (as in effect on such 
                date) because of the Federal responsibility for Indian 
                Tribes and Alaska Native Villages. Nothing in this 
                subparagraph shall be construed as preventing the 
                Secretary from providing additional estate recovery 
                exemptions under this title for Indians.''.

SEC. 5006. CONSULTATION ON MEDICAID AND CHIP.

    (a) In General.--Section 1139 of the Social Security Act (42 U.S.C. 
1320b-9) is amended to read as follows:

       ``consultation with tribal technical advisory group (ttag)

    ``Sec. 1139. 
    ``The Secretary shall maintain within the Centers for Medicaid & 
Medicare Services (CMS) a Tribal Technical Advisory Group, which was 
first established in accordance with requirements of the charter dated 
September 30, 2003, and the Secretary shall include in such Group a 
representative of the Urban Indian Organizations and the Service. The 
representative of the Urban Indian Organization shall be deemed to be 
an elected officer of a tribal government for purposes of applying 
section 204(b) of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1534(b)).''.
    (b) Solicitation of Advice Under Medicaid and CHIP.--
            (1) Medicaid state plan amendment.--Section 1902(a) of the 
        Social Security Act (42 U.S.C. 1396a(a)) is amended--
                    (A) in paragraph (70), by striking ``and'' at the 
                end;
                    (B) in paragraph (71), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by inserting after paragraph (71), the 
                following new paragraph:
            ``(72) in the case of any State in which 1 or more Indian 
        Health Programs or Urban Indian Organizations furnishes health 
        care services, provide for a process under which the State 
        seeks advice on a regular, ongoing basis from designees of such 
        Indian Health Programs and Urban Indian Organizations on 
        matters relating to the application of this title that are 
        likely to have a direct effect on such Indian Health Programs 
        and Urban Indian Organizations and that--
                    ``(A) shall include solicitation of advice prior to 
                submission of any plan amendments, waiver requests, and 
                proposals for demonstration projects likely to have a 
                direct effect on Indians, Indian Health Programs, or 
                Urban Indian Organizations; and
                    ``(B) may include appointment of an advisory 
                committee and of a designee of such Indian Health 
                Programs and Urban Indian Organizations to the medical 
                care advisory committee advising the State on its State 
                plan under this title.''.
            (2) Application to chip.--Section 2107(e)(1) of such Act 
        (42 U.S.C. 1397gg(e)(1)), as amended by section 5005(b), is 
        amended by adding at the end the following new subparagraph:
                    ``(F) Section 1902(a)(72) (relating to requiring 
                certain States to seek advice from designees of Indian 
                Health Programs and Urban Indian Organizations).''.
    (c) Rule of Construction.--Nothing in the amendments made by this 
section shall be construed as superseding existing advisory committees, 
working groups, guidance, or other advisory procedures established by 
the Secretary of Health and Human Services or by any State with respect 
to the provision of health care to Indians.

SEC. 5007. TEMPORARY INCREASE IN DSH ALLOTMENTS DURING RECESSION.

    Section 1923(f)(3) of the Social Security Act (42 U.S.C. 1396r-
4(f)(3)) is amended--
            (1) in subparagraph (A), by striking ``paragraph (6)'' and 
        inserting ``paragraph (6) and subparagraph (E)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(E) Temporary increase in allotments during 
                recession.--
                            ``(i) In general.--Subject to clause (ii), 
                        the DSH allotment for any State--
                                    ``(I) for fiscal year 2009 is equal 
                                to 102.5 percent of the DSH allotment 
                                that would be determined under this 
                                paragraph for the State for fiscal year 
                                2009 without application of this 
                                subparagraph, notwithstanding 
                                subparagraph (B);
                                    ``(II) for fiscal year 2010 is 
                                equal to 102.5 percent of the the DSH 
                                allotment for the State for fiscal year 
                                2009, as determined under subclause 
                                (I); and
                                    ``(III) for each succeeding fiscal 
                                year is equal to the DSH allotment for 
                                the State under this paragraph 
                                determined without applying subclauses 
                                (I) and (II).
                            ``(ii) Application.--Clause (i) shall not 
                        apply to a State for a year in the case that 
                        the DSH allotment for such State for such year 
                        under this paragraph determined without 
                        applying clause (i) would grow higher than the 
                        DSH allotment specified under clause (i) for 
                        the State for such year.''.
                                 <all>