[Congressional Record (Bound Edition), Volume 151 (2005), Part 13]
[Senate]
[Pages 17413-17449]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. SARBANES (for himself, Ms. Mikulski, Mr. Allen, and Mr. 
        Warner):
  S. 1490. A bill to amend the Federal Water Pollution Control Act to 
require environmental--accountability and reporting and to reauthorize 
the Chesapeake Bay Program; to the Committee on Environment and Public 
Works.
                                 ______
                                 
      By Mr. SARBANES (for himself, Ms. Mikulski, Mr. Warner, Mr. 
        Allen, and Mr. Santorum):
  S. 1491. A bill to amend the Federal Water Pollution Control Act to 
provide assistance for nutrient removal technologies to States in the 
Chesapeake Bay watershed; to the Committee on Environment and Public 
Works.
                                 ______
                                 
      By Mr. SARBANES (for himself, Ms. Mikulski, Mr. Warner, and Mr. 
        Allen):
  S. 1492. A bill to amend the Elementary and Secondary Education Act 
of 1965 to establish a pilot program to make grants to eligible 
institutions to develop, demonstrate, or disseminate information on 
practices, methods, or techniques relating to environmental education 
and training in the Chesapeake Bay Watershed; to the Committee on 
Health, Education, Labor, and Pensions.
                                 ______
                                 
      By Mr. SARBANES (for himself, Ms. Mikulski, Mr. Warner, Mr. 
        Allen, and Mr. Santorum):
  S. 1493. A bill to require the Secretary of Agriculture to establish 
a program to expand and strengthen cooperative efforts to restore and 
protect forests in the Chesapeake Bay watershed, and for other 
purposes; to the Committee on Agriculture, Nutrition, and Forestry.
                                 ______
                                 
      By Mr. SARBANES (for himself, Ms. Mikulski, Mr. Warner, and Mr. 
        Allen):
  S. 1494. A bill to amend the National Oceanic and Atmospheric 
Administration Authorization Act of 1992 to establish programs to 
enhance protection of the Chesapeake Bay, and for other purposes; to 
the Committee on Commerce, Science, and Transportation.
  Mr. SARBANES. Mr. President, today I am introducing a package of five 
measures to sustain and indeed renew the Federal commitment to 
restoring the water quality and living resources of the Chesapeake Bay 
watershed. Joining me in sponsoring one or more of these measures are 
my colleagues from Virginia, Pennsylvania, and Maryland, Senators 
Warner, Allen, Mikulski, and Santorum.
  In his 1984 State of the Union message, President Ronald Reagan 
called the Chesapeake Bay a ``special national resource'' and pledged 
$10 million a year for 4 years to ``begin the long, necessary effort to 
clean up'' the Bay. Today, despite more than 2 decades of effort and 
the investment of hundreds of millions of dollars on the part of 
Federal, State, and local governments and the private sector, the goal 
of a clean, restored Bay appears elusive. For the past 3 years, the 
Chesapeake Bay Foundation has given the Chesapeake Bay a failing grade 
of 27 out of 100 on its annual report card--far short of the ``70'' 
level believed necessary for the Bay to be declared ``saved.'' The 
continued flood of sediments and nutrient pollution from sewage 
treatment plants, farms, urban runoff, and air deposition, combined 
with continued rapid growth in population and development in the 
watershed, is offsetting the progress that has been made to date in 
restoring the Bay. The Bay remains an ``impaired water body'' under the 
Clean Water Act, and Chesapeake Bay Program scientists are forecasting 
another summer of very low oxygen levels in the deep waters of the Bay, 
further stressing oysters, crabs, and other living resources. As author 
and naturalist Tom Horton points out in a recent National Geographic 
article, ``No one had illusions that the work of the Chesapeake Bay 
Program, a massive Federal-State restoration effort, begun in 1983 and 
unmatched anywhere in the world, would be quick or easy. But no one 
anticipated that 22 years later we would still be struggling.''
  If the Bay is to be restored, we must redouble our efforts. Nitrogen 
pollution from all sources will have to be substantially reduced, 
thousands of acres of watershed property must be preserved, significant 
efforts must be made to restore living resources, and buffer zones to 
protect rivers and streams need to be created. Likewise, assistance to 
community organizations, local governments, and educational 
institutions at all levels must be expanded dramatically to help foster 
local stewardship and entice more of the 16 million residents who live 
in the watershed to play active roles in the efforts to restore the 
Bay.
  The five measures that we are introducing are an important part of, 
but by no means the entire, solution for addressing the Bay's problems. 
Earlier in this Congress, Members from the Bay-area States, from both 
parties, joined with me in a letter to President Bush,

[[Page 17414]]

urging him to make restoration of Chesapeake Bay a top environmental 
priority and to commit $1 billion in his budget as a down-payment 
towards restoring the Bay's water quality. We called upon the Secretary 
of Agriculture to release $100 million provided under the 2002 Farm 
Bill for farmers to test new, innovative techniques for reducing 
agricultural nutrient pollution in the Chesapeake Bay watershed. Under 
Senator Warner's leadership, we succeeded in getting a provision in the 
Senate-passed SAFETEA legislation, which would provide more than $70 
million for the Bay area States and local governments to mitigate the 
impacts of storm-water runoff from highways and related impervious 
surfaces. We have fought to prevent a significant cut in funding for 
the Clean Water State Revolving Fund. And we have continued to press 
the Administrator of the Environmental Protection Agency to ensure that 
the Clean Water Act is fully enforced. All these are critical 
components of a more comprehensive effort on the part of the Federal, 
State and local governments and the private sector that will be needed 
over the course of the next few years to restore the health of the 
Chesapeake Bay.
  The first measure, the Chesapeake Bay Program Reauthorization and 
Environmental Accountability Act of 2005, would reauthorize and enhance 
EPA's Chesapeake Bay Program and would increase the program's 
accountability for improving the health of the Bay. The Chesapeake Bay 
Program, which has guided the clean-up effort for the past two decades, 
expires this year and must be reauthorized. Originally authorized in 
the Water Quality Act of 1987 and reauthorized in the Estuaries and 
Clean Water Act of 2000, the Chesapeake Bay Program provides support 
and coordination for Federal, State, and local efforts in developing 
strategies and action plans, conducting system-wide monitoring and 
assessment, implementing projects to restore and protect the Bay and 
its living resources, and communicating with the public about the Bay 
and efforts to restore and protect it.
  Last year, Senator Mikulski, Senator Warner, and I asked the 
Government Accountability Office to conduct a review of the Bay Program 
that would assess the overall restoration progress reported for the 
Bay; determine how progress is measured in the Bay watershed; and 
evaluate the effectiveness of Chesapeake Bay Program efforts to ensure 
that proper measures are being used. That study is nearing completion. 
Its preliminary findings recommend a number of improvements to the 
Program, which we have incorporated in this measure. The Chesapeake 
2000 Agreement provides goals for the Bay, but the GAO found that EPA 
has not developed a plan to achieve these goals. Bay restoration has 
also been hampered by a lack of interim goals and time frames against 
which progress can be assessed. The legislation we are introducing 
today requires the EPA Administrator to develop an implementation plan 
for reaching the goals of the Chesapeake 2000 Agreement, including a 
timeline with specific annual goals for nutrient and sediment 
reduction, associated costs, and measures for assessing progress, and 
to prepare an annual report for Congress that describes the 
accomplishments of the previous year and the reductions likely to occur 
in the future. The legislation also directs the Administrator to 
publish and widely circulate annual ``tributary report cards'' that 
describe the progress made in achieving the nutrient and sediment 
reduction goals for each major tributary or tributary segment in the 
Bay watershed. These ``report cards'' will provide the public with a 
clear and accurate picture of the progress toward restoring the Bay, 
which is currently lacking. In addition, the Director of the Office of 
Management and Budget is to submit an annual report on Chesapeake Bay 
Program funding.
  The second measure, the Chesapeake Bay Watershed Nutrient Removal 
Assistance Act, would establish a grants program in the Environmental 
Protection Agency to support the installation of nutrient reduction 
technologies at major wastewater treatment facilities in the Chesapeake 
Bay watershed. I first introduced this measure during the 107th 
Congress, and provisions of the legislation were included as part of S. 
1961, the Water Investment Act of 2002, reported favorably by the 
Senate Environment and Public Works Committee. Unfortunately, no 
further action was taken on that legislation.
  Despite important water quality improvements over the past decade, 
the overabundance of the nutrients nitrogen and phosphorus continues to 
rob the Bay of life-sustaining oxygen. Recent modeling of EPA's Bay 
Program has found that total nutrient discharges must be reduced by 
more than 40 percent from current levels to restore the Chesapeake Bay 
and its major tributaries to health. To do so, nitrogen discharges from 
all sources must be reduced drastically below current levels. Annual 
nitrogen discharges into the Bay will need to be cut by at least 100 
million pounds from the current 275 million pounds to less than 175 
million pounds. Municipal wastewater treatment plants, in particular, 
will have to reduce nitrogen discharges by nearly 75 percent.
  In December 2004, the Chesapeake Bay Commission issued a report 
entitled ``Cost-Effective Strategies for the Bay''; of the six most 
cost-effective strategies listed in that report, upgrading wastewater 
treatment plants is Number One. There are more than 300 significant 
municipal wastewater treatment plants in the Chesapeake Bay watershed. 
These plants contribute almost 60 million pounds of nitrogen per year--
one-fifth--of the total load of nitrogen to the Bay. Upgrading these 
plants with nutrient removal technologies to achieve nitrogen levels of 
3 mg/liter would remove as much as 30 million pounds of nitrogen in the 
Bay each year, or 30 percent of the total nitrogen reductions needed. 
Nutrient removal technologies have other benefits, as well. They 
provide significant savings in energy usage, 20-30 percent, in chemical 
usage, more than 50 percent, and in the amount of sludge produced, 5-15 
percent. Furthermore, the benefits from upgrading sewage treatment 
plants have an immediate result on the Bay's water quality, unlike 
other methods that primarily affect nutrients in ground water and may 
take years to produce results. This legislation would provide grants 
for 55 percent of the capital cost of upgrading the plants with state-
of-the-art nutrient removal technologies capable of achieving nitrogen 
levels of 3 mg/liter. Any publicly owned wastewater treatment plant 
which has a permitted design capacity to treat an annual average of 0.5 
million gallons per day within the Chesapeake Bay watershed portion of 
New York, Pennsylvania, Maryland, West Virginia, Delaware, Virginia, 
and the District of Columbia would be eligible to receive these grants. 
As a signatory to the Chesapeake Bay Agreement, the EPA has an 
important responsibility to assist the states with financing these 
water infrastructure needs.
  The third measure, the Chesapeake Bay Environmental Education Pilot 
Program Act, would establish a new environmental education program in 
the U.S. Department of Education for elementary and secondary school 
students and teachers within the Chesapeake Bay watershed. There is a 
growing consensus that a major commitment to education to promoting an 
ethic of responsible stewardship and citizenship among the 16 million 
people who live in the watershed is necessary if all of the other 
efforts to save the Bay are to succeed. Expanding environmental 
education and training opportunities will lead not only to a healthier 
Chesapeake Bay ecosystem but also to a more educated and informed 
citizenry, with a deeper understanding of and appreciation for the 
environment, their community, and their role in society as responsible 
citizens.
  One of the principal commitments of the Chesapeake 2000 Agreement is 
to ``provide a meaningful Bay or stream outdoor experience for every 
school student in the watershed before graduation from high school'' 
beginning with the class of 2005. There are more than 3.3 million K-12 
students in the watershed, and despite important efforts by Bay area 
states and not-for-

[[Page 17415]]

profit organizations, only a very small percentage of these students 
have had the opportunity to engage in meaningful outdoor experiences or 
receive classroom environmental instruction. Many of the school systems 
in the Bay watershed are only at the beginning stages in developing and 
implementing environmental education into their curriculum, let alone 
exposing students to outdoor watershed experiences. What's lacking is 
not the desire or will, but the resources and training to undertake 
more comprehensive environmental education programs.
  This legislation would authorize $6 million a year over the next four 
years in Federal grant assistance to help close the resource and 
training gap for students in the elementary and secondary levels in the 
Chesapeake Bay watershed. It would require a 50 percent non-Federal 
match, thus leveraging $12 million in assistance. The funding could be 
used to help design, demonstrate or disseminate environmental curricula 
and field practices, train teachers or other educational personnel, and 
support on-the-ground activities or Chesapeake Bay or stream outdoor 
educational experiences involving students and teachers, among other 
things. The program would complement the NOAA Bay Watershed Education 
and Training Program that we established several years ago.
  The fourth measure, the Chesapeake Bay Watershed Forestry Act, would 
continue and enhance the USDA Forest Service's role in the restoration 
of the Chesapeake Bay watershed. Forest loss and fragmentation are 
occurring rapidly in the Chesapeake Bay region and are among the most 
important issues facing the Bay and forest management today. According 
to the National Resources Inventory, the States closest to the Bay lost 
350,000 acres of forest between 1987 and 1997--almost 100 acres per 
day. More and more rural areas are being converted to suburban 
developments, resulting in smaller contiguous forest tracts. These 
trends are leading to a regional forest land base that is more 
vulnerable to conversion, is less likely to be economically viable in 
the future, and is losing its capacity to protect watershed health and 
other ecological benefits, such as controlling stormwater runoff, 
erosion and air pollution. Restoring and conserving forests is 
essential to sustaining the Bay ecosystem.
  Since 1990, the USDA Forest Service has been an important part of the 
Chesapeake Bay Program. The Service has worked closely with Federal, 
State, and local partners in the six-state Chesapeake Bay region to 
demonstrate how forest protection, restoration, and stewardship 
activities can contribute to achieving the Bay restoration goals. With 
the signing of the Chesapeake 2000 Agreement, the role of the USDA 
Forest Service has become more important than ever. Among other 
provisions, this Agreement requires the signatories to conserve 
existing forests along all streams and shoreline; to promote the 
expansion and connection of contiguous forests; to assess the Bay's 
forest lands; and to provide technical and financial assistance to 
local governments to plan for or revise plans, ordinances, and 
subdivision regulations to provide for the conservation and sustainable 
use of the forest and agricultural lands.
  This legislation codifies the role and responsibilities of the USDA 
Forest Service to the Bay restoration effort. It requires an evaluation 
of the urban and rural forests in the watershed. It strengthens 
existing coordination, technical assistance, forest resource 
assessment, and planning efforts for urban, suburban and rural areas of 
the Chesapeake Bay watershed. It authorizes a small grants program to 
support local agencies, watershed associations, and citizen groups in 
conducting on-the-ground conservation projects. It establishes a 
regional applied forestry research and training program to enhance 
urban, suburban and rural forests in the watershed. Finally it 
authorizes $3.5 million for each of fiscal years 2004 through 2010, a 
modest increase in view of the six-State, 64,000-square-mile watershed.
  The fifth measure, the NOAA Chesapeake Bay Watershed Monitoring, 
Education, Training, and Restoration Act, would enhance the authorities 
of the Chesapeake Bay Office of the National Oceanic and Atmospheric 
Administration, NOAA, to address the goals and commitments of the 
Chesapeake 2000 Agreement with regard to living-resource restoration 
and education and training. It builds upon provisions contained in the 
Hydrographic Services Improvement Act Amendments of 2002, and addresses 
several urgent and unmet needs in the watershed. To help meet Bay-wide 
living resource education and training goals, it codifies the Bay 
Watershed Education and Training, or B-WET, Program--the first 
federally funded environmental education program focused solely on the 
Chesapeake Bay watershed--that we initiated in the Fiscal 2002 
Commerce, Justice, State Appropriations bill; it establishes an 
aquaculture education program to assist with oyster and blue crab 
hatchery production; and it codifies the ongoing oyster restoration 
program and authorizes a new restoration program for submerged aquatic 
vegetation.
  To better coordinate and organize the substantial amounts of weather, 
tide, habitat, water-quality and other data collected and compiled by 
Federal, State, and local government agencies and academic institutions 
and to make this information more useful to resource managers, 
scientists, and the public, this bill also establishes an integrated 
observing system for the Chesapeake Bay. This system will build on and 
coordinate existing monitoring and observing activities in the Bay and 
its watershed, and will include development of an internet-based system 
for integrating and disseminating the vast amounts of information 
available.
  These measures would provide an important boost to our efforts to 
restore the Chesapeake Bay. They are strongly supported by the 
Chesapeake Bay Commission and the Chesapeake Bay Foundation. I ask 
unanimous consent that the text of the bills and supporting letters be 
printed in the Record. I urge my colleagues to join with us in 
supporting the measures and continue the momentum contributing to the 
improvement and enhancement of our Nation's most valuable and treasured 
natural resource.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1490

       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 ``Chesapeake Bay Program 
     Reauthorization and Environmental Accountability Act of 
     2005''.

     SEC. 2. CHESAPEAKE BAY ENVIRONMENTAL ACCOUNTABILITY AND 
                   REPORTING REQUIREMENTS.

       Section 117 of the Federal Water Pollution Control Act (33 
     U.S.C. 1267) is amended--
       (1) by redesignating subsection (j) as subsection (l);
       (2) in subsection (e)(7), by inserting ``by the Federal 
     Government or a State government'' after ``funded'' each 
     place it appears; and
       (3) by inserting after subsection (i) the following:
       ``(j) Environmental Accountability.--
       ``(1) Implementation plan.--
       ``(A) In general.--Not later than 180 days after the date 
     of enactment of this paragraph, the Administrator shall 
     complete a plan for achieving the nutrient and sediment 
     reduction goals described in the agreement entered into by 
     the Chesapeake Executive Council entitled `Chesapeake 2000' 
     and dated June 28, 2000.
       ``(B) Inclusions.--The plan shall include--
       ``(i) a timeline identifying--

       ``(I) annual goals for achieving the overall nutrient and 
     sediment reduction goals; and
       ``(II) the estimated annual costs of reaching the annual 
     goals identified under subclause (I);

       ``(ii) a description of any measure, including monitoring 
     or modeling, that the Administrator will use to assess 
     progress made toward achieving a goal described in 
     subparagraph (A) in--

       ``(I) each jurisdictional tributary strategy basin of the 
     Chesapeake Bay; and
       ``(II) the Chesapeake Bay watershed as a whole; and

       ``(iii) a description of any Federal or non-Federal 
     activity necessary to achieve the nutrient and sediment 
     reduction goals, including an identification of any party 
     that is responsible for carrying out the activity.
       ``(2) Annual tributary health report card.--
       ``(A) In general.--Not later than January 31 of each year, 
     the Administrator shall publish and widely circulate a 
     `tributary health

[[Page 17416]]

     report card' to evaluate, based on monitoring and modeling 
     data, progress made during the preceding year (including any 
     practice implemented during the year), and overall progress 
     made, in achieving and maintaining nutrient and sediment 
     reduction goals for each major tributary of the Chesapeake 
     Bay and each separable segment of such a tributary.
       ``(B) Baseline.--The baseline for the report card (referred 
     to in this paragraph as the `baseline') shall be the 
     tributary cap load allocation agreement numbered EPA 903-R-
     03-007, dated December 2003, and entitled `Setting and 
     Allocating the Chesapeake Bay Basin Nutrient and Sediment 
     Loads: The Collaborative Process, Technical Tools and 
     Innovative Approaches'.
       ``(C) Inclusions.--The report card shall include, for each 
     jurisdictional tributary strategy basin of the Chesapeake 
     Bay--
       ``(i) an identification of the total allocation of 
     nutrients and sediments under the baseline;
       ``(ii) the monitored and modeled quantities of nitrogen, 
     phosphorus, and sediment reductions achieved during the 
     preceding year, expressed numerically and as a percentage of 
     reduction;
       ``(iii) a list (organized from least to most progress made) 
     that ranks the comparative progress made, based on the 
     percentage of reduction under clause (ii), by each 
     jurisdictional tributary strategy basin toward meeting the 
     annual allocation goal of that jurisdictional tributary 
     strategy basin for nitrogen, phosphorus, and sediment; and
       ``(iv) to the maximum extent practicable, an identification 
     of the principal sources of pollutants of the tributaries, 
     including airborne sources of pollutants.
       ``(D) Use of data; consideration.--In preparing the report, 
     the Administrator shall--
       ``(i) use monitoring data and data submitted under 
     paragraph (3)(A); and
       ``(ii) take into consideration drought and wet weather 
     conditions.
       ``(3) Actions by states.--
       ``(A) Submission of information.--Not later than December 
     31 of each year, each of the States of Delaware, Maryland, 
     New York, Pennsylvania, Virginia, and West Virginia and the 
     District of Columbia shall submit to the Administrator 
     information describing, for each jurisdictional tributary 
     strategy basin of the Chesapeake Bay located in the State or 
     District, for the preceding year--
       ``(i) the nutrient and sediment cap load allocation of the 
     jurisdictional tributary strategy basin;
       ``(ii) the principal sources of nutrients and sediment in 
     the jurisdictional tributary strategy basin, by category;
       ``(iii) for each category of pollutant source, the 
     technologies or practices used to achieve reductions, 
     including levels of best management practices implementation 
     and sewage treatment plant upgrades; and
       ``(iv) any Federal, State, or non-Federal funding used to 
     implement a technology or practice described in clause (iii).
       ``(B) Audit.--Not later than 1 year after the date of 
     enactment of this subparagraph, and triennially thereafter, 
     the Inspector General of the Environmental Protection Agency 
     shall audit the information submitted by States under 
     subparagraph (A) for accuracy.
       ``(C) Failure to act.--The Administrator shall not make a 
     grant to a State under this Act if the State fails to submit 
     any information in accordance with subparagraph (A).
       ``(k) Reporting Requirements.--
       ``(1) Office of management and budget.--
       ``(A) Initial report.--Not later than 180 days after the 
     date of enactment of this subsection, the Director of the 
     Office of Management and Budget shall submit to the 
     appropriate committees of the Senate and the House of 
     Representatives a report describing the feasibility and 
     advisability of--
       ``(i) combining into a single fund certain or all funds 
     (including formula and grant funds) made available to each 
     Federal agency to carry out restoration activities relating 
     to the Chesapeake Bay; and
       ``(ii) notwithstanding any issue relating to jurisdiction, 
     distributing amounts from that fund in accordance with the 
     priority of water quality improvement activities identified 
     under the Chesapeake Bay Program.
       ``(B) Annual report.--Not later than February 15 of each 
     year, the Director of the Office of Management and Budget 
     shall submit to the appropriate committees of the Senate and 
     the House of Representatives a report containing--
       ``(i) an interagency crosscut budget that displays the 
     proposed budget for use by each Federal agency in carrying 
     out restoration activities relating to the Chesapeake Bay for 
     the following fiscal year; and
       ``(ii) a detailed accounting of all funds received and 
     obligated by Federal and State governments (including formula 
     and grant funds, such as State revolving loan funds and 
     agriculture conservation funds) to achieve the objectives of 
     the Chesapeake Bay Program during the preceding fiscal year.
       ``(2) Environmental protection agency.--Not later than 
     April 15 of each year, the Administrator, in cooperation with 
     appropriate Federal agencies, as determined by the 
     Administrator, shall submit to the appropriate committees of 
     the Senate and the House of Representatives a report 
     containing--
       ``(A)(i) an estimate of the reduction in levels of 
     nutrients and sediments in the Chesapeake Bay and its 
     tributaries; and
       ``(ii) a comparison of each estimated reduction under 
     clause (i) and the appropriate annual goal described in the 
     implementation plan under subsection (j)(1);
       ``(B) based on review by the Administrator of the budget 
     and implementation plans of each Federal agency, and any 
     tributary strategy of an appropriate State agency--
       ``(i) an estimate of the reductions in pollutants likely to 
     occur as a result of each program of an agency under this 
     section during the subsequent 1-year and 5-year periods, 
     including--

       ``(I) an analysis of the success or failure of each program 
     in achieving nutrient and sediment reduction; and
       ``(II) an estimated timeline during which a reduction in 
     nutrient and sediment pollution will occur; and

       ``(ii) accounting for other trend data, an estimate of the 
     actual reduction in the quantities of nutrients and sediments 
     in the Chesapeake Bay and its tributaries from all sources 
     that has occurred over the preceding 1-year and 5-year 
     periods; and
       ``(C) the technical basis and reliability of each estimate 
     under this paragraph.''.

     SEC. 3. AUTHORIZATION OF APPROPRIATIONS.

       Section 117 of the Federal Water Pollution Control Act (33 
     U.S.C. 1267) is amended by striking subsection (l) (as 
     redesignated by section 2) and inserting the following:
       ``(l) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $50,000,000 for 
     each of fiscal years 2006 through 2010, to remain available 
     until expended.''.

                                S. 1491

       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 ``Chesapeake Bay Watershed 
     Nutrient Removal Assistance Act''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds that--
       (1) nutrient pollution from point sources and nonpoint 
     sources continues to be the most significant water quality 
     problem in the Chesapeake Bay watershed;
       (2) a key commitment of the Chesapeake 2000 agreement, an 
     interstate agreement among the Administrator, the Chesapeake 
     Bay Commission, the District of Columbia, and the States of 
     Maryland, Virginia, and Pennsylvania, is to achieve the goal 
     of correcting the nutrient-related problems in the Chesapeake 
     Bay by 2010;
       (3) by correcting those problems, the Chesapeake Bay and 
     its tidal tributaries may be removed from the list of 
     impaired bodies of water designated by the Administrator of 
     the Environmental Protection Agency under section 303(d) of 
     the Federal Water Pollution Control Act (33 U.S.C. 1313(d));
       (4) more than 300 major sewage treatment plants located in 
     the Chesapeake Bay watershed annually discharge approximately 
     60,000,000 pounds of nitrogen, or the equivalent of 20 
     percent of the total nitrogen load, into the Chesapeake Bay; 
     and
       (5) nutrient removal technology is 1 of the most reliable, 
     cost-effective, and direct methods for reducing the flow of 
     nitrogen from point sources into the Chesapeake Bay.
       (b) Purposes.--The purposes of this Act are--
       (1) to authorize the Administrator of the Environmental 
     Protection Agency to provide financial assistance to States 
     and municipalities for use in upgrading publicly-owned 
     wastewater treatment plants in the Chesapeake Bay watershed 
     with nutrient removal technologies; and
       (2) to further the goal of restoring the water quality of 
     the Chesapeake Bay to conditions that are protective of human 
     health and aquatic living resources.

     SEC. 3. SEWAGE CONTROL TECHNOLOGY GRANT PROGRAM.

       The Federal Water Pollution Control Act (33 U.S.C. 1251 et 
     seq.) is amended by adding at the end the following:

                       ``TITLE VII--MISCELLANEOUS

     ``SEC. 701. SEWAGE CONTROL TECHNOLOGY GRANT PROGRAM.

       ``(a) Definition of Eligible Facility.--In this section, 
     the term `eligible facility' means a municipal wastewater 
     treatment plant that--
       ``(1) as of the date of enactment of this title, has a 
     permitted design capacity to treat an annual average of at 
     least 500,000 gallons of wastewater per day; and
       ``(2) is located within the Chesapeake Bay watershed in any 
     of the States of Delaware, Maryland, New York, Pennsylvania, 
     Virginia, or West Virginia or in the District of Columbia.
       ``(b) Grant Program.--
       ``(1) Establishment.--Not later than 1 year after the date 
     of enactment of this title, the Administrator shall establish 
     a program within the Environmental Protection Agency to 
     provide grants to States and municipalities to upgrade 
     eligible facilities with nutrient removal technologies.
       ``(2) Priority.--In providing a grant under paragraph (1), 
     the Administrator shall--

[[Page 17417]]

       ``(A) consult with the Chesapeake Bay Program Office;
       ``(B) give priority to eligible facilities at which 
     nutrient removal upgrades would--
       ``(i) produce the greatest nutrient load reductions at 
     points of discharge; or
       ``(ii) result in the greatest environmental benefits to 
     local bodies of water surrounding, and the main stem of, the 
     Chesapeake Bay; and
       ``(iii) take into consideration the geographic distribution 
     of the grants.
       ``(3) Application.--
       ``(A) In general.--On receipt of an application from a 
     State or municipality for a grant under this section, if the 
     Administrator approves the request, the Administrator shall 
     transfer to the State or municipality the amount of 
     assistance requested.
       ``(B) Form.--An application submitted by a State or 
     municipality under subparagraph (A) shall be in such form and 
     shall include such information as the Administrator may 
     prescribe.
       ``(4) Use of funds.--A State or municipality that receives 
     a grant under this section shall use the grant to upgrade 
     eligible facilities with nutrient removal technologies that 
     are designed to reduce total nitrogen in discharged 
     wastewater to an average annual concentration of 3 milligrams 
     per liter.
       ``(5) Cost sharing.--
       ``(A) Federal share.--The Federal share of the cost of 
     upgrading any eligible facility as described in paragraph (1) 
     using funds provided under this section shall not exceed 55 
     percent.
       ``(B) Non-federal share.--The non-Federal share of the 
     costs of upgrading any eligible facility as described in 
     paragraph (1) using funds provided under this section may be 
     provided in the form of funds made available to a State or 
     municipality under--
       ``(i) any provision of this Act other than this section 
     (including funds made available from a State revolving fund 
     established under title VI); or
       ``(ii) any other Federal or State law.
       ``(c) Authorization of Appropriations.--
       ``(1) In general.--There is authorized to be appropriated 
     to carry out this section $132,000,000 for each of fiscal 
     years 2006 through 2010, to remain available until expended.
       ``(2) Administrative costs.--The Administrator may use not 
     to exceed 4 percent of any amount made available under 
     paragraph (1) to pay administrative costs incurred in 
     carrying out this section.''.

                                S. 1492

       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 ``Chesapeake Bay Environmental 
     Education Pilot Program Act''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) increasing public environmental awareness and 
     understanding through formal environmental education and 
     meaningful bay or stream field experiences are vital parts of 
     the effort to protect and restore the Chesapeake Bay 
     ecosystem;
       (2) using the Chesapeake Bay watershed as an integrating 
     context for learning can help--
       (A) advance student learning skills;
       (B) improve academic achievement in core academic subjects; 
     and
       (C)(i) encourage positive behavior of students in school; 
     and
       (ii) encourage environmental stewardship in school and in 
     the community; and
       (3) the Federal Government, acting through the Secretary of 
     Education, should work with the Under Secretary for Oceans 
     and Atmosphere, the Chesapeake Executive Council, State 
     educational agencies, elementary schools and secondary 
     schools, and nonprofit educational and environmental 
     organizations to support development of curricula, teacher 
     training, special projects, and other activities, to increase 
     understanding of the Chesapeake Bay watershed and to improve 
     awareness of environmental problems.

     SEC. 3. CHESAPEAKE BAY ENVIRONMENTAL EDUCATION AND TRAINING 
                   GRANT PILOT PROGRAM.

       Title IV of the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 7101 et seq.) is amended by adding at the end 
     the following:

  ``PART D--CHESAPEAKE BAY ENVIRONMENTAL EDUCATION AND TRAINING GRANT 
                             PILOT PROGRAM

     ``SEC. 4401. DEFINITIONS.

       ``In this part:
       ``(1) Bay watershed state.--The term `Bay Watershed State' 
     means each of the States of Delaware, Maryland, New York, 
     Pennsylvania, Virginia, and West Virginia, and the District 
     of Columbia.
       ``(2) Chesapeake executive council.--The term `Chesapeake 
     Executive Council' has the meaning given the term in section 
     307(d) of the National Oceanic and Atmospheric Administration 
     Authorization Act of 1992 (15 U.S.C. 1511d(d)).
       ``(3) Eligible institution.--The term `eligible 
     institution' means--
       ``(A) a public elementary school or secondary school 
     located in a Bay Watershed State; and
       ``(B) a nonprofit environmental or educational organization 
     located in a Bay Watershed State.
       ``(4) Program.--The term `Program' means the Chesapeake Bay 
     Environmental Education and Training Grant Pilot Program 
     established under section 4402.

     ``SEC. 4402. CHESAPEAKE BAY ENVIRONMENTAL EDUCATION AND 
                   TRAINING GRANT PILOT PROGRAM.

       ``(a) In General.--The Secretary shall establish a grant 
     program, to be known as the `Chesapeake Bay Environmental 
     Education and Training Grant Pilot Program', to make grants 
     to eligible institutions to pay the Federal share of the cost 
     of developing, demonstrating, or disseminating information on 
     practices, methods, or techniques relating to environmental 
     education and training in the Chesapeake Bay watershed.
       ``(b) Federal Share.--The Federal share referred to in 
     subsection (a) shall be 50 percent.
       ``(c) Administration.--The Secretary may offer to enter 
     into a cooperative agreement or contract with the National 
     Fish and Wildlife Foundation established by the National Fish 
     and Wildlife Foundation Establishment Act (16 U.S.C. 3701 et 
     seq.), the Under Secretary for Oceans and Atmosphere, a State 
     educational agency, or a nonprofit organization that carries 
     out environmental education and training programs, for 
     administration of the Program.
       ``(d) Use of Funds.--An eligible institution that receives 
     a grant under the Program shall use the funds made available 
     through the grant to carry out a project consisting of--
       ``(1) design, demonstration, or dissemination of 
     environmental curricula, including development of educational 
     tools or materials;
       ``(2) design or demonstration of field practices, methods, 
     or techniques, including--
       ``(A) assessments of environmental or ecological 
     conditions; and
       ``(B) analyses of environmental pollution or other natural 
     resource problems;
       ``(3) understanding and assessment of a specific 
     environmental issue or a specific environmental problem;
       ``(4) provision of training or related education for 
     teachers or other educational personnel, including provision 
     of programs or curricula to meet the needs of students in 
     various age groups or at various grade levels;
       ``(5) provision of an environmental education seminar, 
     teleconference, or workshop for environmental education 
     professionals or environmental education students, or 
     provision of a computer network for such professionals and 
     students;
       ``(6) provision of on-the-ground activities involving 
     students and teachers, such as--
       ``(A) riparian forest buffer restoration; and
       ``(B) volunteer water quality monitoring at schools;
       ``(7) provision of a Chesapeake Bay or stream outdoor 
     educational experience; or
       ``(8) development of distance learning or other courses or 
     workshops that are acceptable in all Bay Watershed States and 
     apply throughout the Chesapeake Bay watershed.
       ``(e) Required Elements of Program.--In carrying out the 
     Program, the Secretary shall--
       ``(1) solicit applications for projects;
       ``(2) select suitable projects from among the projects 
     proposed;
       ``(3) supervise projects;
       ``(4) evaluate the results of projects; and
       ``(5) disseminate information on the effectiveness and 
     feasibility of the practices, methods, and techniques 
     addressed by the projects.
       ``(f) Solicitation of Applications.--Not later than 90 days 
     after the date on which amounts are first made available to 
     carry out this part, and each year thereafter, the Secretary 
     shall publish a notice of solicitation for applications for 
     grants under the Program that specifies the information to be 
     included in each application.
       ``(g) Applications.--To be eligible to receive a grant 
     under the Program, an eligible institution shall submit an 
     application to the Secretary at such time, in such form, and 
     containing such information as the Secretary may require.
       ``(h) Priority in Selection of Projects.--In making grants 
     under the Program, the Secretary shall give priority to an 
     applicant that proposes a project that will develop--
       ``(1) a new or significantly improved environmental 
     education practice, method, or technique, in multiple 
     disciplines, or a program that assists appropriate entities 
     and individuals in meeting Federal or State academic 
     standards relating to environmental education;
       ``(2) an environmental education practice, method, or 
     technique that may have wide application; and
       ``(3) an environmental education practice, method, or 
     technique that addresses a skill or scientific field 
     identified as a priority by the Chesapeake Executive Council.
       ``(i) Maximum Amount of Grants.--Under the Program, the 
     maximum amount of a grant shall be $50,000.
       ``(j) Notification.--Not later than 3 days before making a 
     grant under this part, the Secretary shall provide 
     notification of the grant to the appropriate committees of 
     Congress.

[[Page 17418]]

       ``(k) Regulations.--Not later than 1 year after the date of 
     enactment of the Chesapeake Bay Environmental Education Pilot 
     Program Act, the Secretary shall promulgate regulations 
     concerning implementation of the Program.

     ``SEC. 4403. EVALUATION AND REPORT.

       ``(a) Evaluation.--Not later than December 31, 2009, the 
     Secretary shall enter into a contract with an entity that is 
     not the recipient of a grant under this part to conduct a 
     detailed evaluation of the Program. In conducting the 
     evaluation, the Secretary shall determine whether the quality 
     of content, delivery, and outcome of the Program warrant 
     continued support of the Program.
       ``(b) Report.--Not later than December 31, 2010, the 
     Secretary shall submit a report to the appropriate committees 
     of Congress containing the results of the evaluation.

     ``SEC. 4404. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--There is authorized to be appropriated 
     to carry out this part $6,000,000 for each of fiscal years 
     2006 through 2009.
       ``(b) Administrative Expenses.--Of the amounts made 
     available under subsection (a) for each fiscal year, not more 
     than 10 percent may be used for administrative expenses.''.

                                S. 1493

       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 ``Chesapeake Bay Watershed 
     Forestry Program Act of 2005''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds that--
       (1) trees and forests are critical to the long-term health 
     and proper ecological functioning of the Chesapeake Bay and 
     the Chesapeake Bay watershed;
       (2) the Chesapeake Bay States are losing forest land to 
     urban and suburban growth at a rate of nearly 100 acres per 
     day;
       (3) the Forest Service has a vital role to play in 
     assisting States, local governments, and nonprofit 
     organizations in carrying out forest conservation, 
     restoration, and stewardship projects and activities; and
       (4) existing programs do not ensure the support necessary 
     to meet Chesapeake Bay forest goals.
       (b) Purposes.--The purposes of this Act are--
       (1) to expand and strengthen cooperative efforts to 
     protect, restore, and manage forests in the Chesapeake Bay 
     watershed; and
       (2) to contribute to the achievement of the goals of the 
     Chesapeake Bay Agreement.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Chesapeake bay agreement.--The term ``Chesapeake Bay 
     Agreement'' means the formal, voluntary agreements--
       (A) executed to achieve the goal of restoring and 
     protecting the Chesapeake Bay ecosystem and the living 
     resources of the Chesapeake Bay ecosystem; and
       (B) signed by the Council.
       (2) Chesapeake bay state.--The term ``Chesapeake Bay 
     State'' means each of the States of Delaware, Maryland, New 
     York, Pennsylvania, Virginia, and West Virginia and the 
     District of Columbia.
       (3) Coordinator.--The term ``Coordinator'' means the 
     Coordinator of the program designated under section 
     4(b)(1)(B).
       (4) Council.--The term ``Council'' means the Chesapeake Bay 
     Executive Council.
       (5) Program.--The term ``program'' means the Chesapeake Bay 
     watershed forestry program carried out under section 4(a).
       (6) Secretary.--The term ``Secretary'' means the Secretary 
     of Agriculture, acting through the Chief of the Forest 
     Service and the Coordinator.

     SEC. 4. CHESAPEAKE BAY WATERSHED FORESTRY PROGRAM.

       (a) In General.--The Secretary shall carry out a Chesapeake 
     Bay watershed forestry program under which the Secretary 
     shall make grants and provide technical assistance to 
     eligible entities to restore and conserve forests in the 
     Chesapeake Bay watershed, including grants and assistance--
       (1) to promote forest conservation, restoration, and 
     stewardship efforts in urban, suburban, and rural areas of 
     the Chesapeake Bay watershed;
       (2) to accelerate the restoration of riparian forest 
     buffers in the Chesapeake Bay watershed;
       (3) to assist in developing and carrying out projects and 
     partnerships in the Chesapeake Bay watershed;
       (4) to promote the protection and sustainable management of 
     forests in the Chesapeake Bay watershed;
       (5) to develop communication and education resources that 
     enhance public understanding of the value of forests in the 
     Chesapeake Bay watershed;
       (6) to conduct research, assessment, and planning 
     activities to restore and protect forest land in the 
     Chesapeake Bay watershed; and
       (7) to contribute to the achievement of the goals of the 
     Chesapeake Bay Agreement.
       (b) Office; Coordinator.--
       (1) In general.--The Secretary shall--
       (A) maintain an office within the Forest Service to carry 
     out the program; and
       (B) designate an employee of the Forest Service as 
     Coordinator of the program.
       (2) Duties.--As part of the program, the Coordinator, in 
     cooperation with the Secretary and the Chesapeake Bay 
     Program, shall--
       (A) provide grants and technical assistance to restore and 
     protect forests in the Chesapeake Bay watershed;
       (B) enter into partnerships to carry out forest restoration 
     and conservation activities at a watershed scale using the 
     resources and programs of the Forest Service;
       (C) in collaboration with other units of the Forest 
     Service, other Federal agencies, and State forestry agencies, 
     carry out activities that contribute to the goals of the 
     Chesapeake Bay Agreement;
       (D) work with units of the National Forest System in the 
     Chesapeake Bay watershed to ensure that the units are managed 
     in a manner that--
       (i) protects water quality; and
       (ii) sustains watershed health;
       (E) represent the Forest Service in deliberations of the 
     Chesapeake Bay Program; and
       (F) support and collaborate with the Forestry Work Group 
     for the Chesapeake Bay Program in planning and implementing 
     program activities.
       (c) Eligible Entities.--To be eligible to receive 
     assistance under the program, an entity shall be--
       (1) a Chesapeake Bay State;
       (2) a political subdivision of a Chesapeake Bay State;
       (3) a university or other institution of higher education;
       (4) an organization operating in the Chesapeake Bay 
     watershed that is described in section 501(c) of the Internal 
     Revenue Code of 1986 and is exempt from taxation under 
     section 501(a) of that Code; or
       (5) any other person in the Chesapeake Bay watershed that 
     the Secretary determines to be eligible.
       (d) Grants.--
       (1) In general.--The Secretary shall make grants to 
     eligible entities under the program to carry out projects to 
     protect, restore, and manage forests in the Chesapeake Bay 
     watershed.
       (2) Federal share.--The Federal share of a grant made under 
     the program shall not exceed 75 percent, as determined by the 
     Secretary.
       (3) Types of projects.--The Secretary may make a grant to 
     an eligible entity for a project in the Chesapeake Bay 
     watershed that--
       (A) improves habitat and water quality through the 
     establishment, protection, or stewardship of riparian or 
     wetland forests or stream corridors;
       (B) builds the capacity of State forestry agencies and 
     local organizations to implement forest conservation, 
     restoration, and stewardship actions;
       (C) develops and implements watershed management plans 
     that--
       (i) address forest conservation needs; and
       (ii) reduce urban and suburban runoff;
       (D) provides outreach and assistance to private landowners 
     and communities to restore or conserve forests in the 
     watershed;
       (E) implements communication, education, or technology 
     transfer programs that broaden public understanding of the 
     value of trees and forests in sustaining and restoring the 
     Chesapeake Bay watershed;
       (F) coordinates and implements community-based watershed 
     partnerships and initiatives that--
       (i) focus on--

       (I) the expansion of the urban tree canopy; and
       (II) the restoration or protection of forest land; or

       (ii) integrate the delivery of Forest Service programs for 
     restoring or protecting watersheds;
       (G) provides enhanced forest resource data to support 
     watershed management;
       (H) enhances upland forest health to reduce risks to 
     watershed function and water quality; or
       (I) conducts inventory assessment or monitoring activities 
     to measure environmental change associated with projects 
     carried out under the program.
       (4) Chesapeake bay watershed foresters.--Funds made 
     available under section 6 may be used by a Chesapeake Bay 
     State to employ a State watershed forester to work with the 
     Coordinator to carry out activities and watershed projects 
     relating to the program.
       (e) Study.--
       (1) In general.--The Secretary, in consultation with the 
     Council, shall conduct a study of urban and rural forests in 
     the Chesapeake Bay watershed, including--
       (A) an evaluation of the state, and threats to the 
     sustainability, of forests in the Chesapeake Bay watershed;
       (B) an assessment of forest loss and fragmentation in the 
     Chesapeake Bay watershed;
       (C) an identification of forest land within the Chesapeake 
     Bay watershed that should be restored or protected; and
       (D) recommendations for expanded and targeted actions or 
     programs needed to achieve the goals of the Chesapeake Bay 
     Agreement.
       (2) Report.--Not later than 1 year after amounts are first 
     made available under section 6, the Secretary shall submit to 
     the Committee on Agriculture of the House of

[[Page 17419]]

     Representatives and the Committee on Agriculture, Nutrition, 
     and Forestry of the Senate a report that describes the 
     results of the study.

     SEC. 5. WATERSHED FORESTRY RESEARCH PROGRAM.

       (a) In General.--The Secretary, in cooperation with the 
     Council, shall establish a watershed forestry research 
     program for the Chesapeake Bay watershed.
       (b) Administration.--In carrying out the watershed forestry 
     research program established under subsection (a), the 
     Secretary shall--
       (1) use a combination of applied research, modeling, 
     demonstration projects, implementation guidance, strategies 
     for adaptive management, training, and education to meet the 
     needs of the residents of the Chesapeake Bay States for 
     managing forests in urban, developing, and rural areas;
       (2) solicit input from local managers and Federal, State, 
     and private researchers, with respect to air and water 
     quality, social and economic implications, environmental 
     change, and other Chesapeake Bay watershed forestry issues in 
     urban and rural areas;
       (3) collaborate with the Chesapeake Bay Program Scientific 
     and Technical Advisory Committee and universities in the 
     Chesapeake Bay States to--
       (A) address issues in the Chesapeake Bay Agreement; and
       (B) support modeling and informational needs of the 
     Chesapeake Bay program; and
       (4) manage activities of the watershed forestry research 
     program in partnership with the Coordinator.
       (c) Watershed Forestry Research Strategy.--Not later than 1 
     year after the date of enactment of this Act, the Secretary, 
     in collaboration with the Northeastern Forest Research 
     Station and the Southern Forest Research Station, shall 
     submit to Congress a strategy for research to address 
     Chesapeake Bay watershed goals, including recommendations for 
     implementation and leadership of the program.

     SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated to carry out the 
     program $3,500,000 for each of fiscal years 2006 through 
     2012, of which--
       (1) not more than $500,000 shall be used to conduct the 
     study required under section 4(e); and
       (2) not more than $1,000,000 for any fiscal year shall be 
     used to carry out the watershed forestry research program 
     under section 5.

     SEC. 7. REPORT.

       Not later than December 31, 2007, and annually thereafter, 
     the Secretary shall submit to Congress a comprehensive report 
     that describes the costs, accomplishments, and outcomes of 
     the activities carried out under the program.

                                S. 1494

       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 ``NOAA Chesapeake Bay 
     Watershed Monitoring, Education, Training, and Restoration 
     Act''.

     SEC. 2. CHESAPEAKE BAY OFFICE PROGRAMS.

       Section 307 of the National Oceanic and Atmospheric 
     Administration Authorization Act of 1992 (15 U.S.C. 1511d) is 
     amended--
       (1) by redesignating subsections (d) and (e), as 
     subsections (h) and (i), respectively; and
       (2) by inserting after subsection (c), the following new 
     subsections:
       ``(d) Chesapeake Bay Integrated Observing System.--
       ``(1) Establishment.--
       ``(A) In general.--Not later than 1 year after the date of 
     enactment of the NOAA Chesapeake Bay Watershed Monitoring, 
     Education, Training, and Restoration Act, the Director shall 
     collaborate with scientific and academic institutions, 
     Federal agencies, State and nongovernmental organizations, 
     and other constituents located in the Chesapeake Bay 
     watershed to establish a Chesapeake Bay Integrated Observing 
     System (in this section referred to as the `System').
       ``(B) Purpose.--The purpose of the System is to provide 
     information needed to restore the health of the Chesapeake 
     Bay, on such topics as land use, environmental quality of the 
     Bay and its shoreline, coastal erosion, ecosystem health and 
     performance, aquatic living resources and habitat conditions, 
     and weather, tides, currents, and circulation.
       ``(C) Elements of system.--The System shall coordinate 
     existing monitoring and observing activities in the 
     Chesapeake Bay watershed, identify new data collection needs, 
     and deploy new technologies to provide a complete set of 
     environmental information for the Chesapeake Bay, including 
     the following activities:
       ``(i) Collecting and analyzing the scientific information 
     related to the Chesapeake Bay that is necessary for the 
     management of living marine resources and the marine habitat 
     associated with such resources.
       ``(ii) Managing and interpreting the information described 
     in clause (i).
       ``(iii) Organizing the information described in clause (i) 
     into products that are useful to policy makers, resource 
     managers, scientists, and the public.
       ``(iv) Developing or supporting the development of an 
     Internet-based information system for integrating, 
     interpreting, and disseminating coastal information, 
     products, and forecasts concerning the Chesapeake Bay 
     watershed related to--

       ``(I) climate;
       ``(II) land use;
       ``(III) coastal pollution and environmental quality;
       ``(IV) coastal hazards;
       ``(V) ecosystem health and performance;
       ``(VI) aquatic living resources and habitat conditions and 
     management;
       ``(VII) economic and recreational uses; and
       ``(VIII) weather, tides, currents, and circulation that 
     affect the distribution of sediments, nutrients, organisms, 
     coastline erosion, and related physical and chemical events 
     and processes.

       ``(D) Agreements to provide data, information, and 
     support.--The Director may enter into agreements with other 
     entities of the National Oceanic and Atmospheric 
     Administration, other Federal, State, or local government 
     agencies, academic institutions, or organizations described 
     in subsection (e)(2)(A)(i) to provide and interpret data and 
     information, and may provide appropriate support to such 
     agencies, institutions, or organizations to fulfill the 
     purposes of the System.
       ``(E) Agreements relating to information products.--The 
     Director may enter into grants, contracts, and interagency 
     agreements with eligible entities for the collection, 
     processing, analysis, and interpretation of data and 
     information and for electronic publication of information 
     products.
       ``(e) Chesapeake Bay Watershed Education and Training 
     Program.--
       ``(1) Establishment.--
       ``(A) In general.--The Director, in cooperation with the 
     Chesapeake Executive Council, shall establish a Chesapeake 
     Bay watershed education and training program.
       ``(B) Purposes.--The program established under subparagraph 
     (A) shall continue and expand the Chesapeake Bay watershed 
     education programs offered by the Chesapeake Bay Office for 
     the purposes of--
       ``(i) improving the understanding of elementary and 
     secondary school students and teachers of the living 
     resources of the ecosystem of the Chesapeake Bay;
       ``(ii) providing community education to improve watershed 
     protection; and
       ``(iii) meeting the educational goals of the Chesapeake 
     2000 agreement.
       ``(2) Grant program.--
       ``(A) Authorization.--The Director is authorized to award 
     grants to pay the Federal share of the cost of a project 
     described in subparagraph (C) to--
       ``(i) a nongovernmental organization in the Chesapeake Bay 
     watershed that is described in section 501(c) of the Internal 
     Revenue Code of 1986 and is exempt from taxation under 
     section 501(a) of that Code;
       ``(ii) a consortium of institutions described in clause 
     (i);
       ``(iii) an elementary or secondary school located within 
     the Chesapeake Bay watershed;
       ``(iv) a teacher at a school described in clause (iii); or
       ``(v) a department of education of a State if any part of 
     such State is within the Chesapeake Bay watershed.
       ``(B) Criteria.--The Director shall consider, in awarding 
     grants under this subsection, the experience of the applicant 
     in providing environmental education and training projects 
     regarding the Chesapeake Bay watershed to a range of 
     participants and in a range of settings.
       ``(C) Functions and activities.--Grants awarded under this 
     subsection may be used to support education and training 
     projects that--
       ``(i) provide classroom education, including the use of 
     distance learning technologies, on the issues, science, and 
     problems of the living resources of the Chesapeake Bay 
     watershed;
       ``(ii) provide meaningful outdoor experience on the 
     Chesapeake Bay, or on a stream or in a local watershed of the 
     Chesapeake Bay, in the design and implementation of field 
     studies, monitoring and assessments, or restoration 
     techniques for living resources;
       ``(iii) provide professional development for teachers 
     related to the science of the Chesapeake Bay watershed and 
     the dissemination of pertinent education materials oriented 
     to varying grade levels;
       ``(iv) demonstrate or disseminate environmental educational 
     tools and materials related to the Chesapeake Bay watershed;
       ``(v) demonstrate field methods, practices, and techniques 
     including assessment of environmental and ecological 
     conditions and analysis of environmental problems; and
       ``(vi) develop or disseminate projects designed to--

       ``(I) enhance understanding and assessment of a specific 
     environmental problem in the Chesapeake Bay watershed or of a 
     goal of the Chesapeake Bay Program;
       ``(II) protect or restore living resources of the 
     Chesapeake Bay watershed; or
       ``(III) educate local land use officials and decision 
     makers on the relationship of land use to natural resource 
     and watershed protection.

       ``(D) Federal share.--The Federal share of the cost of a 
     project funded with a grant awarded under this subsection 
     shall not exceed 75 percent of the total cost of that 
     project.

[[Page 17420]]

       ``(f) Stock Enhancement and Habitat Restoration Program.--
       ``(1) Establishment.--
       ``(A) In general.--Not later than 1 year after the date of 
     enactment of the NOAA Chesapeake Bay Watershed Monitoring, 
     Education, Training, and Restoration Act, the Director, in 
     cooperation with the Chesapeake Executive Council, shall 
     establish a Chesapeake Bay watershed stock enhancement and 
     habitat restoration program.
       ``(B) Purpose.--The purpose of the program established in 
     subparagraph (A) is to support the restoration of oysters and 
     submerged aquatic vegetation in the Chesapeake Bay.
       ``(2) Activities.--To carry out the purpose of the program 
     established under paragraph (1)(A), the Director is 
     authorized to enter into grants, contracts, and cooperative 
     agreements with an eligible entity to support--
       ``(A) the establishment of oyster hatcheries;
       ``(B) the establishment of submerged aquatic vegetation 
     propagation programs; and
       ``(C) other activities that the Director determines are 
     appropriate to carry out the purposes of such program.
       ``(g) Chesapeake Bay Aquaculture Education.--The Director 
     is authorized to make grants and enter into contracts with an 
     institution of higher education, including a community 
     college, for the purpose of--
       ``(1) supporting education in Chesapeake Bay aquaculture 
     sciences and technologies; and
       ``(2) developing aquaculture processes and technologies to 
     improve production, efficiency, and sustainability of 
     disease-free oyster spat and submerged aquatic vegetation.''.

     SEC. 3. REPORT.

       Section 307(b)(7) of the National Oceanic and Atmospheric 
     Administration Authorization Act of 1992 (15 U.S.C. 
     1511d(b)(7)), is amended to read as follows:
       ``(7) submit a biennial report to the Congress and the 
     Secretary of Commerce with respect to the activities of the 
     Office, including--
       ``(A) a description of the progress made in protecting and 
     restoring the living resources and habitat of the Chesapeake 
     Bay;
       ``(B) a description of each grant awarded under this 
     section since the submission of the most recent biennial 
     report, including the amount of such grant and the activities 
     funded with such grant; and
       ``(C) an action plan consisting of--
       ``(i) a list of recommended research, monitoring, and data 
     collection activities necessary to continue implementation of 
     the strategy described in paragraph (2); and
       ``(ii) proposals for--

       ``(I) continuing any new National Oceanic and Atmospheric 
     Administration activities in the Chesapeake Bay; and
       ``(II) integration of those activities with the activities 
     of the partners in the Chesapeake Bay Program to meet the 
     commitments of the Chesapeake 2000 agreement and subsequent 
     agreements.''.

     SEC. 4. DEFINITIONS.

       Subsection (h) of section 307 of the National Oceanic and 
     Atmospheric Administration Authorization Act of 1992 (15 
     U.S.C. 1511d), as redesignated by section 2(1), is amended to 
     read as follows:
       ``(h) Definitions.--In this section:
       ``(1) Chesapeake executive council.--The term `Chesapeake 
     Executive Council' means the representatives from the 
     Commonwealth of Virginia, the State of Maryland, the 
     Commonwealth of Pennsylvania, the Environmental Protection 
     Agency, the District of Columbia, and the Chesapeake Bay 
     Commission, who are signatories to the Chesapeake Bay 
     Agreement, and any future signatories to that Agreement.
       ``(2) Chesapeake 2000 agreement.--The term `Chesapeake 2000 
     agreement' means the agreement between the United States, 
     Maryland, Pennsylvania, Virginia, the District of Columbia, 
     and the Chesapeake Bay Commission entered into on June 28, 
     2000.
       ``(3) Eligible entity.--Except as provided in subsection 
     (c), the term `eligible entity' means--
       ``(A) the government of a State in the Chesapeake Bay 
     watershed or the government of the District of Columbia;
       ``(B) the government of a political subdivision of a State 
     in the Chesapeake Bay watershed, or a political subdivision 
     of the government of the District of Columbia;
       ``(C) an institution of higher education, including a 
     community college;
       ``(D) a nongovernmental organization in the Chesapeake Bay 
     watershed that is described in section 501(c) of the Internal 
     Revenue Code of 1986 and is exempt from taxation under 
     section 501(a) of that Code; or
       ``(E) a private entity that the Director determines to be 
     appropriate.''.

     SEC. 5. AUTHORIZATION OF APPROPRIATIONS.

       Subsection (i) of section 307 of the National Oceanic and 
     Atmospheric Administration Authorization Act of 1992 (15 
     U.S.C. 1511d), as redesignated by section 2(1), is amended to 
     read as follows:
       ``(i) Authorization of Appropriations.--
       ``(1) FY 2002 through 2005.--There are authorized to be 
     appropriated to the Department of Commerce for the Chesapeake 
     Bay Office $6,000,000 for each of the fiscal years 2002 
     through 2005.
       ``(2) FY 2006 through 2010.--There are authorized to be 
     appropriated to the Department of Commerce for the Chesapeake 
     Bay Office $26,000,000 for each of the fiscal years 2006 
     through 2010. Of the amount appropriated pursuant to such 
     authorization of appropriations--
       ``(A) for each of the fiscal years 2006 through 2010, 
     $1,000,000 is authorized to be made available to carry out 
     the provisions of subsection (d);
       ``(B) for each of the fiscal years 2006 through 2010, 
     $6,000,000 is authorized to be made available to carry out 
     the provisions of subsection (e);
       ``(C) for each of the fiscal years 2006 through 2010, 
     $10,000,000 is authorized to be made available to carry out 
     the provisions of subsection (f);
       ``(D) for each of the fiscal years 2006 through 2010, 
     $1,000,000 to carry out the provisions of subsection (g).''.
                                  ____



                                    Chesapeake Bay Foundation,

                                                    June 28, 2005.
     Senator Paul S. Sarbanes,
     U.S. Senate,
     Washington, DC.
       Dear Senator Sarbanes: The Chesapeake Bay Foundation (CBF) 
     wishes to submit this letter in support of the package of 
     proposed legislation that you have prepared to further the 
     ongoing efforts to restore the Chesapeake Bay and the 
     tributaries that feed it. We believe that the series of 
     legislative proposals you are submitting, in conjunction with 
     the infusion of new and critical federal funding support, are 
     key elements of reinvigorating the Bay restoration effort.
       The bills we have reviewed and support are the following:
       The Chesapeake Bay Watershed Nutrient Removal Assistance 
     Act. A bill to amend the Federal Water Pollution Control Act 
     to provide assistance for nutrient removal technologies to 
     States in the Chesapeake Bay watershed.
       Nitrogen and phosphorus pollution are the two largest 
     problems threatening the water quality of the Chesapeake Bay 
     and its rivers and streams. Consequently, in the Chesapeake 
     2000 Agreement (C2K), the Bay states committed to reduce 
     nutrient pollution (nitrogen and phosphorus pollution) by 
     millions of pounds each year. One of the most effective tools 
     in reducing this pollution is upgrading sewage treatment 
     plants with modern, nutrient pollution removal technologies. 
     Pennsylvania, Maryland and Virginia have all provided new and 
     additional funding to assist in the implementation of these 
     technologies; however, proposed cuts to existing federal 
     funds designated for wastewater treatment upgrades 
     jeopardizes the success of these state initiatives.
       The federal government must make a greater commitment to 
     funding. Grant funding, as proposed in this bill, to assist 
     in the design, construction, and operation of these 
     technologies is a critical part of successfully achieving the 
     C2K pollution reduction goals and restoring the Bay.
       The Chesapeake Bay Program Reauthorization and 
     Environmental Accountability Act of 2005. A bill to amend the 
     Federal Water Pollution Control Act to require environmental 
     accountability and reporting and to reauthorize the 
     Chesapeake Bay Program.
       There has been much criticism and questioning in recent 
     years about the implementation of the multijurisdictional 
     Chesapeake Bay Program. There is no doubt that the members of 
     the Program, from state partners to the federal Environmental 
     Protection Agency (EPA), have not moved forward as 
     aggressively as the resource demands, failing to meet 
     deadlines for water quality improvement actions that the 
     signatories themselves established in C2K. In contrast, the 
     Program has provided essential technical data and the 
     underlying science critical to our understanding of the 
     problems facing the Bay and the watershed rivers and streams. 
     The Chesapeake Bay Program Reauthorization and Environmental 
     Accountability Act of 2005 places a clear mandate on EPA to 
     develop and implement a plan for achieving the nutrient 
     pollution reduction goals of C2K and measure progress through 
     actual water quality improvements. The legislation also 
     requires Bay watershed states to report annually on their 
     progress implementing the plan. Finally, the legislation 
     provides for a much needed assessment by the Office of 
     Management and Budget on the potential benefits of federal 
     monies dedicated to the restoration effort combining into a 
     single fund. This assessment complements the current 
     financing authority efforts of the C2K signatories, an effort 
     looking to develop a vehicle to not only better leverage 
     state and federal monies, but also obtain additional funds. 
     Absent a substantial increase in investment in the Bay, 
     restoration efforts are likely to fail.
       The Chesapeake Bay Environmental Education Pilot Program 
     Act: A bill to amend the Elementary and Secondary Education 
     Act of 1965 to establish a pilot program to make grants to 
     eligible institutions to develop, demonstrate, or disseminate 
     information on practices, methods, or techniques relating to 
     environmental education and training in the Chesapeake Bay 
     watershed.
       We cannot expect the next generation to be responsible 
     stewards of the Bay and the rivers and streams that 
     crisscross its watershed

[[Page 17421]]

     unless we invest in education. We must provide our youth with 
     the knowledge and tools that enable them to choose to be 
     stewards of our natural resources. C2K recognized this need 
     and set a goal of providing every student in the Bay 
     watershed a meaningful field experience before he or she 
     graduates from high school. One single experience alone with 
     the Bay or a river or stream, however, is not adequate to 
     educate students on environmental issues and instill in them 
     a sense of stewardship. The Chesapeake Bay Environmental 
     Education Pilot Program Act will help to accomplish this goal 
     by providing much needed funding for designing and 
     implementing environmental curricula, participation in on-
     the-ground restoration projects, interactive opportunities 
     with among students, and outdoor educational experiences. 
     These tools and others are key to increasing public 
     environmental awareness and developing educated and 
     responsible stewards of the Bay.
       The NOAA Chesapeake Bay Watershed Monitoring, Education, 
     Training and Restoration Act. A bill to establish programs to 
     enhance protection of the Chesapeake Bay, and for other 
     purposes.
       This legislation proposes a series of important initiatives 
     from the integration of data to the establishment of an 
     oyster and submerged aquatic vegetation restoration program. 
     In addition, a critical element is the establishment of the 
     watershed education and training program, which complements 
     the initiatives contained in the Chesapeake Bay Environmental 
     Education Pilot Program Act.
       The Chesapeake Bay Watershed Forestry Program Act of 2005. 
     A bill to require the Secretary of Agriculture to establish a 
     program to expand and strengthen cooperative efforts to 
     restore and protect forests in the Chesapeake Bay watershed, 
     and for other purposes.
       Forests provide habitat for wildlife, filter polluted 
     runoff, and help moderate stream water temperature. Because 
     of their importance in improving water quality, the Bay 
     states have committed to restoring thousands of acres of 
     forested buffers in the watershed. In addition, they are one 
     of the most cost-effective ways to reduce nitrogen and 
     phosphorus pollutions. Yet, the Chesapeake Bay watershed is 
     continuing to lose forests, in both urban and rural areas, at 
     alarming rates. Preservation and restoration of forests and 
     forest buffers, as encouraged by this legislation, are 
     critical elements in Bay restoration efforts.
       This package of legislative initiatives will do much to 
     strengthen and reinvigorate our efforts to Save the Bay. CBF 
     is grateful to you, Senator, for your constant and unwavering 
     commitment to the restoration of waters of the Bay watershed 
     and for your long and distinguished leadership on these 
     issues.
       If CBF can provide you with any additional assistance with 
     the important initiatives evidenced by these bills, please 
     let me know.
       With sincere appreciation for all you have done for the 
     Bay, I am,
           Very truly yours,

                                              Roy A. Hoagland,

                                     Vice President, Environmental
     Protection & Restoration.
                                  ____



                                    Chesapeake Bay Commission,

                                                     July 5, 2005.
     Hon. Paul Sarbanes,
     Senate Office Building,
     Washington, DC.
       Dear Senator Sarbanes: Federal funding has played a crucial 
     role in supporting the Chesapeake Bay restoration. Thanks in 
     large part to your efforts, federal funds have supported 
     nearly one-fifth of the pojects currently underway and served 
     as a catalyst for countless more.
       In October 2004, the Chesapeake Bay Watershed Blue Ribbon 
     Finance Panel issued a report that underscored the enormous 
     challenge facing the Chesapeake and concluded, ``. . . 
     restoring the Chesapeake Bay will require a large-scale 
     national and regional approach, capitalized by federal and 
     state governments and directed according to a watershed-wide 
     strategy.'' The report called for a $15 billion federal and 
     state investment over the next four years to restore the Bay. 
     While $15 billion is an enormous sum, failure to take action 
     and to make the investments needed to restore the health of 
     our nation's largest and most productive estuary will be even 
     more costly. A commitment of this size will require the 
     substantial involvement of all partners, including the 
     federal, state, and local governments and the private sector.
       With this financial need firmly in focus, we are writing to 
     convey our tri-state Commission's strong support for your 
     Chesapeake Bay legislative package. Together, these five 
     bills promote the kinds of enhanced funding and technical 
     assistance that are needed to meet the goals of the, 
     Chesapeake 2000 agreement (C2K) and restore the Bay. We hope 
     that the 109th Congress will join us in our support of:
       1. The Chesapeake Bay Program Reauthorization and 
     Environmental Accountability Act.
       2. The Chesapeake Bay Watershed Nutrient Removal Assistance 
     Act
       3. The Chesapeake Bay Environmental Education Pilot Program 
     Act
       4. The Chesapeake Bay Watershed Forestry Act
       5. The NOAA Chesapeake Bay Watershed Monitoring, Education, 
     Training, and Restoration Act
       The Chesapeake Bay Watershed Nutrient Removal Assistance 
     Act is of particular interest to this Commission. As a 
     signatory to C2K, we have committed to reducing the Bay's 
     nitrogen loads by 110 million pounds. Meeting this goal will 
     restore the Bay waters to conditions that are clean, clear, 
     and productive. Last December, the Commission issued a report 
     entitled ``Cost-Effective Strategies for the Bay''; of the 
     six most cost-effective strategies listed in that report, 
     upgrading wastewater treatment plants is Number One. The Act 
     provides grants to upgrade the major wastewater treatment 
     plants in the Bay's six-state watershed with modern nutrient 
     removal technologies. It will allow the region to demonstrate 
     that state-of-the-art nutrient removal is possible on a large 
     scale. It will result in the removal of as much as 30 million 
     pounds of nitrogen each year, or 30 percent of the reduction 
     that is needed. Furthermore, the benefits from upgrading 
     sewage treatment plants have an immediate result on the Bay's 
     water quality, unlike other methods that primarily affect 
     nutrients in ground water and may take years to produce 
     results in the Bay. Only the Federal government is in the 
     position to trigger such remarkable reductions. It is an 
     opportunity that must not be ignored.
       Reauthorizing the Environmental Protection Agency's 
     Chesapeake Bay Program is critical to the success of efforts 
     to restore the Bay. This program provides support and 
     coordination for Federal, state, and local efforts developing 
     strategies and actions plans, assessing progress throughout 
     the watershed, implementing projects to protect the Bay and 
     its living resources, and communicating with the public.
       The Chesapeake Bay Watershed Forestry Act will help to 
     control pollution by establishing forests and riparian 
     buffers that can filter and absorb sediment and nutrient 
     runoff while providing valuable habitat for animals and birds 
     and food and shelter for fish. Enhanced support for the Bay 
     Program of the Forest Service will ramp up its ability to 
     provide interstate coordination, technical assistance, and 
     forest assessment and planning services that are otherwise 
     limited or unavailable in our region.
       Finally, let us emphasize the important support for 
     education that this package provides. Sustaining our hard-won 
     progress in the restoration of the Bay will ultimately rest 
     in the hands of citizens and communities throughout the 
     watershed. Expanding environmental education and training 
     opportunities for a variety of ages, from kindergarten to 
     adult community education and outreach, will lead to a 
     healthier Bay and to a more educated and informed citizenry, 
     yet these kinds of activities are woefully underfunded. The 
     monies provided by the Chesapeake Bay Environmental Education 
     Pilot Program Act and the NOAA Chesapeake Bay Watershed 
     Monitoring, Education, Training, and Restoration Act will 
     substantially improve our ability to keep our commitments on 
     track and reach the C2K goals.
       The federal government has been a strong partner in efforts 
     to restore the Bay, and your five-bill package maintains and 
     enhances the federal commitment to the Bay. The Commission 
     commends your dedication now and over the past two decades to 
     the health of the Chesapeake Bay. Please instruct us as to 
     how we can further support these measures.
           Sincerely,
                                               Senator Mike Waugh,
                                                         Chairman.
                                 ______
                                 
      By Mr. McCAIN (for himself and Mr. Coburn):
  S. 1495. A bill to prohibit Federal agencies from obligating funds 
for appropriations earmarks included only in congressional reports, and 
for other purposes; to the Committee on Homeland Security and 
Governmental Affairs.
  Mr. McCAIN. Mr. President, the bill I am introducing today, along 
with my friend from Oklahoma, Mr. Coburn, is very simple. The 
Obligation of Funds Transparency Act of 2005 would prohibit Federal 
agencies from obligating funds which have been earmarked only in 
congressional reports. This legislation is designed to help reign in 
unauthorized, unrequested, run-of-the-mill pork barrel projects.
  As my colleagues may know, report language does not have the force of 
law. That fact has been lost when it comes to appropriations bills and 
reports. It has become a standard practice to load up committee reports 
with literally billions of dollars in unreques-
ted, unauthorized, and wasteful pork barrel projects.
  According to information compiled from the Congressional Research 
Service (CRS), the total number of earmarks has grown from 4,126 in 
fiscal year 1994 to 14,040 in fiscal year 2004.

[[Page 17422]]

That's an increase of 240 percent. In terms of dollars, the earmarking 
has gone from $26.6 billion to $47.9 billion over the same period. The 
practice of earmarking funds in appropriations bills has simply lurched 
out of control.
  At a conference in February, 2005, David Walker, the Comptroller 
General of the United States, said this: ``If we continue on our 
present path, we'll see pressure for deep spending cuts or dramatic tax 
increases. GAO's long-term budget simulations paint a chilling picture. 
If we do nothing, by 2040 we may have to cut federal spending by more 
than half or raise federal taxes by more than two and a half times to 
balance the budget. Clearly, the status quo is both unsustainable and 
difficult choices are unavoidable. And the longer we wait, the more 
onerous our options will become and the less transition time we will 
have.''
  Is that really the kind of legacy we should leave to future 
generations of Americans?
  Referring to our economic outlook, Federal Reserve Chairman Alan 
Greenspan testified before Congress that: ``(T)he dimension of the 
challenge is enormous. The one certainty is that the resolution of this 
situation will require difficult choices and that the future 
performance of the economy will depend on those choices. No changes 
will be easy, as they all will involve lowering claims on resources or 
raising financial obligations. It falls on the Congress to determine 
how best to address the competing claims.''
  It falls on the Congress my friends. The head of the U.S. 
Government's chief watchdog agency and the Nation's chief economist 
agree--we are in real trouble.
  We simply must start making some very tough decisions around here if 
we are serious about improving our fiscal future. We need to be 
thinking about the future of America and the future generations who are 
going to be paying the tab for our continued spending. It is simply not 
fiscally responsible for us to continue to load up appropriations bills 
with wasteful and unnecessary spending, and good deals for special 
interests and their lobbyists. We have had ample opportunities to 
tighten our belts in this town in recent years, and we have taken a 
pass each and every time. We can't put off the inevitable any longer.
  Here is the stark reality of our fiscal situation. According to the 
Government Accountability Office, the unfunded federal financial 
burden, such as public debt, future Social Security, Medicare, and 
Medicaid payments, totals more than $40 trillion or $140,000 per man, 
woman and child. To put this in perspective, the average mortgage, 
which is often a family's largest liability, is $124,000--and that is 
often borne by the family breadwinners, not the children too. But, 
instead of fixing the problem, and fixing it will not be easy, we only 
succeeded in making it bigger, more unstable, more complicated, and 
much, much more expensive.
  The Committee for Economic Development, the Concord Coalition, and 
the Center on Budget and Policy Priorities jointly stated that, 
``without a change in current (fiscal) policies, the federal government 
can expect to run a cumulative deficit of $5 trillion over the next 10 
years.'' They also stated that, ``after the baby boom generation starts 
to retire in 2008, the combination of demographic pressures and rising 
health care costs will result in the costs of Medicare, Medicaid and 
Social Security growing faster than the economy. We project that by the 
time today's newborns reach 40 years of age, the cost of these three 
programs as a percentage of the economy will more than double--from 8.5 
percent of the GDP to over 17 percent.
  Additionally, the Congressional Budget Office has issued warnings 
about the dangers that lie ahead if we continue to spend in this 
manner. In a report issued at the beginning of the year, CBO stated 
that, because of rising health care costs and an aging population, 
``spending on entitlement programs--especially Medicare, Medicaid and 
Social Security--will claim a sharply increasing share ofthe nation's 
economic output over the coming decades.'' The report went on to say 
that, ``unless taxation reaches levels that are unprecedented in the 
United States, current spending policies will probably be financially 
unsustainable over the next 50 years. An ever-growing burden of federal 
debt held by the public would have a corrosive. . . effect on the 
economy.''
  Where is it going to end? We have to face the facts, and one fact is 
that we can't continue to spend taxpayer's dollars on wasteful, 
unnecessary pork barrel projects or cater to wealthy corporate special 
interests any longer. The American people won't stand for it, and they 
shouldn't--they deserve better treatment from us. I urge my colleagues 
to support this important legislation.
                                 ______
                                 
      By Mr. ALLARD (for himself and Mr. Salazar):
  S. 1498. A bill to direct the Secretary of the Interior to convey 
certain water distribution facilities to the Northern Colorado Water 
Conservancy District; to the Committee on Energy and Natural Resources.
  Mr. ALLARD. Mr. President, the Northern Colorado Water Conservancy 
District has contacted me, along with other members of the Colorado 
Congressional Delegation, seeking the introduction and passage of 
Federal legislation authorizing the title transfer of specific features 
of the Colorado-Big Thompson Project from the Untied States to 
Northern. This title transfer will be similar to a bill that I carried 
during the 106th Congress, which transferred other Bureau of Rec 
facilities to Northern. The projects involved in the proposed title 
transfer are those single-purpose water conveyance facilities used for 
the distribution of water released from Carter Lake Reservoir: the St. 
Vrain Supply Canal; the Boulder Feed Canal; the Boulder Creek Supply 
Canal; and the South Platte Supply Canal.
  The entire project, called the Colorado-Big Thompson Project, was 
built from 1938 to 1957, and provides supplemental water to more than 
30 cities and towns. The water is used to help irrigate over 600,000 
acres of northeastern Colorado farmland.
  The proposed legislation will divest Reclamation of all present and 
future responsibility for and cost associated with the management, 
operation, maintenance, repair, rehabilitation and replacement of, and 
liability for the transferred facilities. This responsibility will 
become that of the Northern Colorado Water Conservancy District.
  The legislation will eliminate the duplication of efforts between the 
District and Reclamation in issuing and administering crossing licenses 
and other forms of permission to utilize the land on which the 
facilities are located. Finally, the legislation will provide for 
enhanced local control over water facilities that are not of national 
importance, and allow these facilities to be used for more efficient 
and effective water management. Local control, especially in the case 
of matters in relation to water, has always been a major component of 
my philosophy. I am proud to introduce this bill which will serve to 
further that intent.
                                 ______
                                 
      By Mr. BUNNING (for himself and Mr. McConnell):
  S. 1499. A bill to amend the Federal Power Act to provide for 
competitive and reliable electricity transmission in the Commonwealth 
of Kentucky; to the Committee on Energy and Natural Resources.
  Mr. BUNNING. Mr. President, I rise to introduce the Kentucky 
Competitive Access Program (KCAP) bill that would allow Kentucky 
electric distribution companies to purchase cheaper power. This means 
lower rates for many Kentucky consumers served by the Tennessee Valley 
Authority (TVA). I am pleased Senator McConnell has joined me in 
introducing this bill.
  Kentucky has some of the cheapest electric power available in the 
Nation. However, some Kentucky consumers in TVA are paying higher 
electricity rates than Kentucky consumers outside of TVA.
  Kentucky electric distribution companies served by the TVA can not 
provide their customers with access to Kentucky's inexpensive power. 
This is

[[Page 17423]]

because under existing federal law the Federal Energy Regulatory 
Commission (FERC) has limited authority over TVA and can not require it 
to transmit the cheaper power to most, if not all, of the Kentucky 
distributors. The legislation removes this restriction and provides the 
FERC with the authority to require TVA to transmit power to all 
Kentucky distributors.
  In addition to allowing Kentucky customers to access less expensive 
power, the legislation would not harm TVA or result in higher rates to 
TVA's remaining customers. The Kentucky distributors, in total, 
constitute only about 6 percent of TVA's revenues and load. Further, 
TVA is experiencing load growth of about 3 percent per year which 
should quickly result in the replacement of any load lost in Kentucky. 
Thus, the departure of some portion of the Kentucky distributors should 
not result in any significant cost shift to remaining TVA system 
customers.
  All Kentuckians deserve to choose where they receive their power. 
This bill will not only give them that choice, but it will also create 
a more competitive environment among Kentucky distributors and allow 
our businesses and residential consumers to keep more money in their 
pockets.
                                 ______
                                 
      By Mr. CORZINE:
  S. 1502. A bill to clarify the applicability of State law to national 
banks and Federal savings associations, and for other purposes; to the 
Committee on Banking, Housing, and Urban Affairs.
  Mr. CORZINE. Mr. President, I rise today to introduce legislation, 
the Preservation of Federalism in Banking Act, to clarify the 
relationship between State consumer protection laws and national banks.
  This legislation responds to a sweeping new rule issued by the Office 
of the Comptroller of the Currency, the agency that regulates national 
banks. The OCC's new rule gives the agency unprecedented authority to 
pre-empt state laws, thereby shielding national banks and their non-
bank and state-chartered bank affiliates from many important consumer 
protections. It also potentially limits the ability of states to 
enforce many related laws. The most important immediate consequence of 
the OCC rule has been the preemption of state anti-predatory lending 
laws.
  I feel strongly about the need to address predatory lending, which 
can trap people in endless cycles of debt and escalating fees. Many 
States, such as my own state of New Jersey, have enacted tough laws to 
deal with the problem. Unfortunately, the OCC's ruling substantially 
undermines these laws by regulatory fiat. That will leave many 
consumers unprotected, and it shifts too many responsibilities to a 
single agency here in Washington that is not equipped to handle them. 
After all, according to its own website, the OCC ``does not have the 
mandate to engage in consumer advocacy''.
  Although the OCC has a long and successful record of regulating for 
safety and soundness, it has little experience dealing with abusive 
local practices, such as predatory lending. Believe it or not, the OCC 
actually is proposing to handle all consumer complaints through a 
single, lightly staffed call center in Houston. This is totally 
unrealistic. Each year, State officials receive thousands of related 
complaints, which usually are very local in nature. These officials are 
at the forefront of the enforcement effort, identifying and combating 
new practices as they arise. The OCC's system simply could not fill 
this role without major changes.
  The OCC rule also raises concerns about regulatory charter 
competition, the viability of a broad range of State laws, and the 
ability of consumers and State officials to seek remedies in court. 
This concern is only reinforced by two other developments.
  First is a general counsel opinion by the Office of Thrift 
Supervision that attempts to extend federal preemption beyond a 
thrift's corporate family. That effort would nullify the application of 
state consumer protection laws over independent, third-party agents of 
federal thrifts, and is particularly threatening to state insurance and 
securities efforts.
  And second is the FDIC's consideration of a rule that would allow 
State-chartered banks the same preemptive privileges for out-of-State 
branches as those of national banks. These two recent developments only 
reinforce concerns of a ``race to the bottom'' scenario.
  The OCC rule has provoked strong opposition from governors, attorneys 
general, banking supervisors, and many consumer advocacy groups, not to 
mention the public. The OCC received over 2,600 letters in response to 
its rules, and more than 90 percent opposed them.
  The Preservation of Federalism in Banking Act is a reasonable 
response to the OCC rule. The bill will clarify that national banks 
must comply with certain state consumer protection laws, such as anti-
predatory lending laws and privacy acts.
  While the OCC has long had the statutory responsibility to regulate 
the activities of national banks, it has never denied the ability of 
States to protect their citizens. The OCC historically has used its 
authority under the National Bank Act in a reasonable way to shield 
national banks from State banking laws that intrude on the OCC's 
congressionally-granted powers. While we should continue to support the 
appropriate use of the agency's authority, it is important that we 
immediately intervene to reverse the OCC's regulatory overreach and 
prevent the agency from preemption all state consumer protection laws 
and State authority to enforce related laws.
  I ask unanimous consent that the text of the legislation be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1502

       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 ``Preservation of Federalism 
     in Banking Act''.

                        TITLE I--NATIONAL BANKS

     SEC. 101. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS 
                   CLARIFIED.

       (a) In General.--Chapter One of title LXII of the Revised 
     Statutes of the United States (12 U.S.C. 21 et seq.) is 
     amended by inserting after section 5136B the following new 
     section:

     ``SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NATIONAL 
                   BANKS AND SUBSIDIARIES CLARIFIED.

       ``(a) State Consumer Laws of General Application.--
       ``(1) In general.--Notwithstanding any other provision of 
     Federal law, any consumer protection in State consumer law of 
     general application (including any law relating to unfair or 
     deceptive acts or practices, any consumer fraud law and 
     repossession, foreclosure, and collection) shall apply to any 
     national bank.
       ``(2) National bank defined.--For purposes of this section, 
     the term `national bank' includes any Federal branch 
     established in accordance with the International Banking Act 
     of 1978.
       ``(b) State Laws Related to Laws Used by National Banks for 
     Their Benefit.--When a national bank avails itself of a State 
     law for its benefit, all related consumer protections in 
     State law shall apply.
       ``(c) State Banking Laws Enacted Pursuant to Federal Law.--
       ``(1) In general.--Notwithstanding any other provision of 
     Federal law and except as provided in paragraph (2), any 
     State law that--
       ``(A) is applicable to State banks; and
       ``(B) was enacted pursuant to or in accordance with, and is 
     not inconsistent with, an Act of Congress, including the 
     Gramm-Leach-Bliley Act, the Consumer Credit Protection Act, 
     and the Real Estate Settlement Procedures Act, that 
     explicitly or by implication, permits States to exceed or 
     supplement the requirements of any comparable Federal law,
     shall apply to any national bank.
       ``(2) Exceptions.--Paragraph (1) shall not apply with 
     respect to any State law if--
       ``(A) the State law discriminates against national banks; 
     or
       ``(B) State law is inconsistent with provisions of Federal 
     law other than this title LXII, but only to the extent of the 
     inconsistency (as determined in accordance with the provision 
     of the other Federal Law).
       ``(d) State Laws Protecting Against Predatory Mortgage 
     Loans.--To the extent not otherwise addressed in this 
     section, State laws providing greater protection in high cost 
     mortgage loans, however denominated, both in coverage and 
     content, than is provided under the Truth in Lending Act 
     (including the provisions amended by the Home

[[Page 17424]]

     Ownership and Equity Protection Act of 1994) shall apply to 
     any national bank.
       ``(e) Comparable Federal Regulation Required.--In relation 
     to the regulation of consumer credit and deposit 
     transactions, the Comptroller may preempt State law pursuant 
     to this title only when there is a comparable Federal 
     statute, or regulations pursuant to a Federal statute other 
     than this title, expressly governing the activity, except in 
     relation to interest pursuant to section 5197.
       ``(f) No Negative Implications for Applicability of Other 
     State Laws.--No provision of this section shall be construed 
     as altering or affecting the applicability, to national 
     banks, of any State law which is not described in this 
     section.
       ``(g) Effect of Transfer of Transaction.--A transaction 
     that is not entitled to preemption at the time of the 
     origination of the transaction does not become entitled to 
     preemption under this title by virtue of its subsequent 
     acquisition by a national bank.
       ``(h) Denial of Preemption Not a Deprivation of a Civil 
     Right.--The preemption of any provision of the law of any 
     State with respect to any national bank shall not be treated 
     as a right, privilege, or immunity for purposes of section 
     1979 of the Revised Statutes of the United States (42 U.S.C. 
     1983).
       ``(i) Definition.--For purposes of this section, the terms 
     `includes' and `including' have the same meaning as in 
     section 3(t) of the Federal Deposit Insurance Act.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     One of title LXII of the Revised Statutes of the United 
     States is amended by inserting after the item relating to 
     section 5136B the following new item:

``5136C. State law preemption standards for national banks and 
              subsidiaries clarified''.

     SEC. 102. VISITORIAL STANDARDS.

       Section 5136C of the Revised Statutes of the United States 
     (as added by section 101(a) of this Act) is amended by adding 
     at the end the following new subsections:
       ``(j) Visitorial Powers.--No provision of this title which 
     relates to visitorial powers or otherwise limits or restricts 
     the supervisory, examination, or regulatory authority to 
     which any national bank is subject shall be construed as 
     limiting or restricting the authority of any attorney general 
     (or other chief law enforcement officer) of any State to 
     bring any action in any court of appropriate jurisdiction--
       ``(1) to enforce any applicable Federal or State law, as 
     authorized by such law; or
       ``(2) on behalf of residents of such State, to enforce any 
     applicable provision of any Federal or State law against a 
     national bank, as authorized by such law, or to seek relief 
     and recover damages for such residents from any violation of 
     any such law by any national bank.
       ``(k) Enforcement Actions.--The ability of the Comptroller 
     to bring an enforcement action under this title or section 5 
     of the Federal Trade Commission Act does not preclude private 
     parties from enforcing rights granted under Federal or State 
     law in the courts.''.

     SEC. 103. CLARIFICATION OF LAW APPLICABLE TO STATE-CHARTERED 
                   NONDEPOSITORY INSTITUTION SUBSIDIARIES.

       Section 5136C of the Revised Statutes of the United States 
     (as added by section 101(a) of this Act) is amended by 
     inserting after subsection (k) (as added by section 102) the 
     following new subsection:
       ``(l) Clarification of Law Applicable to Nondepository 
     Institution Subsidiaries and Affiliates of National Banks; 
     Definitions.--
       ``(1) In general.--No provision of this title shall be 
     construed as preempting the applicability of State law to any 
     State-chartered nondepository institution, subsidiary, other 
     affiliate, or agent of a national bank.
       ``(2) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(A) Depository institution, subsidiary, affiliate.--The 
     terms `depository institution', `subsidiary', and `affiliate' 
     have the same meanings as in section 3 of the Federal Deposit 
     Insurance Act.
       ``(B) Nondepository institution.--The term `nondepository 
     institution' means any entity that is not a depository 
     institution.''.

     SEC. 104. DATA COLLECTION AND REPORTING.

       (a) Collecting and Monitoring Consumer Complaints.--
       (1) In general.--The Comptroller of the Currency shall 
     record and monitor each complaint received directly or 
     indirectly from a consumer regarding a national bank or any 
     subsidiary of a national bank and record the resolution of 
     the complaint.
       (2) Factors to be included.--In carrying out the 
     requirements of paragraph (1), the Comptroller of the 
     Currency shall include--
       (A) the date the consumer complaint was received;
       (B) the nature of the complaint;
       (C) when and how the complaint was resolved, including a 
     brief description of the extent, and the results, of the 
     investigation made by the Comptroller into the complaint, a 
     brief description of any notices given and inquiries made to 
     any other Federal or State officer or agency in the course of 
     the investigation or resolution of the complaint, a summary 
     of the enforcement action taken upon completion of the 
     investigation, and a summary of the results of subsequent 
     periodic reviews by the Comptroller of the extent and nature 
     of compliance by the national bank or subsidiary with the 
     enforcement action; and
       (D) if the complaint involves any alleged violation of a 
     State law (whether or not Federal law preempts the 
     application of such State law to such national bank) by such 
     bank, a cite to and a description of the State law that 
     formed the basis of the complaint.
       (b) Report to the Congress.--
       (1) Periodic reports required.--The Comptroller of the 
     Currency shall submit a report semi-annually to the Congress 
     on the consumer protection efforts of the Office of the 
     Comptroller of the Currency.
       (2) Contents of report.--Each report submitted under 
     paragraph (1) shall include the following:
       (A) The total number of consumer complaints received by the 
     Comptroller during the period covered by the report with 
     respect to alleged violations of consumer protection laws by 
     national banks and subsidiaries of national banks.
       (B) The total number of consumer complaints received during 
     the reporting period that are based on each of the following:
       (i) Each title of the Consumer Credit Protection Act 
     (reported as a separate aggregate number for each such 
     title).
       (ii) The Truth in Savings Act.
       (iii) The Right to Financial Privacy Act of 1978.
       (iv) The Expedited Funds Availability Act.
       (v) The Community Reinvestment Act of 1977.
       (vi) The Bank Protection Act of 1968.
       (vii) Title LXII of the Revised Statutes of the United 
     States.
       (viii) The Federal Deposit Insurance Act.
       (ix) The Real Estate Settlement Procedures Act of 1974.
       (x) The Home Mortgage Disclosure Act of 1975.
       (xi) Any other Federal law.
       (xii) State consumer protection laws (reported as a 
     separate aggregate number for each State and each State 
     consumer protection law).
       (xiii) Any other State law (reported separately for each 
     State and each State law).
       (C) A summary description of the resolution efforts by the 
     Comptroller for complaints received during the period 
     covered, including--
       (i) the average amount of time to resolve each complaint;
       (ii) the median period of time to resolve each complaint;
       (iii) the average and median time to resolve complaints in 
     each category of complaints described in each clause of 
     subparagraph (B); and
       (iv) a summary description of the longest outstanding 
     complaint during the reporting period and the reason for the 
     difficulty in resolving such complaint in a more timely 
     fashion.
       (3) Disclosure of report on occ website.--Each report 
     submitted to the Congress under this subsection shall be 
     posted, by the Comptroller of the Currency, in a timely 
     fashion and maintained on the website of the Office of the 
     Comptroller of the Currency on the World Wide Web.

                     TITLE II--SAVINGS ASSOCIATIONS

     SEC. 201. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS 
                   ASSOCIATIONS CLARIFIED.

       (a) In General.--The Home Owners' Loan Act (12 U.S.C. 1461 
     et seq.) is amended by inserting after section 5 the 
     following new section:

     ``SEC. 6. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS 
                   ASSOCIATIONS AND AFFILIATES CLARIFIED.

       ``(a) State Consumer Laws of General Application.--
     Notwithstanding any other provision of Federal law, any 
     consumer protection in State consumer law of general 
     application (including any law relating to unfair or 
     deceptive acts or practices, any consumer fraud law and 
     repossession, foreclosure, and collection) shall apply to any 
     Federal savings association.
       ``(b) State Laws Related to Laws Used by Federal Savings 
     Associations for Their Benefit.--When a Federal savings 
     association avails itself of a State law for its benefit, all 
     related consumer protections in State law shall apply.
       ``(c) State Banking or Thrift Laws Enacted Pursuant to 
     Federal Law.--
       ``(1) In general.--Notwithstanding any other provision of 
     Federal law and except as provided in paragraph (2), any 
     State law that--
       ``(A) is applicable to State savings associations (as 
     defined in section 3 of the Federal Deposit Insurance Act); 
     and
       ``(B) was enacted pursuant to or in accordance with, and is 
     not inconsistent with, an Act of Congress, including the 
     Gramm-Leach-Bliley Act, the Consumer Credit Protection Act, 
     and the Real Estate Settlement Procedures Act, that 
     explicitly or by implication, permits States to exceed or 
     supplement the requirements of any comparable Federal law,
     shall apply to any Federal savings association.
       ``(2) Exceptions.--Paragraph (1) shall not apply with 
     respect to any State law if--
       ``(A) the State law discriminates against Federal savings 
     associations; or

[[Page 17425]]

       ``(B) the State law is inconsistent with provisions of 
     Federal law other than this Act, but only to the extent of 
     the inconsistency (as determined in accordance with the 
     provision of the other Federal law).
       ``(d) State Laws Protecting Against Predatory Mortgage 
     Loans.--To the extent not otherwise addressed in this 
     section, State laws providing greater protection in high cost 
     mortgage loans, however denominated, both in coverage and 
     content, than is provided under the Truth in Lending Act 
     (including the provisions amended by the Home Ownership and 
     Equity Protection Act of 1994) shall apply to any Federal 
     savings association.
       ``(e) Comparable Federal Regulation Required.--In relation 
     to the regulation of consumer credit and deposit 
     transactions, the Director of the Office of Thrift 
     Supervision may preempt State law pursuant to this Act only 
     when there is a comparable Federal statute, or regulations 
     pursuant to a Federal statute other than this Act, expressly 
     governing the activity, except in relation to interest 
     pursuant to section 4(g).
       ``(f) No Negative Implications for Applicability of Other 
     State Laws.--No provision of this section shall be construed 
     as altering or affecting the applicability, to Federal 
     savings associations, of any State law which is not described 
     in this section.
       ``(g) Effect of Transfer of Transaction.--A transaction 
     that is not entitled to preemption at the time of the 
     origination of the transaction does not become entitled to 
     preemption under this Act by virtue of its subsequent 
     acquisition by a Federal savings association.
       ``(h) Denial of Preemption Not a Deprivation of a Civil 
     Right.--The preemption of any provision of the law of any 
     State with respect to any Federal savings association shall 
     not be treated as a right, privilege, or immunity for 
     purposes of section 1979 of the Revised Statutes of the 
     United States (42 U.S.C. 1983).
       ``(i) Definition.--For purposes of this section, the terms 
     `includes' and `including' have the same meaning as in 
     section 3(t) of the Federal Deposit Insurance Act.''.
       (b) Clerical Amendment.--The table of sections for the Home 
     Owners' Loan Act (12 U.S.C. 1461 et seq.) is amended by 
     striking the item relating to section 6 and inserting the 
     following new item:

``6. State law preemption standards for Federal savings associations 
              and affiliates clarified''.

     SEC. 202. VISITORIAL STANDARDS.

       Section 6 of the Home Owners' Loan Act (as added by section 
     201(a) of this title) is amended by adding at the end the 
     following new subsections:
       ``(j) Visitorial Powers.--No provision of this Act shall be 
     construed as limiting or restricting the authority of any 
     attorney general (or other chief law enforcement officer) of 
     any State to bring any action in any court of appropriate 
     jurisdiction--
       ``(1) to enforce any applicable Federal or State law, as 
     authorized by such law; or
       ``(2) on behalf of residents of such State, to enforce any 
     applicable provision of any Federal or State law against a 
     Federal savings association, as authorized by such law, or to 
     seek relief and recover damages for such residents from any 
     violation of any such law by any Federal savings association.
       ``(k) Enforcement Actions.--The ability of the Director of 
     the Office of Thrift Supervision to bring an enforcement 
     action under this Act or section 5 of the Federal Trade 
     Commission Act does not preclude private parties from 
     enforcing rights granted under Federal or State law in the 
     courts.''.

     SEC. 203. CLARIFICATION OF LAW APPLICABLE TO STATE-CHARTERED 
                   NONDEPOSITORY INSTITUTION SUBSIDIARIES.

       Section 6 of the Home Owners' Loan Act (as added by section 
     201(a) of this title) is amended by inserting after 
     subsection (k) (as added by section 202) the following new 
     subsection:
       ``(l) Clarification of Law Applicable to Nondepository 
     Institution Affiliates of Federal Savings Associations.--
       ``(1) In general.--No provision of this Act shall be 
     construed as preempting the applicability of State law to any 
     State-chartered nondepository institution, subsidiary, other 
     affiliate, or agent of a Federal savings association.
       ``(2) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(A) Depository institution, subsidiary, affiliate.--The 
     terms `depository institution', `subsidiary', and `affiliate' 
     have the same meanings as in section 3 of the Federal Deposit 
     Insurance Act.
       ``(B) Nondepository institution.--The term `nondepository 
     institution' means any entity that is not a depository 
     institution.''.

     SEC. 204. DATA COLLECTION AND REPORTING.

       (a) Collecting and Monitoring Consumer Complaints.--
       (1) In general.--The Director of the Office of Thrift 
     Supervision shall record and monitor each complaint received 
     directly or indirectly from a consumer regarding a Federal 
     savings association or any subsidiary of a Federal savings 
     association and record the resolution of the complaint.
       (2) Factors to be included.--In carrying out the 
     requirements of paragraph (1), the Director of the Office of 
     Thrift Supervision shall include--
       (A) the date the consumer complaint was received;
       (B) the nature of the complaint;
       (C) when and how the complaint was resolved, including a 
     brief description of the extent, and the results, of the 
     investigation made by the Director into the complaint, a 
     brief description of any notices given and inquiries made to 
     any other Federal or State officer or agency in the course of 
     the investigation or resolution of the complaint, a summary 
     of the enforcement action taken upon completion of the 
     investigation, and a summary of the results of subsequent 
     periodic reviews by the Comptroller of the extent and nature 
     of compliance by the Federal savings association or 
     subsidiary with the enforcement action; and
       (D) if the complaint involves any alleged violation of a 
     State law (whether or not Federal law preempts the 
     application of such State law to such Federal savings 
     association) by such savings association, a cite to and a 
     description of the State law that formed the basis of the 
     complaint.
       (b) Report to the Congress.--
       (1) Periodic reports required.--The Director of the Office 
     of Thrift Supervision shall submit a report semi-annually to 
     the Congress on the consumer protection efforts of the Office 
     of Thrift Supervision.
       (2) Contents of report.--Each report submitted under 
     paragraph (1) shall include the following:
       (A) The total number of consumer complaints received by the 
     Director during the period covered by the report with respect 
     to alleged violations of consumer protection laws by Federal 
     savings associations and subsidiaries of Federal savings 
     associations.
       (B) The total number of consumer complaints received during 
     the reporting period that are based on each of the following:
       (i) Each title of the Consumer Credit Protection Act 
     (reported as a separate aggregate number for each such 
     title).
       (ii) The Truth in Savings Act.
       (iii) The Right to Financial Privacy Act of 1978.
       (iv) The Expedited Funds Availability Act.
       (v) The Community Reinvestment Act of 1977.
       (vi) The Bank Protection Act of 1968.
       (vii) Title LXII of the Revised Statutes of the United 
     States.
       (viii) The Federal Deposit Insurance Act.
       (ix) The Real Estate Settlement Procedures Act of 1974.
       (x) The Home Mortgage Disclosure Act of 1975.
       (xi) Any other Federal law.
       (xii) State consumer protection laws (reported as a 
     separate aggregate number for each State and each State 
     consumer protection law).
       (xiii) Any other State law (reported separately for each 
     State and each State law).
       (C) A summary description of the resolution efforts by the 
     Director for complaints received during the period covered, 
     including--
       (i) the average amount of time to resolve each complaint;
       (ii) the median period of time to resolve each complaint;
       (iii) the average and median time to resolve complaints in 
     each category of complaints described in each clause of 
     subparagraph (B); and
       (iv) a summary description of the longest outstanding 
     complaint during the reporting period and the reason for the 
     difficulty in resolving such complaint in a more timely 
     fashion.
       (3) Disclosure of report on ots website.--Each report 
     submitted to the Congress under this subsection shall be 
     posted, by the Director of the Office of Thrift Supervision, 
     in a timely fashion and maintained on the website of the 
     Office of Thrift Supervision on the World Wide Web.
                                 ______
                                 
      By Mr. FRIST (for himself, Mr. McConnell, Mr. Gregg, Mr. Enzi, 
        Ms. Murkowski, and Mr. DeMint):
  S. 1503. A bill to reduce healthcare costs, expand access to 
affordable healthcare coverage, and improve healthcare and strengthen 
the health care safety net, and for other purposes; to the Committee on 
Finance.
  Mr. FRIST. Mr. President, wherever I travel, Americans tell me the 
same things about our health care system: it costs too much, leaves too 
many without insurance, and does too little to help those in need.
  America has the world's best hospitals, doctors, nurses, and medical 
research labs. But we do not always provide the best care. And we 
certainly do not provide it at an affordable price. We face real 
problems. And we need to act.
  Two years ago, I appointed a task force to investigate what Congress 
could do. Under the leadership of Senator Judd Gregg, the task force 
reported back with a series of comprehensive recommendations. The

[[Page 17426]]

President has also proposed some very constructive policy initiatives. 
We took all of these proposals into account when we wrote this bill.
  The legislation we propose today will build upon our record of 
accomplishment on health care. The Republican Congress has created a 
Medicare drug benefit for seniors, made tax-free, portable Health 
Savings Accounts available to all Americans, and has begun the process 
of moving our medical system into the information age.
  This week, we will pass and send to the President a long-overdue 
measure to encourage doctors and hospitals to report medical errors 
voluntarily. The measure will save lives, and it will improve health 
care quality.
  But we still have more to do.
  The legislation we are proposing today focuses on three broad areas: 
reducing costs, expanding health coverage, and improving the quality of 
care. In this bill--``The Healthy America Act of 2005''--we provide 
comprehensive solutions that will improve health care for every 
American.
  Let me begin by speaking about cost. Every year, Americans see their 
health care costs soar. Just 15 years ago, less than 1 out of every 10 
dollars Americans spent went for health care. In 10 years, almost one 
out of every five dollars you spend will go towards health care.
  Rising life expectancies and the cost of new technologies, 
treatments, and medical procedures all drive up costs. But we can do 
more to hold them in check. And we must.
  Rapidly rising health costs threaten our Nation's small business 
owners, and our largest corporations. They can harm our economy; cost 
jobs, and hurt Americans from all walks of life. During the past few 
years, for example, health care costs have grown three to four times 
more quickly than wages.
  First, we need to reform our broken medical liability system. Under 
our current medical system, doctors face enormous incentives to order 
unnecessary tests and procedures simply to avoid the risk of lawsuits.
  It's expensive, it's wasteful, and unnecessary, and, most of all, 
it's dangerous. It needs to change and, under this bill, it will.
  Hospitals, doctors, patients, and insurers all shoulder some 
responsibility for rising costs. To keep costs down, we need to put the 
patient at the heart of health care. That's why we propose reforms to 
let patients own and control privacy-protected electronic medical 
records, cut down on fraud in our Medicare and Medicaid programs, 
reduce medical errors, and reduce unnecessary regulations and mandates.
  Lower costs alone will help many Americans get the care they need and 
deserve. But we also have to look at ways to cover more Americans who 
would still find themselves left behind.
  Through changes to tax laws, we can make it easier for lower-income 
individuals and small businesses to purchase affordable, high quality 
health insurance.
  And we can also provide more options for those who take charge of 
their own health care by making flexible spending accounts more 
flexible and health savings accounts even more affordable for 
individuals and small businesses.
  Finally, the Federal Government can help support State high-risk 
pools that help provide health coverage to individuals who couldn't 
otherwise afford care.
  America is a caring Nation and we must recognize that not everyone 
has equal ability to take care of his or her own health. That's why we 
need to expand our safety net for the truly needy.
  Many of those without health insurance--particularly children--
qualify for benefits under existing programs but do not receive them. 
By providing grants to faith-based and community organizations, we can 
help more families sign up their children for available health 
coverage.
  We also need to expand the availability of health care services to 
individuals in need by expanding Community Health Centers and Rural 
Health Clinics to more rural areas and poor counties.
  We should also act to make prescription drugs more affordable for 
low-income Americans and provide legal protections and loan forbearance 
that will make it easier for health care practitioners who volunteer 
their time and services to provide needed care in community health 
centers and free clinics.
  Every American should have health care that's available, affordable, 
and always there.
  And we must hold fast to this principle: patients should sit at the 
center of the health care system, not the government, not insurance 
companies, and certainly not predatory trial lawyers.
  The system should free providers to focus on caring for their 
patients: not dealing with regulations, bureaucrats, or lawyers.
  Today, we've put forward a plan that will take a major step towards 
centering America's health care system on the patient.
  We have the vision for what American health care should look like. 
Now we only need the courage to make it happen.
  I want to thank Senator Gregg, and all of the members of the Task 
Force who worked so diligently on this legislation. I also want to 
recognize the contributions of the other cosponsors of this 
legislation: Senators Mitch McConnell, Mike Enzi, Lisa Murkowski, and 
Jim DeMint, I urge all of my colleagues to join us in supporting this 
bill. I ask unanimous consent that the text of the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1503

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Healthy 
     America Act of 2005''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.

              TITLE I--MAKING HEALTH CARE MORE AFFORDABLE

                  Subtitle A--Medical Liability Reform

Sec. 101. Short title.
Sec. 102. Findings and purpose.
Sec. 103. Encouraging speedy resolution of claims.
Sec. 104. Compensating patient injury.
Sec. 105. Maximizing patient recovery.
Sec. 106. Additional health benefits.
Sec. 107. Punitive damages.
Sec. 108. Authorization of payment of future damages to claimants in 
              health care lawsuits.
Sec. 109. Definitions.
Sec. 110. Effect on other laws.
Sec. 111. State flexibility and protection of States' rights.
Sec. 112. Applicability; effective date.

               Subtitle B--Health Information Technology

                     Chapter 1--General Provisions

Sec. 121. Improving health care, quality, safety, and efficiency.
Sec. 122. HIPAA report.
Sec. 123. Study of reimbursement incentives.
Sec. 124. Reauthorization of incentive grants regarding telemedicine.
Sec. 125. Sense of the Senate on physician payment.
Sec. 126. Establishment of quality measurement systems for medicare 
              value-based purchasing programs.
Sec. 127. Exception to Federal anti-kickback and physician self 
              referral laws for the provision of permitted support.

                   Chapter 2--Value Based Purchasing

Sec. 131. Value based purchasing programs.

           Subtitle C--Patient Safety and Quality Improvement

Sec. 141. Short title.
Sec. 142. Findings and purposes.
Sec. 143. Amendments to Public Health Service Act.
Sec. 144. Studies and reports.

                      Subtitle D--Fraud and Abuse

Sec. 151. National expansion of the medicare-medicaid data match pilot 
              program.

                  Subtitle E--Miscellaneous Provisions

Sec. 161. Sense of the Senate on establishing a mandated benefits 
              commission.
Sec. 162. Enforcement of reimbursement provisions by fiduciaries.

 TITLE II--EXPANDING ACCESS TO AFFORDABLE HEALTH COVERAGE THROUGH TAX 
                    INCENTIVES AND OTHER INITIATIVES

             Subtitle A--Refundable Health Insurance Credit

Sec. 201. Refundable health insurance costs credit.

[[Page 17427]]

Sec. 202. Advance payment of credit to issuers of qualified health 
              insurance.

  Subtitle B--High Deductible Health Plans and Health Savings Accounts

Sec. 211. Deduction of premiums for high deductible health plans.
Sec. 212. Refundable credit for contributions to health savings 
              accounts of small business employees.

       Subtitle C--Improvement of the Health Coverage Tax Credit

Sec. 221. Change in State-based coverage rules related to preexisting 
              conditions.
Sec. 222. Eligibility of spouse of certain individuals entitled to 
              medicare.
Sec. 223. Eligible PBGC pension recipient.
Sec. 224. Application of option to offer State-based coverage to Puerto 
              Rico, Northern Mariana Islands, American Samoa, Guam, and 
              the United States Virgin Islands.
Sec. 225. Clarification of disclosure rules.
Sec. 226. Clarification that State-based COBRA continuation coverage is 
              subject to same rules as Federal COBRA.
Sec. 227. Application of rules for other specified coverage to eligible 
              alternative taa recipients consistent with rules for 
              other eligible individuals.

                  Subtitle D--Long-Term Care Insurance

Sec. 231. Sense of the Senate concerning long-term care.

                      Subtitle E--Other Provisions

Sec. 241. Disposition of unused health benefits in cafeteria plans and 
              flexible spending arrangements.
Sec. 242. Microentrepreneurs.
Sec. 243. Study on access to affordable health insurance for full-time 
              college and university students.
Sec. 244. Extension of funding for operation of State high risk health 
              insurance pools.
Sec. 245. Sense of the senate on affordable health coverage for small 
              employers.

                       Subtitle F--Covering Kids

Sec. 251. Short title.
Sec. 252. Grants to promote innovative outreach and enrollment under 
              medicaid and SCHIP.
Sec. 253. State option to provide for simplified determinations of a 
              child's financial eligibility for medical assistance 
              under medicaid or child health assistance under SCHIP.

       TITLE III--IMPROVING CARE AND STRENGTHENING THE SAFETY NET

                      Subtitle A--High Needs Areas

Sec. 301. Purpose.
Sec. 302. High need community health centers.
Sec. 303. Grant application process.

          Subtitle B--Qualified Integrated Health Care systems

Sec. 321. Grants to qualified integrated health care systems.

                  Subtitle C--Miscellaneous Provisions

Sec. 331. Community health center collaborative access expansion.
Sec. 332. Improvements to section 340B program.
Sec. 333. Forbearance for student loans for physicians providing 
              services in free clinics.
Sec. 334. Amendments to the Public Health Service Act relating to 
              liability.
Sec. 335. Sense of the Senate concerning health disparities.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Health care costs are growing rapidly, putting health 
     insurance and needed care out of reach for too many 
     Americans.
       (2) Rapidly growing health care costs pose a threat to the 
     United States economy, as they make American businesses less 
     competitive and make it more difficult to create new jobs.
       (3) Growing health care costs are compromising the 
     stability of health care safety net and entitlement programs.
       (4) There are a series of steps Congress can and should 
     take to slow the growth of health care costs, expand access 
     to health coverage, and improve access to quality health care 
     for millions of Americans.

              TITLE I--MAKING HEALTH CARE MORE AFFORDABLE

                  Subtitle A--Medical Liability Reform

     SEC. 101. SHORT TITLE.

       This subtitle may be cited as the ``Patients First Act of 
     2005''.

     SEC. 102. FINDINGS AND PURPOSE.

       (a) Findings.--
       (1) Effect on health care access and costs.--Congress finds 
     that our current civil justice system is adversely affecting 
     patient access to health care services, better patient care, 
     and cost-efficient health care, in that the current health 
     care liability system is a costly and ineffective mechanism 
     for resolving claims of health care liability and 
     compensating injured patients, and is a deterrent to the 
     sharing of information among health care professionals which 
     impedes efforts to improve patient safety and quality of 
     care.
       (2) Effect on interstate commerce.--Congress finds that the 
     health care and insurance industries are industries affecting 
     interstate commerce and the health care liability litigation 
     systems existing throughout the United States are activities 
     that affect interstate commerce by contributing to the high 
     costs of health care and premiums for health care liability 
     insurance purchased by health care system providers.
       (3) Effect on federal spending.--Congress finds that the 
     health care liability litigation systems existing throughout 
     the United States have a significant effect on the amount, 
     distribution, and use of Federal funds because of--
       (A) the large number of individuals who receive health care 
     benefits under programs operated or financed by the Federal 
     Government;
       (B) the large number of individuals who benefit because of 
     the exclusion from Federal taxes of the amounts spent to 
     provide them with health insurance benefits; and
       (C) the large number of health care providers who provide 
     items or services for which the Federal Government makes 
     payments.
       (b) Purpose.--It is the purpose of this subtitle to 
     implement reasonable, comprehensive, and effective health 
     care liability reforms designed to--
       (1) improve the availability of health care services in 
     cases in which health care liability actions have been shown 
     to be a factor in the decreased availability of services;
       (2) reduce the incidence of ``defensive medicine'' and 
     lower the cost of health care liability insurance, all of 
     which contribute to the escalation of health care costs;
       (3) ensure that persons with meritorious health care injury 
     claims receive fair and adequate compensation, including 
     reasonable noneconomic damages;
       (4) improve the fairness and cost-effectiveness of our 
     current health care liability system to resolve disputes 
     over, and provide compensation for, health care liability by 
     reducing uncertainty in the amount of compensation provided 
     to injured individuals;
       (5) provide an increased sharing of information in the 
     health care system which will reduce unintended injury and 
     improve patient care.

     SEC. 103. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.

       The time for the commencement of a health care lawsuit 
     shall be 3 years after the date of manifestation of injury or 
     1 year after the claimant discovers, or through the use of 
     reasonable diligence should have discovered, the injury, 
     whichever occurs first. In no event shall the time for 
     commencement of a health care lawsuit exceed 3 years after 
     the date of manifestation of injury unless tolled for any of 
     the following:
       (1) Upon proof of fraud;
       (2) Intentional concealment; or
       (3) The presence of a foreign body, which has no 
     therapeutic or diagnostic purpose or effect, in the person of 
     the injured person.

     Actions by a minor shall be commenced within 3 years from the 
     date of the alleged manifestation of injury except that 
     actions by a minor under the full age of 6 years shall be 
     commenced within 3 years of manifestation of injury or prior 
     to the minor's 8th birthday, whichever provides a longer 
     period. Such time limitation shall be tolled for minors for 
     any period during which a parent or guardian and a health 
     care provider or health care organization have committed 
     fraud or collusion in the failure to bring an action on 
     behalf of the injured minor.

     SEC. 104. COMPENSATING PATIENT INJURY.

       (a) Unlimited Amount of Damages for Actual Economic Losses 
     in Health Care Lawsuits.--In any health care lawsuit, the 
     full amount of a claimant's economic loss may be fully 
     recovered without limitation.
       (b) Additional Noneconomic Damages.--In any health care 
     lawsuit, the amount of noneconomic damages recovered may be 
     as much as $250,000, regardless of the number of parties 
     against whom the action is brought or the number of separate 
     claims or actions brought with respect to the same 
     occurrence.
       (c) No Discount of Award for Noneconomic Damages.--In any 
     health care lawsuit, an award for future noneconomic damages 
     shall not be discounted to present value. The jury shall not 
     be informed about the maximum award for noneconomic damages. 
     An award for noneconomic damages in excess of $250,000 shall 
     be reduced either before the entry of judgment, or by 
     amendment of the judgment after entry of judgment, and such 
     reduction shall be made before accounting for any other 
     reduction in damages required by law. If separate awards are 
     rendered for past and future noneconomic damages and the 
     combined awards exceed $250,000, the future noneconomic 
     damages shall be reduced first.
       (d) Fair Share Rule.--In any health care lawsuit, each 
     party shall be liable for that party's several share of any 
     damages only and not for the share of any other person. Each 
     party shall be liable only for the amount of damages 
     allocated to such party in direct proportion to such party's 
     percentage of responsibility. A separate judgment shall be 
     rendered against each such party for the amount allocated to 
     such party. For purposes of this section, the trier of fact 
     shall

[[Page 17428]]

     determine the proportion of responsibility of each party for 
     the claimant's harm.

     SEC. 105. MAXIMIZING PATIENT RECOVERY.

       (a) Court Supervision of Share of Damages Actually Paid to 
     Claimants.--In any health care lawsuit, the court shall 
     supervise the arrangements for payment of damages to protect 
     against conflicts of interest that may have the effect of 
     reducing the amount of damages awarded that are actually paid 
     to claimants. In particular, in any health care lawsuit in 
     which the attorney for a party claims a financial stake in 
     the outcome by virtue of a contingent fee, the court shall 
     have the power to restrict the payment of a claimant's damage 
     recovery to such attorney, and to redirect such damages to 
     the claimant based upon the interests of justice and 
     principles of equity. In no event shall the total of all 
     contingent fees for representing all claimants in a health 
     care lawsuit exceed the following limits:
       (1) 40 percent of the first $50,000 recovered by the 
     claimant(s).
       (2) 33\1/3\ percent of the next $50,000 recovered by the 
     claimant(s).
       (3) 25 percent of the next $500,000 recovered by the 
     claimant(s).
       (4) 15 percent of any amount by which the recovery by the 
     claimant(s) is in excess of $600,000.
       (b) Applicability.--The limitations in subsection (a) shall 
     apply whether the recovery is by judgment, settlement, 
     mediation, arbitration, or any other form of alternative 
     dispute resolution. In a health care lawsuit involving a 
     minor or incompetent person, a court retains the authority to 
     authorize or approve a fee that is less than the maximum 
     permitted under this section.
       (c) Expert Witnesses.--
       (1) Requirement.--No individual shall be qualified to 
     testify as an expert witness concerning issues of negligence 
     in any health care lawsuit against a defendant unless such 
     individual--
       (A) except as required under paragraph (2), is a health 
     care professional who--
       (i) is appropriately credentialed or licensed in 1 or more 
     States to deliver health care services; and
       (ii) typically treats the diagnosis or condition or 
     provides the type of treatment under review; and
       (B) can demonstrate by competent evidence that, as a result 
     of training, education, knowledge, and experience in the 
     evaluation, diagnosis, and treatment of the disease or injury 
     which is the subject matter of the lawsuit against the 
     defendant, the individual was substantially familiar with 
     applicable standards of care and practice as they relate to 
     the act or omission which is the subject of the lawsuit on 
     the date of the incident.
       (2) Physician review.--In a health care lawsuit, if the 
     claim of the plaintiff involved treatment that is recommended 
     or provided by a physician (allopathic or osteopathic), an 
     individual shall not be qualified to be an expert witness 
     under this subsection with respect to issues of negligence 
     concerning such treatment unless such individual is a 
     physician.
       (3) Specialties and subspecialties.--With respect to a 
     lawsuit described in paragraph (1), a court shall not permit 
     an expert in one medical specialty or subspecialty to testify 
     against a defendant in another medical specialty or 
     subspecialty unless, in addition to a showing of substantial 
     familiarity in accordance with paragraph (1)(B), there is a 
     showing that the standards of care and practice in the two 
     specialty or subspecialty fields are similar.
       (4) Limitation.--The limitations in this subsection shall 
     not apply to expert witnesses testifying as to the degree or 
     permanency of medical or physical impairment.

     SEC. 106. ADDITIONAL HEALTH BENEFITS.

       (a) In General.--The amount of any damages received by a 
     claimant in any health care lawsuit shall be reduced by the 
     court by the amount of any collateral source benefits to 
     which the claimant is entitled, less any insurance premiums 
     or other payments made by the claimant (or by the spouse, 
     parent, child, or legal guardian of the claimant) to obtain 
     or secure such benefits.
       (b) Preservation of Current Law.--Where a payor of 
     collateral source benefits has a right of recovery by 
     reimbursement or subrogation and such right is permitted 
     under Federal or State law, subsection (a) shall not apply.
       (c) Application of Provision.--This section shall apply to 
     any health care lawsuit that is settled or resolved by a fact 
     finder.

     SEC. 107. PUNITIVE DAMAGES.

       (a) In General.--Punitive damages may, if otherwise 
     permitted by applicable State or Federal law, be awarded 
     against any person in a health care lawsuit only if it is 
     proven by clear and convincing evidence that such person 
     acted with malicious intent to injure the claimant, or that 
     such person deliberately failed to avoid unnecessary injury 
     that such person knew the claimant was substantially certain 
     to suffer. In any health care lawsuit where no judgment for 
     compensatory damages is rendered against such person, no 
     punitive damages may be awarded with respect to the claim in 
     such lawsuit. No demand for punitive damages shall be 
     included in a health care lawsuit as initially filed. A court 
     may allow a claimant to file an amended pleading for punitive 
     damages only upon a motion by the claimant and after a 
     finding by the court, upon review of supporting and opposing 
     affidavits or after a hearing, after weighing the evidence, 
     that the claimant has established by a substantial 
     probability that the claimant will prevail on the claim for 
     punitive damages. At the request of any party in a health 
     care lawsuit, the trier of fact shall consider in a separate 
     proceeding--
       (1) whether punitive damages are to be awarded and the 
     amount of such award; and
       (2) the amount of punitive damages following a 
     determination of punitive liability.

     If a separate proceeding is requested, evidence relevant only 
     to the claim for punitive damages, as determined by 
     applicable State law, shall be inadmissible in any proceeding 
     to determine whether compensatory damages are to be awarded.
       (b) Determining Amount of Punitive Damages.--
       (1) Factors considered.--In determining the amount of 
     punitive damages, if awarded, in a health care lawsuit, the 
     trier of fact shall consider only the following:
       (A) the severity of the harm caused by the conduct of such 
     party;
       (B) the duration of the conduct or any concealment of it by 
     such party;
       (C) the profitability of the conduct to such party;
       (D) the number of products sold or medical procedures 
     rendered for compensation, as the case may be, by such party, 
     of the kind causing the harm complained of by the claimant;
       (E) any criminal penalties imposed on such party, as a 
     result of the conduct complained of by the claimant; and
       (F) the amount of any civil fines assessed against such 
     party as a result of the conduct complained of by the 
     claimant.
       (2) Maximum award.--The amount of punitive damages, if 
     awarded, in a health care lawsuit may be as much as $250,000 
     or as much as two times the amount of economic damages 
     awarded, whichever is greater. The jury shall not be informed 
     of this limitation.
       (c) No Penalties for Providers in Compliance With FDA 
     Standards.--A health care provider who prescribes a medical 
     product approved or cleared by the Food and Drug 
     Administration shall not be named as a party to a product 
     liability lawsuit involving such product and shall not be 
     liable to a claimant in a class action lawsuit against the 
     manufacturer, distributor, or seller of such product.

     SEC. 108. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO 
                   CLAIMANTS IN HEALTH CARE LAWSUITS.

       (a) In General.--In any health care lawsuit, if an award of 
     future damages, without reduction to present value, equaling 
     or exceeding $50,000 is made against a party with sufficient 
     insurance or other assets to fund a periodic payment of such 
     a judgment, the court shall, at the request of any party, 
     enter a judgment ordering that the future damages be paid by 
     periodic payments in accordance with the Uniform Periodic 
     Payment of Judgments Act promulgated by the National 
     Conference of Commissioners on Uniform State Laws.
       (b) Applicability.--This section applies to all actions 
     which have not been first set for trial or retrial before the 
     effective date of this Act.

     SEC. 109. DEFINITIONS.

       In this subtitle:
       (1) Alternative dispute resolution system; adr.--The term 
     ``alternative dispute resolution system'' or ``ADR'' means a 
     system that provides for the resolution of health care 
     lawsuits in a manner other than through a civil action 
     brought in a State or Federal court.
       (2) Claimant.--The term ``claimant'' means any person who 
     brings a health care lawsuit, including a person who asserts 
     or claims a right to legal or equitable contribution, 
     indemnity or subrogation, arising out of a health care 
     liability claim or action, and any person on whose behalf 
     such a claim is asserted or such an action is brought, 
     whether deceased, incompetent, or a minor.
       (3) Collateral source benefits.--The term ``collateral 
     source benefits'' means any amount paid or reasonably likely 
     to be paid in the future to or on behalf of the claimant, or 
     any service, product or other benefit provided or reasonably 
     likely to be provided in the future to or on behalf of the 
     claimant, as a result of the injury or wrongful death, 
     pursuant to--
       (A) any State or Federal health, sickness, income-
     disability, accident, or workers' compensation law;
       (B) any health, sickness, income-disability, or accident 
     insurance that provides health benefits or income-disability 
     coverage;
       (C) any contract or agreement of any group, organization, 
     partnership, or corporation to provide, pay for, or reimburse 
     the cost of medical, hospital, dental, or income disability 
     benefits; and
       (D) any other publicly or privately funded program.
       (4) Compensatory damages.--The term ``compensatory 
     damages'' means objectively verifiable monetary losses 
     incurred as a result of the provision of, use of, or payment 
     for (or failure to provide, use, or pay for) health care 
     services or medical products, such as past and future medical 
     expenses,

[[Page 17429]]

     loss of past and future earnings, cost of obtaining domestic 
     services, loss of employment, and loss of business or 
     employment opportunities, damages for physical and emotional 
     pain, suffering, inconvenience, physical impairment, mental 
     anguish, disfigurement, loss of enjoyment of life, loss of 
     society and companionship, loss of consortium (other than 
     loss of domestic service), hedonic damages, injury to 
     reputation, and all other nonpecuniary losses of any kind or 
     nature. The term ``compensatory damages'' includes economic 
     damages and noneconomic damages, as such terms are defined in 
     this section.
       (5) Contingent fee.--The term ``contingent fee'' includes 
     all compensation to any person or persons which is payable 
     only if a recovery is effected on behalf of one or more 
     claimants.
       (6) Economic damages.--The term ``economic damages'' means 
     objectively verifiable monetary losses incurred as a result 
     of the provision of, use of, or payment for (or failure to 
     provide, use, or pay for) health care services or medical 
     products, such as past and future medical expenses, loss of 
     past and future earnings, cost of obtaining domestic 
     services, loss of employment, and loss of business or 
     employment opportunities.
       (7) Health care lawsuit.--The term ``health care lawsuit'' 
     means any health care liability claim concerning the 
     provision of health care goods or services affecting 
     interstate commerce, or any health care liability action 
     concerning the provision of health care goods or services 
     affecting interstate commerce, brought in a State or Federal 
     court or pursuant to an alternative dispute resolution 
     system, against a health care provider, a health care 
     organization, or the manufacturer, distributor, supplier, 
     marketer, promoter, or seller of a medical product, 
     regardless of the theory of liability on which the claim is 
     based, or the number of claimants, plaintiffs, defendants, or 
     other parties, or the number of claims or causes of action, 
     in which the claimant alleges a health care liability claim.
       (8) Health care liability action.--The term ``health care 
     liability action'' means a civil action brought in a State or 
     Federal Court or pursuant to an alternative dispute 
     resolution system, against a health care provider, a health 
     care organization, or the manufacturer, distributor, 
     supplier, marketer, promoter, or seller of a medical product, 
     regardless of the theory of liability on which the claim is 
     based, or the number of plaintiffs, defendants, or other 
     parties, or the number of causes of action, in which the 
     claimant alleges a health care liability claim.
       (9) Health care liability claim.--The term ``health care 
     liability claim'' means a demand by any person, whether or 
     not pursuant to ADR, against a health care provider, health 
     care organization, or the manufacturer, distributor, 
     supplier, marketer, promoter, or seller of a medical product, 
     including, but not limited to, third-party claims, cross-
     claims, counter-claims, or contribution claims, which are 
     based upon the provision of, use of, or payment for (or the 
     failure to provide, use, or pay for) health care services or 
     medical products, regardless of the theory of liability on 
     which the claim is based, or the number of plaintiffs, 
     defendants, or other parties, or the number of causes of 
     action.
       (10) Health care organization.--The term ``health care 
     organization'' means any person or entity which is obligated 
     to provide or pay for health benefits under any health plan, 
     including any person or entity acting under a contract or 
     arrangement with a health care organization to provide or 
     administer any health benefit.
       (11) Health care provider.--The term ``health care 
     provider'' means any person or entity required by State or 
     Federal laws or regulations to be licensed, registered, or 
     certified to provide health care services, and being either 
     so licensed, registered, or certified, or exempted from such 
     requirement by other statute or regulation.
       (12) Health care goods or services.--The term ``health care 
     goods or services'' means any goods or services provided by a 
     health care organization, provider, or by any individual 
     working under the supervision of a health care provider, that 
     relates to the diagnosis, prevention, or treatment of any 
     human disease or impairment, or the assessment of the health 
     of human beings.
       (13) Malicious intent to injure.--The term ``malicious 
     intent to injure'' means intentionally causing or attempting 
     to cause physical injury other than providing health care 
     goods or services.
       (14) Medical product.--The term ``medical product'' means a 
     drug or device intended for humans, and the terms ``drug'' 
     and ``device'' have the meanings given such terms in sections 
     201(g)(1) and 201(h) of the Federal Food, Drug and Cosmetic 
     Act (21 U.S.C. 321), respectively, including any component or 
     raw material used therein, but excluding health care 
     services.
       (15) Noneconomic damages.--The term ``noneconomic damages'' 
     means damages for physical and emotional pain, suffering, 
     inconvenience, physical impairment, mental anguish, 
     disfigurement, loss of enjoyment of life, loss of society and 
     companionship, loss of consortium (other than loss of 
     domestic service), hedonic damages, injury to reputation, and 
     all other nonpecuniary losses of any kind or nature.
       (16) Punitive damages.--The term ``punitive damages'' means 
     damages awarded, for the purpose of punishment or deterrence, 
     and not solely for compensatory purposes, against a health 
     care provider, health care organization, or a manufacturer, 
     distributor, or supplier of a medical product. Punitive 
     damages are neither economic nor noneconomic damages.
       (17) Recovery.--The term ``recovery'' means the net sum 
     recovered after deducting any disbursements or costs incurred 
     in connection with prosecution or settlement of the claim, 
     including all costs paid or advanced by any person. Costs of 
     health care incurred by the plaintiff and the attorneys' 
     office overhead costs or charges for legal services are not 
     deductible disbursements or costs for such purpose.
       (18) State.--The term ``State'' means each of the several 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Virgin Islands, Guam, American Samoa, the Northern 
     Mariana Islands, the Trust Territory of the Pacific Islands, 
     and any other territory or possession of the United States, 
     or any political subdivision thereof.

     SEC. 110. EFFECT ON OTHER LAWS.

       (a) Vaccine Injury.--
       (1) To the extent that title XXI of the Public Health 
     Service Act establishes a Federal rule of law applicable to a 
     civil action brought for a vaccine-related injury or death--
       (A) this subtitle does not affect the application of the 
     rule of law to such an action; and
       (B) any rule of law prescribed by this subtitle in conflict 
     with a rule of law of such title XXI shall not apply to such 
     action.
       (2) If there is an aspect of a civil action brought for a 
     vaccine-related injury or death to which a Federal rule of 
     law under title XXI of the Public Health Service Act does not 
     apply, then this subtitle or otherwise applicable law (as 
     determined under this subtitle) will apply to such aspect of 
     such action.
       (b) Other Federal Law.--Except as provided in this section, 
     nothing in this subtitle shall be deemed to affect any 
     defense available to a defendant in a health care lawsuit or 
     action under any other provision of Federal law.

     SEC. 111. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.

       (a) Health Care Lawsuits.--The provisions governing health 
     care lawsuits set forth in this subtitle preempt, subject to 
     subsections (b) and (c), State law to the extent that State 
     law prevents the application of any provisions of law 
     established by or under this subtitle. The provisions 
     governing health care lawsuits set forth in this subtitle 
     supersede chapter 171 of title 28, United States Code, to the 
     extent that such chapter--
       (1) provides for a greater amount of damages or contingent 
     fees, a longer period in which a health care lawsuit may be 
     commenced, or a reduced applicability or scope of periodic 
     payment of future damages, than provided in this subtitle; or
       (2) prohibits the introduction of evidence regarding 
     collateral source benefits, or mandates or permits 
     subrogation or a lien on collateral source benefits.
       (b) Protection of States' Rights.--Any issue that is not 
     governed by any provision of law established by or under this 
     subtitle (including State standards of negligence) shall be 
     governed by otherwise applicable State or Federal law. This 
     subtitle does not preempt or supersede any law that imposes 
     greater protections (such as a shorter statute of 
     limitations) for health care providers and health care 
     organizations from liability, loss, or damages than those 
     provided by this subtitle.
       (c) State Flexibility.--No provision of this subtitle shall 
     be construed to preempt--
       (1) any State law (whether effective before, on, or after 
     the date of the enactment of this subtitle) that specifies a 
     particular monetary amount of compensatory or punitive 
     damages (or the total amount of damages) that may be awarded 
     in a health care lawsuit, regardless of whether such monetary 
     amount is greater or lesser than is provided for under this 
     subtitle, notwithstanding section 104(a); or
       (2) any defense available to a party in a health care 
     lawsuit under any other provision of State or Federal law.

     SEC. 112. APPLICABILITY; EFFECTIVE DATE.

       This subtitle shall apply to any health care lawsuit 
     brought in a Federal or State court, or subject to an 
     alternative dispute resolution system, that is initiated on 
     or after the date of the enactment of this Act, except that 
     any health care lawsuit arising from an injury occurring 
     prior to the date of the enactment of this Act shall be 
     governed by the applicable statute of limitations provisions 
     in effect at the time the injury occurred.

               Subtitle B--Health Information Technology

                     CHAPTER 1--GENERAL PROVISIONS

      SEC. 121. IMPROVING HEALTH CARE, QUALITY, SAFETY, AND 
                   EFFICIENCY.

       The Public Health Service Act (42 U.S.C. 201 et seq.) is 
     amended by adding at the end the following:

[[Page 17430]]



              ``TITLE XXIX--HEALTH INFORMATION TECHNOLOGY

     ``SEC. 2901. DEFINITIONS.

       ``In this title:
       ``(1) Health care provider.--The term `health care 
     provider' means a hospital, skilled nursing facility, home 
     health entity, 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 health facility operated by or 
     pursuant to a contract with the Indian Health Service, a 
     rural health clinic, and any other category of facility or 
     clinician determined appropriate by the Secretary.
       ``(2) Health information.--The term `health information' 
     has the meaning given such term in section 1171(4) of the 
     Social Security Act.
       ``(3) Health insurance plan.--The term `health insurance 
     plan' means--
       ``(A) a health insurance issuer (as defined in section 
     2791(b)(2));
       ``(B) a group health plan (as defined in section 
     2791(a)(1)); and
       ``(C) a health maintenance organization (as defined in 
     section 2791(b)(3)).
       ``(4) Laboratory.--The term `laboratory' has the meaning 
     given that term in section 353.
       ``(5) Pharmacist.--The term `pharmacist' has the meaning 
     given that term in section 804 of the Federal Food, Drug, and 
     Cosmetic Act.
       ``(6) 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.

     ``SEC. 2902. OFFICE OF THE NATIONAL COORDINATOR OF HEALTH 
                   INFORMATION TECHNOLOGY.

       ``(a) Office of National Health Information Technology.--
     There is established within the Office of the Secretary an 
     Office of the National Coordinator of 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, in consultation with the 
     President, and shall report directly to the Secretary.
       ``(b) Purpose.--It shall be the purpose of the Office to 
     coordinate with relevant Federal agencies and oversee 
     programs and activities to develop a nationwide interoperable 
     health information technology infrastructure that--
       ``(1) ensures that patients' individually identifiable 
     health information is secure and protected;
       ``(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, and 
     incomplete information;
       ``(4) ensures that appropriate information to help guide 
     medical decisions is available at the time and place of care;
       ``(5) promotes a more effective marketplace, greater 
     competition, and increased choice through the wider 
     availability of accurate information on health care costs, 
     quality, and outcomes; and
       ``(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.
       ``(c) Duties of the National Coordinator.--The National 
     Coordinator shall--
       ``(1) provide support to the public-private American Health 
     Information Collaborative established under section 2903;
       ``(2) serve as the principal advisor to the Secretary 
     concerning the development, application, and use of health 
     information technology, and coordinate and oversee the health 
     information technology programs of the Department;
       ``(3) facilitate the adoption of a nationwide, 
     interoperable system for the electronic exchange of health 
     information;
       ``(4) ensure the adoption and implementation of standards 
     for the electronic exchange of health information to reduce 
     cost and improve health care quality;
       ``(5) ensure that health information technology policy and 
     programs of the Department are coordinated with those of 
     relevant executive branch agencies (including Federal 
     commissions) 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;
       ``(6) to the extent permitted by law, coordinate outreach 
     and consultation by the relevant executive branch agencies 
     (including Federal commissions) with public and private 
     parties of interest, including consumers, payers, employers, 
     hospitals and other health care providers, physicians, 
     community health centers, laboratories, vendors and other 
     stakeholders;
       ``(7) advise the President regarding specific Federal 
     health information technology programs; and
       ``(8) submit the reports described under section 2903(i) 
     (excluding paragraph (4) of such section).
       ``(d) Rule of Construction.--Nothing in this section shall 
     be construed to require the duplication of Federal efforts 
     with respect to the establishment of the Office, regardless 
     of whether such efforts were carried out prior to or after 
     the enactment of this title.

     ``SEC. 2903. AMERICAN HEALTH INFORMATION COLLABORATIVE.

       ``(a) Purpose.--The Secretary shall establish the public-
     private American Health Information Collaborative (referred 
     to in this section as the `Collaborative') to--
       ``(1) advise the Secretary and recommend specific actions 
     to achieve a nationwide interoperable health information 
     technology infrastructure;
       ``(2) serve as a forum for the participation of a broad 
     range of stakeholders to provide input on achieving the 
     interoperability of health information technology; and
       ``(3) recommend standards (including content, 
     communication, and security standards) for the electronic 
     exchange of health information for adoption by the Federal 
     Government and voluntary adoption by private entities.
       ``(b) Composition.--
       ``(1) In general.--The Collaborative shall be composed of--
       ``(A) the Secretary, who shall serve as the chairperson of 
     the Collaborative;
       ``(B) the Secretary of Defense, or his or her designee;
       ``(C) the Secretary of Veterans Affairs, or his or her 
     designee;
       ``(D) the Secretary of Commerce, or his or her designee;
       ``(E) representatives of other relevant Federal agencies, 
     as determined appropriate by the Secretary; and
       ``(F) representatives from among the following categories 
     to be appointed by the Secretary from nominations submitted 
     by the public--
       ``(i) consumer and patient organizations;
       ``(ii) experts in health information privacy and security;
       ``(iii) health care providers;
       ``(iv) health insurance plans or other third party payors;
       ``(v) standards development organizations;
       ``(vi) information technology vendors;
       ``(vii) purchasers or employers; and
       ``(viii) State or local government agencies or Indian tribe 
     or tribal organizations.
       ``(2) Considerations.--In appointing members under 
     paragraph (1)(F), the Secretary shall select individuals with 
     expertise in--
       ``(A) health information privacy;
       ``(B) health information security;
       ``(C) health care quality and patient safety, including 
     those individuals with experience in utilizing health 
     information technology to improve health care quality and 
     patient safety;
       ``(D) data exchange; and
       ``(E) developing health information technology standards 
     and new health information technology.
       ``(3) Terms.--Members appointed under paragraph (1)(G) 
     shall serve for 2 year terms, except that any member 
     appointed to fill a vacancy for an unexpired term shall be 
     appointed for the remainder of such term. A member may serve 
     for not to exceed 180 days after the expiration of such 
     member's term or until a successor has been appointed.
       ``(c) Recommendations and Policies.--The Collaborative 
     shall make recommendations to identify uniform national 
     policies for adoption by the Federal Government and voluntary 
     adoption by private entities to support the widespread 
     adoption of health information technology, including--
       ``(1) protection of individually identifiable health 
     information through privacy and security practices;
       ``(2) measures to prevent unauthorized access to health 
     information;
       ``(3) methods to facilitate secure patient access to health 
     information;
       ``(4) the ongoing harmonization of industry-wide health 
     information technology standards;
       ``(5) recommendations for a nationwide interoperable health 
     information technology infrastructure;
       ``(6) the identification and prioritization of specific use 
     cases for which health information technology is valuable, 
     beneficial, and feasible;
       ``(7) recommendations for the establishment of an entity to 
     ensure the continuation of the functions of the 
     Collaborative; and
       ``(8) other policies determined to be necessary by the 
     Collaborative.
       ``(d) Standards.--
       ``(1) Existing standards.--The standards adopted by the 
     Consolidated Health Informatics Initiative shall be deemed to 
     have been recommended by the Collaborative under this 
     section.
       ``(2) First year review.--Not later than 1 year after the 
     date of enactment of this title, the Collaborative shall--
       ``(A) review existing standards (including content, 
     communication, and security standards) for the electronic 
     exchange of health information, including such standards 
     adopted by the Secretary under paragraph (2)(A);
       ``(B) identify deficiencies and omissions in such existing 
     standards; and
       ``(C) identify duplication and overlap in such existing 
     standards;

     and recommend modifications to such standards as necessary.
       ``(3) Ongoing review.--Beginning 1 year after the date of 
     enactment of this title, and

[[Page 17431]]

     annually thereafter, the Collaborative shall--
       ``(A) review existing standards (including content, 
     communication, and security standards) for the electronic 
     exchange of health information, including such standards 
     adopted by the Secretary under paragraph (2)(A);
       ``(B) identify deficiencies and omissions in such existing 
     standards; and
       ``(C) identify duplication and overlap in such existing 
     standards;
     and recommend modifications to such standards as necessary.
       ``(4) Limitation.--The standards described in this section 
     shall be consistent with any standards developed pursuant to 
     the Health Insurance Portability and Accountability Act of 
     1996.
       ``(e) Federal Action.--Not later than 60 days after the 
     issuance of a recommendation from the Collaborative under 
     subsection (d)(2), the Secretary of Health and Human 
     Services, in consultation with the Secretary of Veterans 
     Affairs, the Secretary of Defense, and representatives of 
     other relevant Federal agencies, as determined appropriate by 
     the Secretary, shall review such recommendations. The 
     Secretary shall provide for the adoption by the Federal 
     Government of any standard or standards contained in such 
     recommendation.
       ``(f) Coordination of Federal Spending.--Not later than 1 
     year after the adoption by the Federal Government of a 
     recommendation as provided for in subsection (e), and in 
     compliance with chapter 113 of title 40, United States Code, 
     no Federal agency shall expend Federal funds for the purchase 
     of any form of health information technology or health 
     information technology system for clinical care or for the 
     electronic retrieval, storage, or exchange of health 
     information that is not consistent with applicable standards 
     adopted by the Federal Government under subsection (e).
       ``(g) Coordination of Federal Data Collection.--Not later 
     than 3 years after the adoption by the Federal Government of 
     a recommendation as provided for in subsection (e), all 
     Federal agencies collecting health data for the purposes of 
     surveillance, epidemiology, adverse event reporting, 
     research, or for other purposes determined appropriate by the 
     Secretary shall comply with standards adopted under 
     subsection (e).
       ``(h) Voluntary Adoption.--
       ``(1) In general.--Any standards adopted by the Federal 
     Government under subsection (e) shall be voluntary with 
     respect to private entities.
       ``(2) Rule of construction.--Nothing in this section shall 
     be construed to require that a private entity that enters 
     into a contract with the Federal Government adopt the 
     standards adopted by the Federal Government under section 
     2903 with respect to activities not related to the contract.
       ``(3) Limitation.--Private entities that enter into a 
     contract with the Federal Government shall adopt the 
     standards adopted under section 2903 for the purpose of 
     activities under such Federal contract.
       ``(i) Effect on other provisions.--Nothing in this title 
     shall be construed to effect the scope or substance of--
       ``(1) section 264 of the Health Insurance Portability and 
     Accountability Act of 1996;
       ``(2) sections 1171 through 1179 of the Social Security 
     Act; and
       ``(3) any regulation issued pursuant to any such section;

     and such sections shall remain in effect and shall apply to 
     the implementation of standards, programs and activities 
     under this title.
       ``(j) Reports.--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 and the Committee on Ways and Means of the House of 
     Representatives, on an annual basis, a report that--
       ``(1) describes the specific actions that have been taken 
     by the Federal Government and private entities to facilitate 
     the adoption of an interoperable nationwide system for the 
     electronic exchange of health information;
       ``(2) describes barriers to the adoption of such a 
     nationwide system;
       ``(3) contains recommendations to achieve full 
     implementation of such a nationwide system; and
       ``(4) contains a plan and progress toward the establishment 
     of an entity to ensure the continuation of the functions of 
     the Collaborative.
       ``(k) Application of FACA.--The Federal Advisory Committee 
     Act (5 U.S.C. App.) shall apply to the Collaborative, except 
     that the term provided for under section 14(a)(2) shall be 5 
     years.
       ``(l) Rule of Construction.--Nothing in this section shall 
     be construed to require the duplication of Federal efforts 
     with respect to the establishment of the Collaborative, 
     regardless of whether such efforts were carried out prior to 
     or after the enactment of this title.

     ``SEC. 2904. IMPLEMENTATION AND CERTIFICATION OF HEALTH 
                   INFORMATION STANDARDS.

       ``(a) Implementation.--
       ``(1) In general.--The Secretary, based upon the 
     recommendations of the Collaborative, shall develop criteria 
     to ensure uniform and consistent implementation of any 
     standards for the electronic exchange of health information 
     voluntarily adopted by private entities in technical 
     conformance with such standards adopted under this title.
       ``(2) Implementation assistance.--The Secretary may 
     recognize a private entity or entities to assist private 
     entities in the implementation of the standards adopted under 
     this title using the criteria developed by the Secretary 
     under this section.
       ``(b) Certification.--
       ``(1) In general.--The Secretary, based upon the 
     recommendations of the Collaborative, shall develop criteria 
     to ensure and certify that hardware, software, and support 
     services that claim to be in compliance with any standard for 
     the electronic exchange of health information adopted under 
     this title have established and maintained such compliance in 
     technical conformance with such standards.
       ``(2) Certification assistance.--The Secretary may 
     recognize a private entity or entities to assist in the 
     certification described under paragraph (1) using the 
     criteria developed by the Secretary under this section.
       ``(c) Delegation Authority.--The Secretary, through 
     consultation with the Collaborative, may delegate the 
     development of the criteria under subsections (a) and (b) to 
     a private entity.

     ``SEC. 2905. STUDY OF STATE HEALTH INFORMATION LAWS AND 
                   PRACTICES.

       ``(a) In General.--The Secretary shall carry out, or 
     contract with a private entity to carry out, a study that 
     examines--
       ``(1) the variation among State laws and practices that 
     relate to the privacy, confidentiality, and security of 
     health information;
       ``(2) how such variation among State laws and practices may 
     impact the electronic exchange of health information--
       ``(A) among the States;
       ``(B) between the States and the Federal Government; and
       ``(C) among private entities; and
       ``(3) how such laws and practices may be harmonized to 
     permit the secure electronic exchange of health information.
       ``(b) Report and Recommendations.--Not later than 1 year 
     after the date of enactment of this title, the Secretary 
     shall submit to Congress a report that--
       ``(1) describes the results of the study carried out under 
     subsection (a); and
       ``(2) makes recommendations based on the results of such 
     study.

     ``SEC. 2906. SECURE EXCHANGE OF HEALTH INFORMATION; INCENTIVE 
                   GRANTS.

       ``(a) In General.--The Secretary may make grants to States 
     to carry out programs under which such States cooperate with 
     other States to develop and implement State policies that 
     will facilitate the secure electronic exchange of health 
     information utilizing the standards adopted under section 
     2903--
       ``(1) among the States;
       ``(2) between the States and the Federal Government; and
       ``(3) among private entities.
       ``(b) Priority.--In awarding grants under subsection (a), 
     the Secretary shall give priority to States that provide 
     assurance that any funding awarded under such a grant shall 
     be used to harmonize privacy laws and practices between the 
     States, the States and the Federal Government, and among 
     private entities related to the privacy, confidentiality, and 
     security of health information.
       ``(c) Dissemination of Information.--The Secretary shall 
     disseminate information regarding the efficacy of efforts of 
     a recipient of a grant under this section.
       ``(d) Technical Assistance.--The Secretary may provide 
     technical assistance to recipients of a grant under this 
     section.
       ``(e) Authorization of Appropriations.--For the purpose of 
     carrying out subsection (a), there are authorized to be 
     appropriated such sums as may be necessary for each of the 
     fiscal years 2006 through 2010.

     ``SEC. 2907. LICENSURE AND THE ELECTRONIC EXCHANGE OF HEALTH 
                   INFORMATION.

       ``(a) In General.--The Secretary shall carry out, or 
     contract with a private entity to carry out, a study that 
     examines--
       ``(1) the variation among State laws that relate to the 
     licensure, registration, and certification of medical 
     professionals; and
       ``(2) how such variation among State laws impacts the 
     secure electronic exchange of health information--
       ``(A) among the States; and
       ``(B) between the States and the Federal Government.
       ``(b) Report and Recommendations.--Not later than 1 year 
     after the date of enactment of this title, the Secretary 
     shall publish a report that--
       ``(1) describes the results of the study carried out under 
     subsection (a); and
       ``(2) makes recommendations to States regarding the 
     harmonization of State laws based on the results of such 
     study.

     ``SEC. 2908. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--For the purpose of carrying out this 
     title, there is authorized to be appropriated $125,000,000 
     for fiscal year 2006, and such sums as may be necessary for 
     each of fiscal years 2007 through 2010.
       ``(b) Availability.--Amounts appropriated under subsection 
     (a) shall remain available through fiscal year 2010.''.

[[Page 17432]]



     SEC. 122. HIPAA REPORT.

       (a) Study.--Not later than 2 years after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall carry out, or contract with a private entity 
     to carry out, a study that examines the integration of the 
     standards adopted under the amendments made by this subtitle 
     with the standards adopted under the Health Insurance 
     Portability and Accountability Act of 1996 (Public Law 104-
     191).
       (b) Plan; Report.--
       (1) Plan.--Not later than 3 years after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall, based on the results of the study carried out 
     under subsection (a), develop a plan for the integration of 
     the standards described under such subsection and submit a 
     report to Congress describing such plan.
       (2) Periodic reports.--The Secretary shall submit periodic 
     reports to Congress that describe the progress of the 
     integration described under paragraph (1).

     SEC. 123. STUDY OF REIMBURSEMENT INCENTIVES.

       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.

     SEC. 124. REAUTHORIZATION OF INCENTIVE GRANTS REGARDING 
                   TELEMEDICINE.

       Section 330L(b) of the Public Health Service Act (42 U.S.C. 
     254c-18(b)) is amended by striking ``2002 through 2006'' and 
     inserting ``2006 through 2010''.

     SEC. 125. SENSE OF THE SENATE ON PHYSICIAN PAYMENT.

       It is the sense of the Senate that modifications to the 
     medicare fee schedule for physicians' services under section 
     1848 of the Social Security Act (42 U.S.C. 1394w-4) should 
     include provisions based on the reporting of quality measures 
     pursuant to those adopted in section 2909 of the Public 
     Health Service Act (as added by section 121) and the overall 
     improvement of healthcare quality through the use of the 
     electronic exchange of health information pursuant to the 
     standards adopted under section 2903 of such Act (as added by 
     section 121).

     SEC. 126. ESTABLISHMENT OF QUALITY MEASUREMENT SYSTEMS FOR 
                   MEDICARE VALUE-BASED PURCHASING PROGRAMS.

       (a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) is 
     amended--
       (1) by redesignating part E as part F; and
       (2) by inserting after part D the following new part:

                    ``Part E--Value-Based Purchasing


   ``quality measurement systems for value-based purchasing programs

       ``Sec. 1860E-1. (a) Establishment.--
       ``(1) In general.--The Secretary shall develop quality 
     measurement systems for purposes of providing value-based 
     payments to--
       ``(A) hospitals pursuant to section 1860E-2;
       ``(B) physicians and practitioners pursuant to section 
     1860E-3;
       ``(C) plans pursuant to section 1860E-4;
       ``(D) end stage renal disease providers and facilities 
     pursuant to section 1860E-5; and
       ``(E) home health agencies pursuant to section 1860E-6.
       ``(2) Quality.--The systems developed under paragraph (1) 
     shall measure the quality of the care furnished by the 
     provider involved.
       ``(3) High quality health care defined.--In this part, the 
     term `high quality health care' means health care that is 
     safe, effective, patient-centered, timely, equitable, 
     efficient, necessary, and appropriate.
       ``(b) Requirements for Systems.--Under each quality 
     measurement system described in subsection (a)(1), the 
     Secretary shall do the following:
       ``(1) Measures.--
       ``(A) In general.--Subject to subparagraph (B), the 
     Secretary shall select measures of quality to be used by the 
     Secretary under each system.
       ``(B) Requirements.--In selecting the measures to be used 
     under each system pursuant to subparagraph (A), the Secretary 
     shall, to the extent feasible, ensure that--
       ``(i) such measures are evidence-based, reliable and valid, 
     and feasible to collect and report;
       ``(ii) measures of process, structure, outcomes, 
     beneficiary experience, efficiency, and equity are included;
       ``(iii) measures of overuse and underuse of health care 
     items and services are included;
       ``(iv)(I) at least 1 measure of health information 
     technology infrastructure that enables the provision of high 
     quality health care and facilitates the exchange of health 
     information, such as the use of one or more elements of a 
     qualified health information system (as defined in 
     subparagraph (E)), is included during the first year each 
     system is implemented; and
       ``(II) additional measures of health information technology 
     infrastructure are included in subsequent years;
       ``(v) in the case of the system that is used to provide 
     value-based payments to hospitals under section 1860E-2, by 
     not later than January 1, 2008, at least 5 measures that take 
     into account the unique characteristics of small hospitals 
     located in rural areas and frontier areas are included; and
       ``(vi) measures that assess the quality of care furnished 
     to frail individuals over the age of 75 and to individuals 
     with multiple complex chronic conditions are included.
       ``(C) Requirement for collection of data on a measure for 1 
     year prior to use under the systems.--Data on any measure 
     selected by the Secretary under subparagraph (A) must be 
     collected by the Secretary for at least a 12-month period 
     before such measure may be used to determine whether a 
     provider receives a value-based payment under a program 
     described in subsection (a)(1).
       ``(D) Authority to vary measures.--
       ``(i) Under system applicable to hospitals.--In the case of 
     the system applicable to hospitals under section 1860E-2, the 
     Secretary may vary the measures selected under subparagraph 
     (A) by hospital depending on the size of, and the scope of 
     services provided by, the hospital.
       ``(ii) Under system applicable to physicians and 
     practitioners.--In the case of the system applicable to 
     physicians and practitioners under section 1860E-3, the 
     Secretary may vary the measures selected under subparagraph 
     (A) by physician or practitioner depending on the specialty 
     of the physician, the type of practitioner, or the volume of 
     services furnished to beneficiaries by the physician or 
     practitioner.
       ``(iii) Under system applicable to esrd providers and 
     facilities.--In the case of the system applicable to 
     providers of services and renal dialysis facilities under 
     section 1860E-5, the Secretary may vary the measures selected 
     under subparagraph (A) by provider or facility depending on 
     the type of, the size of, and the scope of services provided 
     by, the provider or facility.
       ``(iv) Under system applicable to home health agencies.--In 
     the case of the system applicable to home health agencies 
     under section 1860E-6, the Secretary may vary the measures 
     selected under subparagraph (A) by agency depending on the 
     size of, and the scope of services provided by, the agency.
       ``(E) Qualified health information system defined.--For 
     purposes of subparagraph (B)(iv)(I), the term `qualified 
     health information system' means a computerized system 
     (including hardware, software, and training) that--
       ``(i) protects the privacy and security of health 
     information and properly encrypts such health information;
       ``(ii) maintains and provides access to patients' health 
     records in an electronic format;
       ``(iii) incorporates decision support software to reduce 
     medical errors and enhance health care quality;
       ``(iv) is consistent with data standards and certification 
     processes recommended by the Secretary;
       ``(v) allows for the reporting of quality measures; and
       ``(vi) includes other features determined appropriate by 
     the Secretary.
       ``(2) Weights of measures.--
       ``(A) In general.--The Secretary shall assign weights to 
     the measures used by the Secretary under each system.
       ``(B) Consideration.--If the Secretary determines 
     appropriate, in assigning the weights under subparagraph 
     (A)--
       ``(i) measures of clinical effectiveness shall be weighted 
     more heavily than measures of beneficiary experience; and
       ``(ii) measures of risk adjusted outcomes shall be weighted 
     more heavily than measures of process; and
       ``(3) Risk adjustment.--The Secretary shall establish 
     procedures, as appropriate, to control for differences in 
     beneficiary health status and beneficiary characteristics. To 
     the extent feasible, such procedures may be based on existing 
     models for controlling for such differences.
       ``(4) Maintenance.--
       ``(A) In general.--The Secretary shall, as determined 
     appropriate, but not more often than once each 12-month 
     period, update each system, including through--
       ``(i) the addition of more accurate and precise measures 
     under the systems and the retirement of existing outdated 
     measures under the system;
       ``(ii) the refinement of the weights assigned to measures 
     under the system; and
       ``(iii) the refinement of the risk adjustment procedures 
     established pursuant to paragraph (3) under the system.
       ``(B) Update shall allow for comparison of data.--Each 
     update under subparagraph (A) of a quality measurement system 
     shall allow for the comparison of data from one year to the 
     next for purposes of providing value-based payments under the 
     programs described in subsection (a)(1).
       ``(5) Use of most recent quality data.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the Secretary shall use the most recent quality data with 
     respect to the provider involved that is available to the 
     Secretary.
       ``(B) Insufficient data due to low volume.--If the 
     Secretary determines that there is insufficient data with 
     respect to a measure or measures because of a low number of 
     services provided, the Secretary may aggregate data across 
     more than 1 fiscal or calendar year, as the case may be.
       ``(c) Requirements for Developing and Updating the 
     Systems.--In developing and updating each quality measurement 
     system under this section, the Secretary shall--

[[Page 17433]]

       ``(1) take into account the quality measures developed by 
     nationally recognized quality measurement organizations, 
     researchers, health care provider organizations, and other 
     appropriate groups;
       ``(2) consult with, and take into account the 
     recommendations of, the entity that the Secretary has an 
     arrangement with under subsection (e);
       ``(3) consult with provider-based groups and clinical 
     specialty societies;
       ``(4) take into account existing quality measurement 
     systems that have been developed through a rigorous process 
     of validation and with the involvement of entities and 
     persons described in subsection (e)(2)(B); and
       ``(5) take into account--
       ``(A) each of the reports by the Medicare Payment Advisory 
     Commission that are required under the Medicare Value 
     Purchasing Act of 2005;
       ``(B) the results of--
       ``(i) the demonstrations required under such Act;
       ``(ii) the demonstration program under section 1866A;
       ``(iii) the demonstration program under section 1866C; and
       ``(iv) any other demonstration or pilot program conducted 
     by the Secretary relating to measuring and rewarding quality 
     and efficiency of care; and
       ``(C) the report by the Institute of Medicine of the 
     National Academy of Sciences under section 238(b) of the 
     Medicare Prescription Drug, Improvement, and Modernization 
     Act of 2003 (Public Law 108-173).
       ``(d) Requirements for Implementing the Systems.--In 
     implementing each quality measurement system under this 
     section, the Secretary shall consult with entities--
       ``(1) that have joined together to develop strategies for 
     quality measurement and reporting, including the feasibility 
     of collecting and reporting meaningful data on quality 
     measures; and
       ``(2) that involve representatives of health care 
     providers, health plans, consumers, employers, purchasers, 
     quality experts, government agencies, and other individuals 
     and groups that are interested in quality of care.
       ``(e) Arrangement With an Entity To Provide Advice and 
     Recommendations.--
       ``(1) Arrangement.--On and after July 1, 2006, the 
     Secretary shall have in place an arrangement with an entity 
     that meets the requirements described in paragraph (2) under 
     which such entity provides the Secretary with advice on, and 
     recommendations with respect to, the development and updating 
     of the quality measurement systems under this section, 
     including the assigning of weights to the measures under 
     subsection (b)(2).
       ``(2) Requirements described.--The requirements described 
     in this paragraph are the following:
       ``(A) The entity is a private nonprofit entity governed by 
     an executive director and a board.
       ``(B) The members of the entity include representatives 
     of--
       ``(i)(I) health plans and providers receiving reimbursement 
     under this title for the provision of items and services, 
     including health plans and providers with experience in the 
     care of the frail elderly and individuals with multiple 
     complex chronic conditions; or
       ``(II) groups representing such health plans and providers;
       ``(ii) groups representing individuals receiving benefits 
     under this title;
       ``(iii) purchasers and employers or groups representing 
     purchasers or employers;
       ``(iv) organizations that focus on quality improvement as 
     well as the measurement and reporting of quality measures;
       ``(v) State government health programs;
       ``(vi) persons skilled in the conduct and interpretation of 
     biomedical, health services, and health economics research 
     and with expertise in outcomes and effectiveness research and 
     technology assessment; and
       ``(vii) persons or entities involved in the development and 
     establishment of standards and certification for health 
     information technology systems and clinical data.
       ``(C) The membership of the entity is representative of 
     individuals with experience with--
       ``(i) urban health care issues;
       ``(ii) safety net health care issues; and
       ``(iii) rural and frontier health care issues.
       ``(D) The entity does not charge a fee for membership for 
     participation in the work of the entity related to the 
     arrangement with the Secretary under paragraph (1). If the 
     entity does require a fee for membership for participation in 
     other functions of the entity, there shall be no linkage 
     between such fee and participation in the work of the entity 
     related to such arrangement with the Secretary.
       ``(E) The entity--
       ``(i) permits any member described in subparagraph (B) to 
     vote on matters of the entity related to the arrangement with 
     the Secretary under paragraph (1); and
       ``(ii) ensures that such members have an equal vote on such 
     matters .
       ``(F) With respect to matters related to the arrangement 
     with the Secretary under paragraph (1), the entity conducts 
     its business in an open and transparent manner and provides 
     the opportunity for public comment.
       ``(G) The entity operates as a voluntary consensus 
     standards setting organization as defined for purposes of 
     section 12(d) of the National Technology Transfer and 
     Advancement Act of 1995 (Public Law 104-113) and Office of 
     Management and Budget Revised Circular A-119 (published in 
     the Federal Register on February 10, 1998).''.
       (b) Conforming References to Previous Part E.--Any 
     reference in law (in effect before the date of the enactment 
     of this Act) to part E of title XVIII of the Social Security 
     Act is deemed a reference to part F of such title (as in 
     effect after such date).

     SEC. 127. EXCEPTION TO FEDERAL ANTI-KICKBACK AND PHYSICIAN 
                   SELF REFERRAL LAWS FOR THE PROVISION OF 
                   PERMITTED SUPPORT.

       (a) Anti-Kickback.--Section 1128B(b) (42 U.S.C. 1320a-
     7b(b)(3)) is amended--
       (1) in paragraph (3)--
       (A) in subparagraph (G), by striking ``and'' at the end;
       (B) in subparagraph (H), as added by section 237(d) of the 
     Medicare Prescription Drug, Improvement, and Modernization 
     Act of 2003 (Public Law 108-173; 117 Stat. 2213)--
       (i) by moving such subparagraph 2 ems to the left; and
       (ii) by striking the period at the end and inserting a 
     semicolon;
       (C) by redesignating subparagraph (H), as added by section 
     431(a) of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003 (Public Law 108-173; 117 Stat. 
     2287), as subparagraph (I);
       (D) in subparagraph (I), as so redesignated--
       (i) by moving such subparagraph 2 ems to the left; and
       (ii) by striking the period at the end and inserting ``; 
     and''; and
       (E) by adding at the end the following new:
       ``(J) during the 5-year period beginning on the date the 
     Secretary issues the interim final rule under section 
     801(c)(1) of the Medicare Value Purchasing Act of 2005, the 
     provision, with or without charge, of any permitted support 
     (as defined in paragraph (4)).''; and
       (2) by adding at the end the following new paragraph:
       ``(4) Permitted support.--
       ``(A) Definition of permitted support.--Subject to 
     subparagraph (B), in this section, the term `permitted 
     support' means the provision of any equipment, item, 
     information, right, license, intellectual property, software, 
     training, or service used for developing, implementing, 
     operating, or facilitating the use of systems designed to 
     improve the quality of health care and to promote the 
     electronic exchange of health information.
       ``(B) Exception.--The term `permitted support' shall not 
     include the provision of--
       ``(i) any support that is determined in a manner that is 
     related to the volume or value of any referrals or other 
     business generated between the parties for which payment may 
     be made in whole or in part under a Federal health care 
     program;
       ``(ii) any support that has more than incidental utility or 
     value to the recipient beyond the exchange of health care 
     information; or
       ``(iii) any health information technology system, product, 
     or service that is not capable of exchanging health care 
     information in compliance with data standards consistent with 
     interoperability.
       ``(C) Determination.--In establishing regulations with 
     respect to the requirement under subparagraph (B)(iii), the 
     Secretary shall take in account--
       ``(I) whether the health information technology system, 
     product, or service is widely accepted within the industry 
     and whether there is sufficient industry experience to ensure 
     successful implementation of the system, product, or service; 
     and
       ``(II) whether the health information technology system, 
     product, or service improves quality of care, enhances 
     patient safety, or provides greater administrative 
     efficiencies.''.
       (b) Physician Self-Referral.--Section 1877(e) (42 U.S.C. 
     1395nn(e)) is amended by adding at the end the following new 
     paragraph:
       ``(9) Permitted support.--During the 5-year period 
     beginning on the date the Secretary issues the interim final 
     rule under section 801(c)(1) of the Medicare Value Purchasing 
     Act of 2005, the provision, with or without charge, of any 
     permitted support (as defined in section 1128B(b)(4)).''.
       (c) Regulations.--In order to carry out the amendments made 
     by this section--
       (1) the Secretary shall issue an interim final rule with 
     comment period by not later than the date that is 180 days 
     after the date of enactment of this Act;
       (2) the Secretary shall issue a final rule by not later 
     than the date that is 180 days after the date that the 
     interim final rule under paragraph (1) is issued.

                   CHAPTER 2--VALUE BASED PURCHASING

     SEC. 131. VALUE BASED PURCHASING PROGRAMS; SENSE OF THE 
                   SENATE.

       (a) Medicare Value Based Purchasing Pilot Program.--
       (1) In general.--The Secretary of Health and Human Services 
     (referred to in this section as the ``Secretary'') shall 
     establish under title XVIII of the Social Security Act (42 
     U.S.C. 1395 et seq.) a value based purchasing pilot program 
     based on the reporting

[[Page 17434]]

     of quality measures pursuant to those adopted in section 
     1860E-1 of the Social Security Act (as added by section 126). 
     Such pilot program should be based on experience gained 
     through previous demonstration projects conducted by the 
     Secretary, including demonstration projects conducted under 
     sections 1866A and 1866C of the Social Security Act (42 
     U.S.C. 1395cc-1; 1395cc-3), section 649 of the Medicare 
     Prescription Drug, Improvement, and Modernization Act of 2003 
     (Public Law 108-173; 117 Stat. 2322), and other relevant work 
     conducted by private entities.
       (2) Expansion.--Not later than 2 years after conducting the 
     pilot program under paragraph (1), the Secretary shall 
     transition and implement such program on a national basis.
       (3) Information technology.--Providers reporting quality 
     measurement data electronically under this section shall 
     report such data pursuant to the standards adopted under 
     title XXIX of the Public Health Service Act (as added by 
     section 121).
       (4) Funding.--The Secretary shall ensure that the total 
     amount of expenditures under this Act in a year does not 
     exceed the total amount of expenditures that would have been 
     expended in such year under this Act if this subsection had 
     not been enacted.
       (b) Medicaid Value Based Purchasing Programs.--
       (1) In general.--The Secretary shall authorize waivers 
     under section 1115 of the Social Security Act (42 U.S.C. 
     1315) for States to establish value based purchasing programs 
     for State medicaid programs established under title XIX of 
     such Act (42 U.S.C. 1396 et seq.). Such programs shall be 
     based on the reporting of quality measures pursuant to those 
     adopted in section 1860E-1 of the Social Security Act (as 
     added by section 126).
       (2) Information technology.--Providers reporting quality 
     measurement data electronically under this section shall 
     report such data pursuant to the standards adopted under 
     title XXIX of the Public Health Service Act (as added by 
     section 121).
       (3) Waiver.--In authorizing such waivers, the Secretary 
     shall waive any provisions of title XI or XIX of the Social 
     Security Act that would otherwise prevent a State from 
     establishing a value based purchasing program in accordance 
     with paragraph (1).

           Subtitle C--Patient Safety and Quality Improvement

     SEC. 141. SHORT TITLE.

       This subtitle may be cited as the ``Patient Safety and 
     Quality Improvement Act of 2005''.

     SEC. 142. FINDINGS AND PURPOSES.

       (a) Findings.--Congress makes the following findings:
       (1) In 1999, the Institute of Medicine released a report 
     entitled To Err is Human that described medical errors as the 
     eighth leading cause of death in the United States, with as 
     many as 98,000 people dying as a result of medical errors 
     each year.
       (2) To address these deaths and injuries due to medical 
     errors, the health care system must identify and learn from 
     such errors so that systems of care can be improved.
       (3) In their report, the Institute of Medicine called on 
     Congress to provide legal protections with respect to 
     information reported for the purposes of quality improvement 
     and patient safety.
       (4) The Health, Education, Labor, and Pensions Committee of 
     the Senate held 4 hearings in the 106th Congress and 1 
     hearing in the 107th Congress on patient safety where experts 
     in the field supported the recommendation of the Institute of 
     Medicine for congressional action.
       (5) Myriad public and private patient safety initiatives 
     have begun. The Quality Interagency Coordination Taskforce 
     has recommended steps to improve patient safety that may be 
     taken by each Federal agency involved in health care and 
     activities relating to these steps are ongoing.
       (6) The research on patient safety unequivocally calls for 
     a learning environment, rather than a punitive environment, 
     in order to improve patient safety.
       (7) Voluntary data gathering systems are more supportive 
     than mandatory systems in creating the learning environment 
     referred to in paragraph (6) as stated in the Institute of 
     Medicine's report.
       (8) Promising patient safety reporting systems have been 
     established throughout the United States and the best ways to 
     structure and use these systems are currently being 
     determined, largely through projects funded by the Agency for 
     Healthcare Research and Quality.
       (9) Many organizations currently collecting patient safety 
     data have expressed a need for legal protections that will 
     allow them to review protected information and collaborate in 
     the development and implementation of patient safety 
     improvement strategies. Currently, the State peer review 
     protections are inadequate to allow the sharing of 
     information to promote patient safety.
       (b) Purposes.--It is the purpose of this subtitle to--
       (1) encourage a culture of safety and quality in the United 
     States health care system by providing for legal protection 
     of information reported voluntarily for the purposes of 
     quality improvement and patient safety; and
       (2) ensure accountability by raising standards and 
     expectations for continuous quality improvements in patient 
     safety.

     SEC. 143. AMENDMENTS TO PUBLIC HEALTH SERVICE ACT.

       Title IX of the Public Health Service Act (42 U.S.C. 299 et 
     seq.) is amended--
       (1) in section 912(c), by inserting ``, in accordance with 
     part C,'' after ``The Director shall'';
       (2) by redesignating part C as part D;
       (3) by redesignating sections 921 through 928, as sections 
     931 through 938, respectively;
       (4) in 934(d) (as so redesignated), by striking the second 
     sentence and inserting the following: ``Penalties provided 
     for under this section shall be imposed and collected by the 
     Secretary using the administrative and procedural processes 
     used to impose and collect civil money penalties under 
     section 1128A of the Social Security Act (other than 
     subsections (a) and (b), the second sentence of subsection 
     (f), and subsections (i), (m), and (n)), unless the Secretary 
     determines that a modification of procedures would be more 
     suitable or reasonable to carry out this subsection and 
     provides for such modification by regulation.'';
       (5) in section 938(1) (as so redesignated), by striking 
     ``921'' and inserting ``931''; and
       (6) by inserting after part B the following:

                  ``PART C--PATIENT SAFETY IMPROVEMENT

     ``SEC. 921. DEFINITIONS.

       ``In this part:
       ``(1) Non-identifiable information.--
       ``(A) In general.--The term `non-identifiable information' 
     means, with respect to information, that the information is 
     presented in a form and manner that prevents the 
     identification of a provider, a patient, or a reporter of 
     patient safety data.
       ``(B) Identifiability of patient.--For purposes of 
     subparagraph (A), the term `presented in a form and manner 
     that prevents the identification of a patient' means, with 
     respect to information that has been subject to rules 
     promulgated pursuant to section 264(c) of the Health 
     Insurance Portability and Accountability Act of 1996 (42 
     U.S.C. 1320d-2 note), that the information has been de-
     identified so that it is no longer individually identifiable 
     health information as defined in such rules.
       ``(2) Patient safety data.--
       ``(A) In general.--The term `patient safety data' means--
       ``(i) any data, reports, records, memoranda, analyses (such 
     as root cause analyses), or written or oral statements that 
     are--

       ``(I) collected or developed by a provider for reporting to 
     a patient safety organization, provided that they are 
     reported to the patient safety organization within 60 days;
       ``(II) requested by a patient safety organization 
     (including the contents of such request), if they are 
     reported to the patient safety organization within 60 days;
       ``(III) reported to a provider by a patient safety 
     organization; or
       ``(IV) collected by a patient safety organization from 
     another patient safety organization, or developed by a 
     patient safety organization;

     that could result in improved patient safety, health care 
     quality, or health care outcomes; or
       ``(ii) any deliberative work or process with respect to any 
     patient safety data described in clause (i).
       ``(B) Limitation.--
       ``(i) Collection.--If the original material from which any 
     data, reports, records, memoranda, analyses (such as root 
     case analyses), or written or oral statements referred to in 
     subclause (I) or (IV) of subparagraph (A)(i) are collected 
     and is not patient safety data, the act of such collection 
     shall not make such original material patient safety data for 
     purposes of this part.
       ``(ii) Separate data.--The term `patient safety data' shall 
     not include information (including a patient's medical 
     record, billing and discharge information or any other 
     patient or provider record) that is collected or developed 
     separately from and that exists separately from patient 
     safety data. Such separate information or a copy thereof 
     submitted to a patient safety organization shall not itself 
     be considered as patient safety data. Nothing in this part, 
     except for section 922(f)(1), shall be construed to limit--

       ``(I) the discovery of or admissibility of information 
     described in this subparagraph in a criminal, civil, or 
     administrative proceeding;
       ``(II) the reporting of information described in this 
     subparagraph to a Federal, State, or local governmental 
     agency for public health surveillance, investigation, or 
     other public health purposes or health oversight purposes; or
       ``(III) a provider's recordkeeping obligation with respect 
     to information described in this subparagraph under Federal, 
     State, or local law.

       ``(3) Patient safety organization.--The term `patient 
     safety organization' means a private or public entity or 
     component thereof that is currently listed by the Secretary 
     pursuant to section 924(c).
       ``(4) Patient safety organization activities.--The term 
     `patient safety organization activities' means the following 
     activities, which are deemed to be necessary for the

[[Page 17435]]

     proper management and administration of a patient safety 
     organization:
       ``(A) The conduct, as its primary activity, of efforts to 
     improve patient safety and the quality of health care 
     delivery.
       ``(B) The collection and analysis of patient safety data 
     that are submitted by more than one provider.
       ``(C) The development and dissemination of information to 
     providers with respect to improving patient safety, such as 
     recommendations, protocols, or information regarding best 
     practices.
       ``(D) The utilization of patient safety data for the 
     purposes of encouraging a culture of safety and of providing 
     direct feedback and assistance to providers to effectively 
     minimize patient risk.
       ``(E) The maintenance of procedures to preserve 
     confidentiality with respect to patient safety data.
       ``(F) The provision of appropriate security measures with 
     respect to patient safety data.
       ``(G) The utilization of qualified staff.
       ``(5) Person.--The term `person' includes Federal, State, 
     and local government agencies.
       ``(6) Provider.--The term `provider' means--
       ``(A) a person licensed or otherwise authorized under State 
     law to provide health care services, including--
       ``(i) a hospital, nursing facility, comprehensive 
     outpatient rehabilitation facility, home health agency, 
     hospice program, renal dialysis facility, ambulatory surgical 
     center, pharmacy, physician or health care practitioner's 
     office, long term care facility, behavior health residential 
     treatment facility, clinical laboratory, or health center; or
       ``(ii) a physician, physician assistant, nurse 
     practitioner, clinical nurse specialist, certified registered 
     nurse anesthetist, certified nurse midwife, psychologist, 
     certified social worker, registered dietitian or nutrition 
     professional, physical or occupational therapist, pharmacist, 
     or other individual health care practitioner; or
       ``(B) any other person specified in regulations promulgated 
     by the Secretary.

     ``SEC. 922. PRIVILEGE AND CONFIDENTIALITY PROTECTIONS.

       ``(a) Privilege.--Notwithstanding any other provision of 
     Federal, State, or local law, patient safety data shall be 
     privileged and, subject to the provisions of subsection 
     (c)(1), shall not be--
       ``(1) subject to a Federal, State, or local civil, 
     criminal, or administrative subpoena;
       ``(2) subject to discovery in connection with a Federal, 
     State, or local civil, criminal, or administrative 
     proceeding;
       ``(3) disclosed pursuant to section 552 of title 5, United 
     States Code (commonly known as the Freedom of Information 
     Act) or any other similar Federal, State, or local law;
       ``(4) admitted as evidence or otherwise disclosed in any 
     Federal, State, or local civil, criminal, or administrative 
     proceeding; or
       ``(5) utilized in a disciplinary proceeding against a 
     provider.
       ``(b) Confidentiality.--Notwithstanding any other provision 
     of Federal, State, or local law, and subject to the 
     provisions of subsections (c) and (d), patient safety data 
     shall be confidential and shall not be disclosed.
       ``(c) Exceptions to Privilege and Confidentiality.--Nothing 
     in this section shall be construed to prohibit one or more of 
     the following uses or disclosures:
       ``(1) Disclosure by a provider or patient safety 
     organization of relevant patient safety data for use in a 
     criminal proceeding only after a court makes an in camera 
     determination that such patient safety data contains evidence 
     of a wanton and criminal act to directly harm the patient.
       ``(2) Voluntary disclosure of non-identifiable patient 
     safety data by a provider or a patient safety organization.
       ``(d) Protected Disclosure and Use of Information.--Nothing 
     in this section shall be construed to prohibit one or more of 
     the following uses or disclosures:
       ``(1) Disclosure of patient safety data by a person that is 
     a provider, a patient safety organization, or a contractor of 
     a provider or patient safety organization, to another such 
     person, to carry out patient safety organization activities.
       ``(2) Disclosure of patient safety data by a provider or 
     patient safety organization to grantees or contractors 
     carrying out patient safety research, evaluation, or 
     demonstration projects authorized by the Director.
       ``(3) Disclosure of patient safety data by a provider to an 
     accrediting body that accredits that provider.
       ``(4) Voluntary disclosure of patient safety data by a 
     patient safety organization to the Secretary for public 
     health surveillance if the consent of each provider 
     identified in, or providing, such data is obtained prior to 
     such disclosure. Nothing in the preceding sentence shall be 
     construed to prevent the release of patient safety data that 
     is provided by, or that relates solely to, a provider from 
     which the consent described in such sentence is obtained 
     because one or more other providers do not provide such 
     consent with respect to the disclosure of patient safety date 
     that relates to such nonconsenting providers. Consent for the 
     future release of patient safety data for such purposes may 
     be requested by the patient safety organization at the time 
     the data is submitted.
       ``(5) Voluntary disclosure of patient safety data by a 
     patient safety organization to State of local government 
     agencies for public health surveillance if the consent of 
     each provider identified in, or providing, such data is 
     obtained prior to such disclosure. Nothing in the preceding 
     sentence shall be construed to prevent the release of patient 
     safety data that is provided by, or that relates solely to, a 
     provider from which the consent described in such sentence is 
     obtained because one or more other providers do not provide 
     such consent with respect to the disclosure of patient safety 
     date that relates to such nonconsenting providers. Consent 
     for the future release of patient safety data for such 
     purposes may be requested by the patient safety organization 
     at the time the data is submitted.
       ``(e) Continued Protection of Information after 
     Disclosure.--
       ``(1) In general.--Except as provided in paragraph (2), 
     patient safety data that is used or disclosed shall continue 
     to be privileged and confidential as provided for in 
     subsections (a) and (b), and the provisions of such 
     subsections shall apply to such data in the possession or 
     control of--
       ``(A) a provider or patient safety organization that 
     possessed such data before the use or disclosure; or
       ``(B) a person to whom such data was disclosed.
       ``(2) Exception.--Notwithstanding paragraph (1), and 
     subject to paragraph (3)--
       ``(A) if patient safety data is used or disclosed as 
     provided for in subsection (c)(1), and such use or disclosure 
     is in open court, the confidentiality protections provided 
     for in subsection (b) shall no longer apply to such data; and
       ``(B) if patient safety data is used or disclosed as 
     provided for in subsection (c)(2), the privilege and 
     confidentiality protections provided for in subsections (a) 
     and (b) shall no longer apply to such data.
       ``(3) Construction.--Paragraph (2) shall not be construed 
     as terminating or limiting the privilege or confidentiality 
     protections provided for in subsection (a) or (b) with 
     respect to data other than the specific data used or 
     disclosed as provided for in subsection (c).
       ``(f) Limitation on Actions.--
       ``(1) Patient safety organizations.--Except to enforce 
     disclosures pursuant to subsection (c)(1), no action may be 
     brought or process served against a patient safety 
     organization to compel disclosure of information collected or 
     developed under this part whether or not such information is 
     patient safety data unless such information is specifically 
     identified, is not patient safety data, and cannot otherwise 
     be obtained.
       ``(2) Providers.--An accrediting body shall not take an 
     accrediting action against a provider based on the good faith 
     participation of the provider in the collection, development, 
     reporting, or maintenance of patient safety data in 
     accordance with this part. An accrediting body may not 
     require a provider to reveal its communications with any 
     patient safety organization established in accordance with 
     this part.
       ``(g) Reporter Protection.--
       ``(1) In general.--A provider may not take an adverse 
     employment action, as described in paragraph (2), against an 
     individual based upon the fact that the individual in good 
     faith reported information--
       ``(A) to the provider with the intention of having the 
     information reported to a patient safety organization; or
       ``(B) directly to a patient safety organization.
       ``(2) Adverse employment action.--For purposes of this 
     subsection, an `adverse employment action' includes--
       ``(A) loss of employment, the failure to promote an 
     individual, or the failure to provide any other employment-
     related benefit for which the individual would otherwise be 
     eligible; or
       ``(B) an adverse evaluation or decision made in relation to 
     accreditation, certification, credentialing, or licensing of 
     the individual.
       ``(h) Enforcement.--
       ``(1) Prohibition.--Except as provided in subsections (c) 
     and (d) and as otherwise provided for in this section, it 
     shall be unlawful for any person to negligently or 
     intentionally disclose any patient safety data, and any such 
     person shall, upon adjudication, be assessed in accordance 
     with section 934(d).
       ``(2) Relation to hipaa.--The penalty provided for under 
     paragraph (1) shall not apply if the defendant would 
     otherwise be subject to a penalty under the regulations 
     promulgated under section 264(c) of the Health Insurance 
     Portability and Accountability Act of 1996 (42 U.S.C. 1320d-2 
     note) or under section 1176 of the Social Security Act (42 
     U.S.C. 1320d-5) for the same disclosure.
       ``(3) Equitable relief.--
       ``(A) In general.--Without limiting remedies available to 
     other parties, a civil action may be brought by any aggrieved 
     individual to enjoin any act or practice that violates 
     subsection (g) and to obtain other appropriate equitable 
     relief (including reinstatement, back pay, and restoration of 
     benefits) to redress such violation.

[[Page 17436]]

       ``(B) Against state employees.--An entity that is a State 
     or an agency of a State government may not assert the 
     privilege described in subsection (a) unless before the time 
     of the assertion, the entity or, in the case of and with 
     respect to an agency, the State has consented to be subject 
     to an action as described by this paragraph, and that consent 
     has remained in effect.
       ``(i) Rule of Construction.--Nothing in this section shall 
     be construed to--
       ``(1) limit other privileges that are available under 
     Federal, State, or local laws that provide greater 
     confidentiality protections or privileges than the privilege 
     and confidentiality protections provided for in this section;
       ``(2) limit, alter, or affect the requirements of Federal, 
     State, or local law pertaining to information that is not 
     privileged or confidential under this section;
       ``(3) alter or affect the implementation of any provision 
     of section 264(c) of the Health Insurance Portability and 
     Accountability Act of 1996 (Public Law 104-191; 110 Stat. 
     2033), section 1176 of the Social Security Act (42 U.S.C. 
     1320d-5), or any regulation promulgated under such sections;
       ``(4) limit the authority of any provider, patient safety 
     organization, or other person to enter into a contract 
     requiring greater confidentiality or delegating authority to 
     make a disclosure or use in accordance with subsection (c) or 
     (d); and
       ``(5) prohibit a provider from reporting a crime to law 
     enforcement authorities, regardless of whether knowledge of 
     the existence of, or the description of, the crime is based 
     on patient safety data, so long as the provider does not 
     disclose patient safety data in making such report.

     ``SEC. 923. PATIENT SAFETY NETWORK OF DATABASES.

       ``(a) In General.--The Secretary shall maintain a patient 
     safety network of databases that provides an interactive 
     evidence-based management resource for providers, patient 
     safety organizations, and other persons. The network of 
     databases shall have the capacity to accept, aggregate, and 
     analyze nonidentifiable patient safety data voluntarily 
     reported by patient safety organizations, providers, or other 
     persons.
       ``(b) Network of Database Standards.--The Secretary may 
     determine common formats for the reporting to the patient 
     safety network of databases maintained under subsection (a) 
     of nonidentifiable patient safety data, including necessary 
     data elements, common and consistent definitions, and a 
     standardized computer interface for the processing of such 
     data. To the extent practicable, such standards shall be 
     consistent with the administrative simplification provisions 
     of Part C of title XI of the Social Security Act.

     ``SEC. 924. PATIENT SAFETY ORGANIZATION CERTIFICATION AND 
                   LISTING.

       ``(a) Certification.--
       ``(1) Initial certification.--Except as provided in 
     paragraph (2), an entity that seeks to be a patient safety 
     organization shall submit an initial certification to the 
     Secretary that the entity intends to perform the patient 
     safety organization activities.
       ``(2) Delayed certification of collection from more than 
     one provider.--An entity that seeks to be a patient safety 
     organization may--
       ``(A) submit an initial certification that it intends to 
     perform patient safety organization activities other than the 
     activities described in subparagraph (B) of section 921(4); 
     and
       ``(B) within 2 years of submitting the initial 
     certification under subparagraph (A), submit a supplemental 
     certification that it performs the patient safety 
     organization activities described in subparagraphs (A) 
     through (F) of section 921(4).
       ``(3) Expiration and renewal.--
       ``(A) Expiration.--An initial certification under paragraph 
     (1) or (2)(A) shall expire on the date that is 3 years after 
     it is submitted.
       ``(B) Renewal.--
       ``(i) In general.--An entity that seeks to remain a patient 
     safety organization after the expiration of an initial 
     certification under paragraph (1) or (2)(A) shall, within the 
     3-year period described in subparagraph (A), submit a renewal 
     certification to the Secretary that the entity performs the 
     patient safety organization activities described in section 
     921(4).
       ``(ii) Term of renewal.--A renewal certification under 
     clause (i) shall expire on the date that is 3 years after the 
     date on which it is submitted, and may be renewed in the same 
     manner as an initial certification.
       ``(b) Acceptance of Certification.--Upon the submission by 
     an organization of an initial certification pursuant to 
     subsection (a)(1) or (a)(2)(A), a supplemental certification 
     pursuant to subsection (a)(2)(B), or a renewal certification 
     pursuant to subsection (a)(3)(B), the Secretary shall review 
     such certification and--
       ``(1) if such certification meets the requirements of 
     subsection (a)(1), (a)(2)(A), (a)(2)(B), or (a)(3)(B), as 
     applicable, the Secretary shall notify the organization that 
     such certification is accepted; or
       ``(2) if such certification does not meet such 
     requirements, as applicable, the Secretary shall notify the 
     organization that such certification is not accepted and the 
     reasons therefor.
       ``(c) Listing.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the Secretary shall compile and maintain a 
     current listing of patient safety organizations with respect 
     to which the Secretary has accepted a certification pursuant 
     to subsection (b).
       ``(2) Removal from listing.--The Secretary shall remove 
     from the listing under paragraph (1)--
       ``(A) an entity with respect to which the Secretary has 
     accepted an initial certification pursuant to subsection 
     (a)(2)(A) and which does not submit a supplemental 
     certification pursuant to subsection (a)(2)(B) that is 
     accepted by the Secretary;
       ``(B) an entity whose certification expires and which does 
     not submit a renewal application that is accepted by the 
     Secretary; and
       ``(C) an entity with respect to which the Secretary revokes 
     the Secretary's acceptance of the entity's certification, 
     pursuant to subsection (d).
       ``(d) Revocation of Acceptance.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     the Secretary determines (through a review of patient safety 
     organization activities) that a patient safety organization 
     does not perform one of the patient safety organization 
     activities described in subparagraph (A) through (F) of 
     section 921(4), the Secretary may, after notice and an 
     opportunity for a hearing, revoke the Secretary's acceptance 
     of the certification of such organization.
       ``(2) Delayed certification of collection from more than 
     one provider.--A revocation under paragraph (1) may not be 
     based on a determination that the organization does not 
     perform the activity described in section 921(4)(B) if--
       ``(A) the listing of the organization is based on its 
     submittal of an initial certification under subsection 
     (a)(2)(A);
       ``(B) the organization has not submitted a supplemental 
     certification under subsection (a)(2)(B); and
       ``(C) the 2-year period described in subsection (a)(2)(B) 
     has not expired.
       ``(e) Notification of Revocation or Removal From Listing.--
       ``(1) Supplying confirmation of notification to 
     providers.--Within 15 days of a revocation under subsection 
     (d)(1), a patient safety organization shall submit to the 
     Secretary a confirmation that the organization has taken all 
     reasonable actions to notify each provider whose patient 
     safety data is collected or analyzed by the organization of 
     such revocation.
       ``(2) Publication.--Upon the revocation of an acceptance of 
     an organization's certification under subsection (d)(1), or 
     upon the removal of an organization from the listing under 
     subsection (c)(2), the Secretary shall publish notice of the 
     revocation or removal in the Federal Register.
       ``(f) Status of Data After Removal From Listing.--
       ``(1) New data.--With respect to the privilege and 
     confidentiality protections described in section 922, data 
     submitted to an organization within 30 days after the 
     organization is removed from the listing under subsection 
     (c)(2) shall have the same status as data submitted while the 
     organization was still listed.
       ``(2) Protection to continue to apply.--If the privilege 
     and confidentiality protections described in section 922 
     applied to data while an organization was listed, or during 
     the 30-day period described in paragraph (1), such 
     protections shall continue to apply to such data after the 
     organization is removed from the listing under subsection 
     (c)(2).
       ``(g) Disposition of Data.--If the Secretary removes an 
     organization from the listing as provided for in subsection 
     (c)(2), with respect to the patient safety data that the 
     organization received from providers, the organization 
     shall--
       ``(1) with the approval of the provider and another patient 
     safety organization, transfer such data to such other 
     organization;
       ``(2) return such data to the person that submitted the 
     data; or
       ``(3) if returning such data to such person is not 
     practicable, destroy such data.

     ``SEC. 925. TECHNICAL ASSISTANCE.

       ``The Secretary, acting through the Director, may provide 
     technical assistance to patient safety organizations, 
     including convening annual meetings for patient safety 
     organizations to discuss methodology, communication, data 
     collection, or privacy concerns.

     ``SEC. 926. PROMOTING THE INTEROPERABILITY OF HEALTH CARE 
                   INFORMATION TECHNOLOGY SYSTEMS.

       ``(a) Development.--Not later than 36 months after the date 
     of enactment of the Patient Safety and Quality Improvement 
     Act of 2005, the Secretary shall develop or adopt voluntary 
     standards that promote the electronic exchange of health care 
     information.
       ``(b) Updates.--The Secretary shall provide for the ongoing 
     review and periodic updating of the standards developed under 
     subsection (a).
       ``(c) Dissemination.--The Secretary shall provide for the 
     dissemination of the standards developed and updated under 
     this section.

[[Page 17437]]



     ``SEC. 927. AUTHORIZATION OF APPROPRIATIONS.

       ``There is authorized to be appropriated such sums as may 
     be necessary to carry out this part.''.

     SEC. 144. STUDIES AND REPORTS.

       (a) In General.--The Secretary of Health and Human Services 
     shall enter into a contract (based upon a competitive 
     contracting process) with an appropriate research 
     organization for the conduct of a study to assess the impact 
     of medical technologies and therapies on patient safety, 
     patient benefit, health care quality, and the costs of care 
     as well as productivity growth. Such study shall examine--
       (1) the extent to which factors, such as the use of labor 
     and technological advances, have contributed to increases in 
     the share of the gross domestic product that is devoted to 
     health care and the impact of medical technologies and 
     therapies on such increases;
       (2) the extent to which early and appropriate introduction 
     and integration of innovative medical technologies and 
     therapies may affect the overall productivity and quality of 
     the health care delivery systems of the United States; and
       (3) the relationship of such medical technologies and 
     therapies to patient safety, patient benefit, health care 
     quality, and cost of care.
       (b) Report.--Not later than 18 months after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall prepare and submit to the appropriate 
     committees of Congress a report containing the results of the 
     study conducted under subsection (a).

                      Subtitle D--Fraud and Abuse

     SEC. 151. NATIONAL EXPANSION OF THE MEDICARE-MEDICAID DATA 
                   MATCH PILOT PROGRAM.

       (a) Requirement of the Medicare Integrity Program.--Section 
     1893 of the Social Security Act (42 U.S.C. 1395ddd) is 
     amended--
       (1) in subsection (b), by adding at the end the following:
       ``(6) The Medicare-Medicaid data match program in 
     accordance with subsection (g).''; and
       (2) by adding at the end the following:
       ``(g) Medicare-Medicaid Data Match Program.--
       ``(1) Expansion of program.--
       ``(A) In general.--The Secretary shall enter into contracts 
     with eligible entities for the purpose of ensuring that, 
     beginning with 2006, the Medicare-Medicaid data match program 
     (commonly referred to as the `Medi-Medi Program') is 
     conducted with respect to the program established under this 
     title and the applicable number of State Medicaid programs 
     under title XIX for the purpose of--
       ``(i) identifying vulnerabilities in both such programs;
       ``(ii) assisting States, as appropriate, to take action to 
     protect the Federal share of expenditures under the Medicaid 
     program; and
       ``(iii) increasing the effectiveness and efficiency of both 
     such programs through cost avoidance, savings, and 
     recoupments of fraudulent, wasteful, or abusive expenditures.
       ``(B) Applicable number.--For purposes of subparagraph (A), 
     the term `applicable number' means--
       ``(i) in the case of fiscal year 2006, 10 State Medicaid 
     programs;
       ``(ii) in the case of fiscal year 2007, 12 State Medicaid 
     programs; and
       ``(iii) in the case of fiscal year 2008, 15 State Medicaid 
     programs.
       ``(2) Limited waiver authority.--The Secretary shall waive 
     only such requirements of this section and of titles XI and 
     XIX as are necessary to carry out paragraph (1).''.
       (b) Funding.--Section 1817(k)(4) of the Social Security Act 
     (42 U.S.C. 1395i(k)(4)) is amended--
       (1) in subparagraph (A), by striking ``subparagraph (B)'' 
     and inserting ``subparagraphs (B) and (C)''; and
       (2) by adding at the end the following:
       ``(C) Expansion of the medicare-medicaid data match 
     program.--Of the amount appropriated under subparagraph (A) 
     for a fiscal year, the following amounts shall be used to 
     carry out section 1893(b)(6) for that year:
       ``(i) $10,000,000 of the amount appropriated for fiscal 
     year 2006.
       ``(ii) $12,200,000 of the amount appropriated for fiscal 
     year 2007.
       ``(iii) $15,800,000 of the amount appropriated for fiscal 
     year 2008.''.

                  Subtitle E--Miscellaneous Provisions

     SEC. 161. SENSE OF THE SENATE ON ESTABLISHING A MANDATED 
                   BENEFITS COMMISSION.

       It is the Sense of the Senate that--
       (1) there should be established an independent Federal 
     entity to study and provide advice to Congress on existing 
     and proposed federally mandated health insurance benefits 
     offered by employer-sponsored health plans and insurance 
     issuers; and
       (2) advice provided under paragraph (1) should be evidence- 
     and actuarially-based, and take into consideration the 
     population costs and benefits, including the health, 
     financial, and social impact on affected populations, safety 
     and medical efficacy, the impact on costs and access to 
     insurance generally, and to different types of insurance 
     products, the impact on labor costs and jobs, and any other 
     relevant factors.

     SEC. 162. ENFORCEMENT OF REIMBURSEMENT PROVISIONS BY 
                   FIDUCIARIES.

       Section 502(a)(3) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1132(a)(3)) is amended by 
     inserting before the semicolon the following: ``(which may 
     include the recovery of amounts on behalf of the plan by a 
     fiduciary enforcing the terms of the plan that provide a 
     right of recovery by reimbursement or subrogation with 
     respect to benefits provided to a participant or 
     beneficiary)''.

 TITLE II--EXPANDING ACCESS TO AFFORDABLE HEALTH COVERAGE THROUGH TAX 
                    INCENTIVES AND OTHER INITIATIVES

             Subtitle A--Refundable Health Insurance Credit

     SEC. 201. REFUNDABLE HEALTH INSURANCE COSTS CREDIT.

       (a) Allowance of Credit.--
       (1) In general.--Subpart C of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     refundable personal credits) is amended by redesignating 
     section 36 as section 37 and by inserting after section 35 
     the following new section:

     ``SEC. 36. HEALTH INSURANCE COSTS FOR UNINSURED INDIVIDUALS.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this subtitle for the taxable year an amount equal to the 
     amount paid by the taxpayer during such taxable year for 
     qualified health insurance for the taxpayer and the 
     taxpayer's spouse and dependents.
       ``(b) Limitations.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the amount allowed as a credit under subsection (a) to 
     the taxpayer for the taxable year shall not exceed the lesser 
     of--
       ``(A) 90 percent of the sum of the amounts paid by the 
     taxpayer for qualified health insurance for each individual 
     referred to in subsection (a) for coverage months of the 
     individual during the taxable year, or
       ``(B) $3,000.
       ``(2) Monthly limitation.--
       ``(A) In general.--For purposes of paragraph (1), amounts 
     paid by the taxpayer for qualified health insurance for an 
     individual for any coverage month of such individual during 
     the taxable year shall not be taken into account to the 
     extent such amounts exceed the amount equal to \1/12\ of--
       ``(i) $1,111 if such individual is the taxpayer,
       ``(ii) $1,111 if--

       ``(I) such individual is the spouse of the taxpayer,
       ``(II) the taxpayer and such spouse are married as of the 
     first day of such month, and
       ``(III) the taxpayer files a joint return for the taxable 
     year,

       ``(iii) $1,111 if such individual has attained the age of 
     24 as of the close of the taxable year and is a dependent of 
     the taxpayer for such taxable year, and
       ``(iv) one-half of the amount described in clause (i) if 
     such individual has not attained the age of 24 as of the 
     close of the taxable year and is a dependent of the taxpayer 
     for such taxable year.
       ``(B) Limitation to 2 young dependents.--If there are more 
     than 2 individuals described in subparagraph (A)(iv) with 
     respect to the taxpayer for any coverage month, the aggregate 
     amounts paid by the taxpayer for qualified health insurance 
     for such individuals which may be taken into account under 
     paragraph (1) shall not exceed 1/12 of the dollar amount in 
     effect under subparagraph (A)(i) for the coverage month.
       ``(C) Special rule for married individuals.--In the case of 
     a taxpayer--
       ``(i) who is married (within the meaning of section 7703) 
     as of the close of the taxable year but does not file a joint 
     return for such year, and
       ``(ii) who does not live apart from such taxpayer's spouse 
     at all times during the taxable year,

     any dollar limitation imposed under this paragraph on amounts 
     paid for qualified health insurance for individuals described 
     in subparagraph (A)(iv) shall be divided equally between the 
     taxpayer and the taxpayer's spouse unless they agree on a 
     different division.
       ``(3) Income phaseout of credit percentage for one-person 
     coverage.--
       ``(A) Phaseout for unmarried individuals (other than 
     surviving spouses and heads of households).--In the case of 
     an individual (other than a surviving spouse, the head of a 
     household, or a married individual) with one-person coverage, 
     if such individual has modified adjusted gross income--
       ``(i) in excess of $15,000 for a taxable year but not in 
     excess of $20,000, the 90 percent under paragraph (1)(B) 
     shall be reduced by the number of percentage points which 
     bears the same ratio to 40 percentage points as--

       ``(I) the excess of modified adjusted gross income in 
     excess of $15,000, bears to
       ``(II) $5,000, or

       ``(ii) in excess of $20,000 for a taxable year, the 90 
     percent under paragraph (1)(B) shall be reduced by the sum of 
     40 percentage points plus the number of percentage points 
     which bears the same ratio to 50 percentage points as--

[[Page 17438]]

       ``(I) the excess of modified adjusted gross income in 
     excess of $20,000, bears to
       ``(II) $10,000.

       ``(B) Phaseout for other individuals.--In the case of a 
     taxpayer (other than an individual described in subparagraph 
     (A) or (C)) with one-person coverage, if the taxpayer has 
     modified adjusted gross income in excess of $25,000 for a 
     taxable year, the 90 percent under paragraph (1)(B) shall be 
     reduced by the number of percentage points which bears the 
     same ratio to 90 percentage points as--
       ``(i) the excess of modified adjusted gross income in 
     excess of $25,000, bears to
       ``(ii) $15,000.
       ``(C) Married filing separate return.--In the case of a 
     taxpayer who is married filing a separate return for the 
     taxable year and who has one-person coverage, if the taxpayer 
     has modified adjusted gross income in excess of $12,500 for 
     the taxable year, the 90 percent under paragraph (1)(B) shall 
     be reduced by the number of percentage points which bears the 
     same ratio to 90 percentage points as--
       ``(i) the excess of modified adjusted gross income in 
     excess of $12,500, bears to
       ``(ii) $7,500.
       ``(4) Income phaseout of credit percentage for coverage of 
     more than one person.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     in the case of a taxpayer with coverage of more than one 
     person, if the taxpayer has modified adjusted gross income in 
     excess of $25,000 for a taxable year, the 90 percent under 
     paragraph (1)(B) shall be reduced by the number of percentage 
     points which bears the same ratio to 90 percentage points 
     as--
       ``(i) the excess of modified adjusted gross income in 
     excess of $25,000, bears to
       ``(ii) $35,000.
       ``(B) Married filing separate return.--In the case of a 
     taxpayer who is married filing a separate return for the 
     taxable year and who has coverage of more than one person, if 
     the taxpayer has modified adjusted gross income in excess of 
     $12,500 for the taxable year, the 90 percent under paragraph 
     (1)(B) shall be reduced by the number of percentage points 
     which bears the same ratio to 90 percentage points as--
       ``(i) the excess of modified adjusted gross income in 
     excess of $12,500, bears to
       ``(ii) $17,500.
       ``(5) Rounding.--Any percentage resulting from a reduction 
     under paragraphs (3) and (4) shall be rounded to the nearest 
     one-tenth of a percent.
       ``(6) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income 
     determined--
       ``(A) without regard to this section and sections 911, 931, 
     and 933, and
       ``(B) after application of sections 86, 135, 137, 219, 221, 
     and 469.
       ``(c) Coverage Month.--For purposes of this section--
       ``(1) In general.--The term `coverage month' means, with 
     respect to an individual, any month if--
       ``(A) as of the first day of such month such individual is 
     covered by qualified health insurance, and
       ``(B) the premium for coverage under such insurance for 
     such month is paid by the taxpayer.
       ``(2) Group health plan coverage.--
       ``(A) In general.--The term `coverage month' shall not 
     include any month for which if, as of the first day of the 
     month, the individual participates in any group health plan 
     (within the meaning of section 5000 without regard to section 
     5000(d)).
       ``(B) Exception for certain permitted coverage.--
     Subparagraph (A) shall not apply to an individual if the 
     individual's only coverage for a month is coverage described 
     in clause (i) or (ii) of section 223(c)(1)(B).
       ``(3) Employer-provided coverage.--The term `coverage 
     month' shall not include any month during a taxable year if 
     any amount is not includible in the gross income of the 
     taxpayer for such year under section 106 (other than coverage 
     described in clause (i) or (ii) of section 223(c)(1)(B)).
       ``(4) Medicare, medicaid, and schip.--The term `coverage 
     month' shall not include any month with respect to an 
     individual if, as of the first day of such month, such 
     individual--
       ``(A) is entitled to any benefits under part A of title 
     XVIII of the Social Security Act or is enrolled under part B 
     of such title, or
       ``(B) is enrolled in the program under title XIX or XXI of 
     such Act (other than under section 1928 of such Act).
       ``(5) Certain other coverage.--The term `coverage month' 
     shall not include any month during a taxable year with 
     respect to an individual if, as of the first day of such 
     month at any time during such month, such individual is 
     enrolled in a program under--
       ``(A) chapter 89 of title 5, United States Code, or
       ``(B) chapter 55 of title 10, United States Code.
       ``(6) Prisoners.--The term `coverage month' shall not 
     include any month with respect to an individual if, as of the 
     first day of such month, such individual is imprisoned under 
     Federal, State, or local authority.
       ``(7) Insufficient presence in united states.--The term 
     `coverage month' shall not include any month during a taxable 
     year with respect to an individual if such individual is 
     present in the United States on fewer than 183 days during 
     such year (determined in accordance with section 7701(b)(7)).
       ``(d) Qualified Health Insurance.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified health insurance' 
     means health insurance coverage (as defined in section 
     9832(b)(1)) which--
       ``(A) is coverage described in paragraph (2), and
       ``(B) meets the requirements of paragraph (3).
       ``(2) Eligible coverage.--Coverage described in this 
     paragraph is the following:
       ``(A) Coverage under individual health insurance.
       ``(B) Coverage through a private sector health care 
     coverage purchasing pool.
       ``(C) Coverage through a State care coverage purchasing 
     pool.
       ``(D) Coverage under a State high-risk pool described in 
     subparagraph (C) of section 35(e)(1).
       ``(E) Coverage after December 31, 2006, under an eligible 
     State buy in program.
       ``(3) Requirements.--The requirements of this paragraph are 
     as follows:
       ``(A) Cost limits.--The coverage meets the requirements of 
     section 223(c)(2)(A)(ii).
       ``(B) Maximum benefits.--Under the coverage, the annual and 
     lifetime maximum benefits are not less than $700,000.
       ``(C) Broad coverage.--The coverage includes inpatient and 
     outpatient care, emergency benefits, and physician care.
       ``(D) Guaranteed renewability.--Such coverage is guaranteed 
     renewable by the provider.
       ``(4) Eligible state buy in program.--For purposes of 
     paragraph (2)(E)--
       ``(A) In general.--The term `eligible State buy in program' 
     means a State program under which an individual who--
       ``(i) is not eligible for assistance under the State 
     medicaid program under title XIX of the Social Security Act,
       ``(ii) is not eligible for assistance under the State 
     children's health insurance program under title XXI of such 
     Act, or
       ``(iii) is not a State employee,

     is able to buy health insurance coverage through a purchasing 
     arrangement entered into between the State and a private 
     sector health care purchasing group or health plan.
       ``(B) Requirements.--Subparagraph (A) shall only apply to a 
     State program if--
       ``(i) the program uses private sector health care 
     purchasing groups or health plans, and
       ``(ii) the State maintains separate risk pools for 
     participants under the State buy in program and other 
     participants.
       ``(C) Subsidies.--
       ``(i) In general.--A State program shall not fail to be 
     treated as an eligible State buy in program merely because 
     the State subsidizes the costs of an individual in buying 
     health insurance coverage under the program.
       ``(ii) Exception.--Clause (i) shall not apply if the State 
     subsidy under the program for any adult for any consecutive 
     12-month period exceeds the applicable dollar amount.
       ``(iii) Applicable dollar amount.--

       ``(I) In general.--For purposes of clause (ii), the 
     applicable dollar amount is $2,000.
       ``(II) Reduction.--In the case of a family with annual 
     income in excess of 133 percent of the applicable poverty 
     line (as determined in accordance with criteria established 
     by the Director of the Office of Management and Budget) but 
     not in excess of 200 percent of such line, the dollar amount 
     under clause (i) shall be ratably reduced (but not below 
     zero) for each dollar of such excess. In the case of a family 
     with annual income in excess of 200 percent of such line, the 
     applicable dollar amount shall be zero.

       ``(e) Arrangements Under Which Insurers Contribute to 
     HSA.--
       ``(1) In general.--For purposes of this section, health 
     insurance shall not be treated as qualified health insurance 
     if the insurer makes contributions to a health savings 
     account of the taxpayer unless such insurance is provided 
     under an arrangement described in paragraph (2).
       ``(2) Arrangements described.--
       ``(A) Amounts paid for coverage exceed monthly 
     limitation.--In the case of amounts paid under an arrangement 
     for health insurance for a coverage month in excess of the 
     amount in effect under subsection (b)(2)(A) for such month, 
     an arrangement is described in this subparagraph if under the 
     arrangement--
       ``(i) the aggregate amount contributed by the insurer to 
     any health savings account of the taxpayer does not exceed 90 
     percent of the excess of--

       ``(I) the amount paid by the taxpayer for qualified health 
     insurance under such arrangement for such month, over
       ``(II) the amount in effect under subsection (b)(2)(A) for 
     such month, and

       ``(ii) the amount contributed by the insurer to a qualified 
     health savings account of the taxpayer, reduced by the amount 
     of the excess under clause (i), does not exceed 27 percent of 
     the amount in effect under subsection (b)(2)(A) for such 
     month.
       ``(B) Amounts paid for coverage less than monthly 
     limitation.--In the case of an arrangement under which the 
     amount paid for qualified health insurance for a coverage

[[Page 17439]]

     month does not exceed the amount in effect under subsection 
     (b)(2)(A) for such month, an arrangement is described in this 
     subparagraph if--
       ``(i) under the arrangement the value of the insured 
     benefits (excluding overhead) exceeds 65 percent of the 
     amount paid for qualified health insurance for such month, 
     and
       ``(ii) the amount contributed by the insurer to a qualified 
     health savings account of the taxpayer does not exceed 27 
     percent of the amount in effect under subsection (b)(2)(A) 
     for such month.
       ``(3) Qualified health savings account.--
       ``(A) In general.--The term `qualified health savings 
     account' means a health savings account (as defined in 
     section 223(d))--
       ``(i) which is designated (in such form as the Secretary 
     may prescribe) as a qualified account for purposes of this 
     section,
       ``(ii) which may not include any amount other than 
     contributions described in this subsection and earnings on 
     such contributions, and
       ``(iii) with respect to which section 223(f)(4)(A) is 
     applied by substituting `100 percent' for `10 percent'.
       ``(B) Subaccounts and separate accounting.--The Secretary 
     may prescribe rules under which a subaccount within a health 
     savings account, or separate accounting with respect to 
     contributions and earnings described in subparagraph (A)(ii), 
     may be treated in the same manner as a qualified health 
     savings account.
       ``(C) Rollovers.--A contribution of a distribution from a 
     qualified health savings account to another health savings 
     account shall be treated as a rollover contribution for 
     purposes of section 223(f)(5) only if the other account is a 
     qualified health savings account.
       ``(f) Dependents.--For purposes of this section--
       ``(1) Dependent defined.--The term `dependent' has the 
     meaning given such term by section 152 (determined without 
     regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof).
       ``(2) Special rule for dependent child of divorced 
     parents.--An individual who is a child to whom section 152(e) 
     applies shall be treated as a dependent of the custodial 
     parent for a coverage month unless the custodial and 
     noncustodial parent provide otherwise.
       ``(3) Denial of credit to dependents.--No credit shall be 
     allowed under this section to any individual with respect to 
     whom a deduction under section 151(c) is allowable to another 
     taxpayer for a taxable year beginning in the calendar year in 
     which such individual's taxable year begins.
       ``(g) Inflation Adjustments.--
       ``(1) Credit and health insurance amounts.--In the case of 
     any taxable year beginning after 2006, each dollar amount 
     referred to in subsections (b)(1)(B), (b)(2)(A), (d)(3)(B), 
     and (d)(4)(C)(iii)(I) shall be increased by an amount equal 
     to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 213(d)(10)(B)(ii) for the calendar year in which the 
     taxable year begins, determined by substituting `2005' for 
     `1996' in subclause (II) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $10, such amount shall be rounded to the 
     nearest multiple of $10.
       ``(2) Income phaseout amounts.--In the case of any taxable 
     year beginning after 2006, each dollar amount referred to in 
     paragraph (3) and (4) of subsection (b) shall be increased by 
     an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2005' 
     for `calendar year 1992' in subparagraph (B) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $50, such amount shall be rounded to the next 
     lowest multiple of $50.
       ``(h) Archer MSA Contributions; HSA Contributions.--If a 
     deduction would be allowed under section 220 to the taxpayer 
     for a payment for the taxable year to the Archer MSA of an 
     individual or under section 223 to the taxpayer for a payment 
     for the taxable year to the Health Savings Account of such 
     individual, subsection (a) shall not apply to the taxpayer 
     for any month during such taxable year for which the 
     taxpayer, spouse, or dependent is an eligible individual for 
     purposes of either such section.
       ``(i) Other Rules.--For purposes of this section--
       ``(1) Coordination with medical expense and premium 
     deductions for high deductible health plans.--The amount 
     which would (but for this paragraph) be taken into account by 
     the taxpayer under section 213 or 224 for the taxable year 
     shall be reduced by the credit (if any) allowed by this 
     section to the taxpayer for such year.
       ``(2) Coordination with deduction for health insurance 
     costs of self-employed individuals.--No credit shall be 
     allowable under this section for a taxable year if a 
     deduction is allowed under section 162(l) for the taxable 
     year.
       ``(3) Coordination with advance payment.--Rules similar to 
     the rules of section 35(g)(1) shall apply to any credit to 
     which this section applies.
       ``(4) Coordination with section 35.--If a taxpayer is 
     eligible for the credit allowed under this section and 
     section 35 for any taxable year, the taxpayer shall elect 
     which credit is to be allowed.
       ``(j) Expenses Must Be Substantiated.--A payment for 
     insurance to which subsection (a) applies may be taken into 
     account under this section only if the taxpayer substantiates 
     such payment in such form as the Secretary may prescribe.
       ``(k) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''.
       (b) Information Reporting.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 of the Internal Revenue Code of 1986 (relating to 
     information concerning transactions with other persons) is 
     amended by inserting after section 6050T the following:

     ``SEC. 6050U. RETURNS RELATING TO PAYMENTS FOR QUALIFIED 
                   HEALTH INSURANCE.

       ``(a) In General.--Any person who, in connection with a 
     trade or business conducted by such person, receives payments 
     during any calendar year from any individual for coverage of 
     such individual or any other individual under creditable 
     health insurance, shall make the return described in 
     subsection (b) (at such time as the Secretary may by 
     regulations prescribe) with respect to each individual from 
     whom such payments were received.
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe, and
       ``(2) contains--
       ``(A) the name, address, and TIN of the individual from 
     whom payments described in subsection (a) were received,
       ``(B) the name, address, and TIN of each individual who was 
     provided by such person with coverage under creditable health 
     insurance by reason of such payments and the period of such 
     coverage,
       ``(C) the aggregate amount of payments described in 
     subsection (a), and
       ``(D) such other information as the Secretary may 
     reasonably prescribe.
       ``(c) Creditable Health Insurance.--For purposes of this 
     section, the term `creditable health insurance' means 
     qualified health insurance (as defined in section 36(d)).
       ``(d) Statements To Be Furnished to Individuals With 
     Respect to Whom Information Is Required.--Every person 
     required to make a return under subsection (a) shall furnish 
     to each individual whose name is required under subsection 
     (b)(2)(A) to be set forth in such return a written statement 
     showing--
       ``(1) the name and address of the person required to make 
     such return and the phone number of the information contact 
     for such person,
       ``(2) the aggregate amount of payments described in 
     subsection (a) received by the person required to make such 
     return from the individual to whom the statement is required 
     to be furnished, and
       ``(3) the information required under subsection (b)(2)(B) 
     with respect to such payments.

     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the calendar year for which the return under 
     subsection (a) is required to be made.
       ``(e) Returns Which Would Be Required To Be Made by 2 or 
     More Persons.--Except to the extent provided in regulations 
     prescribed by the Secretary, in the case of any amount 
     received by any person on behalf of another person, only the 
     person first receiving such amount shall be required to make 
     the return under subsection (a).''.
       (2) Assessable penalties.--
       (A) Subparagraph (B) of section 6724(d)(1) of such Code 
     (relating to definitions) is amended by redesignating clauses 
     (xiii) through (xviii) as clauses (xiv) through (xix), 
     respectively, and by inserting after clause (xii) the 
     following:
       ``(xiii) section 6050U (relating to returns relating to 
     payments for qualified health insurance),''.
       (B) Paragraph (2) of section 6724(d) of such Code is 
     amended by striking ``or'' at the end of subparagraph (AA), 
     by striking the period at the end of the subparagraph (BB) 
     and inserting ``, or'', and by adding at the end the 
     following:
       ``(CC) section 6050U(d) (relating to returns relating to 
     payments for qualified health insurance).''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 of such Code is 
     amended by inserting after the item relating to section 6050T 
     the following:

``Sec. 6050U. Returns relating to payments for qualified health 
              insurance.''.

       (c) Criminal Penalty for Fraud.--Subchapter B of chapter 75 
     of the Internal Revenue Code of 1986 (relating to other 
     offenses) is amended by adding at the end the following:

[[Page 17440]]



     ``SEC. 7276. PENALTIES FOR OFFENSES RELATING TO HEALTH 
                   INSURANCE TAX CREDIT.

       ``Any person who knowingly misuses Department of the 
     Treasury names, symbols, titles, or initials to convey the 
     false impression of association with, or approval or 
     endorsement by, the Department of the Treasury of any 
     insurance products or group health coverage in connection 
     with the credit for health insurance costs under section 36 
     shall on conviction thereof be fined not more than $10,000, 
     or imprisoned not more than 1 year, or both.''.
       (d) Conforming Amendments.--
       (1) Section 162(l) of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following:
       ``(6) Election to have subsection apply.--No deduction 
     shall be allowed under paragraph (1) for a taxable year 
     unless the taxpayer elects to have this subsection apply for 
     such year.''.
       (2) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 36 of such Code''.
       (3) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of the Internal Revenue Code of 
     1986 is amended by striking ``35'' and inserting ``36'' and 
     by inserting after the item relating to section 35 the 
     following:

``Sec. 36. Health insurance costs for uninsured individuals.''.

       (4) The table of sections for subchapter B of chapter 75 of 
     such Code is amended by adding at the end the following:

``Sec. 7276. Penalties for offenses relating to health insurance tax 
              credit.''.

       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2005.
       (2) Penalties.--The amendments made by subsections (c) and 
     (d)(4) shall take effect on the date of the enactment of this 
     Act.

     SEC. 202. ADVANCE PAYMENT OF CREDIT TO ISSUERS OF QUALIFIED 
                   HEALTH INSURANCE.

       (a) In General.--Chapter 77 of the Internal Revenue Code of 
     1986 (relating to miscellaneous provisions) is amended by 
     adding at the end the following:

     ``SEC. 7529. ADVANCE PAYMENT OF CREDIT FOR HEALTH INSURANCE 
                   COSTS OF ELIGIBLE INDIVIDUALS.

       ``Not later than July 1, 2007, the Secretary shall 
     establish a program for making payments to providers of 
     qualified health insurance (as defined in section 36(d)) on 
     behalf of individuals eligible for the credit under section 
     36. Such payments shall be made on the basis of modified 
     adjusted gross income of eligible individuals for the 
     preceding taxable year.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     77 of the Internal Revenue Code of 1986 is amended by adding 
     at the end the following:

``Sec. 7529. Advance payment of health insurance credit for purchasers 
              of qualified health insurance.''.

  Subtitle B--High Deductible Health Plans and Health Savings Accounts

     SEC. 211. DEDUCTION OF PREMIUMS FOR HIGH DEDUCTIBLE HEALTH 
                   PLANS.

       (a) In General.--Part VII of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to additional 
     itemized deductions for individuals) is amended by 
     redesignating section 224 as section 225 and by inserting 
     after section 223 the following new section:

     ``SEC. 224. PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS.

       ``(a) Deduction Allowed.--In the case of an individual, 
     there shall be allowed as a deduction for the taxable year 
     the aggregate amount paid by or on behalf of such individual 
     as premiums under a high deductible health plan with respect 
     to months during such year for which such individual is an 
     eligible individual with respect to such health plan.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Eligible individual.--The term `eligible individual' 
     has the meaning given such term by section 223(c)(1).
       ``(2) High deductible health plan.--The term `high 
     deductible health plan' has the meaning given such term by 
     section 223(c)(2).
       ``(c) Special Rules.--
       ``(1) Deduction allowable for only 1 plan.--For purposes of 
     this section, in the case of an individual covered by more 
     than 1 high deductible health plan for any month, the 
     individual may only take into account amounts paid for 1 of 
     such plans for such month.
       ``(2) Group health plan coverage.--
       ``(A) In general.--No deduction shall be allowed to an 
     individual under subsection (a) for any amount paid for 
     coverage under a high deductible health plan for a month if, 
     as of the first day of that month, that individual 
     participates in any coverage under a group health plan 
     (within the meaning of section 5000 without regard to section 
     5000(d)).
       ``(B) Exception for certain permitted coverage.--
     Subparagraph (A) shall not apply to an individual if the 
     individual's only coverage under a group health plan for a 
     month is coverage described in clause (i) or (ii) of section 
     223(c)(1)(B).
       ``(3) Medicare eligible individuals.--No deduction shall be 
     allowed under subsection (a) with respect to any individual 
     for any month if the individual is entitled to benefits under 
     title XVIII of the Social Security Act for the month.
       ``(4) Health savings account required.--A deduction shall 
     not be allowed under subsection (a) for a taxable year with 
     respect to an individual unless the individual is an account 
     beneficiary of a health savings account during a portion of 
     the taxable year.
       ``(5) Medical and health savings accounts.--Subsection (a) 
     shall not apply with respect to any amount which is paid or 
     distributed out of an Archer MSA or a health savings account 
     which is not included in gross income under section 220(f) or 
     223(f), as the case may be.
       ``(6) Coordination with deduction for health insurance of 
     self-employed individuals.--The amount taken into account by 
     the taxpayer in computing the deduction under section 162(l) 
     shall not be taken into account under this section.
       ``(7) Coordination with medical expense deduction.--The 
     amount taken into account by the taxpayer in computing the 
     deduction under this section shall not be taken into account 
     under section 213.''.
       (b) Deduction Allowed Whether or Not Individual Itemizes 
     Other Deductions.--Subsection (a) of section 62 of the 
     Internal Revenue Code of 1986 (defining adjusted gross 
     income) is amended by inserting before the last sentence at 
     the end the following new paragraph:
       ``(21) Premiums for high deductible health plans.--The 
     deduction allowed by section 224.''.
       (c) Coordination With Health Insurance Costs Credit.--
     Section 35(g)(2) of the Internal Revenue Code of 1986 is 
     amended by striking ``or 213'' and inserting ``,213, or 
     224''.
       (d) Clerical Amendment.--The table of sections for part VII 
     of subchapter B of chapter 1 of the Internal Revenue Code of 
     1986 is amended by redesignating section 224 as section 225 
     and by inserting before such item the following new item:

``Sec. 224. Premiums for high deductible health plans.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 212. REFUNDABLE CREDIT FOR CONTRIBUTIONS TO HEALTH 
                   SAVINGS ACCOUNTS OF SMALL BUSINESS EMPLOYEES.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986, as amended by 
     subtitle A, is amended by inserting after section 36 the 
     following new section:

     ``SEC. 36A. SMALL EMPLOYER CONTRIBUTIONS TO HEALTH SAVINGS 
                   ACCOUNTS.

       ``(a) General Rule.--In the case of an eligible employer, 
     there shall be allowed as a credit against the tax imposed by 
     this subtitle an amount equal to the lesser of--
       ``(1) the amount contributed by such employer to any 
     qualified health savings account of any employee who is an 
     eligible individual (as defined in section 223(c)(1)) during 
     the taxable year, or
       ``(2) an amount equal to the product of--
       ``(A) $200 ($500 if coverage for all months described in 
     subparagraph (B)(i) is family coverage), and
       ``(B) a fraction--
       ``(i) the numerator of which is the number of months that 
     the employee was covered under a high deductible health plan 
     maintained by the employer, and
       ``(ii) the denominator of which is the number of months in 
     the taxable year.
       ``(b) Eligible Employer.--For purposes of this section--
       ``(1) In general.--The term `eligible employer' means, with 
     respect to any taxable year, an employer which--
       ``(A) is a small employer, and
       ``(B) maintains a high deductible health plan under which 
     all employees of the employer reasonably expected to receive 
     at least $5,000 of compensation during the taxable year are 
     eligible to participate.

     An employer may exclude from consideration under subparagraph 
     (B) employees who are covered by an agreement described in 
     section 410(b)(3)(A) if there is evidence that health 
     benefits were the subject of good faith bargaining.
       ``(2) Exception for governmental and tax-exempt 
     employers.--The term `eligible employer' shall not include 
     the Federal Government or any employer described in section 
     457(e)(1).
       ``(3) Small employer.--
       ``(A) In general.--The term `small employer' means, with 
     respect to any calendar year, any employer if such employer 
     employed an average of 100 or fewer employees on business 
     days during either of the 2 preceding calendar years. For 
     purposes of the preceding sentence, a preceding calendar year 
     may be taken into account only if the employer was in 
     existence throughout such year.
       ``(B) Employers not in existence in preceding year.--In the 
     case of an employer which was not in existence throughout the 
     1st preceding calendar year, the determination under 
     subparagraph (A) shall be based

[[Page 17441]]

     on the average number of employees that it is reasonably 
     expected such employer will employ on business days in the 
     current calendar year.
       ``(C) Special rule.--Any reference in this paragraph to an 
     employer shall include a reference to any predecessor of such 
     employer.
       ``(c) Definitions.--For purposes of this section--
       ``(1) High deductible health plan.--The term `high 
     deductible health plan' has the meaning given such term by 
     section 223(c)(2).
       ``(2) Qualified health savings account.--
       ``(A) In general.--The term `qualified health savings 
     account' means a health savings account (as defined in 
     section 223(d))--
       ``(i) which is designated (in such form as the Secretary 
     may prescribe) as a qualified account for purposes of this 
     section,
       ``(ii) which may not include any amount other than 
     contributions described in subsection (a) and earnings on 
     such contributions, and
       ``(iii) with respect to which section 223(f)(4)(A) is 
     applied by substituting `100 percent' for `10 percent'.
       ``(B) Subaccounts and separate accounting.--The Secretary 
     may prescribe rules under which a subaccount within a health 
     savings account, or separate accounting with respect to 
     contributions and earnings described in subparagraph (A)(ii), 
     may be treated in the same manner as a qualified health 
     savings account.
       ``(C) Rollovers.--A contribution of a distribution from a 
     qualified health savings account to another health savings 
     account shall be treated as a rollover contribution for 
     purposes of section 223(f)(5) only if the other account is a 
     qualified health savings account.
       ``(d) Special Rules.--For purposes of this section--
       ``(1) Aggregation rules.--All persons treated as a single 
     employer under subsection (a) or (b) of section 52, or 
     subsection (n) or (o) of section 414, shall be treated as one 
     person.
       ``(2) Disallowance of deduction.--No deduction shall be 
     allowed for that portion of contributions to any health 
     savings accounts for the taxable year which is equal to the 
     credit determined under subsection (a).
       ``(3) Election not to claim credit.--This section shall not 
     apply to a taxpayer for any taxable year if such taxpayer 
     elects to have this section not apply for such taxable 
     year.''.
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 36A of such Code''.
       (2) The table of sections for subpart C of part IV of 
     chapter 1 of the Internal Revenue Code of 1986, as amended by 
     subtitle A, is amended by inserting after the item relating 
     to section 36 the following new item:

``Sec. 36A. Small employer contributions to health savings accounts.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2005.

       Subtitle C--Improvement of the Health Coverage Tax Credit

     SEC. 221. CHANGE IN STATE-BASED COVERAGE RULES RELATED TO 
                   PREEXISTING CONDITIONS.

       (a) In General.--Section 35(e)(2) of the Internal Revenue 
     Code of 1986 (relating to requirements for State-based 
     coverage) is amended by adding at the end the following:
       ``(C) Limitation on preexisting condition exclusion 
     period.--The term `qualified health insurance' does not 
     include any coverage described in subparagraphs (C) through 
     (H) of paragraph (1) that imposes a pre-existing condition 
     exclusion with respect to any individual unless--
       ``(i) such exclusion relates to a physical or mental 
     condition, regardless of the cause of the condition, for 
     which medical advice, diagnosis, care, or treatment was 
     recommended or received within the 6-month period ending on 
     the date the individual seeks to enroll in the coverage,
       ``(ii) such exclusion extends for a period of not more than 
     12 months after the individual seeks to enroll in the 
     coverage,
       ``(iii) the period of any such preexisting condition 
     exclusion is reduced by the length of the aggregate of the 
     periods of creditable coverage (as defined in section 
     9801(c)) applicable to the individual as of the enrollment 
     date, and
       ``(iv) such exclusion is not an exclusion described in 
     section 9801(d).''.
       (b) Conforming Amendments.--
       (1) Internal revenue code of 1986.--Subparagraph (A) of 
     section 35(e)(2) of such Code is amended--
       (A) by striking clause (ii); and
       (B) by redesignating clauses (iii) and (iv) as clauses (ii) 
     and (iii), respectively.
       (2) Workforce investment act of 1998 amendments.--Section 
     173(f)(2)(B) of the Workforce Investment Act of 1998 (29 
     U.S.C. 2918(f)(2)(B)) is amended--
       (A) in clause (i)--
       (i) by striking subclause (II); and
       (ii) by redesignating subclauses (III) and (IV) as 
     subclauses (II) and (III), respectively; and
       (B) by adding at the end the following:
       ``(iii) Limitation on preexisting condition exclusion 
     period.--The term `qualified health insurance' does not 
     include any coverage described in clauses (iii) through (ix) 
     of subparagraph (A) that imposes a pre-existing condition 
     exclusion with respect to any individual unless--

       ``(I) such exclusion relates to a physical or mental 
     condition, regardless of the cause of the condition, for 
     which medical advice, diagnosis, care, or treatment was 
     recommended or received within the 6-month period ending on 
     the date the individual seeks to enroll in the coverage;
       ``(II) such exclusion extends for a period of not more than 
     12 months after the individual seeks to enroll in the 
     coverage;
       ``(III) the period of any such preexisting condition 
     exclusion is reduced by the length of the aggregate of the 
     periods of creditable coverage (as defined in section 9801(c) 
     of the Internal Revenue Code of 1986) applicable to the 
     individual as of the enrollment date; and
       ``(IV) such exclusion is not an exclusion described in 
     section 9801(d) of such Code.''.

       (c) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2005.

     SEC. 222. ELIGIBILITY OF SPOUSE OF CERTAIN INDIVIDUALS 
                   ENTITLED TO MEDICARE.

       (a) In General.--Subsection (b) of section 35 of such Code 
     (defining eligible coverage month) is amended by adding at 
     the end the following:
       ``(3) Special rule for spouse of individual entitled to 
     medicare.--Any month which would be an eligible coverage 
     month with respect to a taxpayer (determined without regard 
     to subsection (f)(2)(A)) shall be an eligible coverage month 
     for any spouse of such taxpayer, provided the spouse has 
     attained age 55 and meets the requirements of clauses (ii), 
     (iii), and (iv) of paragraph (1)(A).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     applies to taxable years beginning after December 31, 2005.

     SEC. 223. ELIGIBLE PBGC PENSION RECIPIENT.

       (a) In General.--Subparagraph (B) of section 35(c)(4) of 
     such Code (relating to eligible PBGC pension recipients) is 
     amended by inserting before the period the following ``, or, 
     after August 6, 2002, received from such Corporation a one-
     time single-sum pension payment in lieu of an annuity''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the enactment of section 
     201 of the Trade Act of 2002 (Public Law 107-210, 116 Stat. 
     954).

     SEC. 224. APPLICATION OF OPTION TO OFFER STATE-BASED COVERAGE 
                   TO PUERTO RICO, NORTHERN MARIANA ISLANDS, 
                   AMERICAN SAMOA, GUAM, AND THE UNITED STATES 
                   VIRGIN ISLANDS.

       (a) In General.--Section 35(e) of such Code (relating to 
     requirements for qualified health insurance) is amended by 
     adding at the end the following:
       ``(4) Application to puerto rico, northern mariana islands, 
     american samoa, guam, and the united states virgin islands.--
     For purposes of this section, Puerto Rico, Northern Mariana 
     Islands, American Samoa, Guam, and the United States Virgin 
     Islands shall be considered States.''.
       (b) Conforming Amendment.--Section 173(f)(2) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)(2)) is 
     amended by adding at the end the following:
       ``(D) Application to northern mariana islands, american 
     samoa, guam, and the united states virgin islands.--For 
     purposes of subsection (a)(4)(A) and this subsection, the 
     term `State' shall include the Northern Mariana Islands, 
     American Samoa, Guam, and the United States Virgin 
     Islands.''.
       (c) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2005.

     SEC. 225. CLARIFICATION OF DISCLOSURE RULES.

       (a) In General.--Subsection (k) of section 6103 of such 
     Code (relating to disclosure of certain returns and return 
     information for tax administration purposes) is amended by 
     adding at the end the following:
       ``(10) Disclosure of certain return information for 
     purposes of carrying out a program for advance payment of 
     credit for health insurance costs of eligible individuals.--
     The Secretary may disclose to providers of health insurance, 
     administrators of health plans, or contractors of such 
     providers or administrators, for any certified individual (as 
     defined in section 7527(c)) the taxpayer identity and health 
     insurance member and group numbers of the certified 
     individual (and any qualifying family member as defined in 
     section 35(d), if applicable) and the amount and period of 
     the payment, to the extent the Secretary deems necessary for 
     the administration of the program established by section 7527 
     (relating to advance payment of credit for health insurance 
     costs of eligible individuals).''.
       (b) Conforming Amendments.--
       (1) Section 6103 of such Code (relating to confidentiality 
     and disclosure of returns and return information) is 
     amended--
       (A) in subsection (a)(3), by inserting ``(k)(10),'' after 
     ``(e)(1)(D)(iii),'';
       (B) in subsection (l), by striking paragraph (18); and

[[Page 17442]]

       (C) in subsection (p)--
       (i) in paragraph (3)(A)--

       (I) by striking ``or (9)'' and inserting ``(9), or (10)''; 
     and
       (II) by striking ``(17), or (18)'' and inserting ``or 
     (17)''; and

       (ii) in paragraph (4), by striking ``(18)'' after 
     ``(l)(16)'' each place it appears.
       (2) Section 7213(a)(2) of such Code (relating to 
     unauthorized disclosure of information) is amended by 
     inserting ``(k)(10)'' before ``(l)(6)''.
       (3) Section 7213A(a)(1)(B) of such Code (relating to 
     unauthorized inspection of returns or return information) is 
     amended by striking ``subsection (l)(18) or (n) of section 
     6103'' and inserting ``section 6103(n)''.
       (c) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2005.

     SEC. 226. CLARIFICATION THAT STATE-BASED COBRA CONTINUATION 
                   COVERAGE IS SUBJECT TO SAME RULES AS FEDERAL 
                   COBRA.

       (a) In General.--Section 35(e)(2) of such Code (relating to 
     state-based coverage requirements) is amended--
       (1) in subparagraph (A), in the matter preceding clause 
     (i), by striking ``(B)'' and inserting ``(C)''; and
       (2) in subparagraph(B)(i), by striking ``(B)'' and 
     inserting ``(C)''.
       (b) Conforming Amendments.--Section 173(f)(2)(B) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)(2)(B)) is 
     amended--
       (1) in clause (i), in the matter preceding subclause (I), 
     by striking ``(ii)'' and inserting ``(iii)''; and
       (2) in clause (ii)(I), by striking ``(ii)'' and inserting 
     ``(iii)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of sections 
     201 and 203, respectively, of the Trade Act of 2002 (Public 
     Law 107-210, 116 Stat. 954).

     SEC. 227. APPLICATION OF RULES FOR OTHER SPECIFIED COVERAGE 
                   TO ELIGIBLE ALTERNATIVE TAA RECIPIENTS 
                   CONSISTENT WITH RULES FOR OTHER ELIGIBLE 
                   INDIVIDUALS.

       (a) In General.--Section 35(f)(1) of such Code (relating to 
     subsidized coverage) is amended by striking subparagraph (B) 
     and redesignating subparagraph (C) as subparagraph (B).
       (b) Conforming Amendments.--Section 173(f)(7)(A) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)(7)(A)) is 
     amended by striking clause (ii) and redesignating clause 
     (iii) as clause (ii).

                  Subtitle D--Long-Term Care Insurance

     SEC. 231. SENSE OF THE SENATE CONCERNING LONG-TERM CARE.

       It is the sense of the Senate that Congress should take 
     steps to make long-term care more affordable by providing tax 
     incentives for the purchase of long-term care insurance, 
     support for family caregivers, and making necessary public 
     program reforms.

                      Subtitle E--Other Provisions

     SEC. 241. DISPOSITION OF UNUSED HEALTH BENEFITS IN CAFETERIA 
                   PLANS AND FLEXIBLE SPENDING ARRANGEMENTS.

       (a) In General.--Section 125 of the Internal Revenue Code 
     of 1986 (relating to cafeteria plans) is amended by 
     redesignating subsections (h) and (i) as subsections (i) and 
     (j), respectively, and by inserting after subsection (g) the 
     following:
       ``(h) Contributions of Certain Unused Health Benefits.--
       ``(1) In general.--For purposes of this title, a plan or 
     other arrangement shall not fail to be treated as a cafeteria 
     plan solely because qualified benefits under such plan 
     include a health flexible spending arrangement under which 
     not more than $500 of unused health benefits may be--
       ``(A) carried forward to the succeeding plan year of such 
     health flexible spending arrangement, or
       ``(B) to the extent permitted by section 106(c), 
     contributed by the employer to a health savings account (as 
     defined in section 223(d)) maintained for the benefit of the 
     employee.
       ``(2) Health flexible spending arrangement.--
       ``(A) In general.--For purposes of this subsection, the 
     term `health flexible spending arrangement' means a flexible 
     spending arrangement (as defined in section 106(c)) that is a 
     qualified benefit and only permits reimbursement for expenses 
     for medical care (as defined in section 213(d)(1), without 
     regard to subparagraphs (C) and (D) thereof).
       ``(B) Flexible spending arrangement.--A flexible spending 
     arrangement is a benefit program which provides employees 
     with coverage under which--
       ``(i) specified incurred expenses may be reimbursed 
     (subject to reimbursement maximums and other reasonable 
     conditions), and
       ``(ii) the maximum amount of reimbursement which is 
     reasonably available to a participant for such coverage is 
     less than 500 percent of the value of such coverage.

     In the case of an insured plan, the maximum amount reasonably 
     available shall be determined on the basis of the underlying 
     coverage.
       ``(3) Unused health benefits.--For purposes of this 
     subsection, with respect to an employee, the term `unused 
     health benefits' means the excess of--
       ``(A) the maximum amount of reimbursement allowable to the 
     employee for a plan year under a health flexible spending 
     arrangement, over
       ``(B) the actual amount of reimbursement for such year 
     under such arrangement.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. 242. MICROENTREPRENEURS.

       Section 404(8) of the Assets for Independence Act (42 
     U.S.C. 604 note) is amended by adding at the end the 
     following:
       ``(F) High deductible health insurance.--
       ``(i) In general.--The eligible individual's contribution 
     (as an employer or employee) for coverage under a high 
     deductible health plan (as defined in section 223(c)(2) of 
     the Internal Revenue Code of 1986).
       ``(ii) Definition of employee.--For purposes of clause (i), 
     the term `employee' includes an individual described in 
     section 401(c)(1) of the Internal Revenue Code of 1986.''.

     SEC. 243. STUDY ON ACCESS TO AFFORDABLE HEALTH INSURANCE FOR 
                   FULL-TIME COLLEGE AND UNIVERSITY STUDENTS.

       (a) Sense of the Senate.--It is the sense of the Senate 
     that, because a considerable number of the United States' 
     uninsured population are young adults who are enrolled full-
     time at an institution of higher education, Congress should 
     determine whether health care coverage proposals targeting 
     this population would be effective.
       (b) Study Required.--The Government Accountability Office 
     shall provide for the conduct of a study to evaluate existing 
     and potential sources of affordable health insurance coverage 
     for graduate and undergraduate students enrolled at an 
     institution of higher education (as defined in section 1201 
     of the Higher Education Act of 1965 (20 U.S.C. 1141)).
       (c) Required Elements of Study.--In conducting the study 
     under subsection (b), the Government Accountability Office 
     shall, at a minimum, examine the following:
       (1) Student demographics.--
       (A) In general.--The size and characteristics of the 
     insured and uninsured population of undergraduate and 
     graduate students enrolled at institutions of higher 
     education. Such data shall be differentiated as provided for 
     in subparagraphs (B) and (C).
       (B) Statistical breakdown.--The data concerning the 
     uninsured student population collected under subparagraph (A) 
     shall be differentiated by--
       (i) the full-time, full-time equivalent, and part-time 
     enrollment status of the students involved;
       (ii) the type of institution involved (such as a public, 
     private, non-profit, or community institution);
       (iii) the length and type of educational program involved 
     (such as a certificate or diploma program, a 2-year or 4-year 
     degree program, a masters degree program, or a doctoral 
     degree program); and
       (iv) the undergraduate and graduate student populations 
     involved.
       (C) Coverage.--The data concerning the insured student 
     population collected under subparagraph (A) shall be 
     differentiated by the sources of coverage for such students, 
     including the number and percentage of such insured students 
     who lose parental (or other) coverage during the course of 
     their enrollment at such institutions and the age at which 
     such coverage is lost.
       (2) Impact analysis.--The financial and other impact of 
     uninsured students at such institutions, as compared to 
     insured students, on--
       (A) the health of students;
       (B) the student's family;
       (C) the student's educational progress; and
       (D) education and health care institutions and facilities.
       (3) Assessment of existing programs.--The effect of 
     mandatory and voluntary programs on the access of students to 
     health insurance coverage, including--
       (A) the level and type of coverage provided through 
     mandatory and voluntary State and institutionally-sponsored 
     health care programs currently providing health care 
     insurance coverage to students;
       (B) the average premium paid with respect to students 
     covered under such plans;
       (C) the extent to which any State or institutional health 
     insurance plan may serve as a model for the expansion of 
     access to health insurance for all full-time undergraduate 
     and graduate students attending an institution of higher 
     education; and
       (D) whether such programs targeted to the student 
     population would be more effective in reducing the overall 
     rate of uninsured relative to proposals targeted to broader 
     populations.
       (4) Incentives and disincentives.--The existence of 
     incentives and disincentives offered to institutions of 
     higher education to expand access to health care coverage for 
     students, including--
       (A) an assessment of the types of incentives and 
     disincentives that may be used to encourage or require an 
     institution of higher education to include health care 
     coverage for all of its students on a mandatory basis, 
     including financial, regulatory, administrative, and other 
     incentives or disincentives;

[[Page 17443]]

       (B) a list of burdensome regulatory or administrative 
     reporting and other requirements (from the Department of 
     Education or other governmental agencies) that could be 
     waived without compromising program integrity as a means of 
     encouraging institutions of higher education to provide 
     uninsured students with access to health care coverage;
       (C) other incentives or disincentives that would increase 
     the level of institutional participation in health care 
     coverage programs; and
       (D) an analysis of the costs and effectiveness (to reduce 
     the number of uninsured students) of including the cost of 
     health insurance as an allowable cost of attendance under the 
     Higher Education Act of 1965, and the impact of such 
     inclusion on the student's financial aid package.
       (e) Consultation with Congress.--In carrying out the study 
     under subsection (b), the Government Accountability Office 
     shall consult on a regular basis with the Secretary of 
     Education, the Secretary of Health and Human Services, the 
     Committee on the Budget of the Senate, the Committee on 
     Health, Education, Labor, and Pensions of the Senate, and the 
     Committee on Education and the Workforce of the House of 
     Representatives.
       (f) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Government Accountability Office 
     shall prepare and submit to the Committee on the Budget and 
     the Committee on Health, Education, Labor, and Pensions of 
     the Senate, and the Committee on Education and the Workforce 
     of the House of Representatives, a report concerning the 
     results of the study conducted under this section.

     SEC. 244. EXTENSION OF FUNDING FOR OPERATION OF STATE HIGH 
                   RISK HEALTH INSURANCE POOLS.

       Section 2745 of the Public Health Service Act (42 U.S.C. 
     300gg-45) is amended to read as follows:

     ``SEC. 2745. PROMOTION OF QUALIFIED HIGH RISK POOLS.

       ``(a) Extension of Seed Grants to States.--The Secretary 
     shall provide from the funds appropriated under subsection 
     (d)(1)(A) a grant of up to $1,000,000 to each State that has 
     not created a qualified high risk pool as of the date of 
     enactment of this section for the State's costs of creation 
     and initial operation of such a pool.
       ``(b) Grants for Operational Losses.--
       ``(1) In general.--In the case of a State that has 
     established a qualified high risk pool that--
       ``(A) restricts premiums charged under the pool to no more 
     than 150 percent of the premium for applicable standard risk 
     rates;
       ``(B) offers a choice of two or more coverage options 
     through the pool; and
       ``(C) has in effect a mechanism reasonably designed to 
     ensure continued funding of losses incurred by the State 
     after the end of fiscal year 2004 in connection with 
     operation of the pool;

     the Secretary shall provide, from the funds appropriated 
     under subsection (d)(1)(B)(i) and allotted to the State under 
     paragraph (2), a grant for the losses incurred by the State 
     in connection with the operation of the pool.
       ``(2) Allotment.--The amounts appropriated under subsection 
     (d)(1)(B)(i) for a fiscal year shall be made available to the 
     States (or the entities that operate the high risk pool under 
     applicable State law) as follows:
       ``(A) An amount equal to 50 percent of the appropriated 
     amount for the fiscal year shall be allocated in equal 
     amounts among each eligible State that applies for assistance 
     under this subsection.
       ``(B) An amount equal to 25 percent of the appropriated 
     amount for the fiscal year shall be allocated among the 
     States so that the amount provided to a State bears the same 
     ratio to such available amount as the number of uninsured 
     individuals in the State bears to the total number of 
     uninsured individuals in all States (as determined by the 
     Secretary).
       ``(C) An amount equal to 25 percent of the appropriated 
     amount for the fiscal year shall be allocated among the 
     States so that the amount provided to a State bears the same 
     ratio to such available amount as the number of individuals 
     enrolled in health care coverage through the qualified high 
     risk pool of the State bears to the total number of 
     individuals so enrolled through qualified high risk pools in 
     all States (as determined by the Secretary).
       ``(c) Bonus Grants for Supplemental Consumer Benefits.--
       ``(1) In general.--In the case of a State that has 
     established a qualified high risk pool, the Secretary shall 
     provide, from the funds appropriated under subsection 
     (d)(1)(B)(ii) and allotted to the State under paragraph (3), 
     a grant to be used to provide supplemental consumer benefits 
     to enrollees or potential enrollees (or defined subsets of 
     such enrollees or potential enrollees) in qualified high risk 
     pools.
       ``(2) Benefits.--A State shall use amounts received under a 
     grant under this subsection to provide one or more of the 
     following benefits:
       ``(A) Low-income premium subsidies.
       ``(B) A reduction in premium trends, actual premiums, or 
     other cost-sharing requirements.
       ``(C) An expansion or broadening of the pool of individuals 
     eligible for coverage, including eliminating waiting lists, 
     increasing enrollment caps, or providing flexibility in 
     enrollment rules.
       ``(D) Less stringent rules, or additional waiver authority, 
     with respect to coverage of pre-existing conditions.
       ``(E) Increased benefits.
       ``(F) The establishment of disease management programs.
       ``(3) Limitation.--In allotting amounts under this 
     subsection, the Secretary shall ensure that no State receives 
     an amount that exceeds 10 percent of the amount appropriated 
     for the fiscal year involved under subsection (d)(1)(B)(ii).
       ``(4) Rule of construction.--Nothing in this subsection 
     shall be construed to prohibit States that, on the date of 
     enactment of the State High Risk Pool Funding Extension Act 
     of 2005, are in the process of implementing programs to 
     provide benefits of the type described in paragraph (2), from 
     being eligible for a grant under this subsection.
       ``(d) Funding.--
       ``(1) In general.--Out of any money in the Treasury of the 
     United States not otherwise appropriated, there are 
     authorized and appropriated--
       ``(A) $15,000,000 for the period of fiscal years 2005 and 
     2006 to carry out subsection (a); and
       ``(B) $75,000,000 for each of fiscal years 2005 through 
     2009, of which--
       ``(i) two-thirds of the amount appropriated for a fiscal 
     year shall be made available for allotments under subsection 
     (b)(2); and
       ``(ii) one-third of the amount appropriated for a fiscal 
     year shall be made available for allotments under subsection 
     (c)(2).
       ``(2) Availability.--Funds appropriated under this 
     subsection for a fiscal year shall remain available for 
     obligation through the end of the following fiscal year.
       ``(3) Reallotment.--If, on June 30 of each fiscal year, the 
     Secretary determines that all amounts appropriated under 
     paragraph (1)(B)(ii) for the fiscal year are not allotted, 
     such remaining amounts shall be allotted among States 
     receiving grants under subsection (b) for the fiscal year in 
     amounts determined appropriate by the Secretary.
       ``(4) No entitlement.--Nothing in this section shall be 
     construed as providing a State with an entitlement to a grant 
     under this section.
       ``(e) Applications.--To be eligible for a grant under this 
     section, a State shall submit to the Secretary an application 
     at such time, in such manner, and containing such information 
     as the Secretary may require.
       ``(f) Definitions.--In this section:
       ``(1) Qualified high risk pool.--
       ``(A) In general.--The term `qualified high risk pool' has 
     the meaning given such term in section 2744(c)(2), except 
     that with respect to subparagraph (A) of such section a State 
     may elect to provide for the enrollment of eligible 
     individuals through--
       ``(i) a combination of a qualified high risk pool and an 
     acceptable alternative mechanism; or
       ``(ii) other health insurance coverage described in 
     subparagraph (B).
       ``(B) Health insurance coverage.--Health insurance coverage 
     described in this subparagraph is individual health insurance 
     coverage--
       ``(i) that meets the requirements of section 2741;
       ``(ii) that is subject to limits on the rates charged to 
     individuals;
       ``(iii) that is available to all individuals eligible for 
     health insurance coverage under this title who are not able 
     to participate in a qualified high risk pool; and
       ``(iv) the defined rate limit of which does not exceed the 
     limit allowed for a qualified risk pool that is otherwise 
     eligible to receive assistance under a grant under this 
     section.
       ``(C) Other coverage.--In addition to coverage described in 
     subparagraph (B), a State may provide for the offering of 
     health insurance coverage that provides first dollar 
     coverage, limits on cost-sharing, and comprehensive medical, 
     hospital and surgical coverage, if the limits on rates for 
     such coverage do not exceed 125 percent of the limit 
     described in subparagraph (B)(iv).
       ``(2) Standard risk rate.--The term `standard risk rate' 
     means a rate--
       ``(A) determined under the State high risk pool by 
     considering the premium rates charged by other health 
     insurers offering health insurance coverage to individuals in 
     the insurance market served;
       ``(B) that is established using reasonable actuarial 
     techniques; and
       ``(C) that reflects anticipated claims experience and 
     expenses for the coverage involved.
       ``(3) State.--The term `State' means any of the 50 States 
     and the District of Columbia.''.

     SEC. 245. SENSE OF THE SENATE ON AFFORDABLE HEALTH COVERAGE 
                   FOR SMALL EMPLOYERS.

       It is the sense of the Senate that Congress should pass 
     legislation to support expanded, affordable health coverage 
     options for individuals, particularly those who work for 
     small businesses, by streamlining and reducing regulations 
     and expanding the role of associations and other group 
     purchasing arrangements.

[[Page 17444]]



                       Subtitle F--Covering Kids

     SEC. 251. SHORT TITLE.

       This subtitle may be cited as the ``Covering Kids Act of 
     2005''.

     SEC. 252. GRANTS TO PROMOTE INNOVATIVE OUTREACH AND 
                   ENROLLMENT UNDER MEDICAID AND SCHIP.

       (a) Grants for Expanded Outreach Activities.--Title XXI of 
     the Social Security Act (42 U.S.C. 1397aa et seq.) is amended 
     by adding at the end the following:

     ``SEC. 2111. EXPANDED OUTREACH ACTIVITIES.

       ``(a) Grants To Conduct Innovative Outreach and Enrollment 
     Efforts.--
       ``(1) In general.--The Secretary shall award grants to 
     eligible entities to--
       ``(A) conduct innovative outreach and enrollment efforts 
     that are designed to increase the enrollment and 
     participation of eligible children under this title and title 
     XIX; and
       ``(B) promote understanding of the importance of health 
     insurance coverage for prenatal care and children.
       ``(2) Performance bonuses.--The Secretary may reserve a 
     portion of the funds appropriated under subsection (g) for a 
     fiscal year for the purpose of awarding performance bonuses 
     during the succeeding fiscal year to eligible entities that 
     meet enrollment goals or other criteria established by the 
     Secretary.
       ``(b) Priority for Award of Grants.--
       ``(1) In general.--In making grants under subsection 
     (a)(1), the Secretary shall give priority to--
       ``(A) eligible entities that propose to target geographic 
     areas with high rates of--
       ``(i) eligible but unenrolled children, including such 
     children who reside in rural areas; or
       ``(ii) racial and ethnic minorities and health disparity 
     populations, including those proposals that address cultural 
     and linguistic barriers to enrollment; and
       ``(B) eligible entities that plan to engage in outreach 
     efforts with respect to individuals described in subparagraph 
     (A) and that are--
       ``(i) Federal health safety net organizations; or
       ``(ii) faith-based organizations or consortia.
       ``(2) 10 percent set aside for outreach to indian 
     children.--An amount equal to 10 percent of the funds 
     appropriated under subsection (g) for a fiscal year shall be 
     used by the Secretary to award grants to Indian Health 
     Service providers and urban Indian organizations receiving 
     funds under title V of the Indian Health Care Improvement Act 
     (25 U.S.C. 1651 et seq.) for outreach to, and enrollment of, 
     children who are Indians.
       ``(c) Application.--An eligible entity that desires to 
     receive a grant under subsection (a)(1) shall submit an 
     application to the Secretary in such form and manner, and 
     containing such information, as the Secretary may decide. 
     Such application shall include--
       ``(1) quality and outcomes performance measures to evaluate 
     the effectiveness of activities funded by a grant awarded 
     under this section to ensure that the activities are meeting 
     their goals; and
       ``(2) an assurance that the entity shall--
       ``(A) conduct an assessment of the effectiveness of such 
     activities against such performance measures; and
       ``(B) cooperate with the collection and reporting of 
     enrollment data and other information determined as a result 
     of conducting such assessments to the Secretary, in such form 
     and manner as the Secretary shall require.
       ``(d) Dissemination of Enrollment Data and Information 
     Determined From Effectiveness Assessments; Annual Report.--
     The Secretary shall--
       ``(1) disseminate to eligible entities and make publicly 
     available the enrollment data and information collected and 
     reported in accordance with subsection (c)(2)(B); and
       ``(2) submit an annual report to Congress on the outreach 
     activities funded by grants awarded under this section.
       ``(e) Supplement, Not Supplant.--Federal funds awarded 
     under this section shall be used to supplement, not supplant, 
     non-Federal funds that are otherwise available for activities 
     funded under this section.
       ``(f) Definitions.--In this section:
       ``(1) Eligible entity.--The term `eligible entity' means 
     any of the following:
       ``(A) A State or local government.
       ``(B) A Federal health safety net organization.
       ``(C) A national, local, or community-based public or 
     nonprofit private organization.
       ``(D) A faith-based organization or consortia, to the 
     extent that a grant awarded to such an entity is consistent 
     with the requirements of section 1955 of the Public Health 
     Service Act (42 U.S.C. 300x-65) relating to a grant award to 
     non-governmental entities.
       ``(E) An elementary or secondary school.
       ``(2) Federal health safety net organization.--The term 
     `Federal health safety net organization' means--
       ``(A) an Indian tribe, tribal organization, or an urban 
     Indian organization receiving funds under title V of the 
     Indian Health Care Improvement Act (25 U.S.C. 1651 et seq.), 
     or an Indian Health Service provider;
       ``(B) a Federally-qualified health center (as defined in 
     section 1905(l)(2)(B));
       ``(C) a hospital defined as a disproportionate share 
     hospital for purposes of section 1923;
       ``(D) a covered entity described in section 340B(a)(4) of 
     the Public Health Service Act (42 U.S.C. 256b(a)(4)); and
       ``(E) any other entity or a consortium that serves children 
     under a federally-funded program, including the special 
     supplemental nutrition program for women, infants, and 
     children (WIC) established under section 17 of the Child 
     Nutrition Act of 1966 (42 U.S.C. 1786), the head start and 
     early head start programs under the Head Start Act (42 U.S.C. 
     9801 et seq.), the school lunch program established under the 
     Richard B. Russell National School Lunch Act, and an 
     elementary or secondary school.
       ``(3) Indians; indian tribe; tribal organization; urban 
     indian organization.--The terms `Indian', `Indian tribe', 
     `tribal organization', and `urban Indian organization' have 
     the meanings given such terms in section 4 of the Indian 
     Health Care Improvement Act (25 U.S.C. 1603).
       ``(g) Appropriation.--There is appropriated, out of any 
     money in the Treasury not otherwise appropriated, $50,000,000 
     for each of fiscal years 2006 and 2007 for the purpose of 
     awarding grants under this section. Amounts appropriated and 
     paid under the authority of this section shall be in addition 
     to amounts appropriated under section 2104 and paid to States 
     in accordance with section 2105, including with respect to 
     expenditures for outreach activities in accordance with 
     subsection (a)(1)(D)(iii) of that section.''.
       (b) Extending Use of Outstationed Workers To Accept Title 
     XXI Applications.--Section 1902(a)(55) of the Social Security 
     Act (42 U.S.C. 1396a(a)(55)) is amended by striking ``or 
     (a)(10)(A)(ii)(IX)'' and inserting ``(a)(10)(A)(ii)(IX), or 
     (a)(10)(A)(ii)(XIV), and applications for child health 
     assistance under title XXI''.

     SEC. 253. STATE OPTION TO PROVIDE FOR SIMPLIFIED 
                   DETERMINATIONS OF A CHILD'S FINANCIAL 
                   ELIGIBILITY FOR MEDICAL ASSISTANCE UNDER 
                   MEDICAID OR CHILD HEALTH ASSISTANCE UNDER 
                   SCHIP.

       (a) Medicaid.--Section 1902(e) of the Social Security Act 
     (42 U.S.C. 1396a(e)) is amended by adding at the end the 
     following:
       ``(13)(A) At the option of the State, the plan may provide 
     that financial eligibility requirements for medical 
     assistance are met for a child who is under an age specified 
     by the State (not to exceed 21 years of age) by using a 
     determination made within a reasonable period (as determined 
     by the State) before its use for this purpose, of the child's 
     family or household income, or if applicable for purposes of 
     determining eligibility under this title or title XXI, assets 
     or resources, by a Federal or State agency, or a public or 
     private entity making such determination on behalf of such 
     agency, specified by the plan, including (but not limited to) 
     an agency administering the State program funded under part A 
     of title IV, the Food Stamp Act of 1977, the Richard B. 
     Russell National School Lunch Act, or the Child Nutrition Act 
     of 1966, notwithstanding any differences in budget unit, 
     disregard, deeming, or other methodology, but only if--
       ``(i) the agency has fiscal liabilities or responsibilities 
     affected or potentially affected by such determination; and
       ``(ii) any information furnished by the agency pursuant to 
     this subparagraph is used solely for purposes of determining 
     financial eligibility for medical assistance under this title 
     or for child health assistance under title XXI.
       ``(B) Nothing in subparagraph (A) shall be construed--
       ``(i) to authorize the denial of medical assistance under 
     this title or of child health assistance under title XXI to a 
     child who, without the application of this paragraph, would 
     qualify for such assistance;
       ``(ii) to relieve a State of the obligation under 
     subsection (a)(8) to furnish medical assistance with 
     reasonable promptness after the submission of an initial 
     application that is evaluated or for which evaluation is 
     requested pursuant to this paragraph;
       ``(iii) to relieve a State of the obligation to determine 
     eligibility for medical assistance under this title or for 
     child health assistance under title XXI on a basis other than 
     family or household income (or, if applicable, assets or 
     resources) if a child is determined ineligible for such 
     assistance on the basis of information furnished pursuant to 
     this paragraph; or
       ``(iv) as affecting the applicability of any non-financial 
     requirements for eligibility for medical assistance under 
     this title or child health assistance under title XXI.''.
       (b) SCHIP.--Section 2107(e)(1) of the Social Security Act 
     (42 U.S.C. 1397gg(e)(1)) is amended by adding at the end the 
     following:
       ``(E) Section 1902(e)(13) (relating to the State option to 
     base a determination of child's financial eligibility for 
     assistance on financial determinations made by a program 
     providing nutrition or other public assistance).''.
       (c) Effective Date.--The amendments made by this section 
     take effect on October 1, 2005.

       TITLE III--IMPROVING CARE AND STRENGTHENING THE SAFETY NET

                      Subtitle A--High Needs Areas

     SEC. 301. PURPOSE.

       It is the purpose of this subtitle to enhance the quality 
     of life of residents of high need

[[Page 17445]]

     areas by increasing their access to the preventive and 
     primary healthcare services provided by community health 
     centers and rural health centers.

     SEC. 302. HIGH NEED COMMUNITY HEALTH CENTERS.

       Section 330 of the Public Health Service Act (42 U.S.C. 
     254b) is amended--
       (1) by redesignating subsections (k) through (r) as 
     subsections (l) through (s), respectively;
       (2) by inserting after subsection (j), the following:
       ``(k) Priority for Residents of High Need Areas.--
       ``(1) In general.--In awarding grants under this section, 
     the Secretary shall give priority to eligible health centers 
     in high need areas.
       ``(2) Eligible health centers.--A health center is 
     described in this paragraph if such health center--
       ``(A) is a health center as defined under subsection (a) or 
     a rural health clinic that receives funds under section 330A;
       ``(B) agrees to use grant funds to provide preventive and 
     primary healthcare services to residents of high need areas;
       ``(C) specifically requests such priority in the grant 
     application;
       ``(D) describes how the community to be served meets the 
     definition of high need area; and
       ``(E) otherwise meets all other grant requirements.
       ``(3) High need area.--
       ``(A) In general.--In this subsection, the term `high need 
     area' means a county or a regional area identified by the 
     Secretary pursuant to the regulations promulgated under 
     subparagraph (B).
       ``(B) Regulations.--The Secretary shall promulgate 
     regulations that define the term `high need area' for 
     purposes of this subsection. Such regulations shall specify 
     procedures that the Department shall follow in determining 
     estimates on a periodic basis in the United States of the 
     number of medically uninsured persons and the national 
     percentage of medically uninsured persons served by health 
     centers (referred to in this subsection as the `ENP') and for 
     the designation of an area as a `high need area' if the 
     estimated percentage of medically uninsured individuals in 
     the area is higher than the national average and the 
     estimated percentage of medically uninsured individuals in 
     the area served by health centers in the area is below the 
     ENP.
       ``(C) Medically underserved area.--The Secretary shall 
     designate residents of high need areas as medically 
     underserved for purposes of this section.
       ``(4) Funding preference.--The Secretary may limit the 
     amount of grants awarded to applicants from high need areas 
     as provided for in this subsection to not less than 25 
     percent of the total amount of grants awarded under this 
     subsection for each grant category for each grant period.'';
       (3) in subsection (e)(1)(B), by striking ``subsection 
     (k)(3)'' and inserting ``subsection (l)(3)'';
       (4) in subsection (l)(3)(H)(iii) (as so redesignated), by 
     striking ``or (p)'' and inserting ``or (q)'';
       (5) in subsection (m) (as so redesignated), by striking 
     ``subsection (k)(3)'' and inserting ``subsection (l)(3)'';
       (6) in subsection (q) (as so redesignated), by striking 
     ``subsection (k)(3)(G)'' and inserting ``subsection 
     (l)(3)(G)''; and
       (7) in subsection (s)(2)(A) (as so redesignated), by 
     striking ``subsection (k)'' each place that such appears and 
     inserting ``subsection (l)''.

     SEC. 303. GRANT APPLICATION PROCESS.

       Section 330(k) of the Public Health Service Act (42 U.S.C. 
     254b(k)) is amended by adding at the end the following:
       ``(5) Economic viability of applicants.--
       ``(A) In general.--In considering applications under this 
     section, the Secretary shall ensure that an application that 
     demonstrates economic viability, consistent with funding 
     guidelines established by the Secretary for purposes of this 
     section, is not disadvantaged in the evaluation process on 
     the basis that it relies solely on Federal funding.
       ``(B) Qualification of individuals reviewing 
     applications.--The Secretary shall require verification that 
     all individuals who are evaluating community health center 
     grant applications have completed within the 3-year period 
     ending on the date on which the application is being 
     evaluated a training course on the community health center 
     program which addresses the purposes served by community 
     health centers, the critical role of community health centers 
     in the safety net, expectations for the evaluation of 
     applications, and the criteria for awarding grant funding.
       ``(C) Medically underserved designations.--Not later than 6 
     months after the date of enactment of this paragraph, the 
     Administrator of the Health Resources and Services 
     Administration shall submit to the appropriate committees of 
     Congress a report concerning the process for designating an 
     area or population as medically underserved. Such report 
     shall contain recommendations for ensuring that such 
     designations are current within the last 3 years. The report 
     shall also detail plans for ensuring subsequent review to 
     maintain an accurate reflection of community needs in areas 
     and populations designated as medically underserved. Not 
     later than 1 year after such date of enactment, the Secretary 
     shall promulgate regulations based on the recommendations 
     contained in the report.''.

          Subtitle B--Qualified Integrated Health Care Systems

     SEC. 321. GRANTS TO QUALIFIED INTEGRATED HEALTH CARE SYSTEMS.

       (a) Eligibility for Grants Under PHSA.--Part D of title III 
     of the Public Health Service Act (42 U.S.C. 254b et seq.) is 
     amended by adding at the end the following new subpart:

   ``Subpart XI--Promotion of Integrated Health Care Systems Serving 
                   Medically Underserved Populations

     ``SEC. 340H. GRANTS TO QUALIFIED INTEGRATED HEALTH CARE 
                   SYSTEMS.

       ``(a) Definitions.--For purposes of this section:
       ``(1) Qualified integrated health care system.--The term 
     `qualified integrated health care system' means an integrated 
     health care system that--
       ``(A) has a demonstrated capacity and commitment to provide 
     a full range of primary, specialty, and hospital care to a 
     medically underserved population in both inpatient and 
     outpatient settings, as appropriate;
       ``(B) is organized to provide such care in a coordinated 
     fashion;
       ``(C) operates one or more integrated health centers 
     meeting the requirements of section 340I;
       ``(D) meets the requirements of subsection (c)(3); and
       ``(E) agrees to use any funds received under this section 
     to supplement and not to supplant amounts received from other 
     sources for the provision of such care.
       ``(2) Medically underserved population.--The term 
     `medically underserved population' has the meaning given such 
     term in section 330(b)(3).
       ``(b) Operating Grants.--
       ``(1) Authority.--The Secretary may make grants to private 
     nonprofit entities for the costs of the operation of 
     qualified integrated health care systems that provide 
     primary, specialty, and hospital care to medically 
     underserved populations.
       ``(2) Amount.--
       ``(A) In general.--The amount of any grant made in any 
     fiscal year under paragraph (1) to an integrated health care 
     system shall be determined by the Secretary (taking into 
     account the full range of care, including specialty services, 
     provided by the system), but may not exceed the amount by 
     which the costs of operation of the system in such fiscal 
     year exceed the total of--
       ``(i) State, local, and other operational funding provided 
     to the system; and
       ``(ii) the fees, premiums, and third-party reimbursements 
     which the system may reasonably be expected to receive for 
     its operations in such fiscal year.
       ``(B) Payments.--Payments under grants under paragraph (1) 
     shall be made in advance or by way of reimbursement and in 
     such installments as the Secretary finds necessary and 
     adjustments may be made for overpayments or underpayments.
       ``(C) Use of nongrant funds.--Nongrant funds described in 
     clauses (i) and (ii) of subparagraph (A), including any such 
     funds in excess of those originally expected, shall be used 
     as permitted under this section, and may be used for such 
     other purposes as are not specifically prohibited under this 
     section if such use furthers the objectives of the project.
       ``(c) Applications.--
       ``(1) Submission.--No grant may be made under this section 
     unless an application therefore is submitted to, and approved 
     by, the Secretary. Such an application shall be submitted in 
     such form and manner and shall contain such information as 
     the Secretary shall prescribe.
       ``(2) Description of need.--
       ``(A) In general.--An application for a grant under 
     subsection (b)(1) for an integrated health care system shall 
     include--
       ``(i) a description of the need for health care services in 
     the area served by the integrated health care system;
       ``(ii) a demonstration by the applicant that the area or 
     the population group to be served by the applicant has a 
     shortage of personal health services; and
       ``(iii) a demonstration that the health care system will be 
     located so that it will provide services to the greatest 
     number of individuals residing in such area or included in 
     such population group.
       ``(B) Demonstrations.--A demonstration shall be made under 
     clauses (ii) or (iii) of subparagraph (A) on the basis of the 
     criteria prescribed by the Secretary under section 330(b)(3) 
     or on the basis of any other criteria which the Secretary may 
     prescribe to determine if the area or population group to be 
     served by the applicant has a shortage of personal health 
     services.
       ``(C) Condition of approval.--In considering an application 
     for a grant under subsection (b)(1), the Secretary may 
     require as a condition to the approval of such application an 
     assurance that any integrated health center operated by the 
     applicant will provide any required primary health services 
     and

[[Page 17446]]

     any additional health services (as defined in section 340I) 
     that the Secretary finds are needed to meet specific health 
     needs of the area to be served by the applicant. Such a 
     finding shall be made in writing and a copy shall be provided 
     to the applicant.
       ``(3) Requirements.--The Secretary shall approve an 
     application for a grant under subsection (b)(1) if the 
     Secretary determines that the entity for which the 
     application is submitted is an integrated health care system 
     (within the meaning of subsection (a)) and that--
       ``(A) the primary, specialty, and hospital care provided by 
     the system will be available and accessible in the service 
     area of the system promptly, as appropriate, and in a manner 
     which assures continuity;
       ``(B) the system is participating (or will participate) in 
     a community consortium of safety net providers serving such 
     area (unless other such safety net providers do not exist in 
     a community, decline or refuse to participate, or place 
     unreasonable conditions on their participation);
       ``(C) all of the centers operated by the system are 
     accredited by a national accreditation body recognized by the 
     Secretary;
       ``(D) the system will demonstrate its financial 
     responsibility by the use of such accounting procedures and 
     other requirements as may be prescribed by the Secretary;
       ``(E) the system provides or will provide services to 
     individuals who are eligible for medical assistance under 
     title XIX of the Social Security Act and to individuals who 
     are eligible for assistance under title XXI of such Act;
       ``(F) the system--
       ``(i) has prepared a schedule of fees or payments for the 
     provision of its services consistent with locally prevailing 
     rates or charges and designed to cover its reasonable costs 
     of operation and has prepared a corresponding schedule of 
     discounts to be applied to the payment of such fees or 
     payments, and which discounts are adjusted on the basis of 
     the patient's ability to pay;
       ``(ii)(I) will assure that no patient will be denied health 
     care services due to an individual's inability to pay for 
     such services; and
       ``(II) will assure that any fees or payments required by 
     the system for such services will be reduced or waived to 
     enable the system to fulfill the assurance described in 
     subclause (I); and
       ``(iii) has submitted to the Secretary such reports as the 
     Secretary may require to determine compliance with this 
     subparagraph;
       ``(G) the system has established a governing board that 
     selects the services to be provided by the center, approves 
     the center's annual budget, approves the selection of a 
     director for the center, and establishes general policies for 
     the center;
       ``(H) the system has developed--
       ``(i) an overall plan and budget that meets the 
     requirements of the Secretary; and
       ``(ii) an effective procedure for compiling and reporting 
     to the Secretary such statistics and other information as the 
     Secretary may require relating to--

       ``(I) the costs of its operations;
       ``(II) the patterns of use of its services;
       ``(III) the availability, accessibility, and acceptability 
     of its services; and
       ``(IV) such other matters relating to operations of the 
     applicant as the Secretary may require;

       ``(I) the system will review periodically its service area 
     to--
       ``(i) ensure that the size of such area is such that the 
     services to be provided through the system (including any 
     satellite) are available and accessible to the residents of 
     the area promptly and as appropriate;
       ``(ii) ensure that the boundaries of such area conform, to 
     the extent practicable, to relevant boundaries of political 
     subdivisions, school districts, and Federal and State health 
     and social service programs; and
       ``(iii) ensure that the boundaries of such area eliminate, 
     to the extent possible, barriers to access to the services of 
     the system, including barriers resulting from the area's 
     physical characteristics, its residential patterns, its 
     economic and social grouping, and available transportation;
       ``(J) in the case of a system which serves a substantial 
     proportion of individuals of limited English-speaking 
     ability, the system has--
       ``(i) developed a plan and made arrangements for providing 
     services, to the extent practicable, in the predominant 
     language or languages of such individuals and in the cultural 
     context most appropriate to such individuals; and
       ``(ii) identified one or more individuals on its staff who 
     are fluent in such predominant language or languages and in 
     English and whose responsibilities shall include providing 
     guidance to such individuals and to other appropriate staff 
     members with respect to cultural sensitivities and bridging 
     linguistic and cultural differences;
       ``(K) the system maintains appropriate referral 
     relationships between its hospitals, its physicians with 
     hospital privileges, and any integrated health center 
     operated by the system so that primary, specialty care, and 
     hospital care is provided in a continuous and coordinated 
     way; and
       ``(L) the system encourages persons receiving or seeking 
     health services from the system to participate in any public 
     or private (including employer-offered) health programs or 
     plans for which the persons are eligible, so long as the 
     center, in complying with this paragraph, does not violate 
     the requirements of subparagraph (F)(ii)(I).
       ``(d) Authorization of Appropriations.--
       ``(1) In general.--There are authorized to be appropriated 
     to carry out this section such sums as may be necessary for 
     each of fiscal years 2006 through 2010.
       ``(2) Funding report.--The Secretary shall annually prepare 
     and submit to the appropriate committees of Congress a report 
     concerning the distribution of funds under this section that 
     are provided to meet the health care needs of medically 
     underserved populations, and the appropriateness of the 
     delivery systems involved in responding to the needs of the 
     particular populations. Such report shall include an 
     assessment of the relative health care access needs of the 
     targeted populations and the rationale for any substantial 
     changes in the distribution of funds.
       ``(e) Records.--
       ``(1) In general.--Each entity which receives a grant under 
     subsection (b)(1) shall establish and maintain such records 
     as the Secretary shall require.
       ``(2) Availability.--Each entity which is required to 
     establish and maintain records under this subsection shall 
     make such books, documents, papers, and records available to 
     the Secretary or the Comptroller General of the United 
     States, or any of their duly authorized representatives, for 
     examination, copying, or mechanical reproduction on or off 
     the premises of such entity upon a reasonable request 
     therefore. The Secretary and the Comptroller General of the 
     United States, or any of their duly authorized 
     representatives, shall have the authority to conduct such 
     examination, copying, and reproduction.
       ``(f) Audits.--
       ``(1) In general.--Each entity which receives a grant under 
     this section shall provide for an independent annual 
     financial audit of any books, accounts, financial records, 
     files, and other papers and property which relate to the 
     disposition or use of the funds received under such grant and 
     such other funds received by or allocated to the project for 
     which such grant was made. For purposes of assuring accurate, 
     current, and complete disclosure of the disposition or use of 
     the funds received, each such audit shall be conducted in 
     accordance with generally accepted accounting principles. 
     Each audit shall evaluate--
       ``(A) the entity's implementation of the guidelines 
     established by the Secretary respecting cost accounting;
       ``(B) the processes used by the entity to meet the 
     financial and program reporting requirements of the 
     Secretary; and
       ``(C) the billing and collection procedures of the entity 
     and the relation of the procedures to its fee schedule and 
     schedule of discounts and to the availability of health 
     insurance and public programs to pay for the health services 
     it provides.

     A report of each such audit shall be filed with the Secretary 
     at such time and in such manner as the Secretary may require.
       ``(2) Records.--Each entity which receives a grant under 
     this section shall establish and maintain such records as the 
     Secretary shall by regulation require to facilitate the audit 
     required by paragraph (1). The Secretary may specify by 
     regulation the form and manner in which such records shall be 
     established and maintained.
       ``(3) Availability of records.--Each entity which is 
     required to establish and maintain records or to provide for 
     an audit under this subsection shall make such books, 
     documents, papers, and records available to the Secretary or 
     the Comptroller General of the United States, or any of their 
     duly authorized representatives, for examination, copying, or 
     mechanical reproduction on or off the premises of such entity 
     upon a reasonable request therefore. The Secretary and the 
     Comptroller General of the United States, or any of their 
     duly authorized representatives, shall have the authority to 
     conduct such examination, copying, and reproduction.
       ``(4) Waiver.--The Secretary may, under appropriate 
     circumstances, waive the application of all or part of the 
     requirements of this subsection with respect to an entity.

     ``SEC. 340I. INTEGRATED HEALTH CENTER.

       ``(a) Integrated Health Center.--The term `integrated 
     health center' means an health center that is operated by an 
     integrated health care system and that serves a medically 
     underserved population (as defined for purposes of section 
     330(b)(3)) by providing, either through the staff and 
     supporting resources of the center or through contracts or 
     cooperative arrangements--
       ``(1) required primary health services (as defined in 
     subsection (b)(1)); and
       ``(2) as may be appropriate for particular centers 
     additional health services (as defined in subsection (b)(2)) 
     necessary for the adequate support of the primary health 
     services required under paragraph (1);

     for all residents of the area served by the center.
       ``(b) Definitions.--For purposes of this section:
       ``(1) Required primary health services.--The term `required 
     primary health services' means--

[[Page 17447]]

       ``(A) basic health services which, for purposes of this 
     section, shall consist of--
       ``(i) health services related to family medicine, internal 
     medicine, pediatrics, obstetrics, or gynecology that are 
     furnished by physicians and where appropriate, physician 
     assistants, nurse practitioners, and nurse midwives;
       ``(ii) diagnostic laboratory and radiologic services;
       ``(iii) preventive health services, including--

       ``(I) prenatal and perinatal services;
       ``(II) appropriate cancer screening;
       ``(III) well-child services;
       ``(IV) immunizations against vaccine-preventable diseases;
       ``(V) screenings for elevated blood lead levels, 
     communicable diseases, and cholesterol;
       ``(VI) pediatric eye, ear, and dental screenings to 
     determine the need for vision and hearing correction and 
     dental care;
       ``(VII) voluntary family planning services; and
       ``(VIII) preventive dental services;

       ``(iv) emergency medical services; and
       ``(v) pharmaceutical services and medication therapy 
     management services as may be appropriate for particular 
     centers;
       ``(B) referrals to providers of medical services (including 
     specialty and hospital care referrals when medically 
     indicated) and other health-related services (including 
     substance abuse and mental health services);
       ``(C) patient case management services (including 
     counseling, referral, and follow-up services) and other 
     services designed to assist health center patients in 
     establishing eligibility for and gaining access to Federal, 
     State, and local programs that provide or financially support 
     the provision of medical, social, housing, educational, or 
     other related services;
       ``(D) services that enable individuals to use the services 
     of the center (including outreach and transportation services 
     and, if a substantial number of the individuals in the 
     population served by a center are of limited English-speaking 
     ability, the services of appropriate personnel fluent in the 
     languages spoken by a predominant number of such 
     individuals); and
       ``(E) education of patients and the general population 
     served by the center regarding the availability and proper 
     use of health services.
       ``(2) Additional health services.--The term `additional 
     health services' means services that are not included as 
     required primary health services and that are appropriate to 
     meet the health needs of the population served by the center 
     involved. Such term may include--
       ``(A) behavioral and mental health and substance abuse 
     services;
       ``(B) recuperative care services; and
       ``(C) environmental health services.
       (b) Coverage Under the Medicare Program.--
       (1) Part b benefit.--Section 1861(s)(2)(E) of the Social 
     Security Act (42 U.S.C. 1395x(s)(2)(E)) is amended--
       (A) by striking ``services and'' and inserting 
     ``services,''; and
       (B) by striking ``services'' the second place it appears 
     and inserting ``services, and integrated health center 
     services''.
       (2) Definitions.--Section 1861(aa) of the Social Security 
     Act (42 U.S.C. 1395x(aa)) is amended--
       (A) in the heading--
       (i) by striking ``Services and'' and inserting 
     ``Services,''; and
       (ii) by striking ``Services'' the second place it appears 
     and inserting ``Services, and Integrated Health Center 
     Services'';
       (B) in paragraph (1)(B), by striking ``paragraph (5))'' and 
     inserting ``paragraph (7));
       (C) by redesignating paragraphs (5), (6), and (7) as 
     paragraphs (7), (8), and (9), respectively; and
       (D) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) The term `integrated health center services' means--
       ``(A) services of the type described in subparagraphs (A) 
     through (C) of paragraph (1); and
       ``(B) preventive primary health services that a center is 
     required to provide under section 340I of the Public Health 
     Service Act,

     when furnished to an individual as an outpatient of an 
     integrated health center, and for this purpose, any reference 
     to a rural health clinic or a physician described in 
     paragraph (2)(B) is deemed a reference to an integrated 
     health center or a physician at the center, respectively.
       ``(6) The term `integrated health center' means a center 
     that is operated by a qualified integrated health care system 
     (as defined in section 340H(a)(1) of the Public Health 
     Service Act that--
       ``(A) is receiving a grant under section 340H of such Act; 
     or
       ``(B) is determined by the Secretary to meet the 
     requirements for receiving such a grant.''.
       (3) Payment.--
       (A) In general.--Section 1832(a)(2)(D) of the Social 
     Security Act (42 U.S.C. 1395k(a)(2)(D)) is amended--
       (i) by striking ``and (ii)'' and inserting ``, (ii)''; and
       (ii) by striking ``services'' the second place it appears 
     and inserting ``services, and (iii) integrated health center 
     services.''.
       (B) Part b deductible does not apply.--Section 1833(b)(4) 
     of the Social Security Act (42 U.S.C. 13951(b)(4)) is amended 
     by inserting ``or integrated health center services'' after 
     ``Federally qualified health center services''.
       (C) Exclusion from payment removed.--The second sentence of 
     section 1862(a) of the Social Security Act (42 U.S.C. 
     1395y(a)) is amended by inserting ``or integrated health 
     center services described in section 1861 (aa)(5)(B)'' after 
     ``section 1861(aa)(3)(B)''.
       (D) Waiver of anti-kickback restriction.--Section 
     1128B(b)(3)(D) of the Social Security Act (42 U.S.C. 1320a-
     7b(b)(3)(D)) is amended by inserting ``or by an integrated 
     health center'' after ``Federally qualified health center''.
       (4) Conforming amendments.--(A) Clauses (ii) and (iv) of 
     section 1834(a)(1)(E) of the Social Security Act (42 U.S.C. 
     1395m(a)(1)(E)) are each amended by striking ``section 
     1861(aa)(5)'' and inserting ``section 1861(aa)(7)''.
       (B) Section 1842(b)(18)(C)(i) of the Social Security Act 
     (42 U.S.C. 1395u(b)(18)(C)(i)) is amended by striking 
     ``section 1861(aa)(5)'' and inserting ``section 
     1861(aa)(7)''.
       (C) Section 1861(s)(2) of the Social Security Act (42 
     U.S.C. 1395x(s)(2)) is amended--
       (i) in subparagraph (H)(i), by striking ``subsection 
     (aa)(5)'' and inserting ``subsection (aa)(7)''; and
       (ii) in subparagraph (K)--
       (I) by striking ``subsection (aa)(5)'' each place it 
     appears and inserting ``subsection (aa)(7)''; and
       (II) by striking ``subsection (aa)(6)'' and inserting 
     ``subsection (aa)(8)''.
       (D) Section 1861(dd)(3)(B) of the Social Security Act (42 
     U.S.C. 1395x(dd)(3)(B)) is amended by striking ``subsection 
     (aa)(5)'' and inserting ``subsection (aa)(7)''.
       (c) Recognition Under Medicaid.--
       (1) Coverage.--Section 1905(a)(2) of the Social Security 
     Act (42 U.S.C. 1396d(a)(2)) is amended--
       (A) by striking ``and (C)'' and inserting ``, (C)''; and
       (B) by inserting ``, and
       ``(D) integrated health center services (as defined in 
     subsection (1)(3)(A)) and any other ambulatory services 
     offered by the integrated health center and which are 
     otherwise included in the plan.'' after ``included in the 
     plan'' the second place it appears.
       (2) Definitions.--Section 1905(l) of such Act (42 U.S.C. 
     1396d(l)) is amended by adding at the end the following:
       ``(3)(A) The term `integrated health center services' means 
     services of the type described in subparagraphs (A) through 
     (C) of section 1861(aa) when furnished to an individual as a 
     patient of an integrated health center and, for this purpose, 
     any reference to a rural health clinic or a physician 
     described in section 1861(aa)(2)(B) is deemed a reference to 
     an integrated health center or a physician at the center, 
     respectively.
       ``(B) The term `integrated health center' means a center 
     that is operated by a qualified integrated health care system 
     that--
       ``(i) is receiving a grant under section 340H of the Public 
     Health Service Act; or
       ``(ii) is determined by the Secretary, based on the 
     recommendations of the Administrator of the Centers for 
     Medicare & Medicaid Services, to meet the requirements for 
     receiving such a grant.''.
       (3) Payment.--Section 1902(a) of such Act (42 U.S.C. 
     1396a(a)) is amended--
       (A) in paragraph (15), by inserting ``and for services 
     described in clause (D) of section 1905(a)(2) in accordance 
     with the provisions of subsection (cc)'' after ``subsection 
     (bb)''; and
       (B) by adding at the end the following:
       ``(cc) Payment for Services Provided by Integrated Health 
     Centers.--
       ``(1) In general.--Beginning with fiscal year 2006 with 
     respect to services furnished on or after January 1, 2006, 
     and each succeeding fiscal year, the State plan shall provide 
     for payment for services described in section 1905(a)(2)(D) 
     furnished by an integrated health center in accordance with 
     the provisions of this subsection.
       ``(2) Fiscal year 2006.--Subject to paragraph (4), for 
     services furnished on and after January 1, 2006, during 
     fiscal year 2006, the State plan shall provide for payment 
     for such services in an amount (calculated on a per visit 
     basis) that is equal to 100 percent of the average of the 
     costs of the center of furnishing such services during fiscal 
     years 2004 and 2005 which are reasonable and related to the 
     cost of furnishing such services, or based on such other 
     tests of reasonableness as the Secretary prescribes in 
     regulations under section 1833(a)(3), or, in the case of 
     services to which such regulations do not apply, the same 
     methodology used under section 1833(a)(3), adjusted to take 
     into account any increase or decrease in the scope of such 
     services furnished by the center during fiscal years 2004 and 
     2005.
       ``(3) Fiscal year 2007 and succeeding fiscal years.--
     Subject to paragraph (4), for services furnished during 
     fiscal year 2007 or a succeeding fiscal year, the State plan 
     shall provide for payment for such services in an amount 
     (calculated on a per visit basis) that is equal to the amount 
     calculated for such services under this subsection for the 
     preceding fiscal year--

[[Page 17448]]

       ``(A) increased by the percentage increase in the MEI (as 
     defined in section 1842(i)(3)) for that fiscal year; and
       ``(B) adjusted to take into account any increase or 
     decrease in the scope of such services furnished by the 
     center during that fiscal year.
       ``(4) Establishment of initial year payment amount for new 
     centers.--In any case in which an entity first qualifies as 
     an integrated health center after fiscal year 2006, the State 
     plan shall provide for payment for services described in 
     section 1905(a)(2)(D) furnished by the center in the first 
     fiscal year in which the center so qualifies in an amount 
     (calculated on a per visit basis) that is equal to 100 
     percent of the costs of furnishing such services during such 
     fiscal year based on the rates established under this 
     subsection for the fiscal year for other such centers located 
     in the same or adjacent area with a similar case load or, in 
     the absence of such a center, in accordance with the 
     regulations and methodology referred to in paragraph (2) or 
     based on such other tests of reasonableness as the Secretary 
     may specify. For each fiscal year following the fiscal year 
     in which the entity first qualifies as an integrated health 
     center, the State plan shall provide for the payment amount 
     to be calculated in accordance with paragraph (3).
       ``(5) Administration in the case of managed care.--
       ``(A) In general.--In the case of services furnished by an 
     integrated health center pursuant to a contract between the 
     center and a managed care entity (as defined in section 
     1932(a)(1)(B)), the State plan shall provide for payment to 
     the center by the State of a supplemental payment equal to 
     the amount (if any) by which the amount determined under 
     paragraphs (2), (3), and (4) exceeds the amount of the 
     payments provided under the contract.
       ``(B) Payment schedule.--The supplemental payment required 
     under subparagraph (A) shall be made pursuant to a payment 
     schedule agreed to by the State and the integrated health 
     center, but in no case less frequently than every 4 months.
       ``(6) Alternative payment methodologies.--Notwithstanding 
     any other provision of this section, the State plan may 
     provide for payment in any fiscal year to an integrated 
     health center for services described in section 1905(a)(2)(D) 
     in an amount which is determined under an alternative payment 
     methodology that--
       ``(A) is agreed to by the State and the center; and
       ``(B) results in payment to the center of an amount which 
     is at least equal to the amount otherwise required to be paid 
     to the center under this section.''.
       (4) Waiver prohibited.--Section 1915(b) of the Social 
     Security Act (42 U.S.C.1396n(b)) is amended in the matter 
     preceding paragraph (1), by inserting ``1902(cc),'' after 
     ``1902(bb),''.
       (d) Protection Against Liability.--Section 224(g) of the 
     Public Health Service Act (42 U.S.C. 233(g)) is amended--
       (1) In paragraph (4), by striking ``An entity'' and 
     inserting ``Subject to paragraph (6), an entity''; and
       (2) by adding at the end the following:
       ``(6) For purposes of this section--
       ``(A) a qualified integrated health care system receiving a 
     grant under section 340H and any integrated health center 
     operated by such system shall be considered to be an entity 
     described in paragraph (4); and
       ``(B) the provisions of this section shall apply to such 
     system and centers in the same manner as such provisions 
     apply to an entity described in such paragraph (4), except 
     that--
       ``(i) notwithstanding paragraph (1)(B), the deeming of any 
     system or center, or of an officer, governing board member, 
     employee, or contractor of such system or center, to be an 
     employee of the Public Health Service for purposes of this 
     section shall apply only with respect to items and services 
     that are furnished to a member of the underserved population 
     served by the entity;
       ``(ii) notwithstanding paragraph (3), this paragraph shall 
     apply only with respect to causes of action arising from acts 
     or omissions that occur on or after January 1, 2006; and
       ``(iii) the Secretary shall make separate estimates under 
     subsection (k)(1) with respect to such systems and centers 
     and entities described in paragraph (4) (other than such 
     systems and centers), establish separate funds under 
     subsection (k)(2) with respect to such groups of entities, 
     and any appropriations under this subsection for such systems 
     and centers shall be separate from the amounts authorized by 
     subsection (k)(2).''.
       (e) Effective Date.--The amendments made subsections (b) 
     and (c) shall apply to items and services furnished on or 
     after October 1, 2005.

                  Subtitle C--Miscellaneous Provisions

     SEC. 331. COMMUNITY HEALTH CENTER COLLABORATIVE ACCESS 
                   EXPANSION.

       Section 330 of the Public Health Service Act (42 U.S.C. 
     254b) is amended by adding at the end the following:
       ``(s) Miscellaneous Provisions.--
       ``(1) Rule of construction with respect to rural health 
     clinics.--
       ``(A) In general.--Nothing in this section shall be 
     construed to prevent a community health center from 
     contracting with a federally certified rural health clinic 
     (as defined by section 1861(aa)(2) of the Social Security 
     Act) for the delivery of primary health care services that 
     are available at the rural health clinic to individuals who 
     would otherwise be eligible for free or reduced cost care if 
     that individual were able to obtain that care at the 
     community health center. Such services may be limited in 
     scope to those primary health care services available in that 
     rural health clinic.
       ``(B) Assurances.--In order for a rural health clinic to 
     receive funds under this section through a contract with a 
     community health center under paragraph (1), such rural 
     health clinic shall establish policies to ensure--
       ``(i) nondiscrimination based upon the ability of a patient 
     to pay; and
       ``(ii) the establishment of a sliding fee scale for low-
     income patients.''.

     SEC. 332. IMPROVEMENTS TO SECTION 340B PROGRAM.

       (a) Elimination of Group Purchasing Prohibition for Certain 
     Hospitals.--Section 340B(a)(4)(L) of the Public Health 
     Service Act (42 U.S.C. 256b(a)(4)(L)) is amended--
       (1) in clause (i), by adding ``and'' at the end;
       (2) in clause (ii), by striking ``; and'' and inserting a 
     period; and
       (3) by striking clause (iii).
       (b) Permitting Use of Multiple Contract Pharmacies.--
     Section 340B f the Public Health Service Act (42 U.S.C. 256b) 
     is amended by adding at the end the following:
       ``(e) Permitting Use of Multiple Contract Pharmacies.--
     Nothing in this section shall be construed as prohibiting a 
     covered entity from entering into contracts with more than 
     one pharmacy for the provision of covered drugs, including a 
     contract that--
       ``(1) supplements the use of an in-house pharmacy 
     arrangement; or
       ``(2) requires the approval of the Secretary.''.
       (c) Improvements in Program Administration.--Section 340B 
     of the Public Health Service Act (42 U.S.C. 256b), as amended 
     by subsection (b), is further amended by adding at the end 
     the following:
       ``(f) Improvements in Program Administration.--
       ``(1) In general.--The Secretary shall provide, from funds 
     appropriated under paragraph (2), for improvements in the 
     integrity and administration of the program under this 
     section in order to prevent abuse and misuse of discounted 
     prices made available under this section. Such improvements 
     shall include the following:
       ``(A) The development of a system to verify the accuracy of 
     information regarding covered entities that is listed on the 
     Internet website of the Department of Health and Human 
     Services relating to this section.
       ``(B) The establishment of a third-party auditing system by 
     which covered entities and manufacturers are regularly 
     audited to ensure compliance with the requirements of this 
     section.
       ``(C) The conduct of such audits under subsection (a)(5)(C) 
     that supplement the audits conducted under subparagraph (B) 
     as the Secretary determines appropriate and the 
     implementation of dispute resolution guidelines and other 
     compliance programs.
       ``(D) The development of more detailed guidance regarding 
     the definition of section 340B patients and describing 
     options for billing under the medicaid program under title 
     XIX of the Social Security Act in order to avoid duplicative 
     discounts.
       ``(E) The issuance of advisory opinions within defined time 
     periods in response to questions from manufacturers or 
     covered entities regarding the application of the 
     requirements of this section in specific factual 
     circumstances.
       ``(F) Insofar as the Secretary determines feasible, 
     providing access through the Internet website of the 
     Department of Health and Human Services on the prices for 
     covered drugs made available under this section, but only in 
     a manner (such as through the use of password protection) 
     that limits such access to covered entities.
       ``(G) The improved dissemination of educational materials 
     regarding the program under this section to covered entities 
     that are not currently participating in such programs 
     including regional educational sessions.
       ``(2) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection, 
     such sums as may be necessary for fiscal year 2006 and each 
     succeeding fiscal year.''.

     SEC. 333. FORBEARANCE FOR STUDENT LOANS FOR PHYSICIANS 
                   PROVIDING SERVICES IN FREE CLINICS.

       (a) In General.--Section 428(c)(3)(A) of the Higher 
     Education Act of 1965 (20 U.S.C. 1078(c)(3)(A)) is amended--
       (1) in clause (i)--
       (A) in subclause (III), by striking ``or'' at the end;
       (B) in subclause (V), by adding ``or'' at the end; and
       (C) by adding at the end the following:

       ``(V) is volunteering without pay for at least 80 hours per 
     month at a free clinic as defined under section 224 of the 
     Public Health Service Act;''; and

       (2) in clause (ii)(III), by inserting ``or (i)(V)'' after 
     ``clause (i)(III)''.

[[Page 17449]]

       (b) Perkins Program.--Section 464(e) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087dd(e)) is amended--
       (1) in paragraph (1), by striking ``or'' at the end;
       (2) in paragraph (2), by striking the period and inserting 
     ``; or''; and
       (3) by adding at the end the following:
       ``(3) the borrower is volunteering without pay for at least 
     80 hours per month at a free clinic as defined under section 
     224 of the Public Health Service Act.''.

     SEC. 334. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT 
                   RELATING TO LIABILITY.

       Section 224 of the Public Health Service Act (42 U.S.C. 
     233) is amended--
       (1) in subsection (g)(1)--
       (A) in subparagraph (A)--
       (i) in the first sentence, by striking ``or employee'' and 
     inserting ``employee, or (subject to subsection (k)(4)) 
     volunteer practitioner''; and
       (ii) in the second sentence, by inserting ``and subsection 
     (k)(4)'' after ``subject to paragraph (5)''; and
       (B) by adding at the end the following:
       ``(I) For purposes of this subsection, the term `employee' 
     shall include a health professional who volunteers to provide 
     health-related services for an entity described in paragraph 
     (4).'';
       (2) in subsection (k), by adding at the end the following:
       ``(4)(A) Subsections (g) through (m) apply with respect to 
     volunteer practitioners beginning with the first fiscal year 
     for which an appropriations Act provides that amounts in the 
     fund under paragraph (2) are available with respect to such 
     practitioners.
       ``(B) For purposes of subsections (g) through (m), the term 
     `volunteer practitioner' means a practitioner who, with 
     respect to an entity described in subsection (g)(4), meets 
     the following conditions:
       ``(i) The practitioner is a licensed physician or a 
     licensed clinical psychologist.
       ``(ii) At the request of such entity, the practitioner 
     provides services to patients of the entity, at a site at 
     which the entity operates or at a site designated by the 
     entity. The weekly number of hours of services provided to 
     the patients by the practitioner is not a factor with respect 
     to meeting conditions under this subparagraph.
       ``(iii) The practitioner does not for the provision of such 
     services receive any compensation from such patients, from 
     the entity, or from third-party payors (including 
     reimbursement under any insurance policy or health plan, or 
     under any Federal or State health benefits program).'';
       (3) in subsection (o)(2)--
       (A) in subparagraph (D), by striking clause (i) and 
     inserting the following:
       ``(i) The health care practitioner may provide the services 
     involved as an employee of the free clinic, or may receive 
     repayment from the free clinic only for reasonable expenses 
     incurred by the health care practitioner in the provision of 
     the services to the individual.''; and
       (B) by adding at the end the following:
       ``(G) The health care practitioner is providing the 
     services involved as a paid employee of the free clinic.''; 
     and
       (4) in each of subsections (g), (i), (j), (k), (l), and 
     (m), by striking ``employee, or contractor'' each place such 
     term appears and inserting ``employee, volunteer 
     practitioner, or contractor'';

     SEC. 335. SENSE OF THE SENATE CONCERNING HEALTH DISPARITIES.

       It is the sense of the Senate that additional measures are 
     needed to reduce or eliminate disparities in health care 
     related to race, ethnicity, socioeconomic status, and 
     geography that affect access to quality health care.
                                 ______
                                 
      By Mr. SPECTER (for himself, Mr. Corzine, Mr. Lautenberg, Mr. 
        Schumer, and Ms. Snowe):
  S.J. Res. 21. A joint resolution recognizing Commodore John Barry as 
the first flag officer of the United States Navy; to the Committee on 
Armed Services.
  Mr. SPECTER. Mr. President, I ask unanimous consent that the text of 
the joint resolution be printed in the Record.
  There being no objection, the joint resolution was ordered to be 
printed in the Record, as follows:

                              S.J. Res. 21

       Whereas John Barry, American merchant marine captain and 
     native of County Wexford, Ireland, volunteered his services 
     to the Continental Navy during the American War for 
     Independence and was assigned by the Continental Congress as 
     captain of the Lexington, taking command of that vessel on 
     March 14, 1776, and later participating in the victorious 
     Trenton campaign;
       Whereas the quality and effectiveness of Captain John 
     Barry's service to the American war effort was recognized not 
     only by George Washington but also by the enemies of the new 
     Nation;
       Whereas Captain John Barry rejected British General Lord 
     Howe's flattering offer to desert Washington and the patriot 
     cause, stating: ``Not the value and command of the whole 
     British fleet can lure me from the cause of my country.'';
       Whereas Captain John Barry, while in command of the frigate 
     Alliance, successfully transported French gold to America to 
     help finance the American War for Independence and also won 
     numerous victories at sea;
       Whereas when the First Congress, acting under the new 
     Constitution of the United States, authorized the raising and 
     construction of the United States Navy, it was to Captain 
     John Barry that President George Washington turned to build 
     and lead the new Nation's infant Navy, the successor to the 
     Continental Navy of the War for Independence;
       Whereas Captain John Barry supervised the building of his 
     flagship, the U.S.S. United States;
       Whereas on February 22, 1797, President Washington 
     personally conferred upon Captain John Barry, by and with the 
     advice and consent of the Senate, the rank of Captain, with 
     ``Commission No. 1'', United States Navy, dated June 7, 1794;
       Whereas John Barry served as the senior officer of the 
     United States Navy, with the title of ``Commodore'' (in 
     official correspondence), under Presidents Washington, John 
     Adams, and Jefferson;
       Whereas as commander of the first United States naval 
     squadron under the Constitution of the United States, which 
     included the U.S.S. Constitution (``Old Ironsides''), John 
     Barry was a Commodore, with the right to fly a broad pendant, 
     which made him a flag officer; and
       Whereas in this sense it can be said that Commodore John 
     Barry was the first flag officer of the United States Navy: 
     Now, therefore, be it
       Resolved by the Senate and House of Representatives of the 
     United States of America in Congress assembled, That 
     Commodore John Barry is recognized, and is hereby honored, as 
     the first flag officer of the United States Navy.

                          ____________________