[Congressional Record (Bound Edition), Volume 153 (2007), Part 16]
[House]
[Pages 22175-22292]
[From the U.S. Government Publishing Office, www.gpo.gov]




         CHILDREN'S HEALTH AND MEDICARE PROTECTION ACT OF 2007

  Mr. DINGELL. Mr. Speaker, pursuant to House Resolution 594, I call up 
the bill (H.R. 3162) to amend titles XVIII, XIX, and XXI of the Social 
Security Act to extend and improve the children's health insurance 
program, to improve beneficiary protections under the Medicare, 
Medicaid, and the CHIP program, and for other purposes, and ask for its 
immediate consideration.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 3162

       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 ``Children's 
     Health and Medicare Protection Act of 2007''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:
Sec. 1. Short title; table of contents.

              TITLE I--CHILDREN'S HEALTH INSURANCE PROGRAM

Sec. 100.  Purpose.

                          Subtitle A--Funding

Sec. 101. Establishment of new base CHIP allotments.
Sec. 102. 2-year initial availability of CHIP allotments.
Sec. 103. Redistribution of unused allotments to address State funding 
              shortfalls.
Sec. 104. Extension of option for qualifying States.

  Subtitle B--Improving Enrollment and Retention of Eligible Children

Sec. 111. CHIP performance bonus payment to offset additional 
              enrollment costs resulting from enrollment and retention 
              efforts.
Sec. 112. State option to rely on findings from an express lane agency 
              to conduct simplified eligibility determinations.
Sec. 113. Application of medicaid outreach procedures to all children 
              and pregnant women.
Sec. 114. Encouraging culturally appropriate enrollment and retention 
              practices.

                          Subtitle C--Coverage

Sec. 121. Ensuring child-centered coverage.

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Sec. 122. Improving benchmark coverage options.
Sec. 123. Premium grace period.

                        Subtitle D--Populations

Sec. 131. Optional coverage of older children under Medicaid and CHIP.
Sec. 132. Optional coverage of legal immigrants under the Medicaid 
              program and CHIP.
Sec. 133. State option to expand or add coverage of certain pregnant 
              women under CHIP.
Sec. 134. Limitation on waiver authority to cover adults.

                           Subtitle E--Access

Sec. 141. Children's Access, Payment, and Equality Commission.
Sec. 142. Model of Interstate coordinated enrollment and coverage 
              process.
Sec. 143. Medicaid citizenship documentation requirements.
Sec. 144. Access to dental care for children.
Sec. 145. Prohibiting initiation of new health opportunity account 
              demonstration programs.

               Subtitle F--Quality and Program Integrity

Sec. 151. Pediatric health quality measurement program.
Sec. 152. Application of certain managed care quality safeguards to 
              CHIP.
Sec. 153. Updated Federal evaluation of CHIP.
Sec. 154. Access to records for IG and GAO audits and evaluations.
Sec. 155. References to title XXI.
Sec. 156. Reliance on law; exception for State legislation.

              TITLE II--MEDICARE BENEFICIARY IMPROVEMENTS

                  Subtitle A--Improvements in Benefits

Sec. 201. Coverage and waiver of cost-sharing for preventive services.
Sec. 202. Waiver of deductible for colorectal cancer screening tests 
              regardless of coding, subsequent diagnosis, or ancillary 
              tissue removal.
Sec. 203. Parity for mental health coinsurance.

Subtitle B--Improving, Clarifying, and Simplifying Financial Assistance 
                 for Low Income Medicare Beneficiaries

Sec. 211. Improving assets tests for Medicare Savings Program and low-
              income subsidy program.
Sec. 212. Making QI program permanent and expanding eligibility.
Sec. 213. Eliminating barriers to enrollment.
Sec. 214. Eliminating application of estate recovery.
Sec. 215. Elimination of part D cost-sharing for certain non-
              institutionalized full-benefit dual eligible individuals.
Sec. 216. Exemptions from income and resources for determination of 
              eligibility for low-income subsidy.
Sec. 217. Cost-sharing protections for low-income subsidy-eligible 
              individuals.
Sec. 218. Intelligent assignment in enrollment.

              Subtitle C--Part D Beneficiary Improvements

Sec. 221. Including costs incurred by AIDS drug assistance programs and 
              Indian Health Service in providing prescription drugs 
              toward the annual out of pocket threshold under Part D.
Sec. 222. Permitting mid-year changes in enrollment for formulary 
              changes adversely impact an enrollee.
Sec. 223. Removal of exclusion of benzodiazepines from required 
              coverage under the Medicare prescription drug program.
Sec. 224. Permitting updating drug compendia under part D using part B 
              update process.
Sec. 225. Codification of special protections for six protected drug 
              classifications.
Sec. 226. Elimination of Medicare part D late enrollment penalties paid 
              by low-income subsidy-eligible individuals.
Sec. 227. Special enrollment period for subsidy eligible individuals.

                Subtitle D--Reducing Health Disparities

Sec. 231. Medicare data on race, ethnicity, and primary language.
Sec. 232. Ensuring effective communication in Medicare.
Sec. 233. Demonstration to promote access for Medicare beneficiaries 
              with limited English proficiency by providing 
              reimbursement for culturally and linguistically 
              appropriate services.
Sec. 234. Demonstration to improve care to previously uninsured.
Sec. 235. Office of the Inspector General report on compliance with and 
              enforcement of national standards on culturally and 
              linguistically appropriate services (CLAS) in medicare.
Sec. 236. IOM report on impact of language access services.
Sec. 237. Definitions.

             TITLE III--PHYSICIANS' SERVICE PAYMENT REFORM

Sec. 301. Establishment of separate target growth rates for service 
              categories.
Sec. 302. Improving accuracy of relative values under the Medicare 
              physician fee schedule.
Sec. 303. Physician feedback mechanism on practice patterns.
Sec. 304. Payments for efficient physicians.
Sec. 305. Recommendations on refining the physician fee schedule.
Sec. 306. Improved and expanded medical home demonstration project.
Sec. 307. Repeal of Physician Assistance and Quality Initiative Fund.
Sec. 308. Adjustment to Medicare payment localities.
Sec. 309. Payment for imaging services.
Sec. 310. Repeal of Physicians Advisory Council.

                  TITLE IV--MEDICARE ADVANTAGE REFORMS

                       Subtitle A--Payment Reform

Sec. 401. Equalizing payments between Medicare Advantage plans and fee-
              for-service Medicare.

                  Subtitle B--Beneficiary Protections

Sec. 411. NAIC development of marketing, advertising, and related 
              protections.
Sec. 412. Limitation on out-of-pocket costs for individual health 
              services.
Sec. 413. MA plan enrollment modifications.
Sec. 414. Information for beneficiaries on MA plan administrative 
              costs.

                Subtitle C--Quality and Other Provisions

Sec. 421. Requiring all MA plans to meet equal standards.
Sec. 422. Development of new quality reporting measures on racial 
              disparities.
Sec. 423. Strengthening audit authority.
Sec. 424. Improving risk adjustment for MA payments.
Sec. 425. Eliminating special treatment of private fee-for-service 
              plans.
Sec. 426. Renaming of Medicare Advantage program.

                  Subtitle D--Extension of Authorities

Sec. 431. Extension and revision of authority for special needs plans 
              (SNPs).
Sec. 432. Extension and revision of authority for Medicare reasonable 
              cost contracts.

            TITLE V--PROVISIONS RELATING TO MEDICARE PART A

Sec. 501. Inpatient hospital payment updates.
Sec. 502. Payment for inpatient rehabilitation facility (IRF) services.
Sec. 503. Long-term care hospitals.
Sec. 504. Increasing the DSH adjustment cap.
Sec. 505. PPS-exempt cancer hospitals.
Sec. 506. Skilled nursing facility payment update.
Sec. 507. Revocation of unique deeming authority of the Joint 
              Commission for the Accreditation of Healthcare 
              Organizations.

         TITLE VI--OTHER PROVISIONS RELATING TO MEDICARE PART B

             Subtitle A--Payment and Coverage Improvements

Sec. 601. Payment for therapy services.
Sec. 602. Medicare separate definition of outpatient speech-language 
              pathology services.
Sec. 603. Increased reimbursement rate for certified nurse-midwives.
Sec. 604. Adjustment in outpatient hospital fee schedule increase 
              factor.
Sec. 605. Exception to 60-day limit on Medicare substitute billing 
              arrangements in case of physicians ordered to active duty 
              in the Armed Forces.
Sec. 606. Excluding clinical social worker services from coverage under 
              the medicare skilled nursing facility prospective payment 
              system and consolidated payment.
Sec. 607. Coverage of marriage and family therapist services and mental 
              health counselor services.
Sec. 608. Rental and purchase of power-driven wheelchairs.
Sec. 609. Rental and purchase of oxygen equipment.
Sec. 610. Adjustment for Medicare mental health services.
Sec. 611. Extension of brachytherapy special rule.
Sec. 612. Payment for part B drugs.

       Subtitle B--Extension of Medicare Rural Access Protections

Sec. 621. 2-year extension of floor on medicare work geographic 
              adjustment.
Sec. 622. 2-year extension of special treatment of certain physician 
              pathology services under Medicare.
Sec. 623. 2-year extension of medicare reasonable costs payments for 
              certain clinical diagnostic laboratory tests furnished to 
              hospital patients in certain rural areas.
Sec. 624. 2-year extension of Medicare incentive payment program for 
              physician scarcity areas .
Sec. 625. 2-year extension of medicare increase payments for ground 
              ambulance services in rural areas.

[[Page 22177]]

Sec. 626. Extending hold harmless for small rural hospitals under the 
              HOPD prospective payment system.

              Subtitle C--End Stage Renal Disease Program

Sec. 631. Chronic kidney disease demonstration projects.
Sec. 632. Medicare coverage of kidney disease patient education 
              services.
Sec. 633. Required training for patient care dialysis technicians.
Sec. 634. MedPAC report on treatment modalities for patients with 
              kidney failure.
Sec. 635. Adjustment for erythropoietin stimulating agents (ESAs).
Sec. 636. Site neutral composite rate.
Sec. 637. Development of ESRD bundling system and quality incentive 
              payments.
Sec. 638. MedPAC report on ESRD bundling system.
Sec. 639. OIG study and report on erythropoietin.

                       Subtitle D--Miscellaneous

Sec. 651. Limitation on exception to the prohibition on certain 
              physician referrals for hospitals.

        TITLE VII--PROVISIONS RELATING TO MEDICARE PARTS A AND B

Sec. 701. Home health payment update for 2008.
Sec. 702. 2-year extension of temporary Medicare payment increase for 
              home health services furnished in a rural area.
Sec. 703. Extension of Medicare secondary payer for beneficiaries with 
              end stage renal disease for large group plans.
Sec. 704. Plan for Medicare payment adjustments for never events.
Sec. 705. Treatment of Medicare hospital reclassifications.

                          TITLE VIII--MEDICAID

                Subtitle A--Protecting Existing Coverage

Sec. 801. Modernizing transitional Medicaid.
Sec. 802. Family planning services.
Sec. 803. Authority to continue providing adult day health services 
              approved under a State Medicaid plan.
Sec. 804. State option to protect community spouses of individuals with 
              disabilities.
Sec. 805. County medicaid health insuring organizations .

                          Subtitle B--Payments

Sec. 811. Payments for Puerto Rico and territories.
Sec. 812. Medicaid drug rebate.
Sec. 813. Adjustment in computation of Medicaid FMAP to disregard an 
              extraordinary employer pension contribution.
Sec. 814. Moratorium on certain payment restrictions.
Sec. 815. Tennessee DSH.
Sec. 816. Clarification treatment of regional medical center.

                       Subtitle C--Miscellaneous

Sec. 821. Demonstration project for employer buy-in.
Sec. 822. Diabetes grants.
Sec. 823. Technical correction.

                        TITLE IX--MISCELLANEOUS

Sec. 901.  Medicare Payment Advisory Commission status.
Sec. 902. Repeal of trigger provision.
Sec. 903. Repeal of comparative cost adjustment (CCA) program.
Sec. 904. Comparative effectiveness research.
Sec. 905. Implementation of Health information technology (IT) under 
              Medicare.
Sec. 906. Development, reporting, and use of health care measures.
Sec. 907. Improvements to the Medigap program.

                           TITLE X--REVENUES

Sec. 1001. Increase in rate of excise taxes on tobacco products and 
              cigarette papers and tubes.
Sec. 1002. Exemption for emergency medical services transportation.

              TITLE I--CHILDREN'S HEALTH INSURANCE PROGRAM

     SEC. 100. PURPOSE.

       It is the purpose of this title to provide dependable and 
     stable funding for children's health insurance under titles 
     XXI and XIX of the Social Security Act in order to enroll all 
     six million uninsured children who are eligible, but not 
     enrolled, for coverage today through such titles.

                          Subtitle A--Funding

     SEC. 101. ESTABLISHMENT OF NEW BASE CHIP ALLOTMENTS.

       Section 2104 of the Social Security Act (42 U.S.C. 1397dd) 
     is amended--
       (1) in subsection (a)--
       (A) in paragraph (9), by striking ``and'' at the end;
       (B) in paragraph (10), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following new paragraph:
       ``(11) for fiscal year 2008 and each succeeding fiscal 
     year, the sum of the State allotments provided under 
     subsection (i) for such fiscal year.''; and
       (2) in subsections (b)(1) and (c)(1), by striking 
     ``subsection (d)'' and inserting ``subsections (d) and (i)''; 
     and
       (3) by adding at the end the following new subsection:
       ``(i) Allotments for States and Territories Beginning With 
     Fiscal Year 2008.--
       ``(1) General allotment computation.--Subject to the 
     succeeding provisions of this subsection, the Secretary shall 
     compute a State allotment for each State for each fiscal year 
     as follows:
       ``(A) For fiscal year 2008.--For fiscal year 2008, the 
     allotment of a State is equal to the greater of--
       ``(i) the State projection (in its submission on forms CMS-
     21B and CMS-37 for May 2007) of Federal payments to the State 
     under this title for such fiscal year, except that, in the 
     case of a State that has enacted legislation to modify its 
     State child health plan during 2007, the State may substitute 
     its projection in its submission on forms CMS-21B and CMS-37 
     for August 2007, instead of such forms for May 2007; or
       ``(ii) the allotment of the State under this section for 
     fiscal year 2007 multiplied by the allotment increase factor 
     under paragraph (2) for fiscal year 2008.
       ``(B) Inflation update for fiscal year 2009 and each second 
     succeeding fiscal year.--For fiscal year 2009 and each second 
     succeeding fiscal year, the allotment of a State is equal to 
     the amount of the State allotment under this paragraph for 
     the previous fiscal year multiplied by the allotment increase 
     factor under paragraph (2) for the fiscal year involved.
       ``(C) Rebasing in fiscal year 2010 and each second 
     succeeding fiscal year.--For fiscal year 2010 and each second 
     succeeding fiscal year, the allotment of a State is equal to 
     the Federal payments to the State that are attributable to 
     (and countable towards) the total amount of allotments 
     available under this section to the State (including 
     allotments made available under paragraph (3) as well as 
     amounts redistributed to the State) in the previous fiscal 
     year multiplied by the allotment increase factor under 
     paragraph (2) for the fiscal year involved.
       ``(D) Special rules for territories.--Notwithstanding the 
     previous subparagraphs, the allotment for a State that is not 
     one of the 50 States or the District of Columbia for fiscal 
     year 2008 and for a succeeding fiscal year is equal to the 
     Federal payments provided to the State under this title for 
     the previous fiscal year multiplied by the allotment increase 
     factor under paragraph (2) for the fiscal year involved (but 
     determined by applying under paragraph (2)(B) as if the 
     reference to `in the State' were a reference to `in the 
     United States').
       ``(2) Allotment increase factor.--The allotment increase 
     factor under this paragraph for a fiscal year is equal to the 
     product of the following:
       ``(A) Per capita health care growth factor.--1 plus the 
     percentage increase in the projected per capita amount of 
     National Health Expenditures from the calendar year in which 
     the previous fiscal year ends to the calendar year in which 
     the fiscal year involved ends, as most recently published by 
     the Secretary before the beginning of the fiscal year.
       ``(B) Child population growth factor.--1 plus the 
     percentage increase (if any) in the population of children 
     under 19 years of age in the State from July 1 in the 
     previous fiscal year to July 1 in the fiscal year involved, 
     as determined by the Secretary based on the most recent 
     published estimates of the Bureau of the Census before the 
     beginning of the fiscal year involved, plus 1 percentage 
     point.
       ``(3) Performance-based shortfall adjustment.--
       ``(A) In general.--If a State's expenditures under this 
     title in a fiscal year (beginning with fiscal year 2008) 
     exceed the total amount of allotments available under this 
     section to the State in the fiscal year (determined without 
     regard to any redistribution it receives under subsection (f) 
     that is available for expenditure during such fiscal year, 
     but including any carryover from a previous fiscal year) and 
     if the average monthly unduplicated number of children 
     enrolled under the State plan under this title (including 
     children receiving health care coverage through funds under 
     this title pursuant to a waiver under section 1115) during 
     such fiscal year exceeds its target average number of such 
     enrollees (as determined under subparagraph (B)) for that 
     fiscal year, the allotment under this section for the State 
     for the subsequent fiscal year (or, pursuant to subparagraph 
     (F), for the fiscal year involved) shall be increased by the 
     product of--
       ``(i) the amount by which such average monthly caseload 
     exceeds such target number of enrollees; and
       ``(ii) the projected per capita expenditures under the 
     State child health plan (as determined under subparagraph (C) 
     for the original fiscal year involved), multiplied by the 
     enhanced FMAP (as defined in section 2105(b)) for the State 
     and fiscal year involved
       ``(B) Target average number of child enrollees.--In this 
     subsection, the target average number of child enrollees for 
     a State--
       ``(i) for fiscal year 2008 is equal to the monthly average 
     unduplicated number of children enrolled in the State child 
     health

[[Page 22178]]

     plan under this title (including such children receiving 
     health care coverage through funds under this title pursuant 
     to a waiver under section 1115) during fiscal year 2007 
     increased by the population growth for children in that State 
     for the year ending on June 30, 2006 (as estimated by the 
     Bureau of the Census) plus 1 percentage point; or
       ``(ii) for a subsequent fiscal year is equal to the target 
     average number of child enrollees for the State for the 
     previous fiscal year increased by the population growth for 
     children in that State for the year ending on June 30 before 
     the beginning of the fiscal year (as estimated by the Bureau 
     of the Census) plus 1 percentage point.
       ``(C) Projected per capita expenditures.--For purposes of 
     subparagraph (A)(ii), the projected per capita expenditures 
     under a State child health plan--
       ``(i) for fiscal year 2008 is equal to the average per 
     capita expenditures (including both State and Federal 
     financial participation) under such plan for the targeted 
     low-income children counted in the average monthly caseload 
     for purposes of this paragraph during fiscal year 2007, 
     increased by the annual percentage increase in the per capita 
     amount of National Health Expenditures (as estimated by the 
     Secretary) for 2008; or
       ``(ii) for a subsequent fiscal year is equal to the 
     projected per capita expenditures under such plan for the 
     previous fiscal year (as determined under clause (i) or this 
     clause) increased by the annual percentage increase in the 
     per capita amount of National Health Expenditures (as 
     estimated by the Secretary) for the year in which such 
     subsequent fiscal year ends.
       ``(D) Availability.--Notwithstanding subsection (e), an 
     increase in allotment under this paragraph shall only be 
     available for expenditure during the fiscal year in which it 
     is provided.
       ``(E) No redistribution of performance-based shortfall 
     adjustment.--In no case shall any increase in allotment under 
     this paragraph for a State be subject to redistribution to 
     other States.
       ``(F) Interim allotment adjustment.--The Secretary shall 
     develop a process to administer the performance-based 
     shortfall adjustment in a manner so it is applied to (and 
     before the end of) the fiscal year (rather than the 
     subsequent fiscal year) involved for a State that the 
     Secretary estimates will be in shortfall and will exceed its 
     enrollment target for that fiscal year.
       ``(G) Periodic auditing.--The Comptroller General of the 
     United States shall periodically audit the accuracy of data 
     used in the computation of allotment adjustments under this 
     paragraph. Based on such audits, the Comptroller General 
     shall make such recommendations to the Congress and the 
     Secretary as the Comptroller General deems appropriate.
       ``(4) Continued reporting.--For purposes of paragraph (3) 
     and subsection (f), the State shall submit to the Secretary 
     the State's projected Federal expenditures, even if the 
     amount of such expenditures exceeds the total amount of 
     allotments available to the State in such fiscal year.''.

     SEC. 102. 2-YEAR INITIAL AVAILABILITY OF CHIP ALLOTMENTS.

       Section 2104(e) of the Social Security Act (42 U.S.C. 
     1397dd(e)) is amended to read as follows:
       ``(e) Availability of Amounts Allotted.--
       ``(1) In general.--Except as provided in paragraph (2) and 
     subsection (i)(3)(D), amounts allotted to a State pursuant to 
     this section--
       ``(A) for each of fiscal years 1998 through 2007, shall 
     remain available for expenditure by the State through the end 
     of the second succeeding fiscal year; and
       ``(B) for fiscal year 2008 and each fiscal year thereafter, 
     shall remain available for expenditure by the State through 
     the end of the succeeding fiscal year.
       ``(2) Availability of amounts redistributed.--Amounts 
     redistributed to a State under subsection (f) shall be 
     available for expenditure by the State through the end of the 
     fiscal year in which they are redistributed, except that 
     funds so redistributed to a State that are not expended by 
     the end of such fiscal year shall remain available after the 
     end of such fiscal year and shall be available in the 
     following fiscal year for subsequent redistribution under 
     such subsection.''.

     SEC. 103. REDISTRIBUTION OF UNUSED ALLOTMENTS TO ADDRESS 
                   STATE FUNDING SHORTFALLS.

       Section 2104(f) of the Social Security Act (42 U.S.C. 
     1397dd(f)) is amended--
       (1) by striking ``The Secretary'' and inserting the 
     following:
       ``(1) In general.--The Secretary'';
       (2) by striking ``States that have fully expended the 
     amount of their allotments under this section.'' and 
     inserting ``States that the Secretary determines with respect 
     to the fiscal year for which unused allotments are available 
     for redistribution under this subsection, are shortfall 
     States described in paragraph (2) for such fiscal year, but 
     not to exceed the amount of the shortfall described in 
     paragraph (2)(A) for each such State (as may be adjusted 
     under paragraph (2)(C)). The amount of allotments not 
     expended or redistributed under the previous sentence shall 
     remain available for redistribution in the succeeding fiscal 
     year.''; and
       (3) by adding at the end the following new paragraph:
       ``(2) Shortfall states described.--
       ``(A) In general.--For purposes of paragraph (1), with 
     respect to a fiscal year, a shortfall State described in this 
     subparagraph is a State with a State child health plan 
     approved under this title for which the Secretary estimates 
     on the basis of the most recent data available to the 
     Secretary, that the projected expenditures under such plan 
     for the State for the fiscal year will exceed the sum of--
       ``(i) the amount of the State's allotments for any 
     preceding fiscal years that remains available for expenditure 
     and that will not be expended by the end of the immediately 
     preceding fiscal year;
       ``(ii) the amount (if any) of the performance based 
     adjustment under subsection (i)(3)(A); and
       ``(iii) the amount of the State's allotment for the fiscal 
     year.
       ``(B) Proration rule.--If the amounts available for 
     redistribution under paragraph (1) for a fiscal year are less 
     than the total amounts of the estimated shortfalls determined 
     for the year under subparagraph (A), the amount to be 
     redistributed under such paragraph for each shortfall State 
     shall be reduced proportionally.
       ``(C) Retrospective adjustment.--The Secretary may adjust 
     the estimates and determinations made under paragraph (1) and 
     this paragraph with respect to a fiscal year as necessary on 
     the basis of the amounts reported by States not later than 
     November 30 of the succeeding fiscal year, as approved by the 
     Secretary.''.

     SEC. 104. EXTENSION OF OPTION FOR QUALIFYING STATES.

       Section 2105(g)(1)(A) of the Social Security Act (42 U.S.C. 
     1397ee(g)(1)(A)) is amended by inserting after ``or 2007'' 
     the following: ``Or 30 percent of any allotment under section 
     2104 for any subsequent fiscal year''.

  Subtitle B--Improving Enrollment and Retention of Eligible Children

     SEC. 111. CHIP PERFORMANCE BONUS PAYMENT TO OFFSET ADDITIONAL 
                   ENROLLMENT COSTS RESULTING FROM ENROLLMENT AND 
                   RETENTION EFFORTS.

       Section 2105(a) of the Social Security Act (42 U.S.C. 
     1397ee(a)) is amended by adding at the end the following new 
     paragraphs:
       ``(3) Performance bonus payment to offset additional 
     medicaid and chip child enrollment costs resulting from 
     enrollment and retention efforts.--
       ``(A) In general.--In addition to the payments made under 
     paragraph (1), for each fiscal year (beginning with fiscal 
     year 2008) the Secretary shall pay to each State that meets 
     the condition under paragraph (4) for the fiscal year, an 
     amount equal to the amount described in subparagraph (B) for 
     the State and fiscal year. The payment under this paragraph 
     shall be made, to a State for a fiscal year, as a single 
     payment not later than the last day of the first calendar 
     quarter of the following fiscal year.
       ``(B) Amount.--The amount described in this subparagraph 
     for a State for a fiscal year is equal to the sum of the 
     following amounts:
       ``(i) For above baseline medicaid child enrollment costs.--

       ``(I) First tier above baseline medicaid enrollees.--An 
     amount equal to the number of first tier above baseline child 
     enrollees (as determined under subparagraph (C)(i)) under 
     title XIX for the State and fiscal year multiplied by 35 
     percent of the projected per capita State Medicaid 
     expenditures (as determined under subparagraph (D)(i)) for 
     the State and fiscal year under title XIX.
       ``(II) Second tier above baseline medicaid enrollees.--An 
     amount equal to the number of second tier above baseline 
     child enrollees (as determined under subparagraph (C)(ii)) 
     under title XIX for the State and fiscal year multiplied by 
     90 percent of the projected per capita State Medicaid 
     expenditures (as determined under subparagraph (D)(i)) for 
     the State and fiscal year under title XIX.

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

       ``(I) First tier above baseline chip enrollees.--An amount 
     equal to the number of first tier above baseline child 
     enrollees under this title (as determined under subparagraph 
     (C)(i)) for the State and fiscal year multiplied by 5 percent 
     of the projected per capita State CHIP expenditures (as 
     determined under subparagraph (D)(ii)) for the State and 
     fiscal year under this title.
       ``(II) Second tier above baseline chip enrollees.--An 
     amount equal to the number of second tier above baseline 
     child enrollees under this title (as determined under 
     subparagraph (C)(ii)) for the State and fiscal year 
     multiplied by 75 percent of the projected per capita State 
     CHIP expenditures (as determined under subparagraph (D)(ii)) 
     for the State and fiscal year under this title.

       ``(C) Number of first and second tier above baseline child 
     enrollees; baseline number of child enrollees.--For purposes 
     of this paragraph:
       ``(i) First tier above baseline child enrollees.--The 
     number of first tier above baseline child enrollees for a 
     State for a fiscal year under this title or title XIX is 
     equal

[[Page 22179]]

     to the number (if any, as determined by the Secretary) by 
     which--

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

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

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

       ``(iii) Baseline number of child enrollees.--The baseline 
     number of child enrollees for a State under this title or 
     title XIX--

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

       ``(D) Projected per capita state expenditures.--For 
     purposes of subparagraph (B)--
       ``(i) Projected per capita state medicaid expenditures.--
     The projected per capita State Medicaid expenditures for a 
     State and fiscal year under title XIX is equal to the average 
     per capita expenditures (including both State and Federal 
     financial participation) for children under the State plan 
     under such title, including under waivers but not including 
     such children eligible for assistance by virtue of the 
     receipt of benefits under title XVI, for the most recent 
     fiscal year for which actual data are available (as 
     determined by the Secretary), increased (for each subsequent 
     fiscal year up to and including the fiscal year involved) by 
     the annual percentage increase in per capita amount of 
     National Health Expenditures (as estimated by the Secretary) 
     for the calendar year in which the respective subsequent 
     fiscal year ends and multiplied by a State matching 
     percentage equal to 100 percent minus the Federal medical 
     assistance percentage (as defined in section 1905(b)) for the 
     fiscal year involved.
       ``(ii) Projected per capita state chip expenditures.--The 
     projected per capita State CHIP expenditures for a State and 
     fiscal year under this title is equal to the average per 
     capita expenditures (including both State and Federal 
     financial participation) for children under the State child 
     health plan under this title, including under waivers, for 
     the most recent fiscal year for which actual data are 
     available (as determined by the Secretary), increased (for 
     each subsequent fiscal year up to and including the fiscal 
     year involved) by the annual percentage increase in per 
     capita amount of National Health Expenditures (as estimated 
     by the Secretary) for the calendar year in which the 
     respective subsequent fiscal year ends and multiplied by a 
     State matching percentage equal to 100 percent minus the 
     enhanced FMAP (as defined in section 2105(b)) for the fiscal 
     year involved.
       ``(E) Qualifying children defined.--For purposes of this 
     subsection, the term `qualifying children' means, with 
     respect to this title or title XIX, children who meet the 
     eligibility criteria (including income, categorical 
     eligibility, age, and immigration status criteria) in effect 
     as of July 1, 2007, for enrollment under this title or title 
     XIX, respectively, taking into account crtieria applied as of 
     such date under this title or title XIX, respectively, 
     pursuant to a waiver under section 1115.
       ``(4) Enrollment and retention provisions for children.-- 
     For purposes of paragraph (3)(A), a State meets the condition 
     of this paragraph for a fiscal year if it is implementing at 
     least 4 of the following enrollment and retention provisions 
     (treating each subparagraph as a separate enrollment and 
     retention provision) throughout the entire fiscal year:
       ``(A) Continuous eligibility.--The State has elected the 
     option of continuous eligibility for a full 12 months for all 
     children described in section 1902(e)(12) under title XIX 
     under 19 years of age, as well as applying such policy under 
     its State child health plan under this title.
       ``(B) Liberalization of asset requirements.--The State 
     meets the requirement specified in either of the following 
     clauses:
       ``(i) Elimination of asset test.--The State does not apply 
     any asset or resource test for eligibility for children under 
     title XIX or this title.
       ``(ii) Administrative verification of assets.--The State--

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

       ``(C) Elimination of in-person interview requirement.--The 
     State does not require an application of a child for medical 
     assistance under title XIX (or for child health assistance 
     under this title), including an application for renewal of 
     such assistance, to be made in person nor does the State 
     require a face-to-face interview, unless there are 
     discrepancies or individual circumstances justifying an in-
     person application or face-to-face interview.
       ``(D) Use of joint application for medicaid and chip.--The 
     application form and supplemental forms (if any) and 
     information verification process is the same for purposes of 
     establishing and renewing eligibility for children for 
     medical assistance under title XIX and child health 
     assistance under this title.
       ``(E) Automatic renewal (use of administrative renewal).--
       ``(i) In general.--The State provides, in the case of 
     renewal of a child's eligibility for medical assistance under 
     title XIX or child health assistance under this title, a pre-
     printed form completed by the State based on the information 
     available to the State and notice to the parent or caretaker 
     relative of the child that eligibility of the child will be 
     renewed and continued based on such information unless the 
     State is provided other information. Nothing in this clause 
     shall be construed as preventing a State from verifying, 
     through electronic and other means, the information so 
     provided.
       ``(ii) Satisfaction through demonstrated use of ex parte 
     process.--A State shall be treated as satisfying the 
     requirement of clause (i) if renewal of eligibility of 
     children under title XIX or this title is determined without 
     any requirement for an in-person interview, unless sufficient 
     information is not in the State's possession and cannot be 
     acquired from other sources (including other State agencies) 
     without the participation of the applicant or the applicant's 
     parent or caretaker relative.
       ``(F) Presumptive eligibility for children.--The State is 
     implementing section 1920A under title XIX as well as, 
     pursuant to section 2107(e)(1), under this title.
       ``(G) Express lane.--The State is implementing the option 
     described in section 1902(e)(13) under title XIX as well as, 
     pursuant to section 2107(e)(1), under this title.''.

     SEC. 112. STATE OPTION TO RELY ON FINDINGS FROM AN EXPRESS 
                   LANE AGENCY TO CONDUCT SIMPLIFIED ELIGIBILITY 
                   DETERMINATIONS.

       (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) Express Lane Option.--
       ``(A) In general.--
       ``(i) Option to use a finding from an express lane 
     agency.--At the option of the State, the State plan may 
     provide that in determining eligibility under this title for 
     a child (as defined in subparagraph (F)), the State may rely 
     on a finding made within a reasonable period (as determined 
     by the State) from an Express Lane agency (as defined in 
     subparagraph (E)) when it determines whether a child 
     satisfies one or more components of eligibility for medical 
     assistance under this title. The State may rely on a finding 
     from an Express Lane agency notwithstanding sections 
     1902(a)(46)(B), 1903(x), and 1137(d) and any differences in 
     budget unit, disregard, deeming or other methodology, if the 
     following requirements are met:
       ``(I) Prohibition on determining children ineligible for 
     coverage.-- If a finding from an Express Lane agency would 
     result in a determination that a child does not satisfy an 
     eligibility requirement for medical assistance under this 
     title and for child health assistance under title XXI, the 
     State shall determine eligibility for assistance using its 
     regular procedures.
       ``(II) Notice requirement.--For any child who is found 
     eligible for medical assistance under the State plan under 
     this title or child health assistance under title XXI and who 
     is subject to premiums based on an Express Lane agency's 
     finding of such child's income level, the State shall provide 
     notice that the

[[Page 22180]]

     child may qualify for lower premium payments if evaluated by 
     the State using its regular policies and of the procedures 
     for requesting such an evaluation.
       ``(III) Compliance with screen and enroll requirement.--The 
     State shall satisfy the requirements under (A) and (B) of 
     section 2102(b)(3) (relating to screen and enroll) before 
     enrolling a child in child health assistance under title XXI. 
     At its option, the State may fulfill such requirements in 
     accordance with either option provided under subparagraph (C) 
     of this paragraph.
       ``(ii) Option to apply to renewals and redeterminations.--
     The State may apply the provisions of this paragraph when 
     conducting initial determinations of eligibility, 
     redeterminations of eligibility, or both, as described in the 
     State plan.
       ``(B) Rules of construction.--Nothing in this paragraph 
     shall be construed--
       ``(i) to limit or prohibit a State from taking any actions 
     otherwise permitted under this title or title XXI in 
     determining eligibility for or enrolling children into 
     medical assistance under this title or child health 
     assistance under title XXI; or
       ``(ii) to modify the limitations in section 1902(a)(5) 
     concerning the agencies that may make a determination of 
     eligibility for medical assistance under this title.
       ``(C) Options for satisfying the screen and enroll 
     requirement.--
       ``(i) In general.--With respect to a child whose 
     eligibility for medical assistance under this title or for 
     child health assistance under title XXI has been evaluated by 
     a State agency using an income finding from an Express Lane 
     agency, a State may carry out its duties under subparagraphs 
     (A) and (B) of section 2102(b)(3) (relating to screen and 
     enroll) in accordance with either clause (ii) or clause 
     (iii).
       ``(ii) Establishing a screening threshold.--
       ``(I) In general.--Under this clause, the State establishes 
     a screening threshold set as a percentage of the Federal 
     poverty level that exceeds the highest income threshold 
     applicable under this title to the child by a minimum of 30 
     percentage points or, at State option, a higher number of 
     percentage points that reflects the value (as determined by 
     the State and described in the State plan) of any differences 
     between income methodologies used by the program administered 
     by the Express Lane agency and the methodologies used by the 
     State in determining eligibility for medical assistance under 
     this title.
       ``(II) Children with income not above threshold.--If the 
     income of a child does not exceed the screening threshold, 
     the child is deemed to satisfy the income eligibility 
     criteria for medical assistance under this title regardless 
     of whether such child would otherwise satisfy such criteria.
       ``(III) Children with income above threshold.--If the 
     income of a child exceeds the screening threshold, the child 
     shall be considered to have an income above the Medicaid 
     applicable income level described in section 2110(b)(4) and 
     to satisfy the requirement under section 2110(b)(1)(C) 
     (relating to the requirement that CHIP matching funds be used 
     only for children not eligible for Medicaid). If such a child 
     is enrolled in child health assistance under title XXI, the 
     State shall provide the parent, guardian, or custodial 
     relative with the following:

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

       ``(iii) Temporary enrollment in chip pending screen and 
     enroll.--
       ``(I) In general.--Under this clause, a State enrolls a 
     child in child health assistance under title XXI for a 
     temporary period if the child appears eligible for such 
     assistance based on an income finding by an Express Lane 
     agency.
       ``(II) Determination of eligibility.--During such temporary 
     enrollment period, the State shall determine the child's 
     eligibility for child health assistance under title XXI or 
     for medical assistance under this title in accordance with 
     this clause.
       ``(III) Prompt follow up.--In making such a determination, 
     the State shall take prompt action to determine whether the 
     child should be enrolled in medical assistance under this 
     title or child health assistance under title XXI pursuant to 
     subparagraphs (A) and (B) of section 2102(b)(3) (relating to 
     screen and enroll).
       ``(IV) Requirement for simplified determination.--In making 
     such a determination, the State shall use procedures that, to 
     the maximum feasible extent, reduce the burden imposed on the 
     individual of such determination. Such procedures may not 
     require the child's parent, guardian, or custodial relative 
     to provide or verify information that already has been 
     provided to the State agency by an Express Lane agency or 
     another source of information unless the State agency has 
     reason to believe the information is erroneous.
       ``(V) Availability of chip matching funds during temporary 
     enrollment period.--Medical assistance for items and services 
     that are provided to a child enrolled in title XXI during a 
     temporary enrollment period under this clause shall be 
     treated as child health assistance under such title.
       ``(D) Option for automatic enrollment.--
       ``(i) In general.--At its option, a State may initiate an 
     evaluation of an individual's eligibility for medical 
     assistance under this title without an application and 
     determine the individual's eligibility for such assistance 
     using findings from one or more Express Lane agencies and 
     information from sources other than a child, if the 
     requirements of clauses (ii) and (iii) are met.
       ``(ii) Individual choice requirement.--The requirement of 
     this clause is that the child is enrolled in medical 
     assistance under this title or child health assistance under 
     title XXI only if the child (or a parent, caretaker relative, 
     or guardian on the behalf of the child) has affirmatively 
     assented to such enrollment.
       ``(iii) Information requirement.--The requirement of this 
     clause is that the State informs the parent, guardian, or 
     custodial relative of the child of the services that will be 
     covered, appropriate methods for using such services, premium 
     or other cost sharing charges (if any) that apply, medical 
     support obligations (under section 1912(a)) created by 
     enrollment (if applicable), and the actions the parent, 
     guardian, or relative must take to maintain enrollment and 
     renew coverage.
       ``(E) Express lane agency defined.--In this paragraph, the 
     term `express lane agency' means an agency that meets the 
     following requirements:
       ``(i) The agency determines eligibility for assistance 
     under the Food Stamp Act of 1977, the Richard B. Russell 
     National School Lunch Act, the Child Nutrition Act of 1966, 
     or the Child Care and Development Block Grant Act of 1990.
       ``(ii) The agency notifies the child (or a parent, 
     caretaker relative, or guardian on the behalf of the child)--
       ``(I) of the information which shall be disclosed;
       ``(II) that the information will be used by the State 
     solely for purposes of determining eligibility for and for 
     providing medical assistance under this title or child health 
     assistance under title XXI; and
       ``(III) that the child, or parent, caretaker relative, or 
     guardian, may elect to not have the information disclosed for 
     such purposes.
       ``(iii) The agency and the State agency are subject to an 
     interagency agreement limiting the disclosure and use of such 
     information to such purposes.
       ``(iv) The agency is determined by the State agency to be 
     capable of making the determinations described in this 
     paragraph and is identified in the State plan under this 
     title or title XXI.

     For purposes of this subparagraph, the term `State agency' 
     refers to the agency determining eligibility for medical 
     assistance under this title or child health assistance under 
     title XXI.
       ``(F) Child defined.--For purposes of this paragraph, the 
     term `child' means an individual under 19 years of age, or, 
     at the option of a State, such higher age, not to exceed 21 
     years of age, as the State may elect.''.
       (b) CHIP.--Section 2107(e)(1) of such Act (42 U.S.C. 
     1397gg(e)(1)) is amended by redesignating subparagraph (B) 
     and succeeding subparagraphs as subparagraph (C) and 
     succeeding subparagraphs and by inserting after subparagraph 
     (A) the following new subparagraph:
       ``(B) Section 1902(e)(13) (relating to the State option to 
     rely on findings from an Express Lane agency to help evaluate 
     a child's eligibility for medical assistance).''.
       (c) Electronic Transmission of Information.--Section 1902 
     of such Act (42 U.S.C. 1396a) is amended by adding at the end 
     the following new subsection:
       ``(dd) Electronic Transmission of Information.--If the 
     State agency determining eligibility for medical assistance 
     under this title or child health assistance under title XXI 
     verifies an element of eligibility based on information from 
     an Express Lane Agency (as defined in subsection (e)(13)(F)), 
     or from another public agency, then the applicant's signature 
     under penalty of perjury shall not be required as to such 
     element. Any signature requirement for an application for 
     medical assistance may be satisfied through an electronic 
     signature, as defined in section 1710(1) of the Government 
     Paperwork Elimination Act (44 U.S.C. 3504 note). The 
     requirements of subparagraphs (A) and (B) of section 
     1137(d)(2) may be met through evidence in digital or 
     electronic form.''.
       (d) Authorization of Information Disclosure.--
       (1) In general.--Title XIX of the Social Security Act is 
     amended--
       (A) by redesignating section 1939 as section 1940; and
       (B) by inserting after section 1938 the following new 
     section:

     ``SEC. 1939. AUTHORIZATION TO RECEIVE PERTINENT INFORMATION.

       ``(a) In General.--Notwithstanding any other provision of 
     law, a Federal or State agency or private entity in 
     possession of the

[[Page 22181]]

     sources of data potentially pertinent to eligibility 
     determinations under this title (including eligibility files 
     maintained by Express Lane agencies described in section 
     1902(e)(13)(F), information described in paragraph (2) or (3) 
     of section 1137(a), vital records information about births in 
     any State, and information described in sections 453(i) and 
     1902(a)(25)(I)) is authorized to convey such data or 
     information to the State agency administering the State plan 
     under this title, to the extent such conveyance meets the 
     requirements of subsection (b).
       ``(b) Requirements for Conveyance.--Data or information may 
     be conveyed pursuant to subsection (a) only if the following 
     requirements are met:
       ``(1) The individual whose circumstances are described in 
     the data or information (or such individual's parent, 
     guardian, caretaker relative, or authorized representative) 
     has either provided advance consent to disclosure or has not 
     objected to disclosure after receiving advance notice of 
     disclosure and a reasonable opportunity to object.
       ``(2) Such data or information are used solely for the 
     purposes of--
       ``(A) identifying individuals who are eligible or 
     potentially eligible for medical assistance under this title 
     and enrolling or attempting to enroll such individuals in the 
     State plan; and
       ``(B) verifying the eligibility of individuals for medical 
     assistance under the State plan.
       ``(3) An interagency or other agreement, consistent with 
     standards developed by the Secretary--
       ``(A) prevents the unauthorized use, disclosure, or 
     modification of such data and otherwise meets applicable 
     Federal requirements safeguarding privacy and data security; 
     and
       ``(B) requires the State agency administering the State 
     plan to use the data and information obtained under this 
     section to seek to enroll individuals in the plan.
       ``(c) Criminal Penalty.--A private entity described in the 
     subsection (a) that publishes, discloses, or makes known in 
     any manner, or to any extent not authorized by Federal law, 
     any information obtained under this section shall be fined 
     not more than $1,000 or imprisoned not more than 1 year, or 
     both, for each such unauthorized publication or disclosure.
       ``(d) Rule of Construction.--The limitations and 
     requirements that apply to disclosure pursuant to this 
     section shall not be construed to prohibit the conveyance or 
     disclosure of data or information otherwise permitted under 
     Federal law (without regard to this section).''.
       (2) Conforming amendment to title xxi.--Section 2107(e)(1) 
     of such Act (42 U.S.C. 1397gg(e)(1)), as amended by 
     subsection (b), is amended by adding at the end the following 
     new subparagraph:
       ``(F) Section 1939 (relating to authorization to receive 
     data potentially pertinent to eligibility determinations).''.
       (3) Conforming amendment to provide access to data about 
     enrollment in insurance for purposes of evaluating 
     applications and for chip.--Section 1902(a)(25)(I)(i) of such 
     Act (42 U.S.C. 1396a(a)(25)(I)(i)) is amended--
       (A) by inserting ``(and, at State option, individuals who 
     are potentially eligible or who apply)'' after ``with respect 
     to individuals who are eligible''; and
       (B) by inserting ``under this title (and, at State option, 
     child health assistance under title XXI)'' after ``the State 
     plan''.
       (e) Effective Date.--The amendments made by this section 
     are effective on January 1, 2008.

     SEC. 113. APPLICATION OF MEDICAID OUTREACH PROCEDURES TO ALL 
                   CHILDREN AND PREGNANT WOMEN.

       (a) In General.--Section 1902(a)(55) of the Social Security 
     Act (42 U.S.C. 1396a(a)(55)) is amended--
       (1) in the matter before subparagraph (A), by striking 
     ``individuals for medical assistance under subsection 
     (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), (a)(10)(A)(i)(VII), or 
     (a)(10)(A)(ii)(IX)'' and inserting ``children and pregnant 
     women for medical assistance under any provision of this 
     title''; and
       (2) in subparagraph (B), by inserting before the semicolon 
     at the end the following: ``, which need not be the same 
     application form for all such individuals''.
       (b) Effective Date.--The amendments made by subsection (a) 
     take effect on January 1, 2008.

     SEC. 114. ENCOURAGING CULTURALLY APPROPRIATE ENROLLMENT AND 
                   RETENTION PRACTICES.

       (a) Use of Medicaid Funds.--Section 1903(a)(2) of the 
     Social Security Act (42 U.S.C. 1396b(a)(2)) is amended by 
     adding at the end the following new subparagraph:
       ``(E) an amount equal to 75 percent of so much of the sums 
     expended during such quarter (as found necessary by the 
     Secretary for the proper and efficient administration of the 
     State plan) as are attributable to translation or 
     interpretation services in connection with the enrollment and 
     retention under this title of children of families for whom 
     English is not the primary language; plus''.
       (b) Use of Community Health Workers for Outreach 
     Activities.--
       (1) In general.--Section 2102(c)(1) of such Act (42 U.S.C. 
     1397bb(c)(1)) is amended by inserting ``(through community 
     health workers and others)'' after ``Outreach''.
       (2) In federal evaluation.--Section 2108(c)(3)(B) of such 
     Act (42 U.S.C. 1397hh(c)(3)(B)) is amended by inserting 
     ``(such as through community health workers and others)'' 
     after ``including practices''.

                          Subtitle C--Coverage

     SEC. 121. ENSURING CHILD-CENTERED COVERAGE.

       (a) Additional Required Services.--
       (1) Child-centered coverage.--Section 2103 of the Social 
     Security Act (42 U.S.C. 1397cc) is amended----
       (A) in subsection (a)--
       (i) in the matter before paragraph (1), by striking 
     ``subsection (c)(5)'' and inserting ``paragraphs (5) and (6) 
     of subsection (c)''; and
       (ii) in paragraph (1), by inserting ``at least'' after 
     ``that is''; and
       (B) in subsection (c)--
       (i) by redesignating paragraph (5) as paragraph (6); and
       (ii) by inserting after paragraph (4), the following:
       ``(5) Dental, fqhc, and rhc services.--The child health 
     assistance provided to a targeted low-income child (whether 
     through benchmark coverage or benchmark-equivalent coverage 
     or otherwise) shall include coverage of the following:
       ``(A) Dental services necessary to prevent disease and 
     promote oral health, restore oral structures to health and 
     function, and treat emergency conditions.
       ``(B) Federally-qualified health center services (as 
     defined in section 1905(l)(2)) and rural health clinic 
     services (as defined in section 1905(l)(1)).

     Nothing in this section shall be construed as preventing a 
     State child health plan from providing such services as part 
     of benchmark coverage or in addition to the benefits provided 
     through benchmark coverage.''.
       (2) Required payment for fqhc and rhc services.--Section 
     2107(e)(1) of such Act (42 U.S.C. 1397gg(e)(1)), as amended 
     by sections 112(b) and 112(d)(2), is amended by inserting 
     after subparagraph (B) the following new subparagraph (and 
     redesignating the succeeding subparagraphs accordingly):
       ``(C) Section 1902(bb) (relating to payment for services 
     provided by Federally-qualified health centers and rural 
     health clinics).''.
       (3) Mental health parity.--Section 2103(a)(2)(C) of such 
     Act (42 U.S.C. 1397aa(a)(2)(C)) is amended by inserting ``(or 
     100 percent in the case of the category of services described 
     in subparagraph (B) of such subsection)'' after ``75 
     percent''.
       (4) Effective date.--The amendments made by this subsection 
     and subsection (d) shall apply to health benefits coverage 
     provided on or after October 1, 2008.
       (b) Clarification of Requirement To Provide EPSDT Services 
     for All Children in Benchmark Benefit Packages Under Medicaid 
     .--
       (1) In general.--Section 1937(a)(1) of the Social Security 
     Act (42 U.S.C. 1396u-7(a)(1)) is amended--
       (A) in subparagraph (A)--
       (i) in the matter before clause (i), by striking 
     ``Notwithstanding any other provision of this title'' and 
     inserting ``Subject to subparagraph (E)''; and
       (ii) by striking ``enrollment in coverage that provides'' 
     and all that follows and inserting ``benchmark coverage 
     described in subsection (b)(1) or benchmark equivalent 
     coverage described in subsection (b)(2).'';
       (B) by striking subparagraph (C) and inserting the 
     following new subparagraph:
       ``(C) State option to provide additional benefits.--A 
     State, at its option, may provide such additional benefits to 
     benchmark coverage described in subsection (b)(1) or 
     benchmark equivalent coverage described in subsection (b)(2) 
     as the State may specify.''; and
       (C) by adding at the end the following new subparagraph:
       ``(E) Requiring coverage of epsdt services.--Nothing in 
     this paragraph shall be construed as affecting a child's 
     entitlement to care and services described in subsections 
     (a)(4)(B) and (r) of section 1905 and provided in accordance 
     with section 1902(a)(43) whether provided through benchmark 
     coverage, benchmark equivalent coverage, or otherwise.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect as if included in the amendment made by 
     section 6044(a) of the Deficit Reduction Act of 2005.
       (c) Clarification of Coverage of Services in School-Based 
     Health Centers Included as Child Health Assistance.--
       (1) In general.--Section 2110(a)(5) of such Act (42 U.S.C. 
     1397jj(a)(5)) is amended by inserting after ``health center 
     services'' the following: ``and school-based health center 
     servicesservices for which coverage is otherwise provided 
     under this title when furnished by a school-based health 
     center that is authorized to furnish such services under 
     State law''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to child health assistance furnished on or after 
     the date of the enactment of this Act.
       (d) Assuring Access to Care.--
       (1) State child health plan requirement.--Section 
     2102(a)(7)(B) of such Act (42 U.S.C. 1397bb(c)(2)) is amended 
     by inserting ``and services described in section 2103(c)(5)'' 
     after ``emergency services''.

[[Page 22182]]

       (2) Reference to effective date.--For the effective date 
     for the amendments made by this subsection, see subsection 
     (a)(5).

     SEC. 122. IMPROVING BENCHMARK COVERAGE OPTIONS.

       (a) Limitation on Secretary-Approved Coverage.--
       (1) Under chip.--Section 2103(a)(4) of the Social Security 
     Act (42 U.S.C. 1397cc(a)(4)) is amended by inserting before 
     the period at the end the following: ``if the health benefits 
     coverage is at least equivalent to the benefits coverage in a 
     benchmark benefit package described in subsection (b)''.
       (2) Under medicaid.--Section 1937(b)(1)(D) of the Social 
     Security Act (42 U.S.C. 1396u-7(b)(1)(D)) is amended by 
     inserting before the period at the end the following: ``if 
     the health benefits coverage is at least equivalent to the 
     benefits coverage in benchmark coverage described in 
     subparagraph (A), (B), or (C)''.
       (b) Requirement for Most Popular Family Coverage for State 
     Employee Coverage Benchmark.--
       (1) CHIP.--Section 2103(b)(2) of such Act (42 U.S.C. 
     1397(b)(2)) is amended by inserting ``and that has been 
     selected most frequently by employees seeking dependent 
     coverage, among such plans that provide such dependent 
     coverage, in either of the previous 2 plan years'' before the 
     period at the end.
       (2) Medicaid.--Section 1937(b)(1)(B) of such Act is amended 
     by inserting ``and that has been selected most frequently, by 
     employees seeking dependent coverage, among such plans that 
     provide such dependent coverage, in either of the previous 2 
     plan years'' before the period at the end.
       (c) Effective Date.--The amendments made by this section 
     shall apply to health benefits coverage provided on or after 
     October 1, 2008.

     SEC. 123. PREMIUM GRACE PERIOD.

       (a) In General.--Section 2103(e)(3) of the Social Security 
     Act (42 U.S.C. 1397cc(e)(3)) is amended by adding at the end 
     the following new subparagraph:
       ``(C) Premium grace period.--The State child health plan--
       ``(i) shall afford individuals enrolled under the plan a 
     grace period of at least 30 days from the beginning of a new 
     coverage period to make premium payments before the 
     individual's coverage under the plan may be terminated; and
       ``(ii) shall provide to such an individual, not later than 
     7 days after the first day of such grace period, notice--

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

     For purposes of clause (i), the term `new coverage period' 
     means the month immediately following the last month for 
     which the premium has been paid.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to new coverage periods beginning on or after 
     January 1, 2009.

                        Subtitle D--Populations

     SEC. 131. OPTIONAL COVERAGE OF OLDER CHILDREN UNDER MEDICAID 
                   AND CHIP.

       (a) Medicaid.--
       (1) In general.--Section 1902(l)(1)(D) of the Social 
     Security Act (42 U.S.C. 1396a(l)(1)(D)) is amended by 
     striking ``but have not attained 19 years of age'' and 
     inserting ``but is under 19 years of age (or, at the option 
     of a State and subject to section 131(d) of the Children's 
     Health and Medicare Protection Act of 2007, under such higher 
     age, not to exceed 25 years of age, as the State may 
     elect)''.
       (2) Conforming amendments.--
       (A) Section 1902(e)(3)(A) of such Act (42 U.S.C. 
     1396a(e)(3)(A)) is amended by striking ``18 years of age or 
     younger'' and inserting ``under 19 years of age (or under 
     such higher age as the State has elected under subsection 
     (l)(1)(D))'' after ``18 years of age''.
       (B) Section 1902(e)(12) of such Act (42 U.S.C. 
     1396a(e)(12)) is amended by inserting ``or such higher age as 
     the State has elected under subsection (l)(1)(D)'' after ``19 
     years of age''.
       (C) Section 1905(a) of such Act (42 U.S.C. 1396d(a)) is 
     amended, in clause (i), by inserting ``or under such higher 
     age as the State has elected under subsection (l)(1)(D)'' 
     after ``as the State may choose''.
       (D) Section 1920A(b)(1) of such Act (42 U.S.C. 1396r-
     1a(b)(1)) is amended by inserting ``or under such higher age 
     as the State has elected under section 1902(l)(1)(D)'' after 
     ``19 years of age''.
       (E) Section 1928(h)(1) of such Act (42 U.S.C. 1396s(h)(1)) 
     is amended by striking ``18 years of age or younger'' and 
     inserting ``under 19 years of age or under such higher age as 
     the State has elected under section 1902(l)(1)(D)''.
       (F) Section 1932(a)(2)(A) of such Act (42 U.S.C. 1396u-
     2(a)(2)(A)) is amended by inserting ``(or under such higher 
     age as the State has elected under section 1902(l)(1)(D))'' 
     after ``19 years of age''.
       (b) Title XXI.--Section 2110(c)(1) of such Act (42 U.S.C. 
     1397jj(c)(1)) is amended by inserting ``(or, at the option of 
     the State and subject to section 131(d) of the Children's 
     Health and Medicare Protection Act of 2007, under such higher 
     age as the State has elected under section 1902(l)(1)(D))''.
       (c) Effective Date.--Subject to subsection (d), the 
     amendments made by this section take effect on January 1, 
     2010.
       (d) Transition.--In carrying out the amendments made by 
     subsections (a) and (b)--
       (1) for 2010, a State election under section 1902(l)(1)(D) 
     shall only apply with respect to title XXI of such Act and 
     the age elected may not exceed 21 years of age;
       (2) for 2011, a State election under section 1902(l)(1)(D) 
     may apply under titles XIX and XXI of such Act and the age 
     elected may not exceed 23 years of age;
       (3) for 2012, a State election under section 1902(l)(1)(D) 
     may apply under titles XIX and XXI of such Act and the age 
     elected may not exceed 24 years of age; and
       (4) for 2013 and each subsequent year, a State election 
     under section 1902(l)(1)(D) may apply under titles XIX and 
     XXI of such Act and the age elected may not exceed 25 years 
     of age.

     SEC. 132. OPTIONAL COVERAGE OF LEGAL IMMIGRANTS UNDER THE 
                   MEDICAID PROGRAM AND CHIP.

       (a) Medicaid Program.--Section 1903(v) of the Social 
     Security Act (42 U.S.C. 1396b(v)) is amended--
       (1) in paragraph (1), by striking ``paragraph (2)'' and 
     inserting ``paragraphs (2) and (4)''; and
       (2) by adding at the end the following new paragraph:
       ``(4)(A) A State may elect (in a plan amendment under this 
     title) to provide medical assistance under this title, 
     notwithstanding sections 401(a), 402(b), 403, and 421 of the 
     Personal Responsibility and Work Opportunity Reconciliation 
     Act of 1996, for aliens who are lawfully residing in the 
     United States (including battered aliens described in section 
     431(c) of such Act) and who are otherwise eligible for such 
     assistance, within either or both of the following 
     eligibility categories:
       ``(i) Pregnant women.--Women during pregnancy (and during 
     the 60-day period beginning on the last day of the 
     pregnancy).
       ``(ii) Children.--Individuals under age 19 (or such higher 
     age as the State has elected under section 1902(l)(1)(D)), 
     including optional targeted low-income children described in 
     section 1905(u)(2)(B).
       ``(B) In the case of a State that has elected to provide 
     medical assistance to a category of aliens under subparagraph 
     (A), no debt shall accrue under an affidavit of support 
     against any sponsor of such an alien on the basis of 
     provision of medical assistance to such category and the cost 
     of such assistance shall not be considered as an unreimbursed 
     cost.''.
       (b) CHIP.--Section 2107(e)(1) of such Act (42 U.S.C. 
     1397gg(e)(1)), as amended by section 112(b), 112(d)(2),and 
     121(a)(2), is amended by redesignating subparagraphs (E) 
     through (G) as subparagraphs (G) through (I), respectively, 
     and by inserting after subparagraph (D) the following new 
     subparagraphs:
       ``(E) Section 1903(v)(4)(A) (relating to optional coverage 
     of certain categories of lawfully residing immigrants), 
     insofar as it relates to the category of pregnant women 
     described in clause (i) of such section, but only if the 
     State has elected to apply such section with respect to such 
     women under title XIX and the State has elected the option 
     under section 2111 to provide assistance for pregnant women 
     under this title.
       ``(F) Section 1903(v)(4)(A) (relating to optional coverage 
     of categories of lawfully residing immigrants), insofar as it 
     relates to the category of children described in clause (ii) 
     of such section, but only if the State has elected to apply 
     such section with respect to such children under title 
     XIX.''.
       (c) Effective Date.--The amendments made by this section 
     take effect on the date of the enactment of this Act.

     SEC. 133. STATE OPTION TO EXPAND OR ADD COVERAGE OF CERTAIN 
                   PREGNANT WOMEN UNDER CHIP.

       (a) CHIP.--
       (1) Coverage.--Title XXI (42 U.S.C. 1397aa et seq.) of the 
     Social Security Act is amended by adding at the end the 
     following new section:

     ``SEC. 2111. OPTIONAL COVERAGE OF TARGETED LOW-INCOME 
                   PREGNANT WOMEN.

       ``(a) Optional Coverage.--Notwithstanding any other 
     provision of this title, a State may provide for coverage, 
     through an amendment to its State child health plan under 
     section 2102, of assistance for pregnant women for targeted 
     low-income pregnant women in accordance with this section, 
     but only if--
       ``(1) the State has established an income eligibility 
     level--
       ``(A) for pregnant women, under any of clauses (i)(III), 
     (i)(IV), or (ii)(IX) of section 1902(a)(10)(A), that is at 
     least 185 percent (or such higher percent as the State has in 
     effect for pregnant women under this title) of the poverty 
     line applicable to a family of the size involved, but in no 
     case a percent lower than the percent in effect under any 
     such clause as of July 1, 2007; and
       ``(B) for children under 19 years of age under this title 
     (or title XIX) that is at least 200 percent of the poverty 
     line applicable to a family of the size involved; and

[[Page 22183]]

       ``(2) the State does not impose, with respect to the 
     enrollment under the State child health plan of targeted low-
     income children during the quarter, any enrollment cap or 
     other numerical limitation on enrollment, any waiting list, 
     any procedures designed to delay the consideration of 
     applications for enrollment, or similar limitation with 
     respect to enrollment.
       ``(b) Definitions.--For purposes of this title:
       ``(1) Assistance for pregnant women.--The term `assistance 
     for pregnant women' has the meaning given the term child 
     health assistance in section 2110(a) as if any reference to 
     targeted low-income children were a reference to targeted 
     low-income pregnant women.
       ``(2) Targeted low-income pregnant woman.--The term 
     `targeted low-income pregnant woman' means a woman--
       ``(A) during pregnancy and through the end of the month in 
     which the 60-day period (beginning on the last day of her 
     pregnancy) ends;
       ``(B) whose family income exceeds 185 percent (or, if 
     higher, the percent applied under subsection (a)(1)(A)) of 
     the poverty level applicable to a family of the size 
     involved, but does not exceed the income eligibility level 
     established under the State child health plan under this 
     title for a targeted low-income child; and
       ``(C) who satisfies the requirements of paragraphs (1)(A), 
     (1)(C), (2), and (3) of section 2110(b), applied as if any 
     reference to a child was a reference to a pregnant woman.
       ``(c) References to Terms and Special Rules.--In the case 
     of, and with respect to, a State providing for coverage of 
     assistance for pregnant women to targeted low-income pregnant 
     women under subsection (a), the following special rules 
     apply:
       ``(1) Any reference in this title (other than in subsection 
     (b)) to a targeted low-income child is deemed to include a 
     reference to a targeted low-income pregnant woman.
       ``(2) Any reference in this title to child health 
     assistance (other than with respect to the provision of early 
     and periodic screening, diagnostic, and treatment services) 
     with respect to such women is deemed a reference to 
     assistance for pregnant women.
       ``(3) Any such reference (other than in section 2105(d)) to 
     a child is deemed a reference to a woman during pregnancy and 
     the period described in subsection (b)(2)(A).
       ``(4) In applying section 2102(b)(3)(B), any reference to 
     children found through screening to be eligible for medical 
     assistance under the State medicaid plan under title XIX is 
     deemed a reference to pregnant women.
       ``(5) There shall be no exclusion of benefits for services 
     described in subsection (b)(1) based on any preexisting 
     condition and no waiting period (including any waiting period 
     imposed to carry out section 2102(b)(3)(C)) shall apply.
       ``(6) In applying section 2103(e)(3)(B) in the case of a 
     pregnant woman provided coverage under this section, the 
     limitation on total annual aggregate cost-sharing shall be 
     applied to such pregnant woman.
       ``(7) In applying section 2104(i)--
       ``(A) in the case of a State which did not provide for 
     coverage for pregnant women under this title (under a waiver 
     or otherwise) during fiscal year 2007, the allotment amount 
     otherwise computed for the first fiscal year in which the 
     State elects to provide coverage under this section shall be 
     increased by an amount (determined by the Secretary) equal to 
     the enhanced FMAP of the expenditures under this title for 
     such coverage, based upon projected enrollment and per capita 
     costs of such enrollment; and
       ``(B) in the case of a State which provided for coverage of 
     pregnant women under this title for the previous fiscal 
     year--
       ``(i) in applying paragraph (2)(B) of such section, there 
     shall also be taken into account (in an appropriate 
     proportion) the percentage increase in births in the State 
     for the relevant period; and
       ``(ii) in applying paragraph (3), pregnant women (and per 
     capita expenditures for such women) shall be accounted for 
     separately from children, but shall be included in the total 
     amount of any allotment adjustment under such paragraph.
       ``(d) Automatic Enrollment for Children Born to Women 
     Receiving Assistance for Pregnant Women.--If a child is born 
     to a targeted low-income pregnant woman who was receiving 
     assistance for pregnant women under this section on the date 
     of the child's birth, the child shall be deemed to have 
     applied for child health assistance under the State child 
     health plan and to have been found eligible for such 
     assistance under such plan or to have applied for medical 
     assistance under title XIX and to have been found eligible 
     for such assistance under such title on the date of such 
     birth, based on the mother's reported income as of the time 
     of her enrollment under this section and applicable income 
     eligibility levels under this title and title XIX, and to 
     remain eligible for such assistance until the child attains 1 
     year of age. During the period in which a child is deemed 
     under the preceding sentence to be eligible for child health 
     or medical assistance, the assistance for pregnant women or 
     medical assistance eligibility identification number of the 
     mother shall also serve as the identification number of the 
     child, and all claims shall be submitted and paid under such 
     number (unless the State issues a separate identification 
     number for the child before such period expires).''.
       (2) Additional amendment.--Section 2107(e)(1)(H) of such 
     Act (42 U.S.C. 1397gg(e)(1)(H)), as redesignated by section 
     133(b), is amended to read as follows:
       ``(H) Sections 1920 and 1920A (relating to presumptive 
     eligibility for pregnant women and children).''.
       (b) Amendments to Medicaid.--
       (1) Eligibility of a newborn.--Section 1902(e)(4) of the 
     Social Security Act (42 U.S.C. 1396a(e)(4)) is amended in the 
     first sentence by striking ``so long as the child is a member 
     of the woman's household and the woman remains (or would 
     remain if pregnant) eligible for such assistance''.
       (2) Application of qualified entities to presumptive 
     eligibility for pregnant women under medicaid.--Section 
     1920(b) of the Social Security Act (42 U.S.C. 1396r-1(b)) is 
     amended by adding after paragraph (2) the following flush 
     sentence:

     ``The term `qualified provider' also includes a qualified 
     entity, as defined in section 1920A(b)(3).''.

     SEC. 134. LIMITATION ON WAIVER AUTHORITY TO COVER ADULTS.

       Section 2102 of the Social Security Act (42 U.S.C. 1397bb) 
     is amended by adding at the end the following new subsection:
       ``(d) Limitation on Coverage of Adults.--Notwithstanding 
     any other provision of this title, the Secretary may not, 
     through the exercise of any waiver authority on or after 
     January 1, 2008, provide for Federal financial participation 
     to a State under this title for health care services for 
     individuals who are not targeted low-income children or 
     pregnant women unless the Secretary determines that no 
     eligible targeted low-income child in the State would be 
     denied coverage under this title for health care services 
     because of such eligibility. In making such determination, 
     the Secretary must receive assurances that--
       ``(1) there is no waiting list under this title in the 
     State for targeted low-income children to receive child 
     health assistance under this title; and
       ``(2) the State has in place an outreach program to reach 
     all targeted low-income children in families with incomes 
     less than 200 percent of the poverty line.''.

                           Subtitle E--Access

     SEC. 141. CHILDREN'S ACCESS, PAYMENT, AND EQUALITY 
                   COMMISSION.

       Title XIX of the Social Security Act is amended by 
     inserting before section 1901 the following new section:


         ``CHILDREN'S ACCESS, PAYMENT, AND EQUALITY COMMISSION

       ``Sec. 1900.  (a) Establishment.--There is hereby 
     established as an agency of Congress the Children's Access, 
     Payment, and Equality Commission (in this section referred to 
     as the `Commission').
       ``(b) Duties.--
       ``(1) Review of payment policies and annual reports.--The 
     Commission shall--
       ``(A) review Federal and State payment policies of the 
     Medicaid program established under this title (in this 
     section referred to as `Medicaid') and the State Children's 
     Health Insurance Program established under title XXI (in this 
     section referred to as `CHIP'), including topics described in 
     paragraph (2);
       ``(B) review access to, and affordability of, coverage and 
     services for enrollees under Medicaid and CHIP;
       ``(C) make recommendations to Congress concerning such 
     policies;
       ``(D) by not later than March 1 of each year, submit to 
     Congress a report containing the results of such reviews and 
     its recommendations concerning such policies; and
       ``(E) by not later than June 1 of each year, submit to 
     Congress a report containing an examination of issues 
     affecting Medicaid and CHIP, including the implications of 
     changes in health care delivery in the United States and in 
     the market for health care services on such programs.
       ``(2) Specific topics to be reviewed.--Specifically, the 
     Commission shall review the following:
       ``(A) The factors affecting expenditures for services in 
     different sectors (such as physician, hospital and other 
     sectors), payment methodologies, and their relationship to 
     access and quality of care for Medicaid and CHIP 
     beneficiaries.
       ``(B) The impact of Federal and State Medicaid and CHIP 
     payment policies on access to services (including dental 
     services) for children (including children with disabilities) 
     and other Medicaid and CHIP populations.
       ``(C) The impact of Federal and State Medicaid and CHIP 
     policies on reducing health disparities, including geographic 
     disparities and disparities among minority populations.
       ``(D) The overall financial stability of the health care 
     safety net, including Federally-qualified health centers, 
     rural health centers, school-based clinics, disproportionate 
     share hospitals, public hospitals, providers and grantees 
     under section 2612(a)(5) of the Public Health Service Act 
     (popularly known as the Ryan White CARE Act), and other

[[Page 22184]]

     providers that have a patient base which includes a 
     disproportionate number of uninsured or low-income 
     individuals and the impact of CHIP and Medicaid policies on 
     such stability.
       ``(E) The relation (if any) between payment rates for 
     providers and improvement in care for children as measured 
     under the children's health quality measurement program 
     established under section 151 of the Children's Health and 
     Medicare Protection Act of 2007.
       ``(F) The affordability, cost effectiveness, and 
     accessibility of services needed by special populations under 
     Medicaid and CHIP as compared with private-sector coverage.
       ``(G) The extent to which the operation of Medicaid and 
     CHIP ensures access, comparable to access under employer-
     sponsored or other private health insurance coverage (or in 
     the case of federally-qualified health center services (as 
     defined in section 1905(l)(2)) and rural health clinic 
     services (as defined in section 1905(l)(1)), access 
     comparable to the access to such services under title XIX), 
     for targeted low-income children.
       ``(H) The effect of demonstrations under section 1115, 
     benchmark coverage under section 1937, and other coverage 
     under section 1938, on access to care, affordability of 
     coverage, provider ability to achieve children's health 
     quality performance measures, and access to safety net 
     services.
       ``(3) Comments on certain secretarial reports.--If the 
     Secretary submits to Congress (or a committee of Congress) a 
     report that is required by law and that relates to payment 
     policies under Medicaid or CHIP, the Secretary shall transmit 
     a copy of the report to the Commission. The Commission shall 
     review the report and, not later than 6 months after the date 
     of submittal of the Secretary's report to Congress, shall 
     submit to the appropriate committees of Congress written 
     comments on such report. Such comments may include such 
     recommendations as the Commission deems appropriate.
       ``(4) Agenda and additional reviews.--The Commission shall 
     consult periodically with the Chairmen and Ranking Minority 
     Members of the appropriate committees of Congress regarding 
     the Commission's agenda and progress towards achieving the 
     agenda. The Commission may conduct additional reviews, and 
     submit additional reports to the appropriate committees of 
     Congress, from time to time on such topics relating to the 
     program under this title or title XXI as may be requested by 
     such Chairmen and Members and as the Commission deems 
     appropriate.
       ``(5) Availability of reports.--The Commission shall 
     transmit to the Secretary a copy of each report submitted 
     under this subsection and shall make such reports available 
     to the public.
       ``(6) Appropriate committee of congress.--For purposes of 
     this section, the term `appropriate committees of Congress' 
     means the Committees on Energy and Commerce of the House of 
     Representatives and the Committee on Finance of the Senate.
       ``(7) Voting and reporting requirements.--With respect to 
     each recommendation contained in a report submitted under 
     paragraph (1), each member of the Commission shall vote on 
     the recommendation, and the Commission shall include, by 
     member, the results of that vote in the report containing the 
     recommendation.
       ``(8) Examination of budget consequences.--Before making 
     any recommendations, the Commission shall examine the budget 
     consequences of such recommendations, directly or through 
     consultation with appropriate expert entities.
       ``(c) Application of Provisions.--The following provisions 
     of section 1805 shall apply to the Commission in the same 
     manner as they apply to the Medicare Payment Advisory 
     Commission:
       ``(1) Subsection (c) (relating to membership), except that 
     the membership of the Commission shall also include 
     representatives of children, pregnant women, individuals with 
     disabilities, seniors, low-income families, and other groups 
     of CHIP and Medicaid beneficiaries.
       ``(2) Subsection (d) (relating to staff and consultants).
       ``(3) Subsection (e) (relating to powers).
       ``(d) Authorization of Appropriations.--
       ``(1) Request for appropriations.--The Commission shall 
     submit requests for appropriations in the same manner as the 
     Comptroller General submits requests for appropriations, but 
     amounts appropriated for the Commission shall be separate 
     from amounts appropriated for the Comptroller General.
       ``(2) Authorization.--There are authorized to be 
     appropriated such sums as may be necessary to carry out the 
     provisions of this section.''.

     SEC. 142. MODEL OF INTERSTATE COORDINATED ENROLLMENT AND 
                   COVERAGE PROCESS.

       (a) In General.--In order to assure continuity of coverage 
     of low-income children under the Medicaid program and the 
     State Children's Health Insurance Program (CHIP), not later 
     than 18 months after the date of the enactment of this Act, 
     the Comptroller General of the United States, in consultation 
     with State Medicaid and CHIP directors and organizations 
     representing program beneficiaries, shall develop a model 
     process for the coordination of the enrollment, retention, 
     and coverage under such programs of children who, because of 
     migration of families, emergency evacuations, educational 
     needs, or otherwise, frequently change their State of 
     residency or otherwise are temporarily located outside of the 
     State of their residency.
       (b) Report to Congress.--After development of such model 
     process, the Comptroller General shall submit to Congress a 
     report describing additional steps or authority needed to 
     make further improvements to coordinate the enrollment, 
     retention, and coverage under CHIP and Medicaid of children 
     described in subsection (a).

     SEC. 143. MEDICAID CITIZENSHIP DOCUMENTATION REQUIREMENTS.

       (a) State Option To Require Children To Present 
     Satisfactory Documentary Evidence of Proof of Citizenship or 
     Nationality for Purposes of Eligibility for Medicaid; 
     Requirement for Auditing.--
       (1) In general.--Section 1902 of the Social Security Act 
     (42 U.S.C. 1396a) is amended--
       (A) in subsection (a)(46)--
       (i) by inserting ``(A)'' after ``(46)''; and
       (B) by adding at the end the following new sbparagraphs:
       ``(B) at the option of the State, require that, with 
     respect to a child under 21 years of age (other than an 
     individual described in section 1903(x)(2)) who declares to 
     be a citizen or national of the United States for purposes of 
     establishing initial eligibility for medical assistance under 
     this title (or, at State option, for purposes of renewing or 
     redetermining such eligibility to the extent that such 
     satisfactory documentary evidence of citizenship or 
     nationality has not yet been presented), there is presented 
     satisfactory documentary evidence of citizenship or 
     nationality of the individual (using criteria determined by 
     the State, which shall be no more restrictive than the 
     documentation specified in section 1903(x)(3)); and
       ``(C) comply with the auditing requirements of section 
     1903(x)(4);''; and
       (C) in subsection (b)(3), by inserting ``or any citizenship 
     documentation requirement for a child under 21 years of age 
     that is more restrictive than what a State may provide under 
     section 1903(x)'' before the period at the end.
       (2) Auditing requirement.--Section 1903(x) of such Act (as 
     amended by section 405(c)(1)(A) of division B of the Tax 
     Relief and Health Care Act of 2006 (Public Law 109-432)) is 
     amended by adding at the end the following new paragraph:
       ``(4)(A) Regardless of whether a State has chosen to take 
     the option specified in section 1902(a)(46)(B), each State 
     shall audit a statistically-based sample of cases of children 
     under 21 years of age in order to demonstrate to the 
     satisfaction of the Secretary that the percentage of Federal 
     Medicaid funds being spent for non-emergency benefits for 
     aliens described in subsection (v)(1) who are under 21 years 
     of age does not exceed 3 percent of total expenditures for 
     medical assistance under the plan for items and services for 
     individuals under 21 years of age for the period for which 
     the sample is taken. In conducting such audits, a State may 
     rely on case reviews regularly conducted pursuant to their 
     Medicaid Quality Control or Payment Error Rate Measurement 
     (PERM) eligibility reviews under subsection (u).
       ``(B) In conducting audits under subparagraph (A), payments 
     for non-emergency benefits shall be treated as erroneous if 
     the audit could not confirm the citizenship of the individual 
     based either on documentation in the case file or on 
     documentation obtained independently during the audit.
       ``(C) If the erroneous error rate described in subparagraph 
     (A)--
       ``(i) exceeds 3 percent, the State shall--
       ``(I) remit to the Secretary the Federal share of improper 
     expenditures in excess of the 3 percent level described in 
     such subparagraph;
       ``(II) shall develop a corrective action plan; and
       ``(III) shall conduct another audit the following fiscal 
     year, after the corrective action plan is implemented; or
       ``(ii) does not exceed 3 percent, the State is not required 
     to conduct another audit under subparagraph (A) until the 
     third fiscal year succeeding the fiscal year for which the 
     audit was conducted.'';
       (3) Elimination of denial of payments for children.--
     Section 1903(i)(22) of such Act (42 U.S.C. 1396b(i)(22)) is 
     amended by inserting ``(other than a child under the age of 
     21)'' after ``for an individual''.
       (b) Clarification of Rules for Children Born in the United 
     States to Mothers Eligible for Medicaid.--Section 1903(x)(2) 
     of such Act (42 U.S.C. 1396b(x)(2)) is amended--
       (1) in subparagraph (C), by striking ``or'' at the end;
       (2) by redesignating subparagraph (D) as subparagraph (E); 
     and
       (3) by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) pursuant to the application of section 1902(e)(4) 
     (and, in the case of an individual who is eligible for 
     medical assistance on such basis, the individual shall be 
     deemed to have provided satisfactory documentary evidence of 
     citizenship or nationality and shall not be required to 
     provide further documentary evidence on any date that occurs 
     during or after the period in which the individual is 
     eligible for medical assistance on such basis; or''.

[[Page 22185]]

       (c) Documentation for Native Americans .--Section 
     1903(x)(3)(B) of such Act is amended--
       (1) by redesignating clause (v) as clause (vi); and
       (2) by inserting after clause (iv) the following new 
     clause:
       ``(v) For an individual who is a member of, or enrolled in 
     or affiliated with, a federally-recognized Indian tribe, a 
     document issued by such tribe evidencing such membership, 
     enrollment, or affiliation with the tribe (such as a tribal 
     enrollment card or certificate of degree of Indian blood), 
     and, only with respect to those federally-recognized Indian 
     tribes located within States having an international border 
     whose membership includes individuals who are not citizens of 
     the United States, such other forms of documentation 
     (including tribal documentation, if appropriate) as the 
     Secretary, after consulting with such tribes, determines to 
     be satisfactory documentary evidence of citizenship or 
     nationality for purposes of satisfying the requirement of 
     this subparagraph.''.
       (d) Reasonable Opportunity.--Section 1903(x) of such Act, 
     as amended by subsection (a)(2), is further amended by adding 
     at the end the following new paragraph:
       ``(5) In the case of an individual declaring to be a 
     citizen or national of the United States with respect to whom 
     a State requires the presentation of satisfactory documentary 
     evidence of citizenship or nationality under section 
     1902(a)(46)(B), the individual shall be provided at least the 
     reasonable opportunity to present satisfactory documentary 
     evidence of citizenship or nationality under this subsection 
     as is provided under clauses (i) and (ii) of section 
     1137(d)(4)(A) to an individual for the submittal to the State 
     of evidence indicating a satisfactory immigration status and 
     shall not be denied medical assistance on the basis of 
     failure to provide such documentation until the individual 
     has had such an opportunity.''.
       (e) Effective Date.--
       (1) Retroactive application.--The amendments made by this 
     section shall take effect as if included in the enactment of 
     the Deficit Reduction Act of 2005 (Public Law 109-171; 120 
     Stat. 4).
       (2) Restoration of eligibility.--In the case of an 
     individual who, during the period that began on July 1, 2006, 
     and ends on the date of the enactment of this Act, was 
     determined to be ineligible for medical assistance under a 
     State Medicaid program solely as a result of the application 
     of subsections (i)(22) and (x) of section 1903 of the Social 
     Security Act (as in effect during such period), but who would 
     have been determined eligible for such assistance if such 
     subsections, as amended by this section, had applied to the 
     individual, a State may deem the individual to be eligible 
     for such assistance as of the date that the individual was 
     determined to be ineligible for such medical assistance on 
     such basis.

     SEC. 144. ACCESS TO DENTAL CARE FOR CHILDREN.

       (a) Dental Education for Parents of Newborns.--The 
     Secretary of Health and Human Services shall develop and 
     implement, through entities that fund or provide perinatal 
     care services to targeted low-income children under a State 
     child health plan under title XXI of the Social Security Act, 
     a program to deliver oral health educational materials that 
     inform new parents about risks for, and prevention of, early 
     childhood caries and the need for a dental visit within their 
     newborn's first year of life.
       (b) Provision of Dental Services Through FQHCs.--
       (1) Medicaid.--Section 1902(a) of the Social Security Act 
     (42 U.S.C. 1396a(a)) is amended--
       (A) by striking ``and'' at the end of paragraph (69);
       (B) by striking the period at the end of paragraph (70) and 
     inserting ``; and''; and
       (C) by inserting after paragraph (70) the following new 
     paragraph:
       ``(71) provide that the State will not prevent a Federally-
     qualified health center from entering into contractual 
     relationships with private practice dental providers in the 
     provision of Federally-qualified health center services.''.
       (2) CHIP.--Section 2107(e)(1) of such Act is amended--
       (A) by redesignating subparagraphs (B) through (D) as 
     subparagraphs (C) through (E); and
       (B) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Section 1902(a)(71) (relating to limiting FQHC 
     contracting for provision of dental services).''.
       (3) Effective date.--The amendments made by this subsection 
     shall take effect on January 1, 2008.
       (c) Reporting Information on Dental Health.----
       (1) Medicaid.--Section 1902(a)(43)(D)(iii) of such Act (42 
     U.S.C. 1396a(a)(43)(D)(iii)) is amended by inserting ``and 
     other information relating to the provision of dental 
     services to such children described in section 2108(e)'' 
     after ``receiving dental services,''.
       (2) CHIP.--Section 2108 of such Act (42 U.S.C. 1397hh) is 
     amended by adding at the end the following new subsection:
       ``(e) Information on Dental Care for Children.--
       ``(1) In general.--Each annual report under subsection (a) 
     shall include the following information with respect to care 
     and services described in section 1905(r)(3) provided to 
     targeted low-income children enrolled in the State child 
     health plan under this title at any time during the year 
     involved:
       ``(A) The number of enrolled children by age grouping used 
     for reporting purposes under section 1902(a)(43).
       ``(B) For children within each such age grouping, 
     information of the type contained in questions 12(a)-(c) of 
     CMS Form 416 (that consists of the number of enrolled 
     targeted low income children who receive any, preventive, or 
     restorative dental care under the State plan).
       ``(C) For the age grouping that includes children 8 years 
     of age, the number of such children who have received a 
     protective sealant on at least one permanent molar tooth.
       ``(2) Inclusion of information on enrollees in managed care 
     plans.--The information under paragraph (1) shall include 
     information on children who are enrolled in managed care 
     plans and other private health plans and contracts with such 
     plans under this title shall provide for the reporting of 
     such information by such plans to the State.''.
       (3) Effective date.--The amendments made by this subsection 
     shall be effective for annual reports submitted for years 
     beginning after date of enactment.
       (d) GAO Study and Report.--
       (1) Study.--The Comptroller General of the United States 
     shall provide for a study that examines--
       (A) access to dental services by children in underserved 
     areas; and
       (B) the feasibility and appropriateness of using qualified 
     mid-level dental health providers, in coordination with 
     dentists, to improve access for children to oral health 
     services and public health overall.
       (2) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report on the study conducted under paragraph 
     (1).

     SEC. 145. PROHIBITING INITIATION OF NEW HEALTH OPPORTUNITY 
                   ACCOUNT DEMONSTRATION PROGRAMS.

       After the date of the enactment of this Act, the Secretary 
     of Health and Human Services may not approve any new 
     demonstration programs under section 1938 of the Social 
     Security Act (42 U.S.C. 1396u-8).

               Subtitle F--Quality and Program Integrity

     SEC. 151. PEDIATRIC HEALTH QUALITY MEASUREMENT PROGRAM.

       (a) Quality Measurement of Children's Health.--
       (1) Establishment of program to develop quality measures 
     for children's health.--The Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall establish a child health care quality measurement 
     program (in this subsection referred to as the ``children's 
     health quality measurement program'') to develop and 
     implement--
       (A) pediatric quality measures on children's health care 
     that may be used by public and private health care purchasers 
     (and a system for reporting such measures); and
       (B) measures of overall program performance that may be 
     used by public and private health care purchasers.

     The Secretary shall publish, not later than September 30, 
     2009, the recommended measures under the program for 
     application under the amendments made by subsection (b) for 
     years beginning with 2010.
       (2) Measures.--
       (A) Scope.--The measures developed under the children's 
     health quality measurement program shall--
       (i) provide comprehensive information with respect to the 
     provision and outcomes of health care for young children, 
     school age children, and older children.
       (ii) be designed to identify disparities by pediatric 
     characteristics (including, at a minimum, those specified in 
     subparagraph (C)) in child health and the provision of health 
     care;
       (iii) be designed to ensure that the data required for such 
     measures is collected and reported in a standard format that 
     permits comparison at a State, plan, and provider level, and 
     between insured and uninsured children;
       (iv) take into account existing measures of child health 
     quality and be periodically updated;
       (v) include measures of clinical health care quality which 
     meet the requirements for pediatric quality measures in 
     paragraph (1);
       (vi) improve and augment existing measures of clinical 
     health care quality for children's health care and develop 
     new and emerging measures; and
       (vii) increase the portfolio of evidence-based pediatric 
     quality measures available to public and private purchasers, 
     providers, and consumers.
       (B) Specific measures.--Such measures shall include 
     measures relating to at least the following aspects of health 
     care for children:
       (i) The proportion of insured (and uninsured) children who 
     receive age-appropriate preventive health and dental care 
     (including

[[Page 22186]]

     age appropriate immunizations) at each stage of child health 
     development.
       (ii) The proportion of insured (and uninsured) children who 
     receive dental care for restoration of teeth, relief of pain 
     and infection, and maintenance of dental health.
       (iii) The effectiveness of early health care interventions 
     for children whose assessments indicate the presence or risk 
     of physical or mental conditions that could adversely affect 
     growth and development.
       (iv) The effectiveness of treatment to ameliorate the 
     effects of diagnosed physical and mental health conditions, 
     including chronic conditions.
       (v) The proportion of children under age 21 who are 
     continuously insured for a period of 12 months or longer.
       (vi) The effectiveness of health care for children with 
     disabilities.

     In carrying out clause (vi), the Secretary shall develop 
     quality measures and best practices relating to cystic 
     fibrosis.
       (C) Reporting methodology for analysis by pediatric 
     characteristics.--The children's health quality measurement 
     program shall describe with specificity such measures and the 
     process by which such measures will be reported in a manner 
     that permits analysis based on each of the following 
     pediatric characteristics:
       (i) Age.
       (ii) Gender.
       (iii) Race.
       (iv) Ethnicity.
       (v) Primary language of the child's parents (or caretaker 
     relative).
       (vi) Disability or chronic condition (including cystic 
     fibrosis).
       (vii) Geographic location.
       (viii) Coverage status under public and private health 
     insurance programs.
       (D) Pediatric quality measure.--In this subsection, the 
     term ``pediatric quality measure'' means a measurement of 
     clinical care that assesses one or more aspects of pediatric 
     health care quality (in various settings) including the 
     structure of the clinical care system, the process and 
     outcome of care, or patient experience in such care.
       (3) Consultation in developing quality measures for 
     children's health services.--In developing and implementing 
     the children's health quality measurement program, the 
     Secretary shall consult with--
       (A) States;
       (B) pediatric hospitals, pediatricians, and other primary 
     and specialized pediatric health care professionals 
     (including members of the allied health professions) who 
     specialize in the care and treatment of children, 
     particularly children with special physical, mental, and 
     developmental health care needs;
       (C) dental professionals;
       (D) health care providers that furnish primary health care 
     to children and families who live in urban and rural 
     medically underserved communities or who are members of 
     distinct population sub-groups at heightened risk for poor 
     health outcomes;
       (E) national organizations representing children, including 
     children with disabilities and children with chronic 
     conditions;
       (F) national organizations and individuals with expertise 
     in pediatric health quality performance measurement; and
       (G) voluntary consensus standards setting organizations and 
     other organizations involved in the advancement of evidence 
     based measures of health care.
       (4) Use of grants and contracts.--In carrying out the 
     children's health quality measurement program, the Secretary 
     may award grants and contracts to develop, test, validate, 
     update, and disseminate quality measures under the program.
       (5) Technical assistance.--The Secretary shall provide 
     technical assistance to States to establish for the reporting 
     of quality measures under titles XIX and XXI of the Social 
     Security Act in accordance with the children's health quality 
     measurement program.
       (b) Dissemination of Information on the Quality of Program 
     Performance.--Not later than January 1, 2009, and annually 
     thereafter, the Secretary shall collect, analyze, and make 
     publicly available on a public website of the Department of 
     Health and Human Services in an online format--
       (1) a complete list of all measures in use by States as of 
     such date and used to measure the quality of medical and 
     dental health services furnished to children enrolled under 
     title XIX of XXI of the Social Security Act by participating 
     providers, managed care entities, and plan issuers; and
       (2) information on health care quality for children 
     contained in external quality review reports required under 
     section 1932(c)(2) of such Act (42 U.S.C. 1396u-2) or 
     produced by States that administer separate plans under title 
     XXI of such Act.
       (c) Reports to Congress on Program Performance.--Not later 
     than January 1, 2010, and every 2 years thereafter, the 
     Secretary shall report to Congress on--
       (1) the quality of health care for children enrolled under 
     title XIX and XXI of the Social Security Act under the 
     children's health quality measurement program; and
       (2) patterns of health care utilization with respect to the 
     measures specified in subsection (a)(2)(B) among children by 
     the pediatric characteristics listed in subsection (a)(2)(C).

     SEC. 152. APPLICATION OF CERTAIN MANAGED CARE QUALITY 
                   SAFEGUARDS TO CHIP.

       (a) In General.--Section 2103(f) of Social Security Act (42 
     U.S.C. 1397bb(f)) is amended by adding at the end the 
     following new paragraph:
       ``(3) Compliance with managed care requirements.--The State 
     child health plan shall provide for the application of 
     subsections (a)(4), (a)(5), (b), (c), (d), and (e) of section 
     1932 (relating to requirements for managed care) to coverage, 
     State agencies, enrollment brokers, managed care entities, 
     and managed care organizations under this title in the same 
     manner as such subsections apply to coverage and such 
     entities and organizations under title XIX.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to contract years for health plans beginning on 
     or after July 1, 2008.

     SEC. 153. UPDATED FEDERAL EVALUATION OF CHIP.

       Section 2108(c) of the Social Security Act (42 U.S.C. 
     1397hh(c)) is amended by striking paragraph (5) and inserting 
     the following:
       ``(5) Subsequent evaluation using updated information.--
       ``(A) In general.--The Secretary, directly or through 
     contracts or interagency agreements, shall conduct an 
     independent subsequent evaluation of 10 States with approved 
     child health plans.
       ``(B) Selection of states and matters included.--Paragraphs 
     (2) and (3) shall apply to such subsequent evaluation in the 
     same manner as such provisions apply to the evaluation 
     conducted under paragraph (1).
       ``(C) Submission to congress.--Not later than December 31, 
     2010, the Secretary shall submit to Congress the results of 
     the evaluation conducted under this paragraph.
       ``(D) Funding.--Out of any money in the Treasury of the 
     United States not otherwise appropriated, there are 
     appropriated $10,000,000 for fiscal year 2009 for the purpose 
     of conducting the evaluation authorized under this paragraph. 
     Amounts appropriated under this subparagraph shall remain 
     available for expenditure through fiscal year 2011.''.

     SEC. 154. ACCESS TO RECORDS FOR IG AND GAO AUDITS AND 
                   EVALUATIONS.

       Section 2108(d) of the Social Security Act (42 U.S.C. 
     1397hh(d)) is amended to read as follows:
       ``(d) Access to Records for IG and GAO Audits and 
     Evaluations.--For the purpose of evaluating and auditing the 
     program established under this title, the Secretary, the 
     Office of Inspector General, and the Comptroller General 
     shall have access to any books, accounts, records, 
     correspondence, and other documents that are related to the 
     expenditure of Federal funds under this title and that are in 
     the possession, custody, or control of States receiving 
     Federal funds under this title or political subdivisions 
     thereof, or any grantee or contractor of such States or 
     political subdivisions.''.

     SEC. 155. REFERENCES TO TITLE XXI.

       Section 704 of the Medicare, Medicaid, and SCHIP Balanced 
     Budget Refinement Act of 1999 (Appendix F, 113 Stat. 1501A-
     321), as enacted into law by section 1000(a)(6) of Public Law 
     106-113) is repealed.

     SEC. 156. RELIANCE ON LAW; EXCEPTION FOR STATE LEGISLATION.

       (a) Reliance on Law.-- With respect to amendments made by 
     this title or title VIII that become effective as of a date--
       (1) such amendments are effective as of such date whether 
     or not regulations implementing such amendments have been 
     issued; and
       (2) Federal financial participation for medical assistance 
     or child health assistance furnished under title XIX or XXI, 
     respectively, of the Social Security Act on or after such 
     date by a State in good faith reliance on such amendments 
     before the date of promulgation of final regulations, if any, 
     to carry out such amendments (or before the date of guidance, 
     if any, regarding the implementation of such amendments) 
     shall not be denied on the basis of the State's failure to 
     comply with such regulations or guidance.
       (b) Exception for State Legislation.--In the case of a 
     State plan under title XIX or State child health plan under 
     XXI of the Social Security Act, which the Secretary of Health 
     and Human Services determines requires State legislation in 
     order for respective plan to meet one or more additional 
     requirements imposed by amendments made by this title or 
     title VIII, the respective State plan shall not be regarded 
     as failing to comply with the requirements of such title 
     solely on the basis of its failure to meet such an additional 
     requirement before the first day of the first calendar 
     quarter beginning after the close of the first regular 
     session of the State legislature that begins after the date 
     of enactment of this Act. For purposes of the previous 
     sentence, in the case of a State that has a 2-year 
     legislative session, each year of the session shall be 
     considered to be a separate regular session of the State 
     legislature.

[[Page 22187]]



              TITLE II--MEDICARE BENEFICIARY IMPROVEMENTS

                  Subtitle A--Improvements in Benefits

     SEC. 201. COVERAGE AND WAIVER OF COST-SHARING FOR PREVENTIVE 
                   SERVICES.

       (a) Preventive Services Defined; Coverage of Additional 
     Preventive Services.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x) is amended--
       (1) in subsection (s)(2)--
       (A) in subparagraph (Z), by striking ``and'' after the 
     semicolon at the end;
       (B) in subparagraph (AA), by adding ``and'' after the 
     semicolon at the end; and
       (C) by adding at the end the following new subparagraph:
       ``(BB) additional preventive services (described in 
     subsection (ccc)(1)(M));''; and
       (2) by adding at the end the following new subsection:

                         ``Preventive Services

       ``(ccc)(1) The term `preventive services' means the 
     following:
       ``(A) Prostate cancer screening tests (as defined in 
     subsection (oo)).
       ``(B) Colorectal cancer screening tests (as defined in 
     subsection (pp)).
       ``(C) Diabetes outpatient self-management training services 
     (as defined in subsection (qq)).
       ``(D) Screening for glaucoma for certain individuals (as 
     described in subsection (s)(2)(U)).
       ``(E) Medical nutrition therapy services for certain 
     individuals (as described in subsection (s)(2)(V)).
       ``(F) An initial preventive physical examination (as 
     defined in subsection (ww)).
       ``(G) Cardiovascular screening blood tests (as defined in 
     subsection (xx)(1)).
       ``(H) Diabetes screening tests (as defined in subsection 
     described in subsection (s)(2)(Y)).
       ``(I) Ultrasound screening for abdominal aortic aneurysm 
     for certain individuals (as described in described in 
     subsection (s)(2)(AA)).
       ``(J) Pneumococcal and influenza vaccine and their 
     administration (as described in subsection (s)(10)(A)).
       ``(K) Hepatitis B vaccine and its administration for 
     certain individuals (as described in subsection (s)(10)(B)).
       ``(L) Screening mammography (as defined in subsection 
     (jj)).
       ``(M) Screening pap smear and screening pelvic exam (as 
     described in subsection (s)(14)).
       ``(N) Bone mass measurement (as defined in subsection 
     (rr)).
       ``(O) Additional preventive services (as determined under 
     paragraph (2)).
       ``(2)(A) The term `additional preventive services' means 
     items and services, including mental health services, not 
     described in subparagraphs (A) through (N) of paragraph (1) 
     that the Secretary determines to be reasonable and necessary 
     for the prevention or early detection of an illness or 
     disability.
       ``(B) In making determinations under subparagraph (1), the 
     Secretary shall--
       ``(C) take into account evidence-based recommendations by 
     the United States Preventive Services Task Force and other 
     appropriate organizations; and
       ``(D) use the process for making national coverage 
     determinations (as defined in section 1869(f)(1)(B)) under 
     this title.''.
       (b) Payment and Elimination of Cost-Sharing.--
       (1) In general.--Section 1833(a)(1) of the Social Security 
     Act (42 U.S.C. 1395l(a)(1)) is amended--
       (A) in clause (T), by striking ``80 percent'' and inserting 
     ``100 percent''; and
       (B) by striking ``and'' before ``(V)''; and
       (C) by inserting before the semicolon at the end the 
     following: ``, and (W) with respect to additional preventive 
     services (as defined in section 1861(ccc)(2)) and other 
     preventive services for which a payment rate is not otherwise 
     established under this section, the amount paid shall be 100 
     percent of the lesser of the actual charge for the services 
     or the amount determined under a fee schedule established by 
     the Secretary for purposes of this clause''.
       (2) Elimination of coinsurance in outpatient hospital 
     settings.--
       (A) Exclusion from opd fee schedule.--Section 
     1833(t)(1)(B)(iv) of the Social Security Act (42 U.S.C. 
     1395l(t)(1)(B)(iv)) is amended by striking ``screening 
     mammography (as defined in section 1861(jj)) and diagnostic 
     mammography'' and inserting ``diagnostic mammography and 
     preventive services (as defined in section 1861(ccc)(1))''.
       (B) Conforming amendments.--Section 1833(a)(2) of the 
     Social Security Act (42 U.S.C. 1395l(a)(2)) is amended--
       (i) in subparagraph (F), by striking ``and'' after the 
     semicolon at the end;
       (ii) in subparagraph (G)(ii), by adding ``and''at the end; 
     and
       (iii) by adding at the end the following new subparagraph:
       ``(H) with respect to additional preventive services (as 
     defined in section 1861(ccc)(2)) furnished by an outpatient 
     department of a hospital, the amount determined under 
     paragraph (1)(W);''.
       (3) Waiver of application of deductible for all preventive 
     services.--The first sentence of section 1833(b) of the 
     Social Security Act (42 U.S.C. 1395l(b)) is amended --
       (A) in clause (1), by striking ``items and services 
     described in section 1861(s)(10)(A)'' and inserting 
     ``preventive services (as defined in section 1861(ccc)(1))'';
       (B) by inserting ``and'' before ``(4)''; and
       (C) by striking clauses (5) through (8).
       (c) Inclusion as Part of Initial Preventive Physical 
     Examination.--Section 1861(ww)(2) of the Social Security Act 
     (42 U.S.C. 1395x(ww)(2)) is amended by adding at the end the 
     following new subparagraph:
       ``(M) Additional preventive services (as defined in 
     subsection (ccc)(2)).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after January 1, 
     2008.

     SEC. 202. WAIVER OF DEDUCTIBLE FOR COLORECTAL CANCER 
                   SCREENING TESTS REGARDLESS OF CODING, 
                   SUBSEQUENT DIAGNOSIS, OR ANCILLARY TISSUE 
                   REMOVAL.

       (a) In General.--Section 1833(b)(8) of the Social Security 
     Act (42 U.S.C. 1395l(b)(8)) is amended by inserting ``, 
     regardless of the code applied, of the establishment of a 
     diagnosis as a result of the test, or of the removal of 
     tissue or other matter or other procedure that is performed 
     in connection with and as a result of the screening test'' 
     after ``1861(pp)(1))''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to items and services furnished on or after 
     January 1, 2008.

     SEC. 203. PARITY FOR MENTAL HEALTH COINSURANCE.

       Section 1833(c) of the Social Security Act (42 U.S.C. 
     1395l(c)) is amended--
       (1) in the first sentence, by striking ``62-1/2 percent'' 
     and inserting ``the incurred expense percentage (as specified 
     in the last sentence)''; and
       (2) by adding at the end the following: ``For purposes of 
     this subsection, the `incurred expense percentage' is equal 
     to 62-1/2 percent increased, for each year beginning with 
     2008, by 6-1/4 percentage points, but not to exceed 100 
     percent.''.

Subtitle B--Improving, Clarifying, and Simplifying Financial Assistance 
                 for Low Income Medicare Beneficiaries

     SEC. 211. IMPROVING ASSETS TESTS FOR MEDICARE SAVINGS PROGRAM 
                   AND LOW-INCOME SUBSIDY PROGRAM.

       (a) Application of Highest Level Permitted Under LIS.--
       (1) To full-premium subsidy eligible individuals.--Section 
     1860D-14(a) of the Social Security Act (42 U.S.C. 1395w-
     114(a)) is amended--
       (A) in paragraph (1), in the matter before subparagraph 
     (A), by inserting ``(or, beginning with 2009, paragraph 
     (3)(E))'' after ``paragraph (3)(D)''; and
       (B) in paragraph (3)(A)(iii), by striking ``(D) or''.
       (2) Annual increase in lis resource test.--Section 1860D-
     14(a)(3)(E)(i) of such Act (42 U.S.C. 1395w-114(a)(3)(E)(i)) 
     is amended--
       (A) by striking ``and'' at the end of subclause (I);
       (B) in subclause (II), by inserting ``(before 2009)'' after 
     ``subsequent year'';
       (C) by striking the period at the end of subclause (II) and 
     inserting a semicolon; and
       (D) by inserting after subclause (II) the following new 
     subclauses:

       ``(III) for 2009, $17,000 (or $34,000 in the case of the 
     combined value of the individual's assets or resources and 
     the assets or resources of the individual's spouse); and
       ``(IV) for a subsequent year, the dollar amounts specified 
     in this subclause (or subclause (III)) for the previous year 
     increased by $1,000 (or $2,000 in the case of the combined 
     value referred to in subclause (III)).''.

       (3) Application of lis test under medicare savings 
     program.--Section 1905(p)(1)(C) of such Act (42 U.S.C. 
     1396d(p)(1)(C)) is amended by inserting before the period at 
     the end the following: ``or, effective beginning with January 
     1, 2009, whose resources (as so determined) do not exceed the 
     maximum resource level applied for the year under section 
     1860D-14(a)(3)(E) applicable to an individual or to the 
     individual and the individual's spouse (as the case may 
     be)''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to eligibility determinations for income-related 
     subsidies and medicare cost-sharing furnished for periods 
     beginning on or after January 1, 2009.

     SEC. 212. MAKING QI PROGRAM PERMANENT AND EXPANDING 
                   ELIGIBILITY.

       (a) Making Program Permanent.--
       (1) In general.--Section 1902(a)(10)(E)(iv) of the Social 
     Security Act (42 U.S.C. 1396b(a)(10)(E)(iv)) is amended--
       (A) by striking ``sections 1933 and'' and by inserting 
     ``section''; and
       (B) by striking ``(but only with'' and all that follows 
     through ``September 2007)''.
       (2) Elimination of funding limitation.--
       (A) In general.--Section 1933 of such Act (42 U.S.C. 1396u-
     3) is amended--
       (i) in subsection (a), by striking ``who are selected to 
     receive such assistance under subsection (b)''
       (ii) by striking subsections (b), (c), (e), and (g);
       (iii) in subsection (d), by striking ``furnished in a 
     State'' and all that follows and inserting ``the Federal 
     medical assistance percentage shall be equal to 100 
     percent.''; and

[[Page 22188]]

       (iv) by redesignating subsections (d) and (f) as 
     subsections (b) and (c), respectively.
       (B) Conforming amendment.--Section 1905(b) of such Act (42 
     U.S.C. 1396d(b)) is amended by striking ``1933(d)'' and 
     inserting ``1933(b)''.
       (C) Effective date.--The amendments made by subparagraph 
     (A) shall take effect on October 1, 2007.
       (b) Increase in Eligibility to 150 Percent of the Federal 
     Poverty Level.--Section 1902(a)(10)(E)(iv) of such Act is 
     further amended by inserting ``(or, effective January 1, 
     2008, 150 percent)'' after ``135 percent''.

     SEC. 213. ELIMINATING BARRIERS TO ENROLLMENT.

       (a) Administrative Verification of Income and Resources 
     Under the Low-Income Subsidy Program.--Section 1860D-14(a)(3) 
     of the Social Security Act (42 U.S.C. 1395w-114(a)(3)) is 
     amended by adding at the end the following new subparagraph:
       ``(G) Self-certification of income and resources.--For 
     purposes of applying this section, an individual shall be 
     permitted to qualify on the basis of self-certification of 
     income and resources without the need to provide additional 
     documentation.''.
       (b) Automatic Reenrollment Without Need to Reapply Under 
     Low-Income Subsidy Program.--Section 1860D-14(a)(3) of such 
     Act (42 U.S.C. 1395w-114(a)(3)), as amended by subsection 
     (a), is further amended by adding at the end the following 
     new subparagraph:
       ``(H) Automatic reenrollment.--For purposes of applying 
     this section, in the case of an individual who has been 
     determined to be a subsidy eligible individual (and within a 
     particular class of such individuals, such as a full-subsidy 
     eligible individual or a partial subsidy eligible 
     individual), the individual shall be deemed to continue to be 
     so determined without the need for any annual or periodic 
     application unless and until the individual notifies a 
     Federal or State official responsible for such determinations 
     that the individual's eligibility conditions have changed so 
     that the individual is no longer a subsidy eligible 
     individual (or is no longer within such class of such 
     individuals).''.
       (c) Encouraging Application of Procedures Under Medicare 
     Savings Program.--Section 1905(p) of such Act (42 U.S.C. 
     1396d(p)) is amended by adding at the end the following new 
     paragraph:
       ``(7) The Secretary shall take all reasonable steps to 
     encourage States to provide for administrative verification 
     of income and automatic reenrollment (as provided under 
     clauses (iii) and (iv) of section 1860D-14(a)(3)(C) in the 
     case of the low-income subsidy program).''.
       (d) SSA Assistance With Medicare Savings Program and Low-
     Income Subsidy Program Applications.--Section 1144 of such 
     Act (42 U.S.C. 1320b-14) is amended by adding at the end the 
     following new subsection:
       ``(c) Assistance With Medicare Savings Program and Low-
     Income Subsidy Program Applications.--
       ``(1) Distribution of applications to applicants for 
     medicare.--In the case of each individual applying for 
     hospital insurance benefits under section 226 or 226A, the 
     Commissioner shall provide the following:
       ``(A) Information describing the low-income subsidy program 
     under section 1860D-14 and the medicare savings program under 
     title XIX.
       ``(B) An application for enrollment under such low-income 
     subsidy program as well as an application form (developed 
     under section 1905(p)(5)) for medical assistance for medicare 
     cost-sharing under title XIX.
       ``(C) Information on how the individual may obtain 
     assistance in completing such applications, including 
     information on how the individual may contact the State 
     health insurance assistance program (SHIP) for the State in 
     which the individual is located.
     The Commissioner shall make such application forms available 
     at local offices of the Social Security Administration.
       ``(2) Training personnel in assisting in completing 
     applications.--The Commissioner shall provide training to 
     those employees of the Social Security Administration who are 
     involved in receiving applications for benefits described in 
     paragraph (1) in assisting applicants in completing a 
     medicare savings program application described in paragraph 
     (1). Such employees who are so trained shall provide such 
     assistance upon request.
       ``(3) Transmittal of completed application.--If such an 
     employee assists in completing such an application, the 
     employee, with the consent of the applicant, shall transmit 
     the completed application to the appropriate State medicaid 
     agency for processing.
       ``(4) Coordination with outreach.--The Commissioner shall 
     coordinate outreach activities under this subsection with 
     outreach activities conducted by States in connection with 
     the low-income subsidy program and the medicare savings 
     program.''.
       (e) Medicaid Agency Consideration of Applications.--Section 
     1935(a) of such Act (42 U.S.C. 1396u-5(a)) is amended by 
     adding at the end the following new paragraph:
       ``(4) Consideration of msp applications.--The State shall 
     accept medicare savings program applications transmitted 
     under section 1144(c)(3) and act on such applications in the 
     same manner and deadlines as if they had been submitted 
     directly by the applicant.''.
       (f) Translation of Model Form.--Section 1905(p)(5)(A) of 
     the Social Security Act (42 U.S.C. 1396d(p)(5)(A)) is amended 
     by adding at the end the following: ``The Secretary shall 
     provide for the translation of such application form into at 
     least the 10 languages (other than English) that are most 
     often used by individuals applying for hospital insurance 
     benefits under section 226 or 226A and shall make the 
     translated forms available to the States and to the 
     Commissioner of Social Security.''.
       (g) Disclosure of Tax Return Information for Purposes of 
     Providing Low-Income Subsidies Under Medicare.--
       (1) In general.--Subsection (l) of section 6103 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new paragraph:
       ``(21) Disclosure of return information for purposes of 
     providing low-income subsidies under medicare.--
       ``(A) Return information from internal revenue service to 
     social security administration.--The Secretary, upon written 
     request from the Commissioner of Social Security, shall 
     disclose to the officers and employees of the Social Security 
     Administration with respect to any individual identified by 
     the Commissioner as potentially eligible (based on 
     information other than return information) for low-income 
     subsidies under section 1860D-14 of the Social Security Act--
       ``(i) whether the adjusted gross income for the applicable 
     year is less than 135 percent of the poverty line (as 
     specified by the Commissioner in such request),
       ``(ii) whether such adjusted gross income is between 135 
     percent and 150 percent of the poverty line (as so 
     specified),
       ``(iii) whether any designated distributions (as defined in 
     section 3405(e)(1)) were reported with respect to such 
     individual under section 6047(d) for the applicable year, and 
     the amount (if any) of the distributions so reported,
       ``(iv) whether the return was a joint return for the 
     applicable year, and
       ``(v) the applicable year.
       ``(B) Applicable year.--
       ``(i) In general.--For the purposes of this paragraph, the 
     term `applicable year' means the most recent taxable year for 
     which information is available in the Internal Revenue 
     Service's taxpayer data information systems, or, if there is 
     no return filed for the individual for such year, the prior 
     taxable year.
       ``(ii) No return.--If no return is filed for such 
     individual for both taxable years referred to in clause (i), 
     the Secretary shall disclose the fact that there is no return 
     filed for such individual for the applicable year in lieu of 
     the information described in subparagraph (A).
       ``(C) Restriction on use of disclosed information.--Return 
     information disclosed under this paragraph may be used only 
     for the purpose of improving the efforts of the Social 
     Security Administration to contact and assist eligible 
     individuals for, and administering, low-income subsidies 
     under section 1860D-14 of the Social Security Act.
       ``(D) Termination.--No disclosure shall be made under this 
     paragraph after the 2-year period beginning on the date of 
     the enactment of this paragraph.''.
       (2) Procedures and recordkeeping related to disclosures.--
     Paragraph (4) of section 6103(p) of such Code is amended by 
     striking ``or (17)'' each place it appears and inserting 
     ``(17), or (21)''.
       (3) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Secretary of the Treasury, after 
     consultation with the Commissioner of Social Security, shall 
     submit a written report to Congress regarding the use of 
     disclosures made under section 6103(l)(21) of the Internal 
     Revenue Code of 1986, as added by this subsection, in 
     identifying individuals eligible for the low-income subsidies 
     under section 1860D-14 of the Social Security Act.
       (4) Effective date.--The amendment made by this subsection 
     shall apply to disclosures made after the date of the 
     enactment of this Act.
       (h) Effective Date.--Except as otherwise provided, the 
     amendments made by this section shall take effect on January 
     1, 2009.

     SEC. 214. ELIMINATING APPLICATION OF ESTATE RECOVERY.

       (a) In General.--Section 1917(b)(1)(B)(ii) of the Social 
     Security Act (42 U.S.C. 1396p(b)(1)(B)(ii)) is amended by 
     inserting ``(but not including medical assistance for 
     medicare cost-sharing or for benefits described in section 
     1902(a)(10)(E))'' before the period at the end.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as of January 1, 2008.

     SEC. 215. ELIMINATION OF PART D COST-SHARING FOR CERTAIN NON-
                   INSTITUTIONALIZED FULL-BENEFIT DUAL ELIGIBLE 
                   INDIVIDUALS.

       (a) In General.--Section 1860D-14(a)(1)(D)(i) of the Social 
     Security Act (42 U.S.C. 1395w-114(a)(1)(D)(i)) is amended--
       (1) in the heading, by striking ``Institutionalized 
     individuals.--In'' and inserting ``Elimination of cost-
     sharing for certain full-benefit dual eligible individuals.--

       ``(I) Institutionalized individuals.--In''; and

       (2) by adding at the end the following new subclause:

[[Page 22189]]

       ``(II) Certain other individuals.--In the case of an 
     individual who is a full-benefit dual eligible individual and 
     with respect to whom there has been a determination that but 
     for the provision of home and community based care (whether 
     under section 1915 or under a waiver under section 1115) the 
     individual would require the level of care provided in a 
     hospital or a nursing facility or intermediate care facility 
     for the mentally retarded the cost of which could be 
     reimbursed under the State plan under title XIX, the 
     elimination of any beneficiary coinsurance described in 
     section 1860D-2(b)(2) (for all amounts through the total 
     amount of expenditures at which benefits are available under 
     section 1860D-2(b)(4)).''.

       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to drugs dispensed on or after January 1, 2009.

     SEC. 216. EXEMPTIONS FROM INCOME AND RESOURCES FOR 
                   DETERMINATION OF ELIGIBILITY FOR LOW-INCOME 
                   SUBSIDY.

       (a) In General.--Section 1860D-14(a)(3) of the Social 
     Security Act (42 U.S.C. 1395w-114(a)(3)), as amended by 
     subsections (a) and (b) of section 213, is further amended--
       (1) in subparagraph (C)(i), by inserting ``and except that 
     support and maintenance furnished in kind shall not be 
     counted as income'' after ``section 1902(r)(2)'';
       (2) in subparagraph (D), in the matter before clause (i), 
     by inserting ``subject to the additional exclusions provided 
     under subparagraph (G)'' before ``)'';
       (3) in subparagraph (E)(i), in the matter before subclause 
     (I), by inserting ``subject to the additional exclusions 
     provided under subparagraph (G)'' before ``)''; and
       (4) by adding at the end the following new subparagraph:
       ``(I) Additional exclusions.--In determining the resources 
     of an individual (and the eligible spouse of the individual, 
     if any) under section 1613 for purposes of subparagraphs (D) 
     and (E) the following additional exclusions shall apply:
       ``(i) Life insurance policy.--No part of the value of any 
     life insurance policy shall be taken into account.
       ``(ii) Pension or retirement plan.--No balance in any 
     pension or retirement plan shall be taken into account.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2009, and shall apply to 
     determinations of eligibility for months beginning with 
     January 2009.

     SEC. 217. COST-SHARING PROTECTIONS FOR LOW-INCOME SUBSIDY-
                   ELIGIBLE INDIVIDUALS.

       (a) In General.--Section 1860D-14(a) of the Social Security 
     Act (42 U.S.C. 1395w-114(a)) is amended--
       (1) in paragraph (1)(D), by adding at the end the following 
     new clause:
       ``(iv) Overall limitation on cost-sharing.--In the case of 
     all such individuals, a limitation on aggregate cost-sharing 
     under this part for a year not to exceed 2.5 percent of 
     income.''; and
       (2) in paragraph (2), by adding at the end the following 
     new subparagraph:
       ``(F) Overall limitation on cost-sharing.--A limitation on 
     aggregate cost-sharing under this part for a year not to 
     exceed 2.5 percent of income.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply as of January 1, 2009.

     SEC. 218. INTELLIGENT ASSIGNMENT IN ENROLLMENT.

       (a) In General.--Section 1860D-1(b)(1) of the Social 
     Security Act (42 U.S.C. 1395w-101(b)(1) is amended--
       (1) in the second sentence of subparagraph (C), by 
     inserting ``, subject to subparagraph (D),'' before ``on a 
     random basis''; and
       (2) by adding at the end the following new subparagraph:''.
       ``(D) Intelligent assignment.--In the case of any auto-
     enrollment under subparagraph (C), no part D eligible 
     individual described in such subparagraph shall be enrolled 
     in a prescription drug plan which does not meet the following 
     requirements:
       ``(i) Formulary.--The plan has a formulary that covers at 
     least--

       ``(I) 95 percent of the 100 most commonly prescribed non-
     duplicative generic covered part D drugs for the population 
     of individuals entitled to benefits under part A or enrolled 
     under part B; and
       ``(II) 95 percent of the 100 most commonly prescribed non-
     duplicative brand name covered part D drugs for such 
     population.

       ``(ii) Pharmacy network.--The plan has a network of 
     pharmacies that substantially exceeds the minimum 
     requirements for prescription drug plans in the State and 
     that provides access in areas where lower income individuals 
     reside.
       ``(iii) Quality.--

       ``(I) In general.--Subject to subclause (I), the plan has 
     an above average score on quality ratings of the Secretary of 
     prescription drug plans under this part.
       ``(II) Exception.--Subclause (I) shall not apply to a plan 
     that is a new plan (as defined by the Secretary), with 
     respect to the plan year involved.

       ``(iv) Low cost.--The total cost under this title of 
     providing prescription drug coverage under the plan 
     consistent with the previous clauses of this subparagraph is 
     among the lowest 25th percentile of prescription drug plans 
     under this part in the State.

     In the case that no plan meets the requirements under clauses 
     (i) through (iv), the Secretary shall implement this 
     subparagraph to the greatest extent possible with the goal of 
     protecting beneficiary access to drugs without increasing the 
     cost relative to the enrollment process under subparagraph 
     (C) as in existence before the date of the enactment of this 
     subparagraph.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect for enrollments effected on or after 
     November 15, 2009.

              Subtitle C--Part D Beneficiary Improvements

     SEC. 221. INCLUDING COSTS INCURRED BY AIDS DRUG ASSISTANCE 
                   PROGRAMS AND INDIAN HEALTH SERVICE IN PROVIDING 
                   PRESCRIPTION DRUGS TOWARD THE ANNUAL OUT OF 
                   POCKET THRESHOLD UNDER PART D.

       (a) In General.--Section 1860D-2(b)(4)(C) of the Social 
     Security Act (42 U.S.C. 1395w-102(b)(4)(C)) is amended--
       (1) in clause (i), by striking ``and'' at the end;
       (2) in clause (ii)--
       (A) by striking ``such costs shall be treated as incurred 
     only if'' and inserting ``subject to clause (iii), such costs 
     shall be treated as incurred only if'';
       (B) by striking ``, under section 1860D-14, or under a 
     State Pharmaceutical Assistance Program''; and
       (C) by striking the period at the end and inserting ``; 
     and''; and
       (3) by inserting after clause (ii) the following new 
     clause:
       ``(iii) such costs shall be treated as incurred and shall 
     not be considered to be reimbursed under clause (ii) if such 
     costs are borne or paid--

       ``(I) under section 1860D-14;
       ``(II) under a State Pharmaceutical Assistance Program;
       ``(III) by the Indian Health Service, an Indian tribe or 
     tribal organization, or an urban Indian organization (as 
     defined in section 4 of the Indian Health Care Improvement 
     Act); or
       ``(IV) under an AIDS Drug Assistance Program under part B 
     of title XXVI of the Public Health Service Act.''.

       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to costs incurred on or after January 1, 2009.

     SEC. 222. PERMITTING MID-YEAR CHANGES IN ENROLLMENT FOR 
                   FORMULARY CHANGES ADVERSELY IMPACT AN ENROLLEE.

       (a) In General.--Section 1860D-1(b)(3) of the Social 
     Security Act (42 U.S.C. 1395w-101(b)(3)) is amended by adding 
     at the end the following new subparagraph:
       ``(F) Change in formulary resulting in increase in cost-
     sharing.--
       ``(i) In general.--Except as provided in clause (ii), in 
     the case of an individual enrolled in a prescription drug 
     plan (or MA-PD plan) who has been prescribed a covered part D 
     drug while so enrolled, if the formulary of the plan is 
     materially changed (other than at the end of a contract year) 
     so to reduce the coverage (or increase the cost-sharing) of 
     the drug under the plan.
       ``(ii) Exception.--Clause (i) shall not apply in the case 
     that a drug is removed from the formulary of a plan because 
     of a recall or withdrawal of the drug issued by the Food and 
     Drug Administration.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to contract years beginning on or after January 
     1, 2009.

     SEC. 223. REMOVAL OF EXCLUSION OF BENZODIAZEPINES FROM 
                   REQUIRED COVERAGE UNDER THE MEDICARE 
                   PRESCRIPTION DRUG PROGRAM.

       (a) In General.--Section 1860D-2(e)(2)(A) of the Social 
     Security Act (42 U.S.C. 1395w-102(e)(2)(A)) is amended--
       (1) by striking ``subparagraph (E)'' and inserting 
     ``subparagraphs (E) and (J)''; and
       (2) by inserting ``and benzodiazepines, respectively'' 
     after ``smoking cessation agents''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to prescriptions dispensed on or after January 1, 
     2009.

     SEC. 224. PERMITTING UPDATING DRUG COMPENDIA UNDER PART D 
                   USING PART B UPDATE PROCESS.

       Section 1860D-4(b)(3)(C) of the Social Security Act (42 
     U.S.C. 1395w-104(b)(3)(C)) is amended by adding at the end 
     the following new clause:
       ``(iv) Updating drug compendia using part b process.--The 
     Secretary may apply under this subparagraph the same process 
     for updating drug compendia that is used for purposes of 
     section 1861(t)(2)(B)(ii).''.

     SEC. 225. CODIFICATION OF SPECIAL PROTECTIONS FOR SIX 
                   PROTECTED DRUG CLASSIFICATIONS.

       (a) In General.--Section 1860D-4(b)(3) of the Social 
     Security Act (42 U.S.C. 1395w-104(b)(3)) is amended--
       (1) in subparagraph (C)(i), by inserting ``, except as 
     provided in subparagraph (G),'' after ``although''; and
       (2) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G) Required inclusion of drugs in certain therapeutic 
     classes.--
       ``(i) In general.--The formulary must include all or 
     substantially all covered part D drugs in each of the 
     following therapeutic classes of covered part D drugs:

[[Page 22190]]

       ``(I) Anticonvulsants.
       ``(II) Antineoplastics.
       ``(III) Antiretrovirals.
       ``(IV) Antidepressants.
       ``(V) Antipsychotics.
       ``(VI) Immunosuppresessants.

       ``(ii) Use of utilization management tools.--A PDP sponsor 
     of a prescription drug plan may use prior authorization or 
     step therapy for the initiation of medications within one of 
     the classifications specified in clause (i) but only when 
     approved by the Secretary, except that such prior 
     authorization or step therapy may not be used in the case of 
     antiretrovirals and in the case of individuals who already 
     are stabilized on a drug treatment regimen.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply for plan years beginning on or after January 1, 
     2009.

     SEC. 226. ELIMINATION OF MEDICARE PART D LATE ENROLLMENT 
                   PENALTIES PAID BY LOW-INCOME SUBSIDY-ELIGIBLE 
                   INDIVIDUALS.

       (a) Individuals With Income Below 135 Percent of Poverty 
     Line.--Paragraph (1)(A)(ii) of section 1860D-14(a) of the 
     Social Security Act (42 U.S.C. 1395w-114(a)) is amended to 
     read as follows:
       ``(ii) 100 percent of any late enrollment penalties imposed 
     under section 1860D-13(b) for such individual.''.
       (b) Individuals With Income Between 135 and 150 Percent of 
     Poverty Line.--Paragraph (2)(A) of such section is amended--
       (1) by inserting ``equal to (i) an amount'' after ``premium 
     subsidy'';
       (2) by striking ``paragraph (1)(A)'' and inserting ``clause 
     (i) of paragraph (1)(A)''; and
       (3) by adding at the end before the period the following: 
     ``, plus (ii) 100 percent of the amount described in clause 
     (ii) of such paragraph for such individual''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to subsidies for months beginning with January 
     2008.

     SEC. 227. SPECIAL ENROLLMENT PERIOD FOR SUBSIDY ELIGIBLE 
                   INDIVIDUALS.

       (a) In General.--Section 1860D-1(b)(3) of the Social 
     Security Act (42 U.S.C. 1395w-101(b)(3)), as amended by 
     section 222(a), is further amended by adding at the end the 
     following new subparagraph:
       ``(G) Eligibility for low-income subsidy.--
       ``(i) In general.--In the case of an applicable subsidy 
     eligible individual (as defined in clause (ii)), the special 
     enrollment period described in clause (iii).
       ``(ii) Applicable subsidy eligible individual defined.--For 
     purposes of this subparagraph, the term `applicable subsidy 
     eligible individual' means a part D eligible individual who 
     is determined under subparagraph (B) of section 1860D-
     14(a)(3) to be a subsidy eligible individual (as defined in 
     subparagraph (A) of such section), and includes such an 
     individual who was enrolled in a prescription drug plan or an 
     MA-PD plan on the date of such determination.
       ``(iii) Special enrollment period described.--The special 
     enrollment period described in this clause, with respect to 
     an applicable subsidy eligible individual, is the 90-day 
     period beginning on the date the individual receives 
     notification that such individual has been determined under 
     section 1860D-14(a)(3)(B) to be a subsidy eligible individual 
     (as so defined).''.
       (b) Automatic Enrollment Process for Certain Subsidy 
     Eligible Individuals.--Section 1860D-1(b)(1) of the Social 
     Security Act (42 U.S.C. 1395w-101(b)(1)), as amended by 
     section 218(a)(2), is further amended by adding at the end 
     the following new subparagraph:
       ``(E) Special rule for subsidy eligible individuals.--The 
     process established under subparagraph (A) shall include, in 
     the case of an applicable subsidy eligible individual (as 
     defined in clause (ii) of paragraph (3)(F)) who fails to 
     enroll in a prescription drug plan or an MA-PD plan during 
     the special enrollment period described in clause (iii) of 
     such paragraph applicable to such individual, a process for 
     the facilitated enrollment of the individual in the 
     prescription drug plan or MA-PD plan that is most appropriate 
     for such individual (as determined by the Secretary). Nothing 
     in the previous sentence shall prevent an individual 
     described in such sentence from declining enrollment in a 
     plan determined appropriate by the Secretary (or in the 
     program under this part) or from changing such enrollment.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to subsidy determinations made for months 
     beginning with January 2008.

                Subtitle D--Reducing Health Disparities

     SEC. 231. MEDICARE DATA ON RACE, ETHNICITY, AND PRIMARY 
                   LANGUAGE.

       (a) Requirements.--
       (1) In general.--The Secretary of Health and Human Services 
     (in this subtitle referred to as the ``Secretary'') shall--
       (A) collect data on the race, ethnicity, and primary 
     language of each applicant for and recipient of benefits 
     under title XVIII of the Social Security Act--
       (i) using, at a minimum, the categories for race and 
     ethnicity described in the 1997 Office of Management and 
     Budget Standards for Maintaining, Collecting, and Presenting 
     Federal Data on Race and Ethnicity;
       (ii) using the standards developed under subsection (e) for 
     the collection of language data;
       (iii) where practicable, collecting data for additional 
     population groups if such groups can be aggregated into the 
     minimum race and ethnicity categories; and
       (iv) where practicable, through self-reporting;
       (B) with respect to the collection of the data described in 
     subparagraph (A) for applicants and recipients who are minors 
     or otherwise legally incapacitated, require that--
       (i) such data be collected from the parent or legal 
     guardian of such an applicant or recipient; and
       (ii) the preferred language of the parent or legal guardian 
     of such an applicant or recipient be collected;
       (C) systematically analyze at least annually such data 
     using the smallest appropriate units of analysis feasible to 
     detect racial and ethnic disparities in health and health 
     care and when appropriate, for men and women separately;
       (D) report the results of analysis annually to the Director 
     of the Office for Civil Rights, 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; and
       (E) ensure that the provision of assistance to an applicant 
     or recipient of assistance is not denied or otherwise 
     adversely affected because of the failure of the applicant or 
     recipient to provide race, ethnicity, and primary language 
     data.
       (2) Rules of construction.--Nothing in this subsection 
     shall be construed--
       (A) to permit the use of information collected under this 
     subsection in a manner that would adversely affect any 
     individual providing any such information; and
       (B) to require health care providers to collect data.
       (b) Protection of Data.--The Secretary shall ensure 
     (through the promulgation of regulations or otherwise) that 
     all data collected pursuant to subsection (a) is protected--
       (1) under the same privacy protections as the Secretary 
     applies to other health data under the regulations 
     promulgated under section 264(c) of the Health Insurance 
     Portability and Accountability Act of 1996 (Public Law 104-
     191; 110 Stat. 2033) relating to the privacy of individually 
     identifiable health information and other protections; and
       (2) from all inappropriate internal use by any entity that 
     collects, stores, or receives the data, including use of such 
     data in determinations of eligibility (or continued 
     eligibility) in health plans, and from other inappropriate 
     uses, as defined by the Secretary.
       (c) Collection Plan.--In carrying out the duties specified 
     in subsection (a), the Secretary shall develop and implement 
     a plan to improve the collection, analysis, and reporting of 
     racial, ethnic, and primary language data within the programs 
     administered under title XVIII of the Social Security Act, 
     and, in consultation with the National Committee on Vital 
     Health Statistics, the Office of Minority Health, and other 
     appropriate public and private entities, shall make 
     recommendations on how to--
       (1) implement subsection (a) while minimizing the cost and 
     administrative burdens of data collection and reporting;
       (2) expand awareness that data collection, analysis, and 
     reporting by race, ethnicity, and primary language is legal 
     and necessary to assure equity and non-discrimination in the 
     quality of health care services;
       (3) ensure that future patient record systems have data 
     code sets for racial, ethnic, and primary language 
     identifiers and that such identifiers can be retrieved from 
     clinical records, including records transmitted 
     electronically;
       (4) improve health and health care data collection and 
     analysis for more population groups if such groups can be 
     aggregated into the minimum race and ethnicity categories;
       (5) provide researchers with greater access to racial, 
     ethnic, and primary language data, subject to privacy and 
     confidentiality regulations; and
       (6) safeguard and prevent the misuse of data collected 
     under subsection (a).
       (d) Compliance With Standards.--Data collected under 
     subsection (a) shall be obtained, maintained, and presented 
     (including for reporting purposes and at a minimum) in 
     accordance with the 1997 Office of Management and Budget 
     Standards for Maintaining, Collecting, and Presenting Federal 
     Data on Race and Ethnicity.
       (e) Language Collection Standards.--Not later than 1 year 
     after the date of enactment of this Act, the Director of the 
     Office of Minority Health, in consultation with the Office 
     for Civil Rights of the Department of Health and Human 
     Services, shall develop and disseminate Standards for the 
     Classification of Federal Data on Preferred Written and 
     Spoken Language.
       (f) Technical Assistance for the Collection and Reporting 
     of Data.--
       (1) In general.--The Secretary may, either directly or 
     through grant or contract, provide technical assistance to 
     enable a health care provider or plan operating under the 
     Medicare program to comply with the requirements of this 
     section.

[[Page 22191]]

       (2) Types of assistance.--Assistance provided under this 
     subsection may include assistance to--
       (A) enhance or upgrade computer technology that will 
     facilitate racial, ethnic, and primary language data 
     collection and analysis;
       (B) improve methods for health data collection and analysis 
     including additional population groups beyond the Office of 
     Management and Budget categories if such groups can be 
     aggregated into the minimum race and ethnicity categories;
       (C) develop mechanisms for submitting collected data 
     subject to existing privacy and confidentiality regulations; 
     and
       (D) develop educational programs to raise awareness that 
     data collection and reporting by race, ethnicity, and 
     preferred language are legal and essential for eliminating 
     health and health care disparities.
       (g) Analysis of Racial and Ethnic Data.--The Secretary, 
     acting through the Director of the Agency for Health Care 
     Research and Quality and in coordination with the 
     Administrator of the Centers for Medicare & Medicaid 
     Services, shall--
       (1) identify appropriate quality assurance mechanisms to 
     monitor for health disparities under the Medicare program;
       (2) specify the clinical, diagnostic, or therapeutic 
     measures which should be monitored;
       (3) develop new quality measures relating to racial and 
     ethnic disparities in health and health care;
       (4) identify the level at which data analysis should be 
     conducted; and
       (5) share data with external organizations for research and 
     quality improvement purposes, in compliance with applicable 
     Federal privacy laws.
       (h) Report.--Not later than 2 years after the date of 
     enactment of this Act, and biennially thereafter, the 
     Secretary shall submit to the appropriate committees of 
     Congress a report on the effectiveness of data collection, 
     analysis, and reporting on race, ethnicity, and primary 
     language under the programs administered through title XVIII 
     of the Social Security Act. The report shall evaluate the 
     progress made with respect to the plan under subsection (c) 
     or subsequent revisions thereto.
       (i) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section, such sums as 
     may be necessary for each of fiscal years 2008 through 2012.

     SEC. 232. ENSURING EFFECTIVE COMMUNICATION IN MEDICARE.

       (a) Ensuring Effective Communication by the Centers for 
     Medicare & Medicaid Services.--
       (1) Study on medicare payments for language services.--The 
     Secretary of Health and Human Services shall conduct a study 
     that examines ways that Medicare should develop payment 
     systems for language services using the results of the 
     demonstration program conducted under section 233.
       (2) Analyses.-- The study shall include an analysis of each 
     of the following:
       (A) How to develop and structure appropriate payment 
     systems for language services for all Medicare service 
     providers.
       (B) The feasibility of adopting a payment methodology for 
     on-site interpreters, including interpreters who work as 
     independent contractors and interpreters who work for 
     agencies that provide on-site interpretation, pursuant to 
     which such interpreters could directly bill Medicare for 
     services provided in support of physician office services for 
     an LEP Medicare patient.
       (C) The feasibility of Medicare contracting directly with 
     agencies that provide off-site interpretation including 
     telephonic and video interpretation pursuant to which such 
     contractors could directly bill Medicare for the services 
     provided in support of physician office services for an LEP 
     Medicare patient.
       (D) The feasibility of modifying the existing Medicare 
     resource-based relative value scale (RBRVS) by using 
     adjustments (such as multipliers or add-ons) when a patient 
     is LEP.
       (E) How each of options described in a previous paragraph 
     would be funded and how such funding would affect physician 
     payments, a physician's practice, and beneficiary cost-
     sharing.
       (3) Variation in payment system described.--The payment 
     systems described in subsection (b) may allow variations 
     based upon types of service providers, available delivery 
     methods, and costs for providing language services including 
     such factors as--
       (A) the type of language services provided (such as 
     provision of health care or health care related services 
     directly in a non-English language by a bilingual provider or 
     use of an interpreter);
       (B) type of interpretation services provided (such as in-
     person, telephonic, video interpretation);
       (C) the methods and costs of providing language services 
     (including the costs of providing language services with 
     internal staff or through contract with external independent 
     contractors and/or agencies);
       (D) providing services for languages not frequently 
     encountered in the United States; and
       (E) providing services in rural areas.
       (4) Report.--The Secretary shall submit a report on the 
     study conducted under subsection (a) to appropriate 
     committees of Congress not later than 1 year after the 
     expiration of the demonstration program conducted under 
     section 3.
       (b) Health Plans.--Section 1857(g)(1) of the Social 
     Security Act (42 U.S.C. 1395w-27(g)(1)) is amended--
       (1) by striking ``or'' at the end of subparagraph (F);
       (2) by adding ``and'' at the end of subparagraph (G); and
       (3) by inserting after subparagraph (G) the following new 
     subparagraph:
       ``(H) fails substantially to provide language services to 
     limited English proficient beneficiaries enrolled in the plan 
     that are required under law;''.

     SEC. 233. DEMONSTRATION TO PROMOTE ACCESS FOR MEDICARE 
                   BENEFICIARIES WITH LIMITED ENGLISH PROFICIENCY 
                   BY PROVIDING REIMBURSEMENT FOR CULTURALLY AND 
                   LINGUISTICALLY APPROPRIATE SERVICES.

       (a) In General.--Within one year after the date of the 
     enactment of this Act the Secretary, acting through the 
     Centers for Medicare & Medicaid Services, shall award 24 3-
     year demonstration grants to eligible Medicare service 
     providers to improve effective communication between such 
     providers and Medicare beneficiaries who are limited English 
     proficient. The Secretary shall not authorize a grant larger 
     than $500,000 over three years for any grantee.
       (b) Eligibility; Priority.--
       (1) Eligibility.--To be eligible to receive a grant under 
     subsection (1) an entity shall--
       (A) be--
       (i) a provider of services under part A of title XVIII of 
     the Social Security Act;
       (ii) a service provider under part B of such title;
       (iii) a part C organization offering a Medicare part C plan 
     under part C of such title; or
       (iv) a PDP sponsor of a prescription drug plan under part D 
     of such title; and
       (B) prepare and submit to the Secretary an application, at 
     such time, in such manner, and accompanied by such additional 
     information as the Secretary may require.
       (2) Priority.--
       (A) Distribution.--To the extent feasible, in awarding 
     grants under this section, the Secretary shall award--
       (i) 6 grants to providers of services described in 
     paragraph (1)(A)(i);
       (ii) 6 grants to service providers described in paragraph 
     (1)(A)(ii);
       (iii) 6 grants to organizations described in paragraph 
     (1)(A)(iii); and
       (iv) 6 grants to sponsors described in paragraph 
     (1)(A)(iv).
       (B) For community organizations.--The Secretary shall give 
     priority to applicants that have developed partnerships with 
     community organizations or with agencies with experience in 
     language access.
       (C) Variation in grantees.--The Secretary shall also ensure 
     that the grantees under this section represent, among other 
     factors, variations in--
       (i) different types of service providers and organizations 
     under parts A through D of title XVIII of the Social Security 
     Act;
       (ii) languages needed and their frequency of use;
       (iii) urban and rural settings;
       (iv) at least two geographic regions; and
       (v) at least two large metropolitan statistical areas with 
     diverse populations.
       (c) Use of Funds.--
       (1) In general.--A grantee shall use grant funds received 
     under this section to pay for the provision of competent 
     language services to Medicare beneficiaries who are limited 
     English proficient. Competent interpreter services may be 
     provided through on-site interpretation, telephonic 
     interpretation, or video interpretation or direct provision 
     of health care or health care related services by a bilingual 
     health care provider. A grantee may use bilingual providers, 
     staff, or contract interpreters. A grantee may use grant 
     funds to pay for competent translation services. A grantee 
     may use up to 10 percent of the grant funds to pay for 
     administrative costs associated with the provision of 
     competent language services and for reporting required under 
     subsection (E).
       (2) Organizations.--Grantees that are part C organizations 
     or PDP sponsors must ensure that their network providers 
     receive at least 50 percent of the grant funds to pay for the 
     provision of competent language services to Medicare 
     beneficiaries who are limited English proficient, including 
     physicians and pharmacies.
       (3) Determination of payments for language services.--
     Payments to grantees shall be calculated based on the 
     estimated numbers of LEP Medicare beneficiaries in a 
     grantee's service area utilizing--
       (A) data on the numbers of limited English proficient 
     individuals who speak English less than ``very well'' from 
     the most recently available data from the Bureau of the 
     Census or other State-based study the Secretary determines 
     likely to yield accurate data regarding the number of LEP 
     individuals served by the grantee; or
       (B) the grantee's own data if the grantee routinely 
     collects data on Medicare beneficiaries' primary language in 
     a manner determined by the Secretary to yield accurate data 
     and such data shows greater numbers of LEP individuals than 
     the data listed in subparagraph (A).

[[Page 22192]]

       (4) Limitations.--
       (A) Reporting.--Payments shall only be provided under this 
     section to grantees that report their costs of providing 
     language services as required under subsection (e). If a 
     grantee fails to provide the reports under such section for 
     the first year of a grant, the Secretary may terminate the 
     grant and solicit applications from new grantees to 
     participate in the subsequent two years of the demonstration 
     program.
       (B) Type of services.--
       (i) In general.--Subject to clause (ii), payments shall be 
     provided under this section only to grantees that utilize 
     competent bilingual staff or competent interpreter or 
     translation services which--

       (I) if the grantee operates in a State that has statewide 
     health care interpreter standards, meet the State standards 
     currently in effect; or
       (II) if the grantee operates in a State that does not have 
     statewide health care interpreter standards, utilizes 
     competent interpreters who follow the National Council on 
     Interpreting in Health Care's Code of Ethics and Standards of 
     Practice.

       (ii) Exemptions.--The requirements of clause (i) shall not 
     apply--

       (I) in the case of a Medicare beneficiary who is limited 
     English proficient (who has been informed in the 
     beneficiary's primary language of the availability of free 
     interpreter and translation services) and who requests the 
     use of family, friends, or other persons untrained in 
     interpretation or translation and the grantee documents the 
     request in the beneficiary's record; and
       (II) in the case of a medical emergency where the delay 
     directly associated with obtaining a competent interpreter or 
     translation services would jeopardize the health of the 
     patient.

     Nothing in clause (ii)(II) shall be construed to exempt an 
     emergency rooms or similar entities that regularly provide 
     health care services in medical emergencies from having in 
     place systems to provide competent interpreter and 
     translation services without undue delay.
       (d) Assurances.--Grantees under this section shall--
       (1) ensure that appropriate clinical and support staff 
     receive ongoing education and training in linguistically 
     appropriate service delivery; ensure the linguistic 
     competence of bilingual providers;
       (2) offer and provide appropriate language services at no 
     additional charge to each patient with limited English 
     proficiency at all points of contact, in a timely manner 
     during all hours of operation;
       (3) notify Medicare beneficiaries of their right to receive 
     language services in their primary language;
       (4) post signage in the languages of the commonly 
     encountered group or groups present in the service area of 
     the organization; and
       (5) ensure that--
       (A) primary language data are collected for recipients of 
     language services; and
       (B) consistent with the privacy protections provided under 
     the regulations promulgated pursuant to section 264(c) of the 
     Health Insurance Portability and Accountability Act of 1996 
     (42 U.S.C. 1320d-2 note), if the recipient of language 
     services is a minor or is incapacitated, the primary language 
     of the parent or legal guardian is collected and utilized.
       (e) Reporting Requirements.--Grantees under this section 
     shall provide the Secretary with reports at the conclusion of 
     the each year of a grant under this section. each report 
     shall include at least the following information:
       (1) The number of Medicare beneficiaries to whom language 
     services are provided.
       (2) The languages of those Medicare beneficiaries.
       (3) The types of language services provided (such as 
     provision of services directly in non-English language by a 
     bilingual health care provider or use of an interpreter).
       (4) Type of interpretation (such as in-person, telephonic, 
     or video interpretation).
       (5) The methods of providing language services (such as 
     staff or contract with external independent contractors or 
     agencies).
       (6) The length of time for each interpretation encounter.
       (7) The costs of providing language services (which may be 
     actual or estimated, as determined by the Secretary).
       (f) No Cost Sharing.--LEP Beneficiaries shall not have to 
     pay cost-sharing or co-pays for language services provided 
     through this demonstration program.
       (g) Evaluation and Report.--The Secretary shall conduct an 
     evaluation of the demonstration program under this section 
     and shall submit to the appropriate committees of Congress a 
     report not later than 1 year after the completion of the 
     program. The report shall include the following:
       (1) An analysis of the patient outcomes and costs of 
     furnishing care to the LEP Medicare beneficiaries 
     participating in the project as compared to such outcomes and 
     costs for limited English proficient Medicare beneficiaries 
     not participating.
       (2) The effect of delivering culturally and linguistically 
     appropriate services on beneficiary access to care, 
     utilization of services, efficiency and cost-effectiveness of 
     health care delivery, patient satisfaction, and select health 
     outcomes.
       (3) Recommendations regarding the extension of such project 
     to the entire Medicare program.
       (h) General Provisions.--Nothing in this section shall be 
     construed to limit otherwise existing obligations of 
     recipients of Federal financial assistance under title VI of 
     the Civil Rights Act of 1964 (42 U.S.C. 2000(d) et seq.) or 
     any other statute.
       (i) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $10,000,000 for 
     each fiscal year of the demonstration.

     SEC. 234. DEMONSTRATION TO IMPROVE CARE TO PREVIOUSLY 
                   UNINSURED.

       (a) Establishment.--Within one year after the date of 
     enactment of this Act, the Secretary shall establish a 
     demonstration project to determine the greatest needs and 
     most effective methods of outreach to medicare beneficiaries 
     who were previously uninsured.
       (b) Scope.--The demonstration shall be in no fewer than 10 
     sites, and shall include state health insurance assistance 
     programs, community health centers, community-based 
     organizations, community health workers, and other service 
     providers under parts A, B, and C of title XVIII of the 
     Social Security Act. Grantees that are plans operating under 
     part C shall document that enrollees who were previously 
     uninsured receive the ``Welcome to Medicare'' physical exam.
       (c) Duration.--The Secretary shall conduct the 
     demonstration project for a period of 2 years.
       (d) Report and Evaluation.--The Secretary shall conduct an 
     evaluation of the demonstration and not later than 1 year 
     after the completion of the project shall submit to Congress 
     a report including the following:
       (1) An analysis of the effectiveness of outreach activities 
     targeting beneficiaries who were previously uninsured, such 
     as revising outreach and enrollment materials (including the 
     potential for use of video information), providing one-on-one 
     counseling, working with community health workers, and 
     amending the Medicare and You handbook.
       (2) The effect of such outreach on beneficiary access to 
     care, utilization of services, efficiency and cost-
     effectiveness of health care delivery, patient satisfaction, 
     and select health outcomes.

     SEC. 235. OFFICE OF THE INSPECTOR GENERAL REPORT ON 
                   COMPLIANCE WITH AND ENFORCEMENT OF NATIONAL 
                   STANDARDS ON CULTURALLY AND LINGUISTICALLY 
                   APPROPRIATE SERVICES (CLAS) IN MEDICARE.

       (a) Report.--Not later than two years after the date of the 
     enactment of this Act, the Inspector General of the 
     Department of Health and Human Services shall prepare and 
     publish a report on--
       (1) the extent to which Medicare providers and plans are 
     complying with the Office for Civil Rights' Guidance to 
     Federal Financial Assistance Recipients Regarding Title VI 
     Prohibition Against National Origin Discrimination Affecting 
     Limited English Proficient Persons and the Office of Minority 
     Health's Culturally and Linguistically Appropriate Services 
     Standards in health care; and
       (2) a description of the costs associated with or savings 
     related to the provision of language services.

     Such report shall include recommendations on improving 
     compliance with CLAS Standards and recommendations on 
     improving enforcement of CLAS Standards.
       (b) Implementation.--Not later than one year after the date 
     of publication of the report under subsection (a), the 
     Department of Health and Human Services shall implement 
     changes responsive to any deficiencies identified in the 
     report.

     SEC. 236. IOM REPORT ON IMPACT OF LANGUAGE ACCESS SERVICES.

       (a) In General.--The Secretary of Health and Human Services 
     shall seek to enter into an arrangement with the Institute of 
     under which the Institute will prepare and publish, not later 
     than 3 years after the date of the enactment of this Act, a 
     report on the impact of language access services on the 
     health and health care of limited English proficient 
     populations.
       (b) Contents.--Such report shall include--
       (1) recommendations on the development and implementation 
     of policies and practices by health care organizations and 
     providers for limited English proficient patient populations;
       (2) a description of the effect of providing language 
     access services on quality of health care and access to care 
     and reduced medical error; and
       (3) a description of the costs associated with or savings 
     related to provision of language access services.

     SEC. 237. DEFINITIONS.

       In this subtitle:
       (1) Bilingual.--The term ``bilingual'' with respect to an 
     individual means a person who has sufficient degree of 
     proficiency in two languages and can ensure effective 
     communication can occur in both languages.
       (2) Competent interpreter services.--The term ``competent 
     interpreter services''

[[Page 22193]]

     means a trans-language rendition of a spoken message in which 
     the interpreter comprehends the source language and can speak 
     comprehensively in the target language to convey the meaning 
     intended in the source language. The interpreter knows health 
     and health-related terminology and provides accurate 
     interpretations by choosing equivalent expressions that 
     convey the best matching and meaning to the source language 
     and captures, to the greatest possible extent, all nuances 
     intended in the source message.
       (3) Competent translation services.--The term ``competent 
     translation services'' means a trans-language rendition of a 
     written document in which the translator comprehends the 
     source language and can write comprehensively in the target 
     language to convey the meaning intended in the source 
     language. The translator knows health and health-related 
     terminology and provides accurate translations by choosing 
     equivalent expressions that convey the best matching and 
     meaning to the source language and captures, to the greatest 
     possible extent, all nuances intended in the source document.
       (4) Effective communication.--The term ``effective 
     communication'' means an exchange of information between the 
     provider of health care or health care-related services and 
     the limited English proficient recipient of such services 
     that enables limited English proficient individuals to 
     access, understand, and benefit from health care or health 
     care-related services.
       (5) Interpreting/interpretation.--The terms 
     ``interpreting'' and ``interpretation'' mean the transmission 
     of a spoken message from one language into another, 
     faithfully, accurately, and objectively.
       (6) Health care services.--The term ``health care 
     services'' means services that address physical as well as 
     mental health conditions in all care settings.
       (7) Health care-related services.--The term ``health care-
     related services'' means human or social services programs or 
     activities that provide access, referrals or links to health 
     care.
       (8) Language access.--The term ``language access'' means 
     the provision of language services to an LEP individual 
     designed to enhance that individual's access to, 
     understanding of or benefit from health care or health care-
     related services.
       (9) Language services.--The term ``language services'' 
     means provision of health care services directly in a non-
     English language, interpretation, translation, and non-
     English signage.
       (10) Limited english proficient.--The term ``limited 
     English proficient'' or ``LEP'' with respect to an individual 
     means an individual who speaks a primary language other than 
     English and who cannot speak, read, write or understand the 
     English language at a level that permits the individual to 
     effectively communicate with clinical or nonclinical staff at 
     an entity providing health care or health care related 
     services.
       (11) Medicare program.--The term ``Medicare program'' means 
     the programs under parts A through D of title XVIII of the 
     Social Security Act.
       (12) Service provider.--The term ``service provider'' 
     includes all suppliers, providers of services, or entities 
     under contract to provide coverage, items or services under 
     any part of title XVIII of the Social Security Act.

             TITLE III--PHYSICIANS' SERVICE PAYMENT REFORM

     SEC. 301. ESTABLISHMENT OF SEPARATE TARGET GROWTH RATES FOR 
                   SERVICE CATEGORIES.

       (a) Establishment of Service Categories.--Subsection (j) of 
     section 1848 of the Social Security Act (42 U.S.C. 1395w-4) 
     is amended by adding at the end the following new paragraph:
       ``(5) Service categories.--For services furnished on or 
     after January 1, 2008, each of the following categories of 
     physicians' services shall be treated as a separate `service 
     category':
       ``(A) Evaluation and management services for primary care 
     (including new and established patient office visits 
     delivered by physicians who the Secretary determines provide 
     accessible, continuous, coordinated, and comprehensive care 
     for Medicare beneficiaries, emergency department visits, and 
     home visits), and for preventive services (including 
     screening mammography, colorectal cancer screening, and other 
     services as defined by the Secretary, limited to the 
     recommendations of the United States Preventive Services Task 
     Force).
       ``(B) Evaluation and management services not described in 
     subparagraph (A).
       ``(C) Imaging services (as defined in subsection (b)(4)(B)) 
     and diagnostic tests (other than clinical diagnostic 
     laboratory tests) not described in subparagraph (A).
       ``(D) Procedures that are subject (under regulations 
     promulgated to carry out this section) to a 10-day or 90-day 
     global period (in this paragraph referred to as `major 
     procedures'), except that the Secretary may reclassify as 
     minor procedures under subparagraph (F) any procedures that 
     would otherwise be included in this category if the Secretary 
     determines that such procedures are not major procedures.
       ``(E) Anesthesia services that are paid on the basis of the 
     separate conversion factor for anesthesia services determined 
     under subsection (d)(1)(D).
       ``(F) Minor procedures and any other physicians' services 
     that are not described in a preceding subparagraph.''.
       (b) Establishment of Separate Conversion Factors for Each 
     Service Category.--Subsection (d)(1) of section 1848 of the 
     Social Security Act (42 U.S.C. 1395w-4) is amended--
       (1) in subparagraph (A)--
       (A) by designating the sentence beginning ``The conversion 
     factor'' as clause (i) with the heading ``Application of 
     single conversion factor'' and with appropriate indentation;
       (B) by striking ``The conversion factor'' and inserting 
     ``Subject to clause (ii), the conversion factor''; and
       (C) by adding at the end the following new clause:
       ``(ii) Application of multiple conversion factors beginning 
     with 2008.--

       ``(I) In general.--In applying clause (i) for years 
     beginning with 2008, separate conversion factors shall be 
     established for each service category of physicians' services 
     (as defined in subsection (j)(5)) and any reference in this 
     section to a conversion factor for such years shall be deemed 
     to be a reference to the conversion factor for each of such 
     categories.
       ``(II) Initial conversion factors; special rule for 
     anesthesia services.-- Such factors for 2008 shall be based 
     upon the single conversion factor for 2007 multiplied by the 
     update established under paragraph (8) for such category for 
     2008. In the case of the service category described in 
     subsection (j)(5)(F) (relating to anesthesia services), the 
     conversion factor for 2008 shall be based on the separate 
     conversion factor specified in subparagraph (D) for 2007 
     multiplied by the update established under paragraph (8) for 
     such category for 2008.
       ``(III) Updating of conversion factors.-- Such factor for a 
     service category for a subsequent year shall be based upon 
     the conversion factor for such category for the previous year 
     and adjusted by the update established for such category 
     under paragraph (8) for the year involved.''; and

       (2) in subparagraph (D), by inserting ``(before 2008)'' 
     after ``for a year''.
       (c) Establishing Updates for Conversion Factors for Service 
     Categories.--Section 1848(d) of the Social Security Act (42 
     U.S.C. 1395w-4(d)) is amended--
       (1) in paragraph (4)(B), by striking ``and (6)'' and 
     inserting ``, (6), and (8)'';
       (2) in paragraph (4)(C)(iii), by striking ``The allowed'' 
     and inserting ``Subject to paragraph (8)(B), the allowed'';
       (3) in paragraph (4)(D), by striking ``The update'' and 
     inserting ``Subject to paragraph (8)(E), the update''; and
       (4) by adding at the end the following new paragraphs:
       ``(8) Updates for service categories beginning with 2008.--
       ``(A) In general.--In applying paragraph (4) for a year 
     beginning with 2008, the following rules apply:
       ``(i) Application of separate update adjustments for each 
     service category.--Pursuant to paragraph (1)(A)(ii)(I), the 
     update shall be made to the conversion factor for each 
     service category (as defined in subsection (j)(5)) based upon 
     an update adjustment factor for the respective category and 
     year and the update adjustment factor shall be computed, for 
     a year, separately for each service category.
       ``(ii) Computation of allowed and actual expenditures based 
     on service categories.--In computing the prior year 
     adjustment component and the cumulative adjustment component 
     under clauses (i) and (ii) of paragraph (4)(B), the following 
     rules apply:

       ``(I) Application based on service categories.--The allowed 
     expenditures and actual expenditures shall be the allowed and 
     actual expenditures for the service category, as determined 
     under subparagraph (B).
       ``(II) Limitation to physician fee-schedule services.--
     Actual expenditures shall only take into account expenditures 
     for services furnished under the physician fee schedule.
       ``(III) Application of category specific target growth 
     rate.--The growth rate applied under clause (ii)(II) of such 
     paragraph shall be the target growth rate for the service 
     category involved under subsection (f)(5).
       ``(IV) Allocation of cumulative overhang.--There shall be 
     substituted for the difference described in subparagraph 
     (B)(ii)(I) of such paragraph the amount described in 
     subparagraph (C)(i) for the service category involved.

       ``(B) Determination of allowed expenditures.--In applying 
     paragraph (4) for a year beginning with 2008, notwithstanding 
     subparagraph (C)(iii) of such paragraph, the allowed 
     expenditures for a service category for a year is an amount 
     computed by the Secretary as follows:
       ``(i) For 2008.--For 2008:

       ``(I) Total 2007 allowed expenditures.--Compute the total 
     allowed expenditures for services furnished under the 
     physician fee schedule under such paragraph for 2007.

[[Page 22194]]

       ``(II) Increase by growth rate.--Increase the total under 
     subclause (I) by the target growth rate for such category 
     under subsection (f) for 2008.
       ``(III) Allocation to service category.--Multiply the 
     increased total under subclause (II) by the overhang 
     allocation factor for the service category (as defined in 
     subparagraph (C)(iii)).

       ``(ii) For subsequent years.--For a subsequent year, take 
     the amount of allowed expenditures for such category for the 
     preceding year (under clause (i) or this clause) and increase 
     it by the target growth rate determined under subsection (f) 
     for such category and year.
       ``(C) Computation and application of cumulative overhang 
     among categories.--
       ``(i) In general.--For purposes of applying paragraph 
     (4)(B)(ii)(II) under clause (ii)(IV), the amount described in 
     this clause for a year (beginning with 2008) is the sum of 
     the following:

       ``(I) Pre-2008 cumulative overhang.--The amount of the pre-
     2008 cumulative excess spending (as defined in clause (ii)) 
     multiplied by the overhang allocation factor for the service 
     category (under clause (iii)).
       ``(II) Post-2007 cumulative amounts.--For a year beginning 
     with 2009, the difference (which may be positive or negative) 
     between the amount of the allowed expenditures for 
     physicians' services (as determined under paragraph (4)(C)) 
     in the service category from January 1, 2008, through the end 
     of the prior year and the amount of the actual expenditures 
     for such services in such category during that period.

       ``(ii) Pre-2008 cumulative excess spending defined.--For 
     purposes of clause (i)(I), the term `pre-2008 cumulative 
     excess spending' means the difference described in paragraph 
     (4)(B)(ii)(I) as determined for the year 2008, taking into 
     account expenditures through December 31, 2007. Such 
     difference takes into account expenditures included in 
     subsection (f)(4)(A).
       ``(iii) Overhang allocation factor.--For purposes of this 
     paragraph, the term `overhang allocation factor' means, for a 
     service category, the proportion, as determined by the 
     Secretary of total actual expenditures under this part for 
     items and services in such category during 2007 to the total 
     of such actual expenditures for all the service categories. 
     In calculating such proportion, the Secretary shall only take 
     into account services furnished under the physician fee 
     schedule.
       ``(D) Floor for updates for 2008 and 2009.--The update to 
     the conversion factors for each service category for each of 
     2008 and 2009 shall be not less than 0.5 percent.
       ``(E) Change in restriction on update adjustment factor for 
     2010 and 2011.--The update adjustment factor determined under 
     subparagraph (4)(B), as modified by this paragraph, for a 
     service category for a year (beginning with 2010 and ending 
     with 2011) may be less than -0.07, but may not be less than -
     0.14.''.
       (d) Application of Separate Target Growth Rates for Each 
     Category.--
       (1) In general.--Section 1848(f) of the Social Security Act 
     (42 U.S.C. 1395w-4(f)) is amended by adding at the end the 
     following new paragraph:
       ``(5) Application of separate target growth rates for each 
     service category beginning with 2008.--The target growth rate 
     for a year beginning with 2008 shall be computed and applied 
     separately under this subsection for each service category 
     (as defined in subsection (j)(5)) and shall be computed using 
     the same method for computing the sustainable growth rate 
     except for the following:
       ``(A) The reference in paragraphs (2)(A) and (2)(D) to `all 
     physicians' services' is deemed a reference to the 
     physicians' services included in such category but shall not 
     take into account items and services included in physicians' 
     services through the operation of paragraph (4)(A).
       ``(B) The factor described in paragraph (2)(C) for the 
     service category described in subsection (j)(5)(A) shall be 
     increased by 0.03.
       ``(C) A national coverage determination (as defined in 
     section 1869(f)(1)(B)) shall be treated as a change in 
     regulation described in paragraph (2)(D).''.
       (2) Use of target growth rates.--Section 1848 of such Act 
     is further amended--
       (A) in subsection (d)--
       (i) in paragraph (1)(E)(ii), by inserting ``or target'' 
     after ``sustainable''; and
       (ii) in paragraph (4)(B)(ii)(II), by inserting ``or 
     target'' after ``sustainable''; and
       (B) in subsection (f)--
       (i) in the heading by inserting ``; Target Growth Rate'' 
     after ``Sustainable Growth Rate''
       (ii) in paragraph (1)--

       (I) by striking ``and'' at the end of subparagraph (A);
       (II) in subparagraph (B), by inserting ``before 2008'' 
     after ``each succeeding year'' and by striking the period at 
     the end and inserting ``; and''; and
       (III) by adding at the end the following new subparagraph:

       ``(C) November 1 of each succeeding year the target growth 
     rate for such succeeding year and each of the 2 preceding 
     years.''; and
       (iii) in paragraph (2), in the matter before subparagraph 
     (A), by inserting after ``beginning with 2000'' the 
     following: ``and ending with 2007'' .
       (e) Reports on Expenditures for Part B Drugs and Clinical 
     Diagnostic Laboratory Tests.--
       (1) Reporting requirement.--The Secretary of Health and 
     Human Services shall include information in the annual 
     physician fee schedule proposed rule on the change in the 
     annual rate of growth of actual expenditures for clinical 
     diagnostic laboratory tests or drugs, biologicals, and 
     radiopharmaceuticals for which payment is made under part B 
     of title XVIII of the Social Security Act.
       (2) Recommendations.--The report submitted under paragraph 
     (1) shall include an analysis of the reasons for such excess 
     expenditures and recommendations for addressing them in the 
     future.

     SEC. 302. IMPROVING ACCURACY OF RELATIVE VALUES UNDER THE 
                   MEDICARE PHYSICIAN FEE SCHEDULE.

       (a) Use of Expert Panel To Identify Misvalued Physicians' 
     Services.--Section 1848(c) of the Social Security Act (42 
     U.S.C. 1395w(c)) is amended by adding at the end the 
     following new paragraph:
       ``(7) Use of expert panel to identify misvalued physicians' 
     services.--
       ``(A) In general.--The Secretary shall establish an expert 
     panel (in this paragraph referred to as the `expert panel')--
       ``(i) to identify, through data analysis, physicians' 
     services for which the relative value under this subsection 
     is potentially misvalued, particularly those services for 
     which such relative value may be overvalued;
       ``(ii) to assess whether those misvalued services warrant 
     review using existing processes (referred to in paragraph 
     (2)(J)(ii)) for the consideration of coding changes; and
       ``(iii) to advise the Secretary concerning the exercise of 
     authority under clauses (ii)(III) and (vi) of paragraph 
     (2)(B).
       ``(B) Composition of panel.--The expert panel shall be 
     appointed by the Secretary and composed of--
       ``(i) members with expertise in medical economics and 
     technology diffusion;
       ``(ii) members with clinical expertise;
       ``(iii) physicians, particularly physicians (such as a 
     physician employed by the Veterans Administration or a 
     physician who has a full time faculty appointment at a 
     medical school) who are not directly affected by changes in 
     the physician fee schedule under this section;
       ``(iv) carrier medical directors; and
       ``(v) representatives of private payor health plans.
       ``(C) Appointment considerations.--In appointing members to 
     the expert panel, the Secretary shall assure racial and 
     ethnic diversity on the panel and may consider appointing a 
     liaison from organizations with experience in the 
     consideration of coding changes to the panel.''.
       (b) Examination of Services With Substantial Changes.--Such 
     section is further amended by adding at the end the following 
     new paragraph:
       ``(8) Examination of services with substantial changes.--
     The Secretary, in consultation with the expert panel under 
     paragraph (7), shall--
       ``(A) conduct a five-year review of physicians' services in 
     conjunction with the RUC 5-year review, particularly for 
     services that have experienced substantial changes in length 
     of stay, site of service, volume, practice expense, or other 
     factors that may indicate changes in physician work;
       ``(B) identify new services to determine if they are likely 
     to experience a reduction in relative value over time and 
     forward a list of the services so identified for such five-
     year review; and
       ``(C) for physicians' services that are otherwise 
     unreviewed under the process the Secretary has established, 
     periodically review a sample of relative value units within 
     different types of services to assess the accuracy of the 
     relative values contained in the Medicare physician fee 
     schedule.''.
       (c) Authority To Reduce Work Component for Services With 
     Accelerated Volume Growth.--
       (1) In general.--Paragraph (2)(B) of such section is 
     amended--
       (A) in clause (v), by adding at the end the following new 
     subclause:

       ``(III) Reductions in work value units for services with 
     accelerated volume growth.--Effective January 1, 2009, 
     reduced expenditures attributable to clause (vi).''; and

       (B) by adding at the end the following new clauses:
       ``(vi) Authorizing reduction in work value units for 
     services with accelerated volume growth.--The Secretary may 
     provide (without using existing processes the Secretary has 
     established for review of relative value) for a reduction in 
     the work value units for a particular physician's service if 
     the annual rate of growth in the expenditures for such 
     service for which payment is made under this part for 
     individuals for 2006 or a subsequent year exceeds the average 
     annual rate of growth in expenditures of all physicians' 
     services for which payment is made under this part by more 
     than 10 percentage points for such year.
       ``(vii) Consultation with expert panel and based on 
     clinical evidence.--The Secretary shall exercise authority 
     under clauses

[[Page 22195]]

     (ii)(III) and (vi) in consultation with the expert panel 
     established under paragraph (7) and shall take into account 
     clinical evidence supporting or refuting the merits of such 
     accelerated growth''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply with respect to payment for services furnished on 
     or after January 1, 2009.
       (d) Adjustment Authority for Efficiency Gains for New 
     Procedures.--Paragraph (2)(B)(ii) of such section is amended 
     by adding at the end the following new subclause:

       ``(III) Adjustment authority for efficiency gains for new 
     procedures.--In carrying out subclauses (I) and (II), the 
     Secretary may apply a methodology, based on supporting 
     evidence, under which there is imposed a reduction over a 
     period of years in specified relative value units in the case 
     of a new (or newer) procedure to take into account inherent 
     efficiencies that are typically or likely to be gained during 
     the period of initial increased application of the 
     procedure.''.

     SEC. 303. PHYSICIAN FEEDBACK MECHANISM ON PRACTICE PATTERNS.

       By not later than July 1, 2008, the Secretary of Health and 
     Human Services shall develop and implement a mechanism to 
     measure resource use on a per capita and an episode basis in 
     order to provide confidential feedback to physicians in the 
     Medicare program on how their practice patterns compare to 
     physicians generally, both in the same locality as well as 
     nationally. Such feedback shall not be subject to disclosure 
     under section 552 of title 5, United States Code).

     SEC. 304. PAYMENTS FOR EFFICIENT PHYSICIANS.

       Section 1833 of the Social Security Act (42 U.S.C. 1395l) 
     is amended by adding at the end the following new subsection:
       ``(v) Incentive Payments for Efficient Physicians.--
       ``(1) In general.--In the case of physicians' services 
     furnished on or after January 1, 2009, and before January 1, 
     2011, by a participating physician in an efficient area (as 
     identified under paragraph (2)), in addition to the amount of 
     payment that would otherwise be made for such services under 
     this part, there also shall be paid an amount equal to 5 
     percent of the payment amount for the services under this 
     part.
       ``(2) Identification of efficient areas.--
       ``(A) In general.--Based upon available data, the Secretary 
     shall identify those counties or equivalent areas in the 
     United States in the lowest fifth percentile of utilization 
     based on per capita spending for services provided in 2007 
     under this part and part A.
       ``(B) Identification of counties where service is 
     furnished..--For purposes of paying the additional amount 
     specified in paragraph (1), if the Secretary uses the 5-digit 
     postal ZIP Code where the service is furnished, the dominant 
     county of the postal ZIP Code (as determined by the United 
     States Postal Service, or otherwise) shall be used to 
     determine whether the postal ZIP Code is in a county 
     described in subparagraph (A).
       ``(C) Judicial review.-- There shall be no administrative 
     or judicial review under section 1869, 1878, or otherwise, 
     respecting--
       ``(i) the identification of a county or other area under 
     subparagraph (A); or
       ``(ii) the assignment of a postal ZIP Code to a county or 
     other area under subparagraph (B).
       ``(D) Publication of list of counties; posting on 
     website.--With respect to a year for which a county or area 
     is identified under this paragraph, the Secretary shall 
     identify such counties or areas as part of the proposed and 
     final rule to implement the physician fee schedule under 
     section 1848 for the applicable year. The Secretary shall 
     post the list of counties identified under this paragraph on 
     the Internet website of the Centers for Medicare & Medicaid 
     Services.''.

     SEC. 305. RECOMMENDATIONS ON REFINING THE PHYSICIAN FEE 
                   SCHEDULE.

       (a) Recommendations on Consolidated Coding for Services 
     Commonly Performed Together.--Not later than December 31, 
     2008, the Comptroller General of the United States shall--
       (1) complete an analysis of codes paid under the Medicare 
     physician fee schedule to determine whether the codes for 
     procedures that are commonly furnished together should be 
     combined; and
       (2) submit to Congress a report on such analysis and 
     include in the report recommendations on whether an 
     adjustment should be made to the relative value units for 
     such combined code.
       (b) Recommendations on Increased Use of Bundled Payments.--
     Not later than December 31, 2008, the Comptroller General of 
     the United States shall--
       (1) complete an analysis of those procedures under the 
     Medicare physician fee schedule for which no global payment 
     methodology is applied but for which a ``bundled'' payment 
     methodology would be appropriate; and
       (2) submit to Congress a report on such analysis and 
     include in the report recommendations on increasing the use 
     of ``bundled'' payment methodology under such schedule.
       (c) Medicare Physician Fee Schedule.--In this section, the 
     term ``Medicare physician fee schedule'' means the fee 
     schedule established under section 1848 of the Social 
     Security Act (42 U.S.C. 1395w-4).

     SEC. 306. IMPROVED AND EXPANDED MEDICAL HOME DEMONSTRATION 
                   PROJECT.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     establish under title XVIII of the Social Security Act an 
     expanded medical home demonstration project (in this section 
     referred to as the ``expanded project'') under this section. 
     The expanded project supersedes the project that was 
     initiated under section 204 of the Medicare Improvement and 
     Extension Act of 2006 (division B of Public Law 109-432). The 
     purpose of the expanded project is--
       (1) to guide the redesign of the health care delivery 
     system to provide accessible, continuous, comprehensive, and 
     coordinated, care to Medicare beneficiaries; and
       (2) to provide care management fees to personal physicians 
     delivering continuous and comprehensive care in qualified 
     medical homes.
       (b) Nature and Scope of Project.--
       (1) Duration; scope.--The expanded project shall operate 
     during a period of three years, beginning not later than 
     October 1, 2009, and shall include a nationally 
     representative sample of physicians serving urban, rural, and 
     underserved areas throughout the United States.
       (2) Encouraging participation of small physician 
     practices.--
       (A) In general.--The expanded project shall be designed to 
     include the participation of physicians in practices with 
     fewer than four full-time equivalent physicians, as well as 
     physicians in larger practices particularly in rural and 
     underserved areas.
       (B) Technical assistance.-- In order to facilitate the 
     participation under the expanded project of physicians in 
     such practices, the Secretary shall make available additional 
     technical assistance to such practices during the first year 
     of the expanded project.
       (3) Selection of homes to participate.--The Secretary shall 
     select up to 500 medical homes to participate in the expanded 
     project and shall give priority to--
       (A) the selection of up to 100 HIT-enhanced medical homes; 
     and
       (B) the selection of other medical homes that serve 
     communities whose populations are at higher risk for health 
     disparities,
       (4) Beneficiary participation.--The Secretary shall 
     establish a process for any Medicare beneficiary who is 
     served by a medical home participating in the expanded 
     project to elect to participate in the project. Each 
     beneficiary who elects to so participate shall be eligible--
       (A) for enhanced medical home services under the project 
     with no cost sharing for the additional services; and
       (B) for a reduction of up to 50 percent in the coinsurance 
     for services furnished under the physician fee schedule under 
     section 1848 of the Social Security Act by the medical home.

     The Secretary shall develop standard recruitment materials 
     and election processes for Medicare beneficiaries who are 
     electing to participate in the expanded project.
       (c) Standards for Medical Homes, HIT-Enhanced Medical 
     Homes.--
       (1) Standard setting and certification process.--The 
     Secretary shall establish a process for selection of a 
     qualified standard setting and certification organization--
       (A) to establish standards, consistent with this section, 
     for medical practices to qualify as medical homes or as HIT-
     enhanced medical homes; and
       (B) to provide for the review and certification of medical 
     practices as meeting such standards.
       (2) Basic standards for medical homes.--For purposes of 
     this subsection, the term ``medical home'' means a physician-
     directed practice that has been certified, under paragraph 
     (1), as meeting the following standards:
       (A) Access and communication with patients.--The practice 
     applies standards for access to care and communication with 
     participating beneficiaries.
       (B) Managing patient information and using information in 
     management to support patient care.--The practice has readily 
     accessible, clinically useful information on participating 
     beneficiaries that enables the practice to treat such 
     beneficiaries comprehensively and systematically.
       (C) Managing and coordinating care according to individual 
     needs.--The practice maintains continuous relationships with 
     participating beneficiaries by implementing evidence-based 
     guidelines and applying them to the identified needs of 
     individual beneficiaries over time and with the intensity 
     needed by such beneficiaries.
       (D) Providing ongoing assistance and encouragement in 
     patient self-management.--The practice--
       (i) collaborates with participating beneficiaries to pursue 
     their goals for optimal achievable health; and
       (ii) assesses patient-specific barriers to communication 
     and conducts activities to support patient self-management.
       (E) Resources to manage care.--The practice has in place 
     the resources and processes necessary to achieve improvements 
     in the

[[Page 22196]]

     management and coordination of care for participating 
     beneficiaries.
       (F) Monitoring performance.--The practice monitors its 
     clinical process and performance (including outcome measures) 
     in meeting the applicable standards under this subsection and 
     provides information in a form and manner specified by the 
     Secretary with respect to such process and performance.
       (3) Additional standards for hit-enhanced medical home.--
     For purposes of this subsection, the term ``HIT-enhanced 
     medical home'' means a medical home that has been certified, 
     under paragraph (1), as using a health information technology 
     system that includes at least the following elements:
       (A) Electronic health record (ehr).--The system uses, for 
     participating beneficiaries, an electronic health record that 
     meets the following standards:
       (i) In general.--The record--

       (I) has the capability of interoperability with secure data 
     acquisition from health information technology systems of 
     other health care providers in the area served by the home; 
     or
       (II) the capability to securely acquire clinical data 
     delivered by such other health care providers to a secure 
     common data source.

       (ii) The record protects the privacy and security of health 
     information.
       (iii) The record has the capability to acquire, manage, and 
     display all the types of clinical information commonly 
     relevant to services furnished by the home, such as complete 
     medical records, radiographic image retrieval, and clinical 
     laboratory information.
       (iv) The record is integrated with decision support 
     capacities that facilitate the use of evidence-based medicine 
     and clinical decision support tools to guide decision-making 
     at the point-of-care based on patient-specific factors.
       (B) E-prescribing.--The system supports e-prescribing and 
     computerized physician order entry.
       (C) Outcome measurement.--The system supports the secure, 
     confidential provision of clinical process and outcome 
     measures approved by the National Quality Forum to the 
     Secretary for use in confidential manner for provider 
     feedback and peer review and for outcomes and clinical 
     effectiveness research.
       (D) Patient education capability.--The system actively 
     facilitates participating beneficiaries engaging in the 
     management of their own health through education and support 
     systems and tools for shared decision-making.
       (E) Support of basic standards.-- The elements of such 
     system, such as the electronic health record, email 
     communications, patient registries, and clinical-decision 
     support tools, are integrated in a manner to better achieve 
     the basic standards specified in paragraph (2) for a medical 
     home.
       (4) Use of data.--The Secretary shall use the data 
     submitted under paragraph (1)(F) in a confidential manner for 
     feedback and peer review for medical homes and for outcomes 
     and clinical effectiveness research. After the first two 
     years of the expanded project, these data may be used for 
     adjustment in the monthly medical home care management fee 
     under subsection (d)(2)(E).
       (d) Monthly Medical Home Care Management Fee.--
       (1) In general.--Under the expanded project, the Secretary 
     shall provide for payment to the personal physician of each 
     participating beneficiary of a monthly medical home care 
     management fee.
       (2) Amount of payment.-- In determining the amount of such 
     fee, the Secretary shall consider the following:
       (A) Operating expenses.--The additional practice expenses 
     for the delivery of services through a medical home, taking 
     into account the additional expenses for an HIT-enhanced 
     medical home. Such expenses include costs associated with--
       (i) structural expenses, such as equipment, maintenance, 
     and training costs;
       (ii) enhanced access and communication functions;
       (iii) population management and registry functions;
       (iv) patient medical data and referral tracking functions;
       (v) provision of evidence-based care;
       (vi) implementation and maintenance of health information 
     technology;
       (vii) reporting on performance and improvement conditions; 
     and
       (viii) patient education and patient decision support, 
     including print and electronic patient education materials.
       (B) Added value services.--The value of additional 
     physician work, such as augmented care plan oversight, 
     expanded e-mail and telephonic consultations, extended 
     patient medical data review (including data stored and 
     transmitted electronically), and physician supervision of 
     enhanced self management education, and expanded follow-up 
     accomplished by non-physician personnel, in a medical home 
     that is not adequately taken into account in the 
     establishment of the physician fee schedule under section 
     1848 of the Social Security Act.
       (C) Risk adjustment.--The development of an appropriate 
     risk adjustment mechanism to account for the varying costs of 
     medical homes based upon characteristics of participating 
     beneficiaries.
       (D) HIT adjustment.--Variation of the fee based on the 
     extensiveness of use of the health information technology in 
     the medical home.
       (E) Performance-based.--After the first two years of the 
     expanded project, an adjustment of the fee based on 
     performance of the home in achieving quality or outcomes 
     standards.
       (3) Personal physician defined.--For purposes of this 
     subsection, the term ``personal physician'' means, with 
     respect to a participating Medicare beneficiary, a physician 
     (as defined in section 1861(r)(1) of the Social Security Act 
     (42 U.S.C. 1395x(r)(1)) who provides accessible, continuous, 
     coordinated, and comprehensive care for the beneficiary as 
     part of a medical practice that is a qualified medical home. 
     Such a physician may be a specialist for a beneficiary 
     requiring ongoing care for a chronic condition or multiple 
     chronic conditions (such as severe asthma, complex diabetes, 
     cardiovascular disease, rheumatologic disorder) or for a 
     beneficiary with a prolonged illness.
       (e) Funding.--
       (1) Use of current project funding.--Funds otherwise 
     applied to the demonstration under section 204 of the 
     Medicare Improvement and Extension Act of 2006 (division B of 
     Public Law 109-432) shall be available to carry out the 
     expanded project
       (2) Additional funding from smi trust fund.--
       (A) In general.--In addition to the funds provided under 
     paragraph (1), there shall be available, from the Federal 
     Supplementary Medical Insurance Trust Fund (under section 
     1841 of the Social Security Act), the amount of $500,000,000 
     to carry out the expanded project, including payments to of 
     monthly medical home care management fees under subsection 
     (d), reductions in coinsurance for participating 
     beneficiaries under subsection (b)(4)(B), and funds for the 
     design, implementation, and evaluation of the expanded 
     project.
       (B) Monitoring expenditures; early termination.--The 
     Secretary shall monitor the expenditures under the expanded 
     project and may terminate the project early in order that 
     expenditures not exceed the amount of funding provided for 
     the project under subparagraph (A).
       (f) Evaluations and Reports.--.
       (1) Annual interim evaluations and reports.--For each year 
     of the expanded project, the Secretary shall provide for an 
     evaluation of the project and shall submit to Congress, by a 
     date specified by the Secretary, a report on the project and 
     on the evaluation of the project for each such year.
       (2) Final evaluation and report.--The Secretary shall 
     provide for an evaluation of the expanded project and shall 
     submit to Congress, not later than 18 months after the date 
     of completion of the project, a report on the project and on 
     the evaluation of the project.

     SEC. 307. REPEAL OF PHYSICIAN ASSISTANCE AND QUALITY 
                   INITIATIVE FUND.

       Subsection (l) of section 1848 of the Social Security Act 
     (42 U.S.C. 1395w-4) is repealed.

     SEC. 308. ADJUSTMENT TO MEDICARE PAYMENT LOCALITIES.

       Section 1848(e) of the Social Security Act (42 U.S.C.1395w-
     4(e)) is amended by adding at the end the following new 
     paragraph:
       ``(6) Fee schedule geographic areas.--
       ``(A) In general.--
       ``(i) Revision.--Subject to clause (ii), for services 
     furnished on or after January 1, 2009, the Secretary shall 
     revise the fee schedule areas used for payment under this 
     section applicable to the State of California using the 
     county-based geographic adjustment factor as specified in 
     option 3 (table 9) in the proposed rule for the 2008 
     physician fee schedule published at 72 Fed. Reg. 38,122 (July 
     12, 2007).
       ``(ii) Transition.--For services furnished during the 
     period beginning January 1, 2009, and ending December 31, 
     2010, after calculating the work, practice expense, and 
     malpractice geographic indices described in clauses (i), 
     (ii), and (iii) of paragraph (1)(A) that would otherwise 
     apply, the Secretary shall increase any such geographic index 
     for any county in California that is lower than the 
     geographic index used for payment for services under this 
     section as of December 31, 2008, in such county to such 
     geographic index level.
       ``(iii) Non-application of periodic revision.--If a 
     periodic review of geographic indices, as required under 
     paragraph (1)(B), results in a reduction in a work, practice 
     expense and malpractice geographic index for any county in 
     California that is below the geographic index level 
     established pursuant to clause (ii) during a portion of the 
     period described in such clause, the work, practice expense, 
     or malpractice index established in such clause shall be 
     applied to payment for services furnished in such county 
     during such portion of such period.
       ``(B) Subsequent revisions.--
       ``(i) Timing.--Not later than January 1, 2014, the 
     Secretary shall review and make revisions to fee schedule 
     areas in all States for which more than one fee schedule area 
     is used for payment of services under this section. The 
     Secretary may revise fee schedule areas in States in which a 
     single fee schedule area is used for payment for services 
     under

[[Page 22197]]

     this section using the same methodology applied in the 
     previous sentence.
       ``(ii) Link with geographic index data revision.--The 
     revision described in clause (i) shall be made effective 
     concurrently with the application of the periodic review of 
     geographic adjustment factors required under paragraph (1)(C) 
     for 2014.''.

     SEC. 309. PAYMENT FOR IMAGING SERVICES.

       (a) Payment Under Part B of the Medicare Program for 
     Diagnostic Imaging Services Furnished in Facilities 
     Conditioned on Accreditation of Facilities.--
       (1) Special payment rule.--
       (A) In general.--Section 1848(b)(4) of the Social Security 
     Act (42 U.S.C. 1395w-4(b)(4)) is amended--
       (i) in the heading, by striking ``rule'' and inserting 
     ``rules'';
       (ii) in subparagraph (A), by striking ``In general'' and 
     inserting ``Limitation''; and
       (iii) by adding at the end the following new subparagraph:
       ``(C) Payment only for services provided in accredited 
     facilities.--
       ``(i) In general.--In the case of imaging services that are 
     diagnostic imaging services described in clause (ii), the 
     payment amount for the technical component and the 
     professional component of the services established for a year 
     under the fee schedule described in paragraph (1) shall each 
     be zero, unless the services are furnished at a diagnostic 
     imaging services facility that meets the certificate 
     requirement described in section 354(b)(1) of the Public 
     Health Service Act, as applied under subsection (m). The 
     previous sentence shall not apply with respect to the 
     professional component of a diagnostic imaging service that 
     is furnished by a physician or that is an ultrasound 
     furnished by nurse practitioner or or nurse-midwife.
       ``(ii) Diagnostic imaging services.--For purposes of clause 
     (i) and subsection (m), the term `diagnostic imaging 
     services' means all imaging modalities, including diagnostic 
     magnetic resonance imaging (`MRI'), computed tomography 
     (`CT'), positron emission tomography (`PET'), nuclear 
     medicine procedures, x-rays, sonograms, ultrasounds, 
     echocardiograms, and such emerging diagnostic imaging 
     technologies as specified by the Secretary. Such term does 
     not include image guided procedures.''.
       (B) Effective date.--
       (i) In general.--Subject to clause (ii), the amendments 
     made by subparagraph (A) shall apply to diagnostic imaging 
     services furnished on or after January 1, 2010.
       (ii) Extension for ultrasound services.--The amendments 
     made by subparagraph (A) shall apply to diagnostic imaging 
     services that are ultrasound services on or after January 1, 
     2012.
       (2) Certification of facilities that furnish diagnostic 
     imaging services.--Section 1848 of the Social Security Act 
     (42 U.S.C. 1395w-4) is amended by adding at the end the 
     following new subsection:
       ``(m) Certification of Facilities That Furnish Diagnostic 
     Imaging Services.--
       ``(1) In general.--For purposes of subsection (b)(4)(C)(i), 
     except as provided under paragraphs (2) through (8), the 
     provisions of section 354 of the Public Health Service Act 
     (as in effect as of June 1, 2007), relating to the 
     certification of mammography facilities, shall apply, with 
     respect to the provision of diagnostic imaging services (as 
     defined in subsection (b)(4)(C)(ii)) and to a diagnostic 
     imaging services facility defined in paragraph (8) (and to 
     the process of accrediting such facilities) in the same 
     manner that such provisions apply, with respect to the 
     provision of mammograms and to a facility defined in 
     paragraph (8) (and to the process of accrediting such 
     facilities) in the same manner that such provisions apply, 
     with respect to the provision of mammograms and to a facility 
     defined in subsection (a)(3) of such section (and to the 
     process of accrediting such mammography facilities).
       ``(2) Terminology and references.--For purposes of applying 
     section 354 of the Public Health Service Act under paragraph 
     (1)--
       ``(A) any reference to `mammography', or `breast imaging' 
     is deemed a reference to `diagnostic imaging services (as 
     defined in section 1848(b)(4)(C)(ii) of the Social Security 
     Act)';
       ``(B) any reference to a mammogram or film is deemed a 
     reference to an image, as defined in paragraph (8);
       ``(C) any reference to `mammography facility' or to a 
     `facility' under such section 354 is deemed a reference to a 
     diagnostic imaging services facility, as defined in paragraph 
     (8);
       ``(D) any reference to radiological equipment used to image 
     the breast is deemed a reference to medical imaging equipment 
     used to provide diagnostic imaging services;
       ``(E) any reference to radiological procedures or 
     radiological is deemed a reference to medical imaging 
     services, as defined in paragraph (8) or medical imaging, 
     respectively;
       ``(F) any reference to an inspection (as defined in 
     subsection (a)(4) of such section) or inspector is deemed a 
     reference to an audit (as defined in paragraph (8)) or 
     auditor, respectively;
       ``(G) any reference to a medical physicist (as described in 
     subsection (f)(1)(E) of such section) is deemed to include a 
     reference to a magnetic resonance scientist or the 
     appropriate qualified expert as determined by the accrediting 
     body;
       ``(H) in applying subsection (d)(1)(A)(i) of such section, 
     the reference to `type of each x-ray machine, image receptor, 
     and processor' is deemed a reference to `type of imaging 
     equipment';
       ``(I) in applying subsection (d)(1)(B) of such section, the 
     reference that `the person or agent submits to the Secretary' 
     is deemed a reference that `the person or agent submits to 
     the Secretary, through the appropriate accreditation body';
       ``(J) in applying subsection (d)(1)(B)(i) of such section, 
     the reference to standards established by the Secretary is 
     deemed a reference to standards established by an 
     accreditation body and approved by the Secretary;
       ``(K) in applying subsection (e) of such section, relating 
     to an accreditation body--
       ``(i) in paragraph (1)(A), the reference to `may' is deemed 
     a reference to `shall';
       ``(ii) in paragraph (1)(B)(i)(II), the reference to `a 
     random sample of clinical images from such facilities' is 
     deemed a reference to `a statistically significant random 
     sample of clinical images from a statistically significant 
     random sample of facilities';
       ``(iii) in paragraph (3)(A) of such section--

       ``(I) the reference to `paragraph (1)(B)' in such 
     subsection is deemed to be a reference to `paragraph (1)(B) 
     and subsection (f)'; and
       ``(II) the reference to the `Secretary' is deemed a 
     reference to `an accreditation body, with the approval of the 
     Secretary'; and

       ``(iv) in paragraph (6)(B), the reference to the Committee 
     on Labor and Human Resources of the Senate is deemed to be 
     the Committee on Finance of the Senate and the reference to 
     the Committee on Energy and Commerce of the House of 
     Representatives is deemed to include a reference to the 
     Committee on Ways and Means of the House of Representatives;
       ``(L) in applying subsection (f), relating to quality 
     standards--
       ``(i) each reference to standards established by the 
     Secretary is deemed a reference to standards established by 
     an accreditation body involved and approved by the Secretary 
     under subsection (d)(1)(B)(i) of such section
       ``(ii) in paragraph (1)(A), the reference to `radiation 
     dose' is deemed a reference to `radiation dose, as 
     appropriate';
       ``(iii) in paragraph (1)(B), the reference to `radiological 
     standards' is deemed a reference to `medical imaging 
     standards, as appropriate';
       ``(iv) in paragraphs (1)(D)(ii) and (1)(E)(iii), the 
     reference to `the Secretary' is deemed a reference to `an 
     accreditation body with the approval of the Secretary';
       ``(v) in each of subclauses (III) and (IV) of paragraph 
     (1)(G)(ii), each reference to `patient' is deemed a reference 
     to `patient, if requested by the patient'; and
       ``(M) in applying subsection (g), relating to inspections--
       ``(i) each reference to the `Secretary or State or local 
     agency acting on behalf of the Secretary' is deemed to 
     include a reference to an accreditation body involved;
       ``(ii) in the first sentence of paragraph (1)(F), the 
     reference to `annual inspections required under this 
     paragraph' is deemed a reference to `the audits carried out 
     in facilities at least every three years from the date of 
     initial accreditation under this paragraph'; and
       ``(iii) in the second sentence of paragraph (1)(F), the 
     reference to `inspections carried out under this paragraph' 
     is deemed a reference to `audits conducted under this 
     paragraph during the previous year'.
       ``(3) Dates and periods.--For purposes of paragraph (1), in 
     applying section 354 of the Public Health Service Act, the 
     following applies:
       ``(A) In general.--Except as provided in subparagraph (B)--
       ``(i) any reference to `October 1, 1994' shall be deemed a 
     reference to `January 1, 2010';
       ``(ii) the reference to `the date of the enactment of this 
     section' in each of subsections (e)(1)(D) and (f)(1)(E)(iii) 
     is deemed to be a reference to `the date of the enactment of 
     the Children's Health and Medicare Protection Act of 2007';
       ``(iii) the reference to `annually' in subsection (g)(1)(E) 
     is deemed a reference to `every three years';
       ``(iv) the reference to `October 1, 1996' in subsection (l) 
     is deemed to be a reference to `January 1, 2011';
       ``(v) the reference to `October 1, 1999' in subsection 
     (n)(3)(H) is deemed to be a reference to `January 1, 2012'; 
     and
       ``(vi) the reference to `October 1, 1993' in the matter 
     following paragraph (3)(J) of subsection (n) is deemed to be 
     a reference `January 1, 2010'.
       ``(B) Ultrasound services.--With respect to diagnostic 
     imaging services that are ultrasounds--
       ``(i) any reference to `October 1, 1994' shall be deemed a 
     reference to `January 1, 2012';
       ``(ii) the reference to `the date of the enactment of this 
     section' in subsection (f)(1)(E)(iii) is deemed to be a 
     reference to `7 years after the date of the enactment of the 
     Children's Health and Medicare Protection Act of 2007';
       ``(iii) the reference to `October 1, 1996' in subsection 
     (l) is deemed to be a reference to `January 1, 2013';
       ``(4) Provisions not applicable.--For purposes of paragraph 
     (1), in applying section

[[Page 22198]]

     354 of the Public Health Service Act, the following provision 
     shall not apply:
       ``(A) Subsections (e) and (f) of such section, in so far as 
     the respective subsection imposes any requirement for a 
     physician to be certified, accredited, or otherwise meet 
     requirements, with respect to the provision of any diagnostic 
     imaging services, as a condition of payment under subsection 
     (b)(4)(C)(i), with respect to the professional or technical 
     component, for such service.
       ``(B) Subsection (e)(1)(B)(iv) of such section, insofar as 
     it applies to a facility with respect to the provision of 
     ultrasounds.
       ``(C) Subsection (e)(1)(B)(v).
       ``(D) Subsection (f)(1)(H) of such section, relating to 
     standards for special techniques for mammograms of patients 
     with breast implants.
       ``(E) Subsection (g)(6) of such section, relating to an 
     inspection demonstration program.
       ``(F) Subsection (n)(3)(G) of such section, relating to the 
     national advisory committee.
       ``(G) Subsection (p) of such section, relating to breast 
     cancer screening surveillance research grants.
       ``(H) Paragraphs (1)(B) and (2) of subsection (r) of such 
     section, related to funding.
       ``(5) Accreditation bodies.--For purposes of paragraph (1), 
     in applying section 354(e)(1) of the Public Health Service, 
     the following shall apply:
       ``(A) Approval of two accreditation bodies for each 
     treatment modality.--In the case that there is more than one 
     accreditation body for a treatment modality that qualifies 
     for approval under this subsection, the Secretary shall 
     approve at least two accreditation bodies for such treatment 
     modality.
       ``(B) Additional accreditation body standards.--In addition 
     to the standards described in subparagraph (B) of such 
     section for accreditation bodies, the Secretary shall 
     establish standards that require--
       ``(i) the timely integration of new technology by 
     accreditation bodies for purposes of accrediting facilities 
     under this subsection; and
       ``(ii) the accreditation body involved to evaluate the 
     annual medical physicist survey (or annual medical survey of 
     another appropriate qualified expert chosen by the 
     accreditation body) of a facility upon onsite review of such 
     facility.
       ``(6) Additional quality standards.--For purposes of 
     paragraph (1), in applying subsection (f)(1) of section 354 
     of the Public Health Service--
       ``(A) the quality standards under such subsection shall, 
     with respect to a facility include--
       ``(i) standards for qualifications of medical personnel who 
     are not physicians and who perform diagnostic imaging 
     services at the facility that require such personnel to 
     ensure that individuals, prior to performing medical imaging, 
     demonstrate compliance with the standards established under 
     subsection (a) through successful completion of certification 
     by a nationally recognized professional organization, 
     licensure, completion of an examination, pertinent coursework 
     or degree program, verified pertinent experience, or through 
     other ways determined appropriate by an accreditation body 
     (with the approval of the Secretary, or through some 
     combination thereof);
       ``(ii) standards requiring the facility to maintain records 
     of the credentials of physicians and other medical personnel 
     described in clause (i);
       ``(iii) standards for qualifications and responsibilities 
     of medical directors and other personnel with supervising 
     roles at the facility;
       ``(iv) standards that require the facility has procedures 
     to ensure the safety of patients of the facility; and
       ``(v) standards for the establishment of a quality control 
     program at the facility to be implemented as described in 
     subparagraph (E) of such subsection;
       ``(B) the quality standards described in subparagraph (B) 
     of such subsection shall be deemed to include standards that 
     require the establishment and maintenance of a quality 
     assurance and quality control program at each facility that 
     is adequate and appropriate to ensure the reliability, 
     clarity, and accuracy of the technical quality of diagnostic 
     images produced at such facilities; and
       ``(C) the quality standard described in subparagraph (C) of 
     such subsection, relating to a requirement for personnel who 
     perform specified services, shall include in such requirement 
     that such personnel must meet continuing medical education 
     standards as specified by an accreditation body (with the 
     approval of the Secretary) and update such standards at least 
     once every three years.
       ``(7) Additional requirements.--Notwithstanding any 
     provision of section 354 of the Public Health Service Act, 
     the following shall apply to the accreditation process under 
     this subsection for purposes of subsection (b)(4)(C)(i):
       ``(A) Any diagnostic imaging services facility accredited 
     before January 1, 2010 (or January 1, 2012 in the case of 
     ultrasounds), by an accrediting body approved by the 
     Secretary shall be deemed a facility accredited by an 
     approved accreditation body for purposes of such subsection 
     as of such date if the facility submits to the Secretary 
     proof of such accreditation by transmittal of the certificate 
     of accreditation, including by electronic means.
       ``(B) The Secretary may require the accreditation under 
     this subsection of an emerging technology used in the 
     provision of a diagnostic imaging service as a condition of 
     payment under subsection (b)(4)(C)(i) for such service at 
     such time as the Secretary determines there is sufficient 
     empirical and scientific information to properly carry out 
     the accreditation process for such technology.
       ``(8) Definitions.--For purposes of this subsection:
       ``(A)  Audit.--The term `audit' means an onsite evaluation, 
     with respect to a diagnostic imaging services facility, by 
     the Secretary, State or local agency on behalf of the 
     Secretary, or accreditation body approved under this 
     subsection that includes the following:
       ``(i) Equipment verification.
       ``(ii) Evaluation of policies and procedures for compliance 
     with accreditation requirements.
       ``(iii) Evaluation of personnel qualifications and 
     credentialing.
       ``(iv) Evaluation of the technical quality of images.
       ``(v) Evaluation of patient reports.
       ``(vi) Evaluation of peer-review mechanisms and other 
     quality assurance activities.
       ``(vii) Evaluation of quality control procedures, results, 
     and follow-up actions.
       ``(viii) Evaluation of medical physicists (or other 
     appropriate professionals chosen by the accreditation body) 
     and magnetic resonance scientist surveys.
       ``(ix) Evaluation of consumer complaint mechanisms.
       ``(x) Provision of recommendations for improvement based on 
     findings with respect to clauses (i) through (ix).
       ``(B) Diagnostic imaging services facility.--The term 
     `diagnostic imaging services facility' has the meaning given 
     the term `facility' in section 354(a)(3) of the Public Health 
     Service Act (42 U.S.C. 263b(a)(3)) subject to the reference 
     changes specified in paragraph (2), but does not include any 
     facility that does not furnish diagnostic imaging services 
     for which payment may be made under this section.
       ``(C) Image.--The term `image' means the portrayal of 
     internal structures of the human body for the purpose of 
     detecting and determining the presence or extent of disease 
     or injury and may be produced through various techniques or 
     modalities, including radiant energy or ionizing radiation 
     and ultrasound and magnetic resonance. Such term does not 
     include image guided procedures.
       ``(D) Medical imaging service.--The term `medical imaging 
     service' means a service that involves the science of an 
     image. Such term does not include image guided procedures.''.
       (b) Adjustment in Practice Expense To Reflect Higher 
     Presumed Utilization.--Section 1848 of the Social Security 
     Act (42 U.S.C. 1395w(b)(4)) is amended--
       (1) in subsection (b)(4)--
       (A) in the heading, by striking ``rule'' and inserting 
     ``rules'';
       (B) in subparagraph (B), by striking ``subparagraph (A)'' 
     and inserting ``this paragraph''; and
       (C) by adding at the end the following new subparagraph:
       ``(C) Adjustment in practice expense to reflect higher 
     presumed utilization.--In computing the number of practice 
     expense relative value units under subsection (c)(2)(C)(ii) 
     with respect to imaging services described in subparagraph 
     (B), the Secretary shall adjust such number of units so it 
     reflects a 75 percent (rather than 50 percent) presumed rate 
     of utilization of imaging equipment.''; and
       (2) in subsection (c)(2)(B)(v)(II), by inserting ``and 
     other provisions'' after ``OPD payment cap''
       (c) Adjustment in Technical Component ``discount'' on 
     Single-Session Imaging to Consecutive Body Parts.--Section 
     1848(b)(4) of such Act is further amended by adding at the 
     end the following new subparagraph:
       ``(D) Adjustment in technical component discount on single-
     session imaging involving consecutive body parts.--The 
     Secretary shall increase the reduction in expenditures 
     attributable to the multiple procedure payment reduction 
     applicable to the technical component for imaging under the 
     final rule published by the Secretary in the Federal Register 
     on November 21, 2005 (42 C.F.R. 405, et al.) from 25 percent 
     to 50 percent.''.
       (d) Adjustment in Assumed Interest Rate for Capital 
     Purchases.--Section 1848(b)(4) of such Act is further amended 
     by adding at the end the following new subparagraph:
       ``(E) Adjustment in assumed interest rate for capital 
     purchases.--In computing the practice expense component for 
     imaging services under this section, the Secretary shall 
     change the interest rate assumption for capital purchases of 
     imaging devices to reflect the prevailing rate in the market, 
     but in no case higher than 11 percent.''.
       (e) Disallowance of Global Billing.--Effective for claims 
     filed for imaging services (as defined in subsection 
     (b)(4)(B) of section

[[Page 22199]]

     1848 of the Social Security Act) furnished on or after the 
     first day of the first month that begins more than 1 year 
     after the date of the enactment of this Act, the Secretary of 
     Health and Human Services shall not accept (or pay) a claim 
     under such section unless the claim is made separately for 
     each component of such services.
       (f) Effective Date.--Except as otherwise provided, this 
     section, and the amendments made by this section, shall apply 
     to services furnished on or after January 1, 2008.

     SEC. 310. REPEAL OF PHYSICIANS ADVISORY COUNCIL.

       Section 1868(a) of the Social Security Act (42 U.S.C. 
     1395ee(a)), relating to the Practicing Physicians Advisory 
     Council, is repealed.

                  TITLE IV--MEDICARE ADVANTAGE REFORMS

                       Subtitle A--Payment Reform

     SEC. 401. EQUALIZING PAYMENTS BETWEEN MEDICARE ADVANTAGE 
                   PLANS AND FEE-FOR-SERVICE MEDICARE.

       (a) Phase in of Payment Based on Fee-for-Service Costs.--
     Section 1853 of the Social Security Act (42 U.S.C. 1395w-23) 
     is amended--
       (1) in subsection (j)(1)(A)--
       (A) by striking ``beginning with 2007'' and inserting ``for 
     2007 and 2008''; and
       (B) by inserting after ``(k)(1)'' the following: ``, or, 
     beginning with 2009, \1/12\ of the blended benchmark amount 
     determined under subsection (l)(1)''; and
       (2) by adding at the end the following new subsection:
       ``(l) Determination of Blended Benchmark Amount.--
       ``(1) In general.--For purposes of subsection (j), subject 
     to paragraphs (2) and (3), the term `blended benchmark 
     amount' means for an area--
       ``(A) for 2009 the sum of--
       ``(i) \2/3\ of the applicable amount (as defined in 
     subsection (k)(1)) for the area and year; and
       ``(ii) \1/3\ of the amount specified in subsection 
     (c)(1)(D)(i) for the area and year;
       ``(B) for 2010 the sum of--
       ``(i) \1/3\ of the applicable amount for the area and year; 
     and
       ``(ii) \2/3\ of the amount specified in subsection 
     (c)(1)(D)(i) for the area and year; and
       ``(C) for a subsequent year the amount specified in 
     subsection (c)(1)(D)(i) for the area and year.
       ``(2) Fee-for-service payment floor.--In no case shall the 
     blended benchmark amount for an area and year be less than 
     the amount specified in subsection (c)(1)(D)(i) for the area 
     and year.
       ``(3) Exception for pace plans.--This subsection shall not 
     apply to payments to a PACE program under section 1894.''.
       (b) Phase in of Payment Based on IME Costs.--
       (1) In general.--Section 1853(c)(1)(D)(i) of such Act (42 
     U.S.C. 1395w-23(c)(1)(D)(i)) is amended by inserting ``and 
     costs attributable to payments under section 1886(d)(5)(B)'' 
     after ``1886(h)''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to the capitation rate for years beginning with 
     2009.
       (c) Limitation on Plan Enrollment in Cases of Excess Bids 
     for 2009 and 2010.--
       (1) In general.--In the case of a Medicare Part C 
     organization that offers a Medicare Part C plan in the 50 
     States or the District of Columbia for which--
       (A) bid amount described in paragraph (2) for a Medicare 
     Part C plan for 2009 or 2010, exceeds
       (B) the percent specified in paragraph (4) of the fee-for-
     service amount described in paragraph (3),

     the Medicare Part C plan may not enroll any new enrollees in 
     the plan during the annual, coordinated election period 
     (under section 1851(e)(3)(B) of such Act (42 U.S.C. 1395w-
     21(e)(3)(B)) for the year or during the year (if the 
     enrollment becomes effective during the year).
       (2) Bid amount for part a and b services.--
       (A) In general.--Except as provided in subparagraph (B), 
     the bid amount described in this paragraph is the unadjusted 
     Medicare Part C statutory non-drug monthly bid amount (as 
     defined in section 1854(b)(2)(E) of the Social Security Act 
     (42 U.S.C. 1395w-24(b)(2)(E)).
       (B) Treatment of msa plans.--In the case of an MSA plan (as 
     defined in section 1859(b)(3) of the Social Security Act, 42 
     U.S.C. 1935w-28(b)(3)), the bid amount described in this 
     paragraph is the amount described in section 1854(a)(3)(A) of 
     such Act (42 U.S.C. 1395w-24(a)(3)(A)).
       (3) Fee-for-service amount described.--
       (A) In general.--Subject to subparagraph (B), the fee-for-
     service amount described in this paragraph for an Medicare 
     Part C local area is the amount described in section 
     1853(c)(1)(D)(i) of the Social Security Act (42 U.S.C. 1395w-
     23) for such area.
       (B) Treatment of multi-county plans.--In the case of an MA 
     plan the service area for which covers more than one Medicare 
     Part C local area, the fee-for-service amount described in 
     this paragraph is the amount described in section 
     1853(c)(1)(D)(i) of the Social Security Act for each such 
     area served, weighted for each such area by the proportion of 
     the enrollment of the plan that resides in the county (as 
     determined based on amounts posted by the Administrator of 
     the Centers for Medicare & Medicaid Services in the April bid 
     notice for the year involved).
       (4) Percentage phase down.--For purposes of paragraph (1), 
     the percentage specified in this paragraph--
       (A) for 2009 is 106 percent; and
       (B) for 2010 is 103 percent.
       (5) Exemption of age-ins.--For purposes of paragraph (1), 
     the term ``new enrollee'' with respect to a Medicare Part C 
     plan offered by a Medicare Part C organization, does not 
     include an individual who was enrolled in a plan offered by 
     the organization in the month immediately before the month in 
     which the individual was eligible to enroll in such a 
     Medicare Part C plan offered by the organization.
       (d) Annual Rebasing of Fee-for-Service Rates.--Section 
     1853(c)(1)(D)(ii) of the Social Security Act (42 U.S.C. 
     1395w-23(c)(1)(D)(ii)) is amended--
       (1) by inserting ``(before 2009)'' after ``for subsequent 
     years''; and
       (2) by inserting before the period at the end the 
     following: ``and for each year beginning with 2009''.
       (e) Repeal of PPO Stabilization Fund.--Section 1858 of the 
     Social Security Act (42 U.S.C. 1395) is amended--
       (1) by striking subsection (e); and
       (2) in subsection (f)(1), by striking ``subject to 
     subsection (e),''.

                  Subtitle B--Beneficiary Protections

     SEC. 411. NAIC DEVELOPMENT OF MARKETING, ADVERTISING, AND 
                   RELATED PROTECTIONS.

       (a) In General.--Section 1852 of the Social Security Act 
     (42 U.S.C. 1395w-22) is amended by adding at the end the 
     following new subsection:
       ``(m) Application of Model Marketing and Enrollment 
     Standards.--
       ``(1) In general.--The National Association of Insurance 
     Commissioners (in this subsection referred to as the `NAIC') 
     is requested to develop, and to submit to the Secretary of 
     Health and Human Services not later than 12 months after the 
     date of the enactment of this Act, model regulations (in this 
     section referred to as `model regulations') regarding 
     Medicare plan marketing, enrollment, broker and agent 
     training and certification, agent and broker commissions, and 
     market conduct by plans, agents and brokers for 
     implementation (under paragraph (7)) under this part and part 
     D, including for enforcement by States under section 
     1856(b)(3).
       ``(2) Marketing guidelines.--
       ``(A) In general.--The model regulations shall address the 
     sales and advertising techniques used by Medicare private 
     plans, agents and brokers in selling plans, including 
     defining and prohibiting cold calls, unsolicited door-to-door 
     sales, cross-selling, and co-branding.
       ``(B) Special considerations.--The model regulations shall 
     specifically address the marketing--
       ``(i) of plans to full benefit dual-eligible individuals 
     and qualified medicare beneficiaries;
       ``(ii) of plans to populations with limited English 
     proficiency;
       ``(iii) of plans to beneficiaries in senior living 
     facilities; and
       ``(iv) of plans at educational events.
       ``(3) Enrollment guidelines.--
       ``(A) In general.--The model regulations shall address the 
     disclosures Medicare private plans, agents, and brokers must 
     make when enrolling beneficiaries, and a process--
       ``(i) for affirmative beneficiary sign off before 
     enrollment in a plan; and
       ``(ii) in the case of Medicare Part C plans, for plans to 
     conduct a beneficiary call-back to confirm beneficiary sign 
     off and enrollment.
       ``(B) Specific considerations.--The model regulations shall 
     specially address beneficiary understanding of the Medicare 
     plan through required disclosure (or beneficiary 
     verification) of each of the following:
       ``(i) The type of Medicare private plan involved.
       ``(ii) Attributes of the plan, including premiums, cost 
     sharing, formularies (if applicable), benefits, and provider 
     access limitations in the plan.
       ``(iii) Comparative quality of the plan.
       ``(iv) The fact that plan attributes may change annually.
       ``(4) Appointment, certification and training of agents and 
     brokers.--The model regulations shall establish procedures 
     and requirements for appointment, certification (and periodic 
     recertification), and training of agents and brokers that 
     market or sell Medicare private plans consistent with 
     existing State appointment and certification procedures and 
     with this paragraph.
       ``(5) Agent and broker commissions.--
       ``(A) In general.--The model regulations shall establish 
     standards for fair and appropriate commissions for agents and 
     brokers consistent with this paragraph.
       ``(B) Limitation on types of commission.--The model 
     regulations shall specifically prohibit the following:
       ``(i) Differential commissions--

       ``(I) for Medicare Part C plans based on the type of 
     Medicare private plan; or
       ``(II) prescription drug plans under part D based on the 
     type of prescription drug plan.

[[Page 22200]]

       ``(ii) Commissions in the first year that are more than 200 
     percent of subsequent year commissions.
       ``(iii) The payment of extra bonuses or incentives (such as 
     trips, gifts, and other non-commission cash payments).
       ``(C) Agent disclosure.--In developing the model 
     regulations, the NAIC shall consider requiring agents and 
     brokers to disclose commissions to a beneficiary upon request 
     of the beneficiary before enrollment.
       ``(D) Prevention of fraud.--The model regulations shall 
     consider the opportunity for fraud and abuse and beneficiary 
     steering in setting standards under this paragraph and shall 
     provide for the ability of State commissioners to investigate 
     commission structures.
       ``(6) Market conduct.--
       ``(A) In general.--The model regulations shall establish 
     standards for the market conduct of organizations offering 
     Medicare private plans, and of agents and brokers selling 
     such plans, and for State review of plan market conduct.
       ``(B) Matters to be included.--Such standards shall include 
     standards for--
       ``(i) timely payment of claims;
       ``(ii) beneficiary complaint reporting and disclosure; and
       ``(iii) State reporting of market conduct violations and 
     sanctions.
       ``(7) Implementation.--
       ``(A) Publication of naic model regulations.--If the model 
     regulations are submitted on a timely basis under paragraph 
     (1)--
       ``(i) the Secretary shall publish them in the Federal 
     Register upon receipt and request public comment on the issue 
     of whether such regulations are consistent with the 
     requirements established in this subsection for such 
     regulations;
       ``(ii) not later than 6 months after the date of such 
     publication, the Secretary shall determine whether such 
     regulations are so consistent with such requirements and 
     shall publish notice of such determination in the Federal 
     Register; and
       ``(iii) if the Secretary makes the determination under 
     clause (ii) that such regulations are consistent with such 
     requirements, in the notice published under clause (ii) the 
     Secretary shall publish notice of adoption of such model 
     regulations as constituting the marketing and enrollment 
     standards adopted under this subsection to be applied under 
     this title; and
       ``(iv) if the Secretary makes the determination under such 
     clause that such regulations are not consistent with such 
     requirements, the procedures of clauses (ii) and (iii) of 
     subparagraph (B) shall apply (in relation to the notice 
     published under clause (ii)), in the same manner as such 
     clauses would apply in the case of publication of a notice 
     under subparagraph (B)(i).
       ``(B) No model regulations.--If the model regulations are 
     not submitted on a timely basis under paragraph (1)--
       ``(i) the Secretary shall publish notice of such fact in 
     the Federal Register;
       ``(ii) not later than 6 months after the date of 
     publication of such notice, the Secretary shall propose 
     regulations that provide for marketing and enrollment 
     standards that incorporate the requirements of this 
     subsection for the model regulations and request public 
     comments on such proposed regulations; and
       ``(iii) not later than 6 months after the date of 
     publication of such proposed regulations, the Secretary shall 
     publish final regulations that shall constitute the marketing 
     and enrollment standards adopted under this subsection to be 
     applied under this title.
       ``(C) References to marketing and enrollment standards.--In 
     this title, a reference to marketing and enrollment standards 
     adopted under this subsection is deemed a reference to the 
     regulations constituting such standards adopted under 
     subparagraph (A) or (B), as the case may be.
       ``(D) Effective date of standards.--In order to provide for 
     the orderly and timely implementation of marketing and 
     enrollment standards adopted under this subsection, the 
     Secretary, in consultation with the NAIC, shall specify (by 
     program instruction or otherwise) effective dates with 
     respect to all components of such standards consistent with 
     the following:
       ``(i) In the case of components that relate predominantly 
     to operations in relation to Medicare private plans, the 
     effective date shall be for plan years beginning on or after 
     such date (not later than 1 year after the date of 
     promulgation of the standards) as the Secretary specifies.
       ``(ii) In the case of other components, the effective date 
     shall be such date, not later than 1 year after the date of 
     promulgation of the standards, as the Secretary specifies.
       ``(E) Consultation.-- In promulgating marketing and 
     enrollment standards under this paragraph, the NAIC or 
     Secretary shall consult with a working group composed of 
     representatives of issuers of Medicare private plans, 
     consumer groups, medicare beneficiaries, State Health 
     Insurance Assistance Programs, and other qualified 
     individuals. Such representatives shall be selected in a 
     manner so as to assure balanced representation among the 
     interested groups.
       ``(8) Enforcement.--
       ``(A) In general.--Any Medicare private plan that violates 
     marketing and enrollment standards is subject to sanctions 
     under section 1857(g).
       ``(B) State responsibilities.--Nothing in this subsection 
     or section 1857(g) shall prohibit States from imposing 
     sanctions against Medicare private plans, agents, or brokers 
     for violations of the marketing and enrollment standards 
     adopted under section 1852(m). States shall have the sole 
     authority to regulate agents and brokers.
       ``(9) Medicare private plan defined.--In this subsection, 
     the term `Medicare private plan' means a Medicare Part C plan 
     and a prescription drug plan under part D.''.
       (b) Expansion of Exception to Preemption of State Role.--
       (1) In general.--Section 1856(b)(3) of the Social Security 
     Act (42 U.S.C. 1395w-26(b)(3)) is amended by striking 
     ``(other than State licensing laws or State laws relating to 
     plan solvency)'' and inserting ``(other than State laws 
     relating to licensing or plan solvency and State laws or 
     regulations adopting the marketing and enrollment standards 
     adopted under section 1852(m)).''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to plans offered on or after July 1, 2008.
       (c) Application to Prescription Drug Plans.--
       (1) In general.--Section 1860D-1 of such Act is amended by 
     adding at the end the following new subsection:
       ``(d) Application of Marketing and Enrollment Standards.--
     The marketing and enrollment standards adopted under section 
     1852(m) shall apply to prescription drug plans (and sponsors 
     of such plans) in the same manner as they apply to Medicare 
     Part C plans and organizations offering such plans.''.
       (2) Reference to current law provisions.--The amendment 
     made by subsection (a) and (b) apply, pursuant to section 
     1860D-1(b)(1)(B)(ii) of the Social Security Act (42 U.S.C. 
     1395w-101(b)(1)(B)(ii)), to prescription drug plans under 
     part D of title XVIII of such Act.
       (d) Contract Requirement To Meet Marketing and Advertising 
     Standards.--
       (1) In general.--Section 1857(d) of the Social Security Act 
     (42 U.S.C. 1395w-27(d)), as amended by subsection (b)(1), is 
     further amended by adding at the end the following new 
     paragraph:
       ``(7) Marketing and advertising standards.--The contract 
     shall require the organization to meet all standards adopted 
     under section 1852(m) (including those enforced by the State 
     involved pursuant to section 1856(b)(3)) relating to 
     marketing and advertising conduct''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to contracts for plan years beginning on or after 
     January 1, 2011.
       (e) Application of Sanctions.--
       (1) Application to violation of marketing and enrollment 
     standards.--Section 1857(g) of such Act (42 U.S.C. 1395w-
     27(g)) is amended--
       (A) by striking ``or'' at the end of subparagraph (F);
       (B) by adding ``or'' at the end of subparagraph (G); and
       (C) by inserting after subparagraph (G) the following new 
     subparagraph:
       ``(H) violates marketing and enrollment standards adopted 
     under section 1852(m);''.
       (2) Enhanced civil money sanctions.--Such section is 
     further amended--
       (A) in paragraph (2)(A), by striking ``$25,000'', 
     ``$100,000'', and ``$15,000'' and inserting ``$50,000'', 
     ``$200,000'', and ``$30,000'', respectively; and
       (B) in subparagraphs (A), (B), and (D) of paragraph (3), by 
     striking ``$25,000'', ``$10,000'', and ``$100,000'', 
     respectively, and inserting ``$50,000'', ``$20,000'', and 
     ``$200,000'', respectively.
       (3) Effective date.--The amendments made by paragraph (2) 
     shall apply to violations occurring on or after the date of 
     the enactment of this Act.
       (f) Disclosure of Market and Advertising Contract 
     Violations and Imposed Sanctions.--Section 1857 of such Act 
     is amended by adding at the end the following new subsection
       ``(j) Disclosure of Market and Advertising Contract 
     Violations and Imposed Sanctions.--For years beginning with 
     2009, the Secretary shall post on its public website for the 
     Medicare program an annual report that--
       ``(1) lists each MA organization for which the Secretary 
     made during the year a determination under subsection (c)(2) 
     the basis of which is described in paragraph (1)(E); and
       ``(2) that describes any applicable sanctions under 
     subsection (g) applied to such organization pursuant to such 
     determination.''.
       (g) Standard Definitions of Benefits and Formats for Use in 
     Marketing Materials.--Section 1851(h) of such Act (42 U.S.C. 
     1395w-21(h)) is amended by adding at the end the following 
     new paragraph:
       ``(6) Standard definitions of benefits and formats for use 
     in marketing materials.--
       ``(A) In general.--Not later than January 1, 2010, the 
     Secretary, in consultation with the National Association of 
     Insurance Commissioners and a working group of the type

[[Page 22201]]

     described in section 1852(m)(7)(E), shall develop standard 
     descriptions and definitions for benefits under this title 
     for use in marketing material distributed by Medicare Part C 
     organizations and formats for including such descriptions in 
     such marketing material.
       ``(B) Required use of standard definitions.-- For plan 
     years beginning on or after January 1, 2011, the Secretary 
     shall disapprove the distribution of marketing material under 
     paragraph (1)(B) if such marketing material does not use, 
     without modification, the applicable descriptions and formats 
     specified under subparagraph (A).''.
       (h) Support for State Health Insurance Assistance Programs 
     (SHIPs).--Section 1857(e)(2) of the Social Security Act (42 
     U.S.C. 1395w-27(e)(2)) is amended--
       (1) in subparagraph (B), by adding at the end the 
     following: ``Of the amounts so collected, no less than 
     $55,000,000 for fiscal year 2009, $65,000,000 for fiscal year 
     2010, $75,000,000 for fiscal year 2011, and $85,000,000 for 
     fiscal year 2012 shall be used to support Medicare Part C and 
     Part D counseling and assistance provided by State Health 
     Insurance Assistance Programs.'';
       (2) in subparagraph (C)--
       (A) by striking ``and'' after ``$100,000,000''; and
       (B) by striking ``an amount equal to $200,000,000'' and 
     inserting ``and ending with fiscal year 2008 an amount equal 
     to $200,000,000, for fiscal year 2009 an amount equal to 
     $255,000,000, for fiscal year 2010 an amount equal to 
     $265,000,000, for fiscal year 2011 an amount equal to 
     $275,000,000, and for fiscal year 2012 an amount equal to 
     $285,000,000''; and
       (3) in subparagraph (D)(ii)--
       (A) by striking ``and'' at the end of subclause (IV);
       (B) in subclause (V), by striking the period at the end and 
     inserting ``before fiscal year 2009; and''; and
       (C) by adding at the end the following new subclauses:
       ``(VI) for fiscal year 2009 and each succeeding fiscal year 
     the applicable portion (as so defined) of the amount 
     specified in subparagraph (C) for that fiscal year.''.

     SEC. 412. LIMITATION ON OUT-OF-POCKET COSTS FOR INDIVIDUAL 
                   HEALTH SERVICES.

       (a) In General.--Section 1852(a)(1) of the Social Security 
     Act (42 U.S.C. 1395w-22(a)(1)) is amended--
       (1) in subparagraph (A), by inserting before the period at 
     the end the following: ``with cost-sharing that is no greater 
     (and may be less) than the cost-sharing that would otherwise 
     be imposed under such program option'';
       (2) in subparagraph (B)(i), by striking `` or an 
     actuarially equivalent level of cost-sharing as determined in 
     this part''; and
       (3) by amending clause (ii) of subparagraph (B) to read as 
     follows:
       ``(ii) Permitting use of flat copayment or per diem rate.--
     Nothing in clause (i) shall be construed as prohibiting a 
     Medicare part C plan from using a flat copayment or per diem 
     rate, in lieu of the cost-sharing that would be imposed under 
     part A or B, so long as the amount of the cost-sharing 
     imposed does not exceed the amount of the cost-sharing that 
     would be imposed under the respective part if the individual 
     were not enrolled in a plan under this part.''.
       (b) Limitation for Dual Eligibles and Qualified Medicare 
     Beneficiaries.--Section 1852(a) of such Act is amended by 
     adding at the end the following new paragraph:
       ``(7) Limitation on cost-sharing for dual eligibles and 
     qualified medicare beneficiaries.--In the case of a 
     individual who is a full-benefit dual eligible individual (as 
     defined in section 1935(c)(6)) or a qualified medicare 
     beneficiary (as defined in section 1905(p)(1)) who is 
     enrolled in a Medicare Part C plan, the plan may not impose 
     cost-sharing that exceeds the amount of cost-sharing that 
     would be permitted with respect to the individual under this 
     title and title XIX if the individual were not enrolled with 
     such plan.''.
       (c) Effective Dates.--
       (1) The amendments made by subsection (a) shall apply to 
     plan years beginning on or after January 1, 2009.
       (2) The amendments made by subsection (b) shall apply to 
     plan years beginning on or after January 1, 2008.

     SEC. 413. MA PLAN ENROLLMENT MODIFICATIONS.

       (a) Improved Plan Enrollment, Disenrollment, and Change of 
     Enrollment.--
       (1) Continuous open enrollment for full-benefit dual 
     eligible individuals and qualified medicare beneficiaries 
     (qmb).--Section 1851(e)(2)(D) of the Social Security Act (42 
     U.S.C. 1395w-21(e)(2)(D)) is amended--
       (A) in the heading, by inserting ;``, full-benefit dual 
     eligible individuals, and qualified medicare beneficiaries'' 
     after ``institutionalized individuals''; and
       (B) in the matter before clause (i), by inserting ``, a 
     full-benefit dual eligible individual (as defined in section 
     1935(c)(6)), or a qualified medicare beneficiary (as defined 
     in section 1905(p)(1))'' after ``institutionalized (as 
     defined by the Secretary)''; and
       (C) in clause (i), by inserting ``or disenroll'' after 
     ``enroll''.
       (2) Special election periods for additional categories of 
     individuals.--Section 1851(e)(4) of such Act (42 U.S.C. 
     1395w(e)(4)) is amended--
       (A) in subparagraph (C), by striking at the end ``or'';
       (B) in subparagraph (D), by inserting ``, taking into 
     account the health or well-being of the individual'' before 
     the period and redesignating such subparagraph as 
     subparagraph (G); and
       (C) by inserting after subparagraph (C) the following new 
     subparagraphs:
       ``(D) the individual is described in section 
     1902(a)(10)(E)(iii) (relating to specified low-income 
     medicare beneficiaries); or
       ``(E) the individual is enrolled in an MA plan and 
     enrollment in the plan is suspended under paragraph (2)(B) or 
     (3)(C) of section 1857(g) because of a failure of the plan to 
     meet applicable requirements.''.
       (3) Elimination of continuous open enrollment of original 
     fee-for-service enrollees in medicare advantage non-
     prescription drug plans.--Subparagraph (E) of section 
     1851(e)(2) of the Social Security Act, as added by section 
     206 of division B of the Tax Relief and Health Care Act of 
     2006 (Public Law 109-432), is repealed.
       (4) Effective date.--The amendments made by this subsection 
     shall take effect on the date of the enactment of this Act.
       (b) Access to Medigap Coverage for Individuals Who Leave MA 
     Plans.--
       (1) In general.--Section 1882(s)(3) of the Social Security 
     Act (42 U.S.C. 1395ss(s)(3)) is amended--
       (A) in each of clauses (v)(III) and (vi) subparagraph (B), 
     by striking ``12 months'' and inserting ``24 months''; and
       (B) in each of subclauses (I) and (II) of subparagraph 
     (F)(i), by striking ``12 months'' and inserting ``24 
     months''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply to terminations of enrollments in MA plans 
     occurring on or after the date of the enactment of this Act.
       (c) Improved Enrollment Policies.--
       (1) No auto-enrollment of medicaid beneficiaries.--
       (A) In general.--Section 1851(e) of such Act (42 U.S.C. 
     1395w-21(e)) is amended by adding at the end the following 
     new paragraph:
       ``(7) No auto-enrollment of medicaid beneficiaries.--In no 
     case may the Secretary provide for the enrollment in a MA 
     plan of a Medicare Advantage eligible individual who is 
     eligible to receive medical assistance under title XIX as a 
     full-benefit dual eligible individual or a qualified medicare 
     beneficiary, without the affirmative application of such 
     individual (or authorized representative of the individual) 
     to be enrolled in such plan.''.
       (B) No application to prescription drug plans.--Section 
     1860D-1(b)(1)(B)(iii) of such Act (42 U.S.C. 1395w-
     101(b)(1)(B)(iii)) is amended--
       (i) by striking ``paragraph (2) and'' and by inserting 
     ``paragraph (2),''; and
       (ii) by inserting ``, and paragraph (7),'' after 
     ``paragraph (4)''.
       (C) Effective date.--The amendments made by this paragraph 
     shall apply to enrollments that are effective on or after the 
     date of the enactment of this Act.

     SEC. 414. INFORMATION FOR BENEFICIARIES ON MA PLAN 
                   ADMINISTRATIVE COSTS.

       (a) Disclosure of Medical Loss Ratios and Other Expense 
     Data.--Section 1851 of the Social Security Act (42 U.S.C. 
     1395w-21) is amended by adding at the end the following new 
     subsection:
       ``(j) Publication of Medical Loss Ratios and Other Cost-
     Related Information.--
       ``(1) In general.--The Secretary shall publish, not later 
     than October 1 of each year (beginning with 2009), for each 
     Medicare Part C plan contract, the following:
       ``(A) The medical loss ratio of the plan in the previous 
     year.
       ``(B) The per enrollee payment under this part to the plan, 
     as adjusted to reflect a risk score (based on factors 
     described in section 1853(a)(1)(C)(i)) of 1.0.
       ``(C) The average risk score (as so based).
       ``(2) Submission of data.--
       ``(A) In general.--Each Medicare Part C organization shall 
     submit to the Secretary, in a form and manner specified by 
     the Secretary, data necessary for the Secretary to publish 
     the information described in paragraph (1) on a timely basis, 
     including the information described in paragraph (3).
       ``(B) Data for 2008 and 2009.--The data submitted under 
     subparagraph (A) for 2008 and for 2009 shall be consistent in 
     content with the data reported as part of the Medicare Part C 
     plan bid in June 2007 for 2008.
       ``(C) Medical loss ratio data.--The data to be submitted 
     under subparagraph (A) relating to medical loss ratio for a 
     year--
       ``(i) shall be submitted not later than June 1 of the 
     following year; and
       ``(ii) beginning with 2010, shall be submitted based on the 
     standardized elements and definitions developed under 
     paragraph (4).
       ``(D) Audited data.--Data submitted under this paragraph 
     shall be data that has been audited by an independent third 
     party auditor.
       ``(3) MLR information.--The information described in this 
     paragraph with respect to a Medicare Part C plan for a year 
     is as follows:
       ``(A) The costs for the plan in the previous year for each 
     of the following:

[[Page 22202]]

       ``(i) Total medical expenses, separately indicated for 
     benefits for the original medicare fee-for-service program 
     option and for supplemental benefits.
       ``(ii) Non-medical expenses, shown separately for each of 
     the following categories of expenses:

       ``(I) Marketing and sales.
       ``(II) Direct administration.
       ``(III) Indirect administration.
       ``(IV) Net cost of private reinsurance.

       ``(B) Gain or loss margin.
       ``(C) Total revenue requirement, computed as the total of 
     medical and nonmedical expenses and gain or loss margin, 
     multiplied by the gain or loss margin.
       ``(D) Percent of revenue ratio, computed as the total 
     revenue requirement expressed as a percentage of revenue.
       ``(4) Development of data reporting standards.--
       ``(A) In general.--The Secretary shall develop and 
     implement standardized data elements and definitions for 
     reporting under this subsection, for contract years beginning 
     with 2010, of data necessary for the calculation of the 
     medical loss ratio for Medicare Part C plans. Not later than 
     December 31, 2008, the Secretary shall publish a report 
     describing the elements and definitions so developed.
       ``(B) Consultation.--The Secretary shall consult with 
     representatives of Medicare Part C organizations, experts on 
     health plan accounting systems, and representatives of the 
     National Association of Insurance Commissioners, in the 
     development of such data elements and definitions
       ``(5) Medical loss ratio defined.--For purposes of this 
     part, the term `medical loss ratio' means, with respect to an 
     MA plan for a year, the ratio of--
       ``(A) the aggregate benefits (excluding nonmedical expenses 
     described in paragraph (3)(A)(ii)) paid under the plan for 
     the year, to
       ``(B) the aggregate amount of premiums (including basic and 
     supplemental beneficiary premiums) and payments made under 
     sections 1853 and 1860D-15) collected for the plan and year.

     Such ratio shall be computed without regard to whether the 
     benefits or premiums are for required or supplemental 
     benefits under the plan.''.
       (b) Audit of Administrative Costs and Compliance With the 
     Federal Acquisition Regulation.--
       (1) In general.--Section 1857(d)(2)(B) of such Act (42 
     U.S.C. 1395w-27(d)(2)(B)) is amended--
       (A) by striking ``or (ii)'' and inserting ``(ii)''; and
       (B) by inserting before the period at the end the 
     following: ``, or (iii) to compliance with the requirements 
     of subsection (e)(4) and the extent to which administrative 
     costs comply with the applicable requirements for such costs 
     under the Federal Acquisition Regulation''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply for contract years beginning after the date of 
     the enactment of this Act.
       (c) Minimum Medical Loss Ratio.--Section 1857(e) of the 
     Social Security Act (42 U.S.C. 1395w-27(e)) is amended by 
     adding at the end the following new paragraph:
       ``(4) Requirement for minimum medical loss ratio.--If the 
     Secretary determines for a contract year (beginning with 
     2010) that an MA plan has failed to have a medical loss ratio 
     (as defined in section 1851(j)(4)) of at least .85--
       ``(A) for that contract year, the Secretary shall reduce 
     the blended benchmark amount under subsection (l) for the 
     second succeeding contract year by the numer of percentage 
     points by which such loss ratio was less than 85 percent;
       ``(B) for 3 consecutive contract years, the Secretary shall 
     not permit the enrollment of new enrollees under the plan for 
     coverage during the second succeeding contract year; and
       ``(C) the Secretary shall terminate the plan contract if 
     the plan fails to have such a medical loss ratio for 5 
     consecutive contract years.''.
       (d) Information on Medicare Part C Plan Enrollment and 
     Services.--Section 1851 of such Act, as amended by subsection 
     (a), is further amended by adding at the end the following 
     new subsection:
       ``(k) Publication of Enrollment and Other Information.--
       ``(1) Monthly publication of plan-specific enrollment 
     data.--The Secretary shall publish (on the public website of 
     the Centers for Medicare & Medicaid Services or otherwise) 
     not later than 30 days after the end of each month (beginning 
     with January 2008) on the actual enrollment in each Medicare 
     Part C plan by contract and by county.
       ``(2) Availability of other information.--The Secretary 
     shall make publicly available data and other information in a 
     format that may be readily used for analysis of the Medicare 
     Part C program under this part and will contribute to the 
     understanding of the organization and operation of such 
     program.''.
       (e) MedPAC Report on Varying Minimum Medical Loss Ratios.--
       (1) Study.--The Medicare Payment Advisory Commission shall 
     conduct a study of the need and feasibility ofproviding for 
     different minimum medical loss ratios for different types of 
     Medicare Part C plans, including coordinated care plans, 
     group model plans, coordinated care independent practice 
     association plans, preferred provider organization plans, and 
     private fee-for-services plans.
       (2) Report.--Not later than 1 year after the date of the 
     enactment of this Act, submit to Congress a report on the 
     study conducted under paragraph (1).

                Subtitle C--Quality and Other Provisions

     SEC. 421. REQUIRING ALL MA PLANS TO MEET EQUAL STANDARDS.

       (a) Collection and Reporting of Information.--
       (1) In general.--Section 1852(e)(1) of the Social Security 
     Act (42 U.S.C. 1395w-112(e)(1)) is amended by striking 
     ``(other than an MA private fee-for-service plan or an MSA 
     plan)''.
       (2) Reporting for private fee-for-services and msa plans.--
     Section 1852(e)(3) of such Act is amended by adding at the 
     end the following new subparagraph:
       ``(C) Data collection requirements by private fee-for-
     service plans and msa plans.--
       ``(i) Using measures for ppos for contract year 2009.--For 
     contract year 2009, the Medicare Part C organization offering 
     a private fee-for-service plan or an MSA plan shall submit to 
     the Secretary for such plan the same information on the same 
     performance measures for which such information is required 
     to be submitted for Medicare Part C plans that are preferred 
     provider organization plans for that year.
       ``(ii) Application of same measures as coordinated care 
     plans beginning in contract year 2010.--For a contract year 
     beginning with 2010, a Medicare Part C organization offering 
     a private fee-for-service plan or an MSA plan shall submit to 
     the Secretary for such plan the same information on the same 
     performance measures for which such information is required 
     to be submitted for such contract year Medicare Part C plans 
     described in section 1851(a)(2)(A)(i) for contract year such 
     contract year.''.
       (3) Effective date.--The amendment made by paragraph (1) 
     shall apply to contract years beginning on or after January 
     1, 2009.
       (b) Employer Plans.--
       (1) In general.--The first sentence of paragraph (2) of 
     section 1857(i) of such Act (42 U.S.C. 1395w-27(i)) is 
     amended by inserting before the period at the end the 
     following: ``, but only if 90 percent of the Medicare part C 
     eligible individuals enrolled under such plan reside in a 
     county in which the Medicare Part C organization offers a 
     Medicare Part C local plan''.
       (2) Limitation on application of waiver authority.--
     Paragraphs (1) and (2) of such section are each amended by 
     inserting ``that were in effect before the date of the 
     enactment of the Children's Health and Medicare Protection 
     Act of 2007'' after ``waive or modify requirements''.
       (3) Effective dates.--The amendment made by paragraph (1) 
     shall apply for plan years beginning on or after January 1, 
     2009, and the amendments made by paragraph (2) shall take 
     effect on the date of the enactment of this Act.

     SEC. 422. DEVELOPMENT OF NEW QUALITY REPORTING MEASURES ON 
                   RACIAL DISPARITIES.

       (a) New Quality Reporting Measures.--
       (1) In general.--Section 1852(e)(3) of the Social Security 
     Act (42 U.S.C. 1395w-22(e)(3)), as amended by section 
     421(a)(2), is amended--
       (A) in subparagraph (B)--
       (i) in clause (i), by striking ``The Secretary'' and 
     inserting ``Subject to subparagraph (D), the Secretary''; and
       (ii) in clause (ii), by inserting ``and subparagraph (C)'' 
     after ``clause (iii)''; and
       (B) by adding at the end the following new subparagraph:
       ``(D) Additional quality reporting measures.--
       ``(i) In general.--The Secretary shall develop by October 
     1, 2009, quality measures for Medicare Part C plans that 
     measure disparities in the amount and quality of health 
     services provided to racial and ethnic minorities.
       ``(ii) Data to measure racial and ethnic disparities in the 
     amount and quality of care provided to enrollees.--The 
     Secretary shall provide for Medicare Part C organizations to 
     submit data under this paragraph, including data similar to 
     those submitted for other quality measures, that permits 
     analysis of disparities among racial and ethnic minorities in 
     health services, quality of care, and health status among 
     Medicare Part C plan enrollees for use in submitting the 
     reports under paragraph (5).''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to reporting of quality measures for plan years 
     beginning on or after January 1, 2010.
       (b) Biennial Report on Racial and Ethnic Minorities.--
     Section 1852(e) of such Act (42 U.S.C. 1395w-22(e)) is 
     amended by adding at the end the following new paragraph:
       ``(5) Report to congress.--
       ``(A) In general.--Not later than 2 years after the date of 
     the enactment of this paragraph, and biennially thereafter, 
     the Secretary shall submit to Congress a report regarding how 
     quality assurance programs conducted under this subsection 
     measure and

[[Page 22203]]

     report on disparities in the amount and quality of health 
     care services furnished to racial and ethnic minorities.
       ``(B) Contents of report.--Each such report shall include 
     the following:
       ``(i) A description of the means by which such programs 
     focus on such racial and ethnic minorities.
       ``(ii) An evaluation of the impact of such programs on 
     eliminating health disparities and on improving health 
     outcomes, continuity and coordination of care, management of 
     chronic conditions, and consumer satisfaction.
       ``(iii) Recommendations on ways to reduce clinical outcome 
     disparities among racial and ethnic minorities.
       ``(iv) Data for each MA plan from HEDIS and other source 
     reporting the disparities in the amount and quality of health 
     services furnished to racial and ethnic minorities.''.

     SEC. 423. STRENGTHENING AUDIT AUTHORITY.

       (a) For Part C Payments Risk Adjustment.--Section 
     1857(d)(1) of the Social Security Act (42 U.S.C. 1395w-
     27(d)(1)) is amended by inserting after ``section 1858(c))'' 
     the following: ``, and data submitted with respect to risk 
     adjustment under section 1853(a)(3).''.
       (b) Enforcement of Audits and Deficiencies.--
       (1) In general.--Section 1857(e) of such Act is amended by 
     adding at the end the following new paragraph:
       ``(4) Enforcement of audits and deficiencies.--
       ``(A) Information in contract.--The Secretary shall require 
     that each contract with a Medicare Part C organization under 
     this section shall include terms that inform the organization 
     of the provisions in subsection (d).
       ``(B) Enforcement authority.--The Secretary is authorized, 
     in connection with conducting audits and other activities 
     under subsection (d), to take such actions, including pursuit 
     of financial recoveries, necessary to address deficiencies 
     identified in such audits or other activities.''.
       (2) Application under part d.--For provision applying the 
     amendment made by paragraph (1) to prescription drug plans 
     under part D, see section 1860D-12(b)(3)(D) of the Social 
     Security Act.
       (c) Effective Date.--The amendments made by this section 
     shall take effect the date of the enactment of this Act and 
     shall apply to audits and activities conducted for contract 
     years beginning on or after January 1, 2009.

     SEC. 424. IMPROVING RISK ADJUSTMENT FOR MA PAYMENTS.

       (a) In General.--Not later than 1 year after the date of 
     the enactment of this Act, the Secretary of Health and Human 
     Services shall submit to Congress a report that evaluates the 
     adequacy of the Medicare Advantage risk adjustment system 
     under section 1853(a)(1)(C) of the Social Security Act (42 
     U.S.C. 1395-23(a)(1)(C)).
       (b) Particulars.--The report under subsection (a) shall 
     include an evaluation of at least the following:
       (1) The need and feasibility of improving the adequacy of 
     the risk adjustment system in predicting costs for 
     beneficiaries with co-morbid conditions and associated 
     cognitive impairments.
       (2) The need and feasibility of including further 
     gradations of diseases and conditions (such as the degree of 
     severity of congestive heart failure).
       (3) The feasibility of measuring difference in coding over 
     time between Medicare part C plans and the medicare 
     traditional fee-for-service program and, to the extent this 
     difference exists, the options for addressing it.
       (4) The feasibility and value of including part D and other 
     drug utilization data in the risk adjustment model.

     SEC. 425. ELIMINATING SPECIAL TREATMENT OF PRIVATE FEE-FOR-
                   SERVICE PLANS.

       (a) Elimination of Extra Billing Provision.--Section 
     1852(k)(2) of the Social Security Act (42 U.S.C. 1395w-
     22(k)(2)) is amended--
       (1) in subparagraph (A)(i), by striking ``115 percent'' and 
     inserting ``100 percent''; and
       (2) in subparagraph (C)(i), by striking `` (including any 
     liability for balance billing consistent with this 
     subsection)''.
       (b) Review of Bid Information.--Section 1854(a)(6)(B) of 
     such Act (42 U.S.C. 1395w-24(a)(6)(B)) is amended--
       (1) in clause (i), by striking ``clauses (iii) and (iv)'' 
     and inserting ``clause (iii)''; and
       (2) by striking clause (iv).
       (c) Effective Date.--The amendments made by this section 
     shall apply to contract years beginning with 2009.

     SEC. 426. RENAMING OF MEDICARE ADVANTAGE PROGRAM.

       (a) In General.--The program under part C of title XVIII of 
     the Social Security Act is henceforth to be known as the 
     ``Medicare Part C program''.
       (b) Change in References.--
       (1) Amending social security act.--The Social Security Act 
     is amended by striking ``Medicare Advantage'', ``MA'', and 
     ``Medicare+Choice'' and inserting ``Medicare Part C'' each 
     place it appears, with the appropriate, respective 
     typographic formatting, including typeface and 
     capitalization.
       (2) Additional references.--Notwithstanding section 201(b) 
     of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003 (Public Law 108-173), any reference 
     to the program under part C of title XVIII of the Social 
     Security Act shall be deemed a reference to the ``Medicare 
     Part C'' program and, with respect to such part, any 
     reference to ``Medicare+Choice''. ``Medicare Advantage'', or 
     ``MA'' is deemed a reference to the program under such part.

                  Subtitle D--Extension of Authorities

     SEC. 431. EXTENSION AND REVISION OF AUTHORITY FOR SPECIAL 
                   NEEDS PLANS (SNPS).

       (a) Extending Restriction on Enrollment Authority for SNPs 
     for 3 Years.--Subsection (f) of section 1859 of the Social 
     Security Act (42 U.S.C. 1395w-28) is amended by striking 
     ``2009'' and inserting ``2012''.
       (b) Structure of Authority for SNPs.--
       (1) In general.--Such section is further amended--
       (A) in subsection (b)(6)(A), by striking all that follows 
     ``means'' and inserting the following: ``an MA plan--
       ``(i) that serves special needs individuals (as defined in 
     subparagraph (B));
       ``(ii) as of January 1, 2009, either--

       ``(I) at least 90 percent of the enrollees in which are 
     described in subparagraph (B)(i), as determined under 
     regulations in effect as of July 1, 2007; or
       ``(II) at least 90 percent of the enrollees in which are 
     described in subparagraph (B)(ii) and are full-benefit dual 
     eligible individuals (as defined in section 1935(c)(6)) or 
     qualified medicare beneficiaries (as defined in section 
     1905(p)(1)); and

       ``(iii) as of January 1, 2009, meets the applicable 
     requirements of paragraph (2) or (3) of subsection (f), as 
     the case may be.'';
       (B) in subsection (b)(6)(B)(iii), by inserting ``only for 
     contract years beginning before January 1, 2009,'' after 
     ``(iii)'';
       (C) in subsection (f)--
       (i) by amending the heading to read as follows: 
     ``Requirements for Enrollment in Part C Plans for Special 
     Needs Beneficiaries'';
       (ii) by designating the sentence beginning ``In the case 
     of'' as paragraph (1) with the heading ``Requirements for 
     enrollment'' and with appropriate indentation; and
       (iii) by adding at the end the following new paragraphs:
       ``(2) Additional requirements for institutional snps.--In 
     the case of a specialized MA plan for special needs 
     individuals described in subsection (b)(6)(A)(ii)(I), the 
     applicable requirements of this subsection are as follows:
       ``(A) The plan has an agreement with the State that 
     includes provisions regarding cooperation on the coordination 
     of care for such individuals. Such agreement shall include a 
     description of the manner that the State Medicaid program 
     under title XIX will pay for the costs of services for 
     individuals eligible under such title for medical assistance 
     for acute care and long-term care services.
       ``(B) The plan has a contract with long-term care 
     facilities and other providers in the area sufficient to 
     provide care for enrollees described in subsection 
     (b)(6)(B)(i).
       ``(C) The plan reports to the Secretary information on 
     additional quality measures specified by the Secretary under 
     section 1852(e)(3)(D)(iv)(I) for such plans.
       ``(3) Additional requirements for dual snps.--In the case 
     of a specialized MA plan for special needs individuals 
     described in subsection (b)(6)(A)(ii)(II), the applicable 
     requirements of this subsection are as follows:
       ``(A) The plan has an agreement with the State Medicaid 
     agency that--
       ``(i) includes provisions regarding cooperation on the 
     coordination of the financing of care for such individuals;
       ``(ii) includes a description of the manner that the State 
     Medicaid program under title XIX will pay for the costs of 
     cost-sharing and supplemental services for individuals 
     enrolled in the plan eligible under such title for medical 
     assistance for acute and long-term care services; and
       ``(iii) effective January 1, 2011, provides for capitation 
     payments to cover costs of supplemental benefits for 
     individuals described in subsection (b)(6)(A)(ii)(II).
       ``(B) The out-of-pocket costs for services under parts A 
     and B that are charged to enrollees may not exceed the out-
     of-pocket costs for same services permitted for such 
     individuals under title XIX.
       ``(C) The plan reports to the Secretary information on 
     additional quality measures specified by the Secretary under 
     section 1852(e)(3)(D)(iv)(II) for such plans.''.
       (2) Quality standards and quality reporting.--Section 
     1852(e)(3) of such Act (42 U.S.C. 1395w-22(e)(3) is amended--
       (A) in subparagraph (A)(i), by adding at the end the 
     following: ``In the case of a specialized Medicare Part C 
     plan for special needs individuals described in paragraph (2) 
     or (3) of section 1859(f), the organization shall provide for 
     the reporting on quality measures developed for the plan 
     under subparagraph (D)(iii).''; and
       (B) in subparagraph (D), as added by section 422(a)(1), by 
     adding at the end the following new clause:
       ``(iii) Specification of additional quality measurements 
     for specialized part c plans.--For implementation for plan 
     years beginning not later than January 1, 2010, the Secretary 
     shall develop new quality measures appropriate to meeting the 
     needs of--

[[Page 22204]]

       ``(I) beneficiaries enrolled in specialized Medicare Part C 
     plans for special needs individuals (described in section 
     1859(b)(6)(A)(ii)(I)) that serve predominantly individuals 
     who are dual-eligible individuals eligible for medical 
     assistance under title XIX by measuring the special needs for 
     care of individuals who are both Medicare and Medicaid 
     beneficiaries; and
       ``(II) beneficiaries enrolled in specialized Medicare Part 
     C plans for special needs individuals (described in section 
     1859(b)(6)(A)(ii)(II)) that serve predominantly 
     institutionalized individuals by measuring the special needs 
     for care of individuals who are a resident in long-term care 
     institution.''.

       (3) Effective date; grandfather.--The amendments made by 
     paragraph (1) shall take effect for enrollments occurring on 
     or after January 1, 2009, and shall not apply--
       (A) to plans with a contract with a State Medicaid agency 
     to operate an integrated Medicaid-Medicare program, that had 
     been approved by Centers for Medicare & Medicaid Services on 
     January 1, 2004; and
       (B) to plans that are operational as of the date of the 
     enactment of this Act as approved Medicare demonstration 
     projects and that provide services predominantly to 
     individuals with end-stage renal disease.
       (4) Transition for non-qualifying snps.--
       (A) Restrictions in 2008 for chronic care snps.--In the 
     case of a specialized MA plan for special needs individuals 
     (as defined in section 1859(b)(6)(A) of the Social Security 
     Act (42 U.S.C. 1395w-28(b)(6)(A)) that, as of December 31, 
     2007, is not described in either subclause (I) or subclause 
     (II) of clause (ii) of such section, as amended by paragraph 
     (1), then as of January 1, 2008--
       (i) the plan may not be offered unless it was offered 
     before such date;
       (ii) no new members may be enrolled with the plan; and
       (iii) there may be no expansion of the service area of such 
     plan.
       (B) Transition of enrollees.--The Secretary of Health and 
     Human Services shall provide for an orderly transition of 
     those specialized MA plans for special needs individuals (as 
     defined in section 1859(b)(6)(A) of the Social Security Act 
     (42 U.S.C. 1395w-28(b)(6)(A)), as of the date of the 
     enactment of this Act), and their enrollees, that no longer 
     qualify as such plans under such section, as amended by this 
     subsection.

     SEC. 432. EXTENSION AND REVISION OF AUTHORITY FOR MEDICARE 
                   REASONABLE COST CONTRACTS.

       (a) Extension for 3 Years of Period Reasonable Cost Plans 
     Can Remain in the Market.--Section 1876(h)(5)(C)(ii) of the 
     Social Security Act (42 U.S.C. 1395mm(h)(5)(C)(ii)) is 
     amended, in the matter preceding subclause (I), by striking 
     ``January 1, 2008'' and inserting ``January 1, 2011''.
       (b) Application of Certain Medicare Advantage Requirements 
     to Cost Contracts Extended or Renewed After Enactment.--
     Section 1876(h) of such Act (42 U.S.C. 1395mm(h)), as amended 
     by subsection (a), is amended--
       (1) by redesignating paragraph (5) as paragraph (6); and
       (2) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5)(A) Any reasonable cost reimbursement contract with an 
     eligible organization under this subsection that is extended 
     or renewed on or after the date of enactment of the 
     Children's Health and Medicare Protection Act of 2007 shall 
     provide that the provisions of the Medicare Part C program 
     described in subparagraph (B) shall apply to such 
     organization and such contract in a substantially similar 
     manner as such provisions apply to Medicare Part C 
     organizations and Medicare Part C plans under part C.
       ``(B) The provisions described in this subparagraph are as 
     follows:
       ``(i) Section 1851(h) (relating to the approval of 
     marketing material and application forms).
       ``(ii) Section 1852(e) (relating to the requirement of 
     having an ongoing quality improvement program and treatment 
     of accreditation in the same manner as such provisions apply 
     to Medicare Part C local plans that are preferred provider 
     organization plans).
       ``(iii) Section 1852(f) (relating to grievance mechanisms).
       ``(iv) Section 1852(g) (relating to coverage 
     determinations, reconsiderations, and appeals).
       ``(v) Section 1852(j)(4) (relating to limitations on 
     physician incentive plans).
       ``(vi) Section 1854(c) (relating to the requirement of 
     uniform premiums among individuals enrolled in the plan).
       ``(vii) Section 1854(g) (relating to restrictions on 
     imposition of premium taxes with respect to payments to 
     organizations).
       ``(viii) Section 1856(b)(3) (relating to relation to State 
     laws).
       ``(ix) The provisions of part C relating to timelines for 
     contract renewal and beneficiary notification.''.

            TITLE V--PROVISIONS RELATING TO MEDICARE PART A

     SEC. 501. INPATIENT HOSPITAL PAYMENT UPDATES.

       (a) For Acute Hospitals.--Clause (i) of section 
     1886(b)(3)(B) of the Social Security Act (42 U.S.C. 
     1395ww(b)(3)(B)) is amended--
       (1) in subclause (XIX), by striking ``and'';
       (2) by redesignating subclause (XX) as subclause (XXII); 
     and
       (3) by inserting after subclause (XIX) the following new 
     subclauses:
       ``(XX) for fiscal year 2007, subject to clause (viii), the 
     market basket percentage increase for hospitals in all areas,
       ``(XXI) for fiscal year 2008, subject to clause (viii), the 
     market basket percentage increase minus 0.25 percentage point 
     for hospitals in all areas, and''.
       (b) For Other Hospitals.--Clause (ii) of such section is 
     amended--
       (1) in subclause (VII) by striking ``and'';
       (2) by redesignating subclause (VIII) as subclause (X); and
       (3) by inserting after subclause (VII) the following new 
     subclauses:
       ``(VIII) fiscal years 2003 through 2007, is the market 
     basket percentage increase,
       ``(IX) fiscal year 2008, is the market basket percentage 
     increase minus 0.25 percentage point, and''.
       (c) Delayed Effective Date.--
       (1) Acute care hospitals.--The amendments made by 
     subsection (a) shall not apply to discharges occurring before 
     January 1, 2008.
       (2) Other hospitals.--The amendments made by subsection (b) 
     shall be applied, only with respect to cost reporting periods 
     beginning during fiscal year 2008 and not with respect to the 
     computation for any succeeding cost reporting period, by 
     substituting ``0.1875 percentage point'' for ``0.25 
     percentage point''.

     SEC. 502. PAYMENT FOR INPATIENT REHABILITATION FACILITY (IRF) 
                   SERVICES.

       (a) Payment Update.--
       (1) In general.--Section 1886(j)(3)(C) of the Social 
     Security Act (42 U.S.C. 1395ww(j)(3)(C)) is amended by adding 
     at the end the following: ``The increase factor to be applied 
     under this subparagraph for fiscal year 2008 shall be 1 
     percent.''
       (2) Delayed effective date.--The amendment made by 
     paragraph (1) shall not apply to payment units occurring 
     before January 1, 2008.
       (b) Inpatient Rehabilitation Facility Classification 
     Criteria.--
       (1) In general.--Section 5005 of the Deficit Reduction Act 
     of 2005 (Public Law 109-171) is amended--
       (A) in subsection (a), by striking ``apply the applicable 
     percent specified in subsection (b)'' and inserting ``require 
     a compliance rate that is no greater than the 60 percent 
     compliance rate that became effective for cost reporting 
     periods beginning on or after July 1, 2006,''; and
       (B) by amending subsection (b) to read as follows:
       ``(b) Continued Use of Comorbidities.--For portions of cost 
     reporting periods occurring on or after the date of the 
     enactment of the Children's Health and Medicare Protection 
     Act of 2007, the Secretary shall include patients with 
     comorbidities as described in section 412.23(b)(2)(i) of 
     title 42, Code of Federal Regulations (as in effect as of 
     January 1, 2007), in the inpatient population that counts 
     towards the percent specified in subsection (a).''.
       (2) Effective date.--The amendment made by paragraph (1)(A) 
     shall apply to portions of cost reporting periods beginning 
     on or after the date of the enactment of this Act.
       (c) Payment for Certain Medical Conditions Treated in 
     Inpatient Rehabilitation Facilities.--
       (1) In general.--Section 1886(j) of the Social Security Act 
     (42 U.S.C. 1395ww(j)) is amended--
       (A) by redesignating paragraph (7) as paragraph (8);
       (B) by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) Special payment rule for certain medical 
     conditions.--
       ``(A) In general.--Subject to subparagraph (H), in the case 
     of discharges occurring on or after October 1, 2008, in lieu 
     of the standardized payment amount (as determined pursuant to 
     the preceding provisions of this subsection) that would 
     otherwise be applicable under this subsection, the Secretary 
     shall substitute, for payment units with respect to an 
     applicable medical condition (as defined in subparagraph 
     (G)(i)) that is treated in an inpatient rehabilitation 
     facility, the modified standardized payment amount determined 
     under subparagraph (B).
       ``(B) Modified standardized payment amount.--The modified 
     standardized payment amount for an applicable medical 
     condition shall be based on the amount determined under 
     subparagraph (C) for such condition, as adjusted under 
     subparagraphs (D), (E), and (F).
       ``(C) Amount determined.--
       ``(i) In general.--The amount determined under this 
     subparagraph for an applicable medical condition shall be 
     based on the sum of the following:

       ``(I) An amount equal to the average per stay skilled 
     nursing facility payment rate for the applicable medical 
     condition (as determined under clause (ii)).
       ``(II) An amount equal to 25 percent of the difference 
     between the overhead costs (as defined in subparagraph 
     (G)(ii)) component of the average inpatient rehabilitation 
     facility per stay payment amount for the applicable

[[Page 22205]]

     medical condition (as determined under the preceding 
     paragraphs of this subsection) and the overhead costs 
     component of the average per stay skilled nursing facility 
     payment rate for such condition (as determined under clause 
     (ii)).
       ``(III) An amount equal to 33 percent of the difference 
     between the patient care costs (as defined in subparagraph 
     (G)(iii)) component of the average inpatient rehabilitation 
     facility per stay payment amount for the applicable medical 
     condition (as determined under the preceding paragraphs of 
     this subsection) and the patient care costs component of the 
     average per stay skilled nursing facility payment rate for 
     such condition (as determined under clause (ii)).

       ``(ii) Determination of average per stay skilled nursing 
     facility payment rate.--For purposes of clause (i), the 
     Secretary shall convert skilled nursing facility payment 
     rates for applicable medical conditions, as determined under 
     section 1888(e), to average per stay skilled nursing facility 
     payment rates for each such condition.
       ``(D) Adjustments.--The Secretary shall adjust the amount 
     determined under subparagraph (C) for an applicable medical 
     condition using the adjustments to the prospective payment 
     rates for inpatient rehabilitation facilities described in 
     paragraphs (2), (3), (4), and (6).
       ``(E) Update for inflation.--Except in the case of a fiscal 
     year for which the Secretary rebases the amounts determined 
     under subparagraph (C) for applicable medical conditions 
     pursuant to subparagraph (F), the Secretary shall annually 
     update the amounts determined under subparagraph (C) for each 
     applicable medical condition by the increase factor for 
     inpatient rehabilitation facilities (as described in 
     paragraph (3)(C)).
       ``(F) Rebasing.--The Secretary shall periodically (but in 
     no case less than once every 5 years) rebase the amounts 
     determined under subparagraph (C) for applicable medical 
     conditions using the methodology described in such 
     subparagraph and the most recent and complete cost report and 
     claims data available.
       ``(G) Definitions.--In this paragraph:
       ``(i) Applicable medical condition.--The term `applicable 
     medical condition' means--

       ``(I) unilateral knee replacement;
       ``(II) unilateral hip replacement; and
       ``(III) unilateral hip fracture.

       ``(ii) Overhead costs.--The term `overhead costs' means 
     those Medicare-allowable costs that are contained in the 
     General Service cost centers of the Medicare cost reports for 
     inpatient rehabilitation facilities and for skilled nursing 
     facilities, respectively, as determined by the Secretary.
       ``(iii) Patient care costs.--The term `patient care costs' 
     means total Medicare-allowable costs minus overhead costs.
       ``(H) Sunset.--The provisions of this paragraph shall cease 
     to apply as of the date the Secretary implements an 
     integrated, site-neutral payment methodology under this title 
     for post-acute care.''; and
       (C) in paragraph (8), as redesignated by paragraph (1)--
       (i) in subparagraph (C), by striking ``and'' at the end;
       (ii) in subparagraph (D), by striking the period at the end 
     and inserting ``, and''; and
       (iii) by adding at the end the following new subparagraph:
       ``(E) modified standardized payment amounts under paragraph 
     (7).''.
       (2) Special rule for discharges occurring in the second 
     half of fiscal year 2008.--
       (A) In general.--In the case of discharges from an 
     inpatient rehabilitation facility occurring during the period 
     beginning on April 1, 2008, and ending on September 30, 2008, 
     for applicable medical conditions (as defined in paragraph 
     (7)(G)(i) of section 1886(j) of the Social Security Act (42 
     U.S.C. 1395ww(j)), as inserted by paragraph (1)(B), in lieu 
     of the standardized payment amount determined pursuant to 
     such section, the standardized payment amount shall be $9,507 
     for unilateral knee replacement, $10,398 for unilateral hip 
     replacement, and $10,958 for unilateral hip fracture. Such 
     amounts are the amounts that are estimated would be 
     determined under paragraph (7)(C) of such section 1886(j) for 
     such conditions if such paragraph applied for such period. 
     Such standardized payment amounts shall be multiplied by the 
     relative weights for each case-mix group and tier, as 
     published in the final rule of the Secretary of Health and 
     Human Services for inpatient rehabilitation facility services 
     prospective payment for fiscal year 2008, to obtain the 
     applicable payment amounts for each such condition for each 
     case-mix group and tier.
       (B) Implementation.--Notwithstanding any other provision of 
     law, the Secretary of Health and Human Services may implement 
     this subsection by program instruction or otherwise. 
     Paragraph (8)(E) of such section 1886(j) of the Social 
     Security Act, as added by paragraph (1)(C), shall apply for 
     purposes of this subsection in the same manner as such 
     paragraph applies for purposes of paragraph (7) of such 
     section 1886(j).
       (d) Recommendations for Classifying Inpatient 
     Rehabilitation Hospitals and Units.--
       (1) Report to congress.--Not later than 12 months after the 
     date of the enactment of this Act, the Secretary of Health 
     and Human Services, in consultation with physicians 
     (including geriatricians and physiatrists), administrators of 
     inpatient rehabilitation, acute care hospitals, skilled 
     nursing facilities, and other settings providing 
     rehabilitation services, Medicare beneficiaries, trade 
     organizations representing inpatient rehabilitation hospitals 
     and units and skilled nursing facilities, and the Medicare 
     Payment Advisory Commission, shall submit to the Committee on 
     Ways and Means of the House of Representatives and the 
     Committee on Finance of the Senate a report that includes--
       (A) an examination of Medicare beneficiaries' access to 
     medically necessary rehabilitation services;
       (B) alternatives or refinements to the 75 percent rule 
     policy for determining exclusion criteria for inpatient 
     rehabilitation hospital and unit designation under the 
     Medicare program, including determining clinical 
     appropriateness of inpatient rehabilitation hospital and unit 
     admissions and alternative criteria which would consider a 
     patient's functional status, diagnosis, co-morbidities, and 
     other relevant factors; and
       (C) an examination that identifies any condition for which 
     individuals are commonly admitted to inpatient rehabilitation 
     hospitals that is not included as a condition described in 
     section 412.23(b)(2)(iii) of title 42, Code of Federal 
     Regulations, to determine the appropriate setting of care, 
     and any variation in patient outcomes and costs, across 
     settings of care, for treatment of such conditions.

     For the purposes of this subsection, the term ``75 percent 
     rule'' means the requirement of section 412.23(b)(2) of title 
     42, Code of Federal Regulations, that 75 percent of the 
     patients of a rehabilitation hospital or converted 
     rehabilitation unit are in 1 or more of 13 listed treatment 
     categories.
       (2) Considerations.--In developing the report described in 
     paragraph (1), the Secretary shall include the following:
       (A) The potential effect of the 75 percent rule on access 
     to rehabilitation care by Medicare beneficiaries for the 
     treatment of a condition, whether or not such condition is 
     described in section 412.23(b)(2)(iii) of title 42, Code of 
     Federal Regulations.
       (B) An analysis of the effectiveness of rehabilitation care 
     for the treatment of conditions, whether or not such 
     conditions are described in section 412.23(b)(2)(iii) of 
     title 42, Code of Federal Regulations, available to Medicare 
     beneficiaries in various health care settings, taking into 
     account variation in patient outcomes and costs across 
     different settings of care, and which may include whether the 
     Medicare program and Medicare beneficiaries may incur higher 
     costs of care for the entire episode of illness due to 
     readmissions, extended lengths of stay, and other factors.

     SEC. 503. LONG-TERM CARE HOSPITALS.

       (a) Long-Term Care Hospital Payment Update.--
       (1) In general.--Section 1886 of the Social Security Act 
     (42 U.S.C. 1395ww) is amended by adding at the end the 
     following new subsection:
       ``(m) Prospective Payment for Long-Term Care Hospitals.--
       ``(1) Reference to establishment and implementation of 
     system.--For provisions related to the establishment and 
     implementation of a prospective payment system for payments 
     under this title for inpatient hospital services furnished by 
     a long-term care hospital described in subsection 
     (d)(1)(B)(iv), see section 123 of the Medicare, Medicaid, and 
     SCHIP Balanced Budget Refinement Act of 1999 and section 
     307(b) of Medicare, Medicaid, and SCHIP Benefits Improvement 
     and Protection Act of 2000.
       ``(2) Update for rate year 2008.--In implementing the 
     system described in paragraph (1) for discharges occurring 
     during the rate year ending in 2008 for a hospital, the base 
     rate for such discharges for the hospital shall be the same 
     as the base rate for discharges for the hospital occurring 
     during the previous rate year.''.
       (2) Delayed effective date.--Subsection (m)(2) of section 
     1886 of the Social Security Act, as added by paragraph (1), 
     shall not apply to discharges occurring on or after July 1, 
     2007, and before January 1, 2008.
       (b) Payment for Long-Term Care Hospital Services; Patient 
     and Facility Criteria.--
       (1) Definition of long-term care hospital.--
       (A) Definition.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x) is amended by adding at the end the 
     following new subsection:

                       ``Long-Term Care Hospital

       ``(ccc) The term `long-term care hospital' means an 
     institution which--
       ``(1) is primarily engaged in providing inpatient services, 
     by or under the supervision of a physician, to Medicare 
     beneficiaries whose medically complex conditions require a 
     long hospital stay and programs of care provided by a long-
     term care hospital;
       ``(2) has an average inpatient length of stay (as 
     determined by the Secretary) for Medicare beneficiaries of 
     greater than 25 days, or as otherwise defined in section 
     1886(d)(1)(B)(iv);
       ``(3) satisfies the requirements of subsection (e);

[[Page 22206]]

       ``(4) meets the following facility criteria:
       ``(A) the institution has a patient review process, 
     documented in the patient medical record, that screens 
     patients prior to admission for appropriateness of admission 
     to a long-term care hospital, validates within 48 hours of 
     admission that patients meet admission criteria for long-term 
     care hospitals, regularly evaluates patients throughout their 
     stay for continuation of care in a long-term care hospital, 
     and assesses the available discharge options when patients no 
     longer meet such continued stay criteria;
       ``(B) the institution has active physician involvement with 
     patients during their treatment through an organized medical 
     staff, physician-directed treatment with physician on-site 
     availability on a daily basis to review patient progress, and 
     consulting physicians on call and capable of being at the 
     patient's side within a moderate period of time, as 
     determined by the Secretary;
       ``(C) the institution has interdisciplinary team treatment 
     for patients, requiring interdisciplinary teams of health 
     care professionals, including physicians, to prepare and 
     carry out an individualized treatment plan for each patient; 
     and
       ``(5) meets patient criteria relating to patient mix and 
     severity appropriate to the medically complex cases that 
     long-term care hospitals are designed to treat, as measured 
     under section 1886(m).''.
       (B) New patient criteria for long-term care hospital 
     prospective payment.--Section 1886 of such Act (42 U.S.C. 
     1395ww), as amended by subsection (a), is further amended by 
     adding at the end the following new subsection:
       ``(n) Patient Criteria for Prospective Payment to Long-Term 
     Care Hospitals.--
       ``(1) In general.--To be eligible for prospective payment 
     under this section as a long-term care hospital, a long-term 
     care hospital must admit not less than a majority of patients 
     who have a high level of severity, as defined by the 
     Secretary, and who are assigned to one or more of the 
     following major diagnostic categories:
       ``(A) Circulatory diagnoses.
       ``(B) Digestive, endocrine, and metabolic diagnoses.
       ``(C) Infection disease diagnoses.
       ``(D) Neurological diagnoses.
       ``(E) Renal diagnoses.
       ``(F) Respiratory diagnoses.
       ``(G) Skin diagnoses.
       ``(H) Other major diagnostic categories as selected by the 
     Secretary.
       ``(2) Major diagnostic category defined.--In paragraph (1), 
     the term `major diagnostic category' means the medical 
     categories formed by dividing all possible principle 
     diagnosis into mutually exclusive diagnosis areas which are 
     referred to in 67 Federal Register 49985 (August 1, 2002).''.
       (C) Establishment of rehabilitation units within certain 
     long-term care hospitals.--If the Secretary of Health and 
     Human Services does not include rehabilitation services 
     within a major diagnostic category under section 1886(n)(2) 
     of the Social Security Act, as added by subparagraph (B), the 
     Secretary shall approve for purposes of title XVIII of such 
     Act distinct part inpatient rehabilitation hospital units in 
     long-term care hospitals consistent with the following:
       (i) A hospital that, on or before October 1, 2004, was 
     classified by the Secretary as a long-term care hospital, as 
     described in section 1886(d)(1)(B)(iv)(I) of such Act (42 
     U.S.C. 1395ww(d)(1)(V)(iv)(I)), and was accredited by the 
     Commission on Accreditation of Rehabilitation Facilities, may 
     establish a hospital rehabilitation unit that is a distinct 
     part of the long-term care hospital, if the distinct part 
     meets the requirements (including conditions of 
     participation) that would otherwise apply to a distinct-part 
     rehabilitation unit if the distinct part were established by 
     a subsection (d) hospital in accordance with the matter 
     following clause (v) of section 1886(d)(1)(B) of such Act, 
     including any regulations adopted by the Secretary in 
     accordance with this section, except that the one-year 
     waiting period described in section 412.30(c) of title 42, 
     Code of Federal Regulations, applicable to the conversion of 
     hospital beds into a distinct-part rehabilitation unit shall 
     not apply to such units.
       (ii) Services provided in inpatient rehabilitation units 
     established under clause (i) shall not be reimbursed as long-
     term care hospital services under section 1886 of such Act 
     and shall be subject to payment policies established by the 
     Secretary to reimburse services provided by inpatient 
     hospital rehabilitation units.
       (D) Effective date.--The amendments made by subparagraphs 
     (A) and (B), and the provisions of subparagraph (C), shall 
     apply to discharges occurring on or after January 1, 2008.
       (2) Implementation of facility and patient criteria.--
       (A) Report.--No later than 1 year after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall submit to the appropriate committees of Congress a 
     report containing recommendations regarding the promulgation 
     of the national long-term care hospital facility and patient 
     criteria for application under paragraphs (4) and (5) of 
     section 1861(ccc) and section 1886(n) of the Social Security 
     Act, as added by subparagraphs (A) and (B), respectively, of 
     paragraph (1). In the report, the Secretary shall consider 
     recommendations contained in a report to Congress by the 
     Medicare Payment Advisory Commission in June 2004 for long-
     term care hospital-specific facility and patient criteria to 
     ensure that patients admitted to long-term care hospitals are 
     medically complex and appropriate to receive long-term care 
     hospital services.
       (B) Implementation.--No later than 1 year after the date of 
     submittal of the report under subparagraph (A), the Secretary 
     shall, after rulemaking, implement the national long-term 
     care hospital facility and patient criteria referred to in 
     such subparagraph. Such long-term care hospital facility and 
     patient criteria shall be used to screen patients in 
     determining the medical necessity and appropriateness of a 
     Medicare beneficiary's admission to, continued stay at, and 
     discharge from, long-term care hospitals under the Medicare 
     program and shall take into account the medical judgment of 
     the patient's physician, as provided for under sections 
     1814(a)(3) and 1835(a)(2)(B) of the Social Security Act (42 
     U.S.C. 1395f(a)(3), 1395n(a)(2)(B)).
       (3) Expanded review of medical necessity.--
       (A) In general.--The Secretary of Health and Human Services 
     shall provide, under contracts with one or more appropriate 
     fiscal intermediaries or medicare administrative contractors 
     under section 1874A(a)(4)(G) of the Social Security Act (42 
     U.S.C. 1395kk(a)(4)(G)), for reviews of the medical necessity 
     of admissions to long-term care hospitals (described in 
     section 1886(d)(1)(B)(iv) of such Act) and continued stay at 
     such hospitals, of individuals entitled to, or enrolled for, 
     benefits under part A of title XVIII of such Act on a 
     hospital-specific basis consistent with this paragraph. Such 
     reviews shall be made for discharges occurring on or after 
     October 1, 2007.
       (B) Review methodology.--The medical necessity reviews 
     under paragraph (A) shall be conducted for each such long-
     term care hospital on an annual basis in accordance with 
     rules (including a sample methodology) specified by the 
     Secretary. Such sample methodology shall--
       (i) provide for a statistically valid and representative 
     sample of admissions of such individuals sufficient to 
     provide results at a 95 percent confidence interval; and
       (ii) guarantee that at least 75 percent of overpayments 
     received by long-term care hospitals for medically 
     unnecessary admissions and continued stays of individuals in 
     long-term care hospitals will be identified and recovered and 
     that related days of care will not be counted toward the 
     length of stay requirement contained in section 
     1886(d)(1)(B)(iv) of the Social Security Act (42 U.S.C. 
     1395ww(d)(1)(B)(iv)).
       (C) Continuation of reviews.--Under contracts under this 
     paragraph, the Secretary shall establish a denial rate with 
     respect to such reviews that, if exceeded, could require 
     further review of the medical necessity of admissions and 
     continued stay in the hospital involved.
       (D) Termination of required reviews.--
       (i) In general.--Subject to clause (iii), the previous 
     provisions of this subsection shall cease to apply as of the 
     date specified in clause (ii).
       (ii) Date specified.--The date specified in this clause is 
     the later of January 1, 2013, or the date of implementation 
     of national long-term care hospital facility and patient 
     criteria under section paragraph (2)(B).
       (iii) Continuation.--As of the date specified in clause 
     (ii), the Secretary shall determine whether to continue to 
     guarantee, through continued medical review and sampling 
     under this paragraph, recovery of at least 75 percent of 
     overpayments received by long-term care hospitals due to 
     medically unnecessary admissions and continued stays.
       (4) Limited, qualified moratorium of long-term care 
     hospitals.--
       (A) In general.--Subject to subparagraph (B), the Secretary 
     shall impose a temporary moratorium on the certification of 
     new long-term care hospitals (and satellite facilities), and 
     new long-term care hospital and satellite facility beds, for 
     purposes of the Medicare program under title XVIII of the 
     Social Security Act. The moratorium shall terminate at the 
     end of the 4-year period beginning on the date of the 
     enactment of this Act.
       (B) Exceptions.--
       (i) In general.--The moratorium under subparagraph (A) 
     shall not apply as follows:

       (I) To a long-term care hospital, satellite facility, or 
     additional beds under development as of the date of the 
     enactment of this Act.
       (II) To a new long-term care hospital in an area in which 
     there is not a long-term care hospital, if the Secretary 
     determines it to be in the best interest to provide access to 
     long-term care hospital services to Medicare beneficiaries 
     residing in such area. There shall be a presumption in favor 
     of the moratorium, which may be rebutted by evidence the 
     Secretary deems sufficient to show the need for long-term 
     care hospital services in that area.
       (III) To an existing long-term care hospital that requests 
     to increase its number of long-

[[Page 22207]]

     term care hospital beds, if the Secretary determines there is 
     a need at the long-term care hospital for additional beds to 
     accommodate--

       (aa) infectious disease issues for isolation of patients;
       (bb) bedside dialysis services;
       (cc) single-sex accommodation issues;
       (dd) behavioral issues;
       (ee) any requirements of State or local law; or
       (ff) other clinical issues the Secretary determines warrant 
     additional beds, in the best interest of Medicare 
     beneficiaries.

       (IV) To an existing long-term care hospital that requests 
     an increase in beds because of the closure of a long-term 
     care hospital or significant decrease in the number of long-
     term care hospital beds, in a State where there is only one 
     other long-term care hospital.

     There shall be no administrative or judicial review from a 
     decision of the Secretary under this subparagraph.
       (ii) ``Under development'' defined.--For purposes of clause 
     (i)(I), a long-term care hospital or satellite facility is 
     considered to be ``under development'' as of a date if any of 
     the following have occurred on or before such date:

       (I) The hospital or a related party has a binding written 
     agreement with an outside, unrelated party for the 
     construction, reconstruction, lease, rental, or financing of 
     the long-term care hospital.
       (II) Actual construction, renovation or demolition for the 
     long-term care hospital has begun.
       (III) A certificate of need has been approved in a State 
     where one is required or other necessary approvals from 
     appropriate State agencies have been received for the 
     operation of the hospital.
       (IV) The hospital documents that it is within a 6-month 
     long-term care hospital demonstration period required by 
     section 412.23(e)(1)-(3) of title 42, Code of Federal 
     Regulations, to demonstrate that it has a greater than 25 day 
     average length of stay.
       (V) There is other evidence presented that the Secretary 
     determines would indicate that the hospital or satellite is 
     under development.

       (5) No application of 25 percent patient threshold payment 
     adjustment to freestanding and grandfathered ltchs.--The 
     Secretary shall not apply, during the 5-year period beginning 
     on the date of the enactment of this Act, section 412.536 of 
     title 42, Code of Federal Regulations, or any similar 
     provision, to freestanding long-term care hospitals and the 
     Secretary shall not apply such section or section 412.534 of 
     title 42, Code of Federal Regulations, or any similar 
     provisions, to a long-term care hospital identified by 
     section 4417(a) of the Balanced Budget Act of 1997 (Public 
     Law 105-33). A long-term care hospital identified by such 
     section 4417(a) shall be deemed to be a freestanding long-
     term care hospital for the purpose of this section. Section 
     412.536 of title 42, Code of Federal Regulations, shall be 
     void and of no effect.
       (6) Payment for hospitals-within-hospitals.--
       (A) In general.--Payments to an applicable long-term care 
     hospital or satellite facility which is located in a rural 
     area or which is co-located with an urban single or MSA 
     dominant hospital under paragraphs (d)(1), (e)(1), and (e)(4) 
     of section 412.534 of title 42, Code of Federal Regulations, 
     shall not be subject to any payment adjustment under such 
     section if no more than 75 percent of the hospital's Medicare 
     discharges (other than discharges described in paragraphs 
     (d)(2) or (e)(3) of such section) are admitted from a co-
     located hospital.
       (B) Co-located long-term care hospitals and satellite 
     facilities.--
       (i) In general.--Payment to an applicable long-term care 
     hospital or satellite facility which is co-located with 
     another hospital shall not be subject to any payment 
     adjustment under section 412.534 of title 42, Code of Federal 
     Regulations, if no more than 50 percent of the hospital's 
     Medicare discharges (other than discharges described in 
     section 412.534(c)(3) of such title) are admitted from a co-
     located hospital.
       (ii) Applicable long-term care hospital or satellite 
     facility defined.--In this paragraph, the term ``applicable 
     long-term care hospital or satellite facility'' means a 
     hospital or satellite facility that is subject to the 
     transition rules under section 412.534(g) of title 42, Code 
     of Federal Regulations.
       (C) Effective date.--Subparagraphs (A) and (B) shall apply 
     to discharges occurring on or after October 1, 2007, and 
     before October 1, 2012.
       (7) No application of very short-stay outlier policy.--The 
     Secretary shall not apply, during the 5-year period beginning 
     on the date of the enactment of this Act, the amendments 
     finalized on May 11, 2007 (72 Federal Register 26904) made to 
     the short-stay outlier payment provision for long-term care 
     hospitals contained in section 412.529(c)(3)(i) of title 42, 
     Code of Federal Regulations, or any similar provision.
       (8) No application of one time adjustment to standard 
     amount.--The Secretary shall not, during the 5-year period 
     beginning on the date of the enactment of this Act, make the 
     one-time prospective adjustment to long-term care hospital 
     prospective payment rates provided for in section 
     412.523(d)(3) of title 42, Code of Federal Regulations, or 
     any similar provision.
       (c) Separate Classification for Certain Long-Stay Cancer 
     Hospitals.--
       (1) In general.--Subsection (d)(1)(B) of section 1886 of 
     the Social Security Act (42 U.S.C. 1395ww) is amended--
       (A) in clause (iv)--
       (i) in subclause (I), by striking ``(iv)(I)'' and inserting 
     ``(iv)'' and by striking ``or'' at the end; and
       (ii) in subclause (II)--

       (I) by striking ``, or'' at the end and inserting a 
     semicolon; and
       (II) by redesignating such subclause as clause (vi) and by 
     moving it to immediately follow clause (v); and

       (B) in clause (v), by striking the semicolon at the end and 
     inserting ``, or''.
       (2) Conforming payment references.--Subsection (b) of such 
     section is amended--
       (A) in paragraph (2)(E)(ii), by adding at the end the 
     following new subclause:

       ``(III) Hospitals described in clause (vi) of such 
     subsection.'';

       (B) in paragraph (3)(F)(iii), by adding at the end the 
     following new subclause:

       ``(VI) Hospitals described in clause (vi) of such 
     subsection.'';

       (C) in paragraphs (3)(G)(ii), (3)(H)(i), and (3)(H)(ii)(I), 
     by inserting ``or (vi)'' after ``clause (iv)'' each place it 
     appears;
       (D) in paragraph (3)(H)(iv), by adding at the end the 
     following new subclause:

       ``(IV) Hospitals described in clause (vi) of such 
     subsection.'';

       (E) in paragraph (3)(J), by striking ``subsection 
     (d)(1)(B)(iv)'' and inserting ``clause (iv) or (vi) of 
     subsection (d)(1)(B)''; and
       (F) in paragraph (7)(B), by adding at the end the following 
     new clause:
       ``(iv) Hospitals described in clause (vi) of such 
     subsection.''.
       (3) Additional conforming amendments.--The second sentence 
     of subsection (d)(1)(B) of such section is amended--
       (A) by inserting ``(as in effect as of such date)'' after 
     ``clause (iv)''; and
       (B) by inserting ``(or, in the case of a hospital 
     classified under clause (iv)(II), as so in effect, shall be 
     classified under clause (vi) on and after the effective date 
     of such clause)'' after ``so classified''.
       (4) Transition rule.--In the case of a hospital that is 
     classified under clause (iv)(II) of section 1886(d)(1)(B) of 
     the Social Security Act immediately before the date of the 
     enactment of this Act and which is classified under clause 
     (vi) of such section after such date of enactment, payments 
     under section 1886 of such Act for cost reporting periods 
     beginning after the date of the enactment of this Act shall 
     be based upon payment rates in effect for the cost reporting 
     period for such hospital beginning during fiscal year 2001, 
     increased for each succeeding cost reporting period 
     (beginning before the date of the enactment of this Act) by 
     the applicable percentage increase under section 
     1886(b)(3)(B)(ii) of such Act.
       (5) Clarification of treatment of satellite facilities and 
     remote locations.--A long-stay cancer hospital described in 
     section 1886(d)(1)(B)(vi) of the Social Security Act, as 
     designated under paragraph (1), shall include satellites or 
     remote site locations for such hospital established before or 
     after the date of the enactment of this Act if the provider-
     based requirements under section 413.65 of title 42, Code of 
     Federal Regulations, applicable certification requirements 
     under title XVIII of the Social Security, and such other 
     applicable State licensure and certificate of need 
     requirements are met with respect to such satellites or 
     remote site locations.

     SEC. 504. INCREASING THE DSH ADJUSTMENT CAP.

       Section 1886(d)(5)(F)(xiv) of the Social Security Act (42 
     U.S.C. 1395ww(d)(5)(F)(xiv)) is amended--
       (1) subclause (II), by striking ``12 percent'' and 
     inserting ``the percent specified in subclause (III)''; and
       (2) by adding at the end the following new subclause:
       ``(III) The percent specified in this subclause is, in the 
     case of discharges occurring--
       ``(a) before October 1, 2007, 12 percent;
       ``(b) during fiscal year 2008, 16 percent;
       ``(c) during fiscal year 2009, 18 percent; and
       ``(d) on or after October 1, 2009, 12 percent.''.

     SEC. 505. PPS-EXEMPT CANCER HOSPITALS.

       (a) Authorizing Rebasing for PPS-Exempt Cancer Hospitals.--
     Section 1886(b)(3)(F) of the Social Security Act (42 U.S.C. 
     1395ww(b)(3)(F)) is amended by adding at the end the 
     following new clause:
       ``(iv) In the case of a hospital (or unit described in the 
     matter following clause (v) of subsection (d)(1)(B)) that 
     received payment under this subsection for inpatient hospital 
     services furnished during cost reporting periods beginning 
     before October 1, 1999, that is within a class of hospital 
     described in clause (iii) (other than subclause (IV), 
     relating to long-term care hospitals, and that requests the 
     Secretary (in a form and manner specified by the Secretary) 
     to effect a rebasing under this clause for the hospital, the 
     Secretary may compute the target amount for

[[Page 22208]]

     the hospital's 12-month cost reporting period beginning 
     during fiscal year 2008 as an amount equal to the average 
     described in clause (ii) but determined as if any reference 
     in such clause to `the date of the enactment of this 
     subparagraph' were a reference to `the date of the enactment 
     of this clause'.''.
       (b) MedPAC Report on PPS-Exempt Cancer Hospitals.--Not 
     later than March 1, 2009, the Medicare Payment Advisory 
     Commission (established under section 1805 of the Social 
     Security Act (42 U.S.C. 1395b-6)) shall submit to the 
     Secretary and Congress a report evaluating the following:
       (1) Measures of payment adequacy and Medicare margins for 
     PPS-exempt cancer hospitals, as established under section 
     1886(d)(1)(B)(v) of the Social Security Act (42 U.S.C. 
     1395ww(d)(1)(B)(v)).
       (2) To the extent a PPS-exempt cancer hospital was 
     previously affiliated with another hospital, the margins of 
     the PPS-exempt hospital and the other hospital as separate 
     entities and the margins of such hospitals that existed when 
     the hospitals were previously affiliated.
       (3) Payment adequacy for cancer discharges under the 
     Medicare inpatient hospital prospective payment system.

     SEC. 506. SKILLED NURSING FACILITY PAYMENT UPDATE.

       (a) In General.--Section 1888(e)(4)(E)(ii) of the Social 
     Security Act (42 U.S.C. 1395yy(e)(4)(E)(ii)) is amended--
       (1) in subclause (III), by striking ``and'';
       (2) by redesignating subsection (IV) as subclause (VI); and
       (3) by inserting after subclause (III) the following new 
     subclauses:

       ``(IV) for each of fiscal years 2004, 2005, 2006, and 2007, 
     the rate computed for the previous fiscal year increased by 
     the skilled nursing facility market basket percentage change 
     for the fiscal year involved;
       ``(V) for fiscal year 2008, the rate computed for the 
     previous fiscal year; and''.

       (b) Delayed Effective Date.--Section 1888(e)(4)(E)(ii)(V) 
     of the Social Security Act, as inserted by subsection (a)(3), 
     shall not apply to payment for days before January 1, 2008.

     SEC. 507. REVOCATION OF UNIQUE DEEMING AUTHORITY OF THE JOINT 
                   COMMISSION FOR THE ACCREDITATION OF HEALTHCARE 
                   ORGANIZATIONS.

       (a) Revocation.--Section 1865 of the Social Security Act 
     (42 U.S.C. 1395bb) is amended--
       (1) by striking subsection (a); and
       (2) by redesignating subsections (b), (c), (d), and (e) as 
     subsections (a), (b), (c), and (d), respectively.
       (b) Conforming Amendments.--(1) Such section is further 
     amended--
       (A) in subsection (a)(1), as so redesignated, by striking 
     ``In addition, if'' and inserting ``If'';
       (B) in subsection (b), as so redesignated--
       (i) by striking ``released to him by the Joint Commission 
     on Accreditation of Hospitals,'' and inserting ``released to 
     the Secretary by''; and
       (ii) by striking the comma after ``Association'';
       (C) in subsection (c), as so redesignated, by striking 
     ``pursuant to subsection (a) or (b)(1)'' and inserting 
     ``pursuant to subsection (a)(1)''; and
       (D) in subsection (d), as so redesignated, by striking 
     ``pursuant to subsection (a) or (b)(1)'' and inserting 
     ``pursuant to subsection (a)(1)''.
       (2) Section 1861(e) of such Act (42 U.S.C. 1395x(e)) is 
     amended in the fourth sentence by striking ``and (ii) is 
     accredited by the Joint Commission on Accreditation of 
     Hospitals, or is accredited by or approved by a program of 
     the country in which such institution is located if the 
     Secretary finds the accreditation or comparable approval 
     standards of such program to be essentially equivalent to 
     those of the Joint Commission on Accreditation of Hospitals'' 
     and inserting ``and (ii) is accredited by a national 
     accreditation body recognized by the Secretary under section 
     1865(a), or is accredited by or approved by a program of the 
     country in which such institution is located if the Secretary 
     finds the accreditation or comparable approval standards of 
     such program to be essentially equivalent to those of such a 
     national accreditation body.''.
       (3) Section 1864(c) of such Act (42 U.S.C. 1395aa(c)) is 
     amended by striking ``pursuant to subsection (a) or (b)(1) of 
     section 1865'' and inserting ``pursuant to section 
     1865(a)(1)''.
       (4) Section 1875(b) of such Act (42 U.S.C. 1395ll(b)) is 
     amended by striking ``the Joint Commission on Accreditation 
     of Hospitals,'' and inserting ``national accreditation bodies 
     under section 1865(a)''.
       (5) Section 1834(a)(20)(B) of such Act (42 U.S.C. 
     1395m(a)(20)(B)) is amended by striking ``section 1865(b)'' 
     and inserting ``section 1865(a)''.
       (6) Section 1852(e)(4)(C) of such Act (42 U.S.C. 1395w-
     22(e)(4)(C)) is amended by striking ``section 1865(b)(2)'' 
     and inserting ``section 1865(a)(2)''.
       (c) Authority to Recognize JCAHO as a National 
     Accreditation Body.--The Secretary of Health and Human 
     Services may recognize the Joint Commission on Accreditation 
     of Healthcare Organizations as a national accreditation body 
     under section 1865 of the Social Security Act (42 U.S.C. 
     1395bb), as amended by this section, upon such terms and 
     conditions, and upon submission of such information, as the 
     Secretary may require.
       (d) Effective Date; Transition Rule.--(1) Subject to 
     paragraph (2), the amendments made by this section shall 
     apply with respect to accreditations of hospitals granted on 
     or after the date that is 18 months after the date of the 
     enactment of this Act.
       (2) For purposes of title XVIII of the Social Security Act 
     (42 U.S.C. 1395 et seq.), the amendments made by this section 
     shall not effect the accreditation of a hospital by the Joint 
     Commission on Accreditation of Healthcare Organizations, or 
     under accreditation or comparable approval standards found to 
     be essentially equivalent to accreditation or approval 
     standards of the Joint Commission on Accreditation of 
     Healthcare Organizations, for the period of time applicable 
     under such accreditation.

         TITLE VI--OTHER PROVISIONS RELATING TO MEDICARE PART B

             Subtitle A--Payment and Coverage Improvements

     SEC. 601. PAYMENT FOR THERAPY SERVICES.

       (a) Extension of Exceptions Process for Medicare Therapy 
     Caps.--Section 1833(g)(5) of the Social Security Act (42 
     U.S.C. 1395l(g)(5)), as amended by section 201 of the 
     Medicare Improvements and Extension Act of 2006 (division B 
     of Public Law 109-432), is amended by striking ``2007'' and 
     inserting ``2009''.
       (b) Study and Report.--
       (1) Study.--The Secretary of Health and Human Services, in 
     consultation with appropriate stakeholders, shall conduct a 
     study on refined and alternative payment systems to the 
     Medicare payment cap under section 1833(g) of the Social 
     Security Act (42 U.S.C. 1395l(g)) for physical therapy 
     services and speech-language pathology services, described in 
     paragraph (1) of such section and occupational therapy 
     services described in paragraph (3) of such section. Such 
     study shall consider, with respect to payment amounts under 
     Medicare, the following:
       (A) The creation of multiple payment caps for such services 
     to better reflect costs associated with specific health 
     conditions.
       (B) The development of a prospective payment system, 
     including an episode-based system of payments, for such 
     services.
       (C) The data needed for the development of a system of 
     multiple payment caps (or an alternative payment methodology) 
     for such services and the availability of such data.
       (2) Report.--Not later than January 1, 2009, the Secretary 
     shall submit to Congress a report on the study conducted 
     under paragraph (1).

     SEC. 602. MEDICARE SEPARATE DEFINITION OF OUTPATIENT SPEECH-
                   LANGUAGE PATHOLOGY SERVICES.

       (a) In General.--Section 1861(ll) of the Social Security 
     Act (42 U.S.C. 1395x(ll)) is amended--
       (1) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively; and
       (2) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) The term `outpatient speech-language pathology 
     services' has the meaning given the term `outpatient physical 
     therapy services' in subsection (p), except that in applying 
     such subsection--
       ``(A) `speech-language pathology' shall be substituted for 
     `physical therapy' each place it appears; and
       ``(B) `speech-language pathologist' shall be substituted 
     for `physical therapist' each place it appears.''.
       (b) Conforming Amendments.--
       (1) Section 1832(a)(2)(C) of the Social Security Act (42 
     U.S.C. 1395k(a)(2)(C)) is amended--
       (A) by striking ``and outpatient'' and inserting ``, 
     outpatient''; and
       (B) by inserting before the period at the end the 
     following: ``, and outpatient speech-language pathology 
     services (other than services to which the second sentence of 
     section 1861(p) applies through the application of section 
     1861(ll)(2))''.
       (2) Subparagraphs (A) and (B) of section 1833(a)(8) of such 
     Act (42 U.S.C. 1395l(a)(8)) are each amended by striking 
     ``(which includes outpatient speech-language pathology 
     services)'' and inserting ``, outpatient speech-language 
     pathology services,''.
       (3) Section 1833(g)(1) of such Act (42 U.S.C. 1395l(g)(1)) 
     is amended--
       (A) by inserting ``and speech-language pathology services 
     of the type described in such section through the application 
     of section 1861(ll)(2)'' after ``1861(p)''; and
       (B) by inserting ``and speech-language pathology services'' 
     after ``and physical therapy services''.
       (4) The second sentence of section 1835(a) of such Act (42 
     U.S.C. 1395n(a)) is amended--
       (A) by striking ``section 1861(g)'' and inserting 
     ``subsection (g) or (ll)(2) of section 1861'' each place it 
     appears; and
       (B) by inserting ``or outpatient speech-language pathology 
     services, respectively'' after ``occupational therapy 
     services''.
       (5) Section 1861(p) of such Act (42 U.S.C. 1395x(p)) is 
     amended by striking the fourth sentence.
       (6) Section 1861(s)(2)(D) of such Act (42 U.S.C. 
     1395x(s)(2)(D)) is amended by inserting ``, outpatient 
     speech-language pathology services,'' after ``physical 
     therapy services''.
       (7) Section 1862(a)(20) of such Act (42 U.S.C. 
     1395y(a)(20)) is amended--

[[Page 22209]]

       (A) by striking ``outpatient occupational therapy services 
     or outpatient physical therapy services'' and inserting 
     ``outpatient physical therapy services, outpatient speech-
     language pathology services, or outpatient occupational 
     therapy services''; and
       (B) by striking ``section 1861(g)'' and inserting 
     ``subsection (g) or (ll)(2) of section 1861''.
       (8) Section 1866(e)(1) of such Act (42 U.S.C. 1395cc(e)(1)) 
     is amended--
       (A) by striking ``section 1861(g)'' and inserting 
     ``subsection (g) or (ll)(2) of section 1861'' the first two 
     places it appears;
       (B) by striking ``defined) or'' and inserting 
     ``defined),''; and
       (C) by inserting before the semicolon at the end the 
     following: ``, or (through the operation of section 
     1861(ll)(2)) with respect to the furnishing of outpatient 
     speech-language pathology''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after January 1, 
     2008.
       (d) Construction.--Nothing in this section shall be 
     construed to affect existing regulations and policies of the 
     Centers for Medicare & Medicaid Services that require 
     physician oversight of care as a condition of payment for 
     speech-language pathology services under part B of the 
     medicare program.

     SEC. 603. INCREASED REIMBURSEMENT RATE FOR CERTIFIED NURSE-
                   MIDWIVES.

       (a) In General.--Section 1833(a)(1)(K) of the Social 
     Security Act (42 U.S.C.1395l(a)(1)(K)) is amended by striking 
     ``(but in no event'' and all that follows through ``performed 
     by a physician)''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services furnished on or after April 1, 2008.

     SEC. 604. ADJUSTMENT IN OUTPATIENT HOSPITAL FEE SCHEDULE 
                   INCREASE FACTOR.

       The first sentence of section 1833(t)(3)(C)(iv) of the 
     Social Security Act (42 U.S.C. 1395l(t)(3)(C)(iv)) is amended 
     by inserting before the period at the end the following: 
     ``and reduced by 0.25 percentage point for such factor for 
     such services furnished in 2008''.

     SEC. 605. EXCEPTION TO 60-DAY LIMIT ON MEDICARE SUBSTITUTE 
                   BILLING ARRANGEMENTS IN CASE OF PHYSICIANS 
                   ORDERED TO ACTIVE DUTY IN THE ARMED FORCES.

       (a) In General.--Section 1842(b)(6)(D)(iii) of the Social 
     Security Act (42 U.S.C. 1395u(b)(6)(D)(iii)) is amended by 
     inserting after ``of more than 60 days'' the following: ``or 
     are provided over a longer continuous period during all of 
     which the first physician has been called or ordered to 
     active duty as a member of a reserve component of the Armed 
     Forces''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services furnished on or after the date of the 
     enactment of this section.

     SEC. 606. EXCLUDING CLINICAL SOCIAL WORKER SERVICES FROM 
                   COVERAGE UNDER THE MEDICARE SKILLED NURSING 
                   FACILITY PROSPECTIVE PAYMENT SYSTEM AND 
                   CONSOLIDATED PAYMENT.

       (a) In General.--Section 1888(e)(2)(A)(ii) of the Social 
     Security Act (42 U.S.C. 1395yy(e)(2)(A)(ii)) is amended by 
     inserting ``clinical social worker services,'' after 
     ``qualified psychologist services,''..
       (b) Conforming Amendment.--Section 1861(hh)(2) of the 
     Social Security Act (42 U.S.C. 1395x(hh)(2)) is amended by 
     striking ``and other than services furnished to an inpatient 
     of a skilled nursing facility which the facility is required 
     to provide as a requirement for participation''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     January 1, 2008.

     SEC. 607. COVERAGE OF MARRIAGE AND FAMILY THERAPIST SERVICES 
                   AND MENTAL HEALTH COUNSELOR SERVICES.

       (a) Coverage of Marriage and Family Therapist Services.--
       (1) Coverage of services.--Section 1861(s)(2) of the Social 
     Security Act (42 U.S.C. 1395x(s)(2)) is amended--
       (A) in subparagraph (Z), by striking ``and'' at the end;
       (B) in subparagraph (AA), by adding ``and'' at the end; and
       (C) by adding at the end the following new subparagraph:
       ``(BB) marriage and family therapist services (as defined 
     in subsection (ccc));''.
       (2) Definition.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x) is amended by adding at the end the 
     following new subsection:
       ``(ccc) Marriage and Family Therapist Services.--(1) The 
     term `marriage and family therapist services' means services 
     performed by a marriage and family therapist (as defined in 
     paragraph (2)) for the diagnosis and treatment of mental 
     illnesses, which the marriage and family therapist is legally 
     authorized to perform under State law (or the State 
     regulatory mechanism provided by State law) of the State in 
     which such services are performed, provided such services are 
     covered under this title, as would otherwise be covered if 
     furnished by a physician or as incident to a physician's 
     professional service, but only if no facility or other 
     provider charges or is paid any amounts with respect to the 
     furnishing of such services.
       ``(2) The term `marriage and family therapist' means an 
     individual who--
       ``(A) possesses a master's or doctoral degree which 
     qualifies for licensure or certification as a marriage and 
     family therapist pursuant to State law;
       ``(B) after obtaining such degree has performed at least 2 
     years of clinical supervised experience in marriage and 
     family therapy; and
       ``(C) is licensed or certified as a marriage and family 
     therapist in the State in which marriage and family therapist 
     services are performed.''.
       (3) Provision for payment under part b.--Section 
     1832(a)(2)(B) of the Social Security Act (42 U.S.C. 
     1395k(a)(2)(B)) is amended by adding at the end the following 
     new clause:
       ``(v) marriage and family therapist services;''.
       (4) Amount of payment.--
       (A) In general.--Section 1833(a)(1) of the Social Security 
     Act (42 U.S.C. 1395l(a)(1)) is amended--
       (i) by striking ``and'' before ``(V)''; and
       (ii) by inserting before the semicolon at the end the 
     following: ``, and (W) with respect to marriage and family 
     therapist services under section 1861(s)(2)(BB), the amounts 
     paid shall be 80 percent of the lesser of (i) the actual 
     charge for the services or (ii) 75 percent of the amount 
     determined for payment of a psychologist under subparagraph 
     (L)''.
       (B) Development of criteria with respect to consultation 
     with a physician.--The Secretary of Health and Human Services 
     shall, taking into consideration concerns for patient 
     confidentiality, develop criteria with respect to payment for 
     marriage and family therapist services for which payment may 
     be made directly to the marriage and family therapist under 
     part B of title XVIII of the Social Security Act (42 U.S.C. 
     1395j et seq.) under which such a therapist must agree to 
     consult with a patient's attending or primary care physician 
     in accordance with such criteria.
       (5) Exclusion of marriage and family therapist services 
     from skilled nursing facility prospective payment system.--
     Section 1888(e)(2)(A)(ii) of the Social Security Act (42 
     U.S.C. 1395yy(e)(2)(A)(ii)), is amended by inserting 
     ``marriage and family therapist services (as defined in 
     subsection (ccc)(1)),'' after ``qualified psychologist 
     services,''.
       (6) Coverage of marriage and family therapist services 
     provided in rural health clinics and federally qualified 
     health centers.--Section 1861(aa)(1)(B) of the Social 
     Security Act (42 U.S.C. 1395x(aa)(1)(B)) is amended by 
     striking ``or by a clinical social worker (as defined in 
     subsection (hh)(1)),'' and inserting ``, by a clinical social 
     worker (as defined in subsection (hh)(1)), or by a marriage 
     and family therapist (as defined in subsection (ccc)(2)),''.
       (7) Inclusion of marriage and family therapists as 
     practitioners for assignment of claims.--Section 
     1842(b)(18)(C) of the Social Security Act (42 U.S.C. 
     1395u(b)(18)(C)) is amended by adding at the end the 
     following new clause:
       ``(vii) A marriage and family therapist (as defined in 
     section 1861(ccc)(2)).''.
       (b) Coverage of Mental Health Counselor Services.--
       (1) Coverage of services.--Section 1861(s)(2) of the Social 
     Security Act (42 U.S.C. 1395x(s)(2)), as amended in 
     subsection (a)(1), is further amended--
       (A) in subparagraph (AA), by striking ``and'' at the end;
       (B) in subparagraph (BB), by inserting ``and'' at the end; 
     and
       (C) by adding at the end the following new subparagraph:
       ``(CC) mental health counselor services (as defined in 
     subsection (ddd)(2));''.
       (2) Definition.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x), as amended by subsection (a)(2), is 
     further amended by adding at the end the following new 
     subsection:
       ``(ddd) Mental Health Counselor; Mental Health Counselor 
     Services.--(1) The term `mental health counselor' means an 
     individual who--
       ``(A) possesses a master's or doctor's degree which 
     qualifies the individual for licensure or certification for 
     the practice of mental health counseling in the State in 
     which the services are performed;
       ``(B) after obtaining such a degree has performed at least 
     2 years of supervised mental health counselor practice; and
       ``(C) is licensed or certified as a mental health counselor 
     or professional counselor by the State in which the services 
     are performed.
       ``(2) The term `mental health counselor services' means 
     services performed by a mental health counselor (as defined 
     in paragraph (1)) for the diagnosis and treatment of mental 
     illnesses which the mental health counselor is legally 
     authorized to perform under State law (or the State 
     regulatory mechanism provided by the State law) of the State 
     in which such services are performed, provided such services 
     are covered under this title, as would otherwise be covered 
     if furnished by a physician or as incident to a physician's 
     professional service, but only if no facility or other 
     provider charges or is

[[Page 22210]]

     paid any amounts with respect to the furnishing of such 
     services.''.
       (3) Provision for payment under part b.--Section 
     1832(a)(2)(B) of the Social Security Act (42 U.S.C. 
     1395k(a)(2)(B)), as amended by subsection (a)(3), is further 
     amended by adding at the end the following new clause:
       ``(vi) mental health counselor services;''.
       (4) Amount of payment.--
       (A) In general.--Section 1833(a)(1) of the Social Security 
     Act (42 U.S.C. 1395l(a)(1)), as amended by subsection (a)(4), 
     is further amended--
       (i) by striking ``and'' before ``(W)''; and
       (ii) by inserting before the semicolon at the end the 
     following: ``, and (X) with respect to mental health 
     counselor services under section 1861(s)(2)(CC), the amounts 
     paid shall be 80 percent of the lesser of (i) the actual 
     charge for the services or (ii) 75 percent of the amount 
     determined for payment of a psychologist under subparagraph 
     (L)''.
       (B) Development of criteria with respect to consultation 
     with a physician.--The Secretary of Health and Human Services 
     shall, taking into consideration concerns for patient 
     confidentiality, develop criteria with respect to payment for 
     mental health counselor services for which payment may be 
     made directly to the mental health counselor under part B of 
     title XVIII of the Social Security Act (42 U.S.C. 1395j et 
     seq.) under which such a counselor must agree to consult with 
     a patient's attending or primary care physician in accordance 
     with such criteria.
       (5) Exclusion of mental health counselor services from 
     skilled nursing facility prospective payment system.--Section 
     1888(e)(2)(A)(ii) of the Social Security Act (42 U.S.C. 
     1395yy(e)(2)(A)(ii)), as amended by subsection (a)(5), is 
     amended by inserting ``mental health counselor services (as 
     defined in section 1861(ddd)(2)),'' after ``marriage and 
     family therapist services (as defined in subsection 
     (ccc)(1)),''.
       (6) Coverage of mental health counselor services provided 
     in rural health clinics and federally qualified health 
     centers.--Section 1861(aa)(1)(B) of the Social Security Act 
     (42 U.S.C. 1395x(aa)(1)(B)), as amended by subsection (a)(6), 
     is amended by striking ``or by a marriage and family 
     therapist (as defined in subsection (ccc)(2)),'' and 
     inserting ``by a marriage and family therapist (as defined in 
     subsection (ccc)(2)), or a mental health counselor (as 
     defined in subsection (ddd)(1)),''.
       (7) Inclusion of mental health counselors as practitioners 
     for assignment of claims.--Section 1842(b)(18)(C) of the 
     Social Security Act (42 U.S.C. 1395u(b)(18)(C)), as amended 
     by subsection (a)(7), is amended by adding at the end the 
     following new clause:
       ``(viii) A mental health counselor (as defined in section 
     1861(fff)(1)).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     January 1, 2008.

     SEC. 608. RENTAL AND PURCHASE OF POWER-DRIVEN WHEELCHAIRS.

       (a) In General.--Section 1834(a)(7) of the Social Security 
     Act (42 U.S.C. 1395m(a)(7)) is amended--
       (1) in subparagraph (A)--
       (A) clause (i)(I), by striking ``Except as provided in 
     clause (iii), payment'' and inserting ``Payment'';
       (B) by striking clause (iii); and
       (C) in clause (iv)--
       (i) by redesignating such clause as clause (iii); and
       (ii) by striking ``or in the case of a power-driven 
     wheelchair for which a purchase agreement has been entered 
     into under clause (iii)''; and
       (2) in subparagraph (C)(ii)(II), by striking ``or 
     (A)(iii)''.
       (b) Effective Date.--
       (1) In general.--Subject to paragraph (1), the amendments 
     made by subsection (a) shall take effect on January 1, 2008, 
     and shall apply to power-driven wheelchairs furnished on or 
     after such date.
       (2) Application to competitive acquisition.--The amendments 
     made by subsection (a) shall not apply to contracts entered 
     into under section 1847 of the Social Security Act (42 U.S.C. 
     1395w-3) pursuant to a bid submitted under such section 
     before July 21, 2007.

     SEC. 609. RENTAL AND PURCHASE OF OXYGEN EQUIPMENT.

       (a) In General.--Section 1834(a)(5)(F) of the Social 
     Security Act (42 U.S.C. 1395m(a)(5)(F)) is amended--
       (1) in clause (i)--
       (A) by striking ``Payment'' and inserting ``Subject to 
     clause (iii), payment''; and
       (B) by striking ``36 months'' and inserting ``13 months'';
       (2) in clause (ii)(I), by striking ``36th continuous 
     month'' and inserting ``13th continuous month''; and
       (3) by adding at the end the following new clause:
       ``(iii) Special rule for oxygen generating portable 
     equipment.--In the case of oxygen generating portable 
     equipment referred to in the final rule published in the 
     Federal Register on November 9, 2006 (71 Fed. Reg. 65897-
     65899), in applying clauses (i) and (ii)(I) each reference to 
     `13 months' is deemed a reference to `36 months'.''.
       (b) Effective Date.--
       (1) In general.--Subject to paragraph (3), the amendments 
     made by subsection (a) shall apply to oxygen equipment 
     furnished on or after January 1, 2008.
       (2) Transition.--In the case of an individual receiving 
     oxygen equipment on December 31, 2007, for which payment is 
     made under section 1834(a) of the Social Security Act (42 
     U.S.C. 1395m(a)), the 13-month period described in paragraph 
     (5)(F)(i) of such section, as amended by subsection (a), 
     shall begin on January 1, 2008, but in no case shall the 
     rental period for such equipment exceed 36 months.
       (3) Application to competitive acquisition.--The amendments 
     made by subsection (a) shall not apply to contracts entered 
     into under section 1847 of the Social Security Act (42 U.S.C. 
     1395w-3) pursuant to a bid submitted under such section 
     before July 21, 2007.
       (c) Study and Report.--
       (1) Study.--The Secretary of Health and Human Services 
     shall conduct a study to examine the service component and 
     the equipment component of the provision of oxygen to 
     Medicare beneficiaries. The study shall assess--
       (A) the type of services provided and variation across 
     suppliers in providing such services;
       (B) whether the services are medically necessary or affect 
     patient outcomes;
       (C) whether the Medicare program pays appropriately for 
     equipment in connection with the provision of oxygen;
       (D) whether such program pays appropriately for necessary 
     services;
       (E) whether such payment in connection with the provision 
     of oxygen should be divided between equipment and services, 
     and if so, how; and
       (F) how such payment rate compares to a competitively bid 
     rate.
       (2) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall submit to Congress a report on the study 
     conducted under paragraph (1).

     SEC. 610. ADJUSTMENT FOR MEDICARE MENTAL HEALTH SERVICES.

       (a) In General.--For purposes of payment for services 
     furnished under the physician fee schedule under section 1848 
     of the Social Security Act (42 U.S.C. 1395w-4) during the 
     applicable period, the Secretary of Health and Human Services 
     shall increase the amount otherwise payable for applicable 
     services by 5 percent.
       (b) Definitions.--For purposes of subsection (a):
       (1) Applicable period.--The term ``applicable period'' 
     means the period beginning on January 1, 2008, and ending on 
     December 31 of the year before the effective date of the 
     first review after January 1, 2008, of work relative value 
     units conducted under section 1848(c)(2)(B)(i) of the Social 
     Security Act.
       (2) Applicable services.--The term ``applicable services'' 
     means procedure codes for services--
       (A) in the categories of psychiatric therapeutic procedures 
     furnished in office or other outpatient facility settings, or 
     inpatient hospital, partial hospital or residential care 
     facility settings; and
       (B) which cover insight oriented, behavior modifying, or 
     supportive psychotherapy and interactive psychotherapy 
     services in the Healthcare Common Procedure Coding System 
     established by the Secretary of Health and Human Services 
     under section 1848(c)(5) of such Act.
       (c) Implementation.--Notwithstanding any other provision of 
     law, the Secretary of Health and Human Services may implement 
     this section by program instruction or otherwise.

     SEC. 611. EXTENSION OF BRACHYTHERAPY SPECIAL RULE.

       Section 1833(t)(16)(C) of the Social Security Act (42 
     U.S.C. 1395l(t)(16)(C)) is amended by striking ``2008'' and 
     inserting ``2009''.

     SEC. 612. PAYMENT FOR PART B DRUGS.

       (a) Application of Consistent Volume Weighting in 
     Computation of ASP.--In order to assure that payments for 
     drugs and biologicals under section 1847A of the Social 
     Security Act (42 U.S.C. 1395w-3a) are correct and consistent 
     with law, the Secretary of Health and Human Services shall, 
     for payment for drugs and biologicals furnished on or after 
     July 1, 2008, compute the volume-weighted average sales price 
     using equation #2 (specified in appendix A of the report of 
     the Inspector General of the Department of Health and Human 
     Services on ``Calculation of Volume-Weighted Average Sales 
     Price for Medicare Part B Prescription Drugs'' (February 
     2006; OEI-03-05-00310)) used by the Office of Inspector 
     General to calculate a volume-weighted ASP.
       (b) Improvements in the Competitive Acquisition Program 
     (CAP).--
       (1) Continuous open enrollment; automatic reenrollment 
     without need for reapplication.--Subsection (a)(1)(A) of 
     section 1847B of the Social Security Act (42 U.S.C. 1395w-3b) 
     is amended--
       (A) in clause (ii), by striking ``annually'' and inserting 
     ``on an ongoing basis'';
       (B) in clause (iii), by striking ``an annual selection'' 
     and inserting ``a selection (which may be changed on an 
     annual basis)'' ; and
       (C) by adding at the end the following: ``An election and 
     selection described in clauses (ii) and (iii) shall continue 
     to be effective without the need for any periodic reelection 
     or reapplication or selection.''.

[[Page 22211]]

       (2) Permitting vender to deliver drugs to site of 
     administration.--Subsection (b)(4)(E) of such section is 
     amended--
       (A) by striking ``or'' at the end of clause (I);
       (B) by striking the period at the end of clause (ii) and 
     inserting ``; or''; and
       (C) by adding at the end the following new clause:
       ``(iii) prevent a contractor from delivering drugs and 
     biologicals to the site in which the drugs or biologicals 
     will be administered.''.
       (3) Physician outreach and education.--Subsection (a)(1) of 
     such section is amended by adding at the end the following 
     new subparagraph:
       ``(E) Physician outreach and education.--The Secretary 
     shall conduct a program of outreach to education physicians 
     concerning the program and the ongoing opportunity of 
     physicians to elect to obtain drugs and biologicals under the 
     program.''.
       (4) Rebidding of contracts.--The Secretary of Health and 
     Human Services shall provide for the rebidding of contracts 
     under section 1847B(c) of the Social Security Act (42 U.S.C. 
     1395w-3b(c)) only for periods on or after the expiration of 
     the contract in effect under such section as of the date of 
     the enactment of this Act.
       (c) Treatment of Certain Drugs.--Section 1847A(b) of the 
     Social Security Act (42 U.S.C. 1395w-3a(b)) is amended--
       (1) in paragraph (1), by inserting ``paragraph (6) and'' 
     after ``Subject to''; and
       (2) by adding at the end the following new paragraph:
       ``(6) Special rule.--.In applying subsection (c)(6)(C)(ii), 
     beginning with January 1, 2008, the average sales price for 
     drugs or biologicals described in section 1842(o)(1)(G) is 
     the lower of the average sales price calculated including 
     drugs or biologicals to which such subsection applies and the 
     average sales price that would have been calculated if such 
     subsection were not applied.''.
       (d) Effective Date.--Except as otherwise provided, the 
     amendments made by this section shall apply to drugs 
     furnished on or after January 1, 2008.

       Subtitle B--Extension of Medicare Rural Access Protections

     SEC. 621. 2-YEAR EXTENSION OF FLOOR ON MEDICARE WORK 
                   GEOGRAPHIC ADJUSTMENT.

       Section 1848(e)(1)(E) of such Act (42 U.S.C. 1395w-
     4(e)(1)(E)) is amended by striking ``2008'' and inserting 
     ``2010''.

     SEC. 622. 2-YEAR EXTENSION OF SPECIAL TREATMENT OF CERTAIN 
                   PHYSICIAN PATHOLOGY SERVICES UNDER MEDICARE.

       Section 542(c) of the Medicare, Medicaid, and SCHIP 
     Benefits Improvement and Protection Act of 2000, as amended 
     by section 732 of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003, and section 104 
     of the Medicare Improvements and Extension Act of 2006 
     (division B of Public Law 109-432), is amended by striking 
     ``and 2007'' and inserting ``2007, 2008, and 2009''.

     SEC. 623. 2-YEAR EXTENSION OF MEDICARE REASONABLE COSTS 
                   PAYMENTS FOR CERTAIN CLINICAL DIAGNOSTIC 
                   LABORATORY TESTS FURNISHED TO HOSPITAL PATIENTS 
                   IN CERTAIN RURAL AREAS.

       Section 416(b) of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (Public Law 108-
     173; 117 Stat. 2282; 42 U.S.C. 1395l-4(b)), as amended by 
     section 105 of the Medicare Improvement and Extension Act of 
     2006 (division B of Public Law 109-432), is amended by 
     striking ``3-year'' and inserting ``5-year''.

     SEC. 624. 2-YEAR EXTENSION OF MEDICARE INCENTIVE PAYMENT 
                   PROGRAM FOR PHYSICIAN SCARCITY AREAS .

       (a) In General.--Section 1833(u)(1) of the Social Security 
     Act (42 U.S.C. 1395l(u)(1)) is amended by striking ``2008'' 
     and inserting ``2010''.
       (b) Transition.--With respect to physicians' services 
     furnished during 2008 and 2009, for purposes of subsection 
     (a), the Secretary of Health and Human Services shall use the 
     primary care scarcity areas and the specialty care scarcity 
     areas (as identified in section 1833(u)(4)) that the 
     Secretary was using under such subsection with respect to 
     physicians' services furnished on December 31, 2007.

     SEC. 625. 2-YEAR EXTENSION OF MEDICARE INCREASE PAYMENTS FOR 
                   GROUND AMBULANCE SERVICES IN RURAL AREAS.

       Section 1834(l)(13) of the Social Security Act (42 U.S.C. 
     1395m(l)(13)) is amended--
       (1) in subparagraph (A)--
       (A) in the matter before clause (i), by striking 
     ``furnished on or after July 1, 2004, and before January 1, 
     2007,'';
       (B) in clause (i), by inserting ``for services furnished on 
     or after July 1, 2004, and before January 1, 2007, and on or 
     after January 1, 2008, and before January 1, 2010,'' after 
     ``in such paragraph,''; and
       (C) in clause (ii), by inserting ``for services furnished 
     on or after July 1, 2004, and before January 1, 2007,'' after 
     ``in clause (i),''; and
       (2) in subparagraph (B)--
       (A) in the heading, by striking ``after 2006'' and 
     inserting ``for subsequent periods'';
       (B) by inserting ``clauses (i) and (ii) of'' before 
     ``subparagraph (A)''; and
       (C) by striking ``in such subparagraph'' and inserting ``in 
     the respective clause''.

     SEC. 626. EXTENDING HOLD HARMLESS FOR SMALL RURAL HOSPITALS 
                   UNDER THE HOPD PROSPECTIVE PAYMENT SYSTEM.

       Section 1833(t)(7)(D)(i)(II) of the Social Security Act (42 
     U.S.C. 1395l(t)(7)(D)(I)(II)) is amended--
       (1) by striking ``January 1, 2009'' and inserting ``January 
     1, 2010'';
       (2) by striking ``2007, or 2008,''; and
       (3) by striking ``90 percent, and 85 percent, 
     respectively,'' and inserting ``, and with respect to such 
     services furnished after 2006 the applicable percentage shall 
     be 90 percent.''.

              Subtitle C--End Stage Renal Disease Program

     SEC. 631. CHRONIC KIDNEY DISEASE DEMONSTRATION PROJECTS.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary''), acting 
     through the Director of the National Institutes of Health, 
     shall establish demonstration projects to--
       (1) increase public and medical community awareness 
     (particularly of those who treat patients with diabetes and 
     hypertension) about the factors that lead to chronic kidney 
     disease, how to prevent it, how to diagnose it, and how to 
     treat it;
       (2) increase screening and use of prevention techniques for 
     chronic kidney disease for Medicare beneficiaries and the 
     general public (particularly among patients with diabetes and 
     hypertension, where prevention techniques are well 
     established and early detection makes prevention possible); 
     and
       (3) enhance surveillance systems and expand research to 
     better assess the prevalence and incidence of chronic kidney 
     disease, (building on work done by Centers for Disease 
     Control and Prevention).
       (b) Scope and Duration.--
       (1) Scope.--The Secretary shall select at least 3 States in 
     which to conduct demonstration projects under this section. 
     In selecting the States under this paragraph, the Secretary 
     shall take into account the size of the population of 
     individuals with end-stage renal disease who are enrolled in 
     part B of title XVIII of the Social Security Act and ensure 
     the participation of individuals who reside in rural and 
     urban areas.
       (2) Duration.--The demonstration projects under this 
     section shall be conducted for a period that is not longer 
     than 5 years and shall begin on January 1, 2009.
       (c) Evaluation and Report.--
       (1) Evaluation.--The Secretary shall conduct an evaluation 
     of the demonstration projects conducted under this section.
       (2) Report.--Not later than 12 months after the date on 
     which the demonstration projects under this section are 
     completed, the Secretary shall submit to Congress a report on 
     the evaluation conducted under paragraph (1) together with 
     recommendations for such legislation and administrative 
     action as the Secretary determines appropriate.

     SEC. 632. MEDICARE COVERAGE OF KIDNEY DISEASE PATIENT 
                   EDUCATION SERVICES.

       (a) Coverage of Kidney Disease Education Services.--
       (1) Coverage.--Section 1861(s)(2) of the Social Security 
     Act (42 U.S.C. 1395x(s)(2)) is amended--
       (A) in subparagraph (Z), by striking ``and'' after the 
     semicolon at the end;
       (B) in subparagraph (AA), by adding ``and'' after the 
     semicolon at the end; and
       (C) by adding at the end the following new subparagraph:
       ``(BB) kidney disease education services (as defined in 
     subsection (ccc));''.
       (2) Services described.--Section 1861 of the Social 
     Security Act (42 U.S.C. 1395x) is amended by adding at the 
     end the following new subsection:

                  ``Kidney Disease Education Services

       ``(ccc)(1) The term `kidney disease education services' 
     means educational services that are--
       ``(A) furnished to an individual with stage IV chronic 
     kidney disease who, according to accepted clinical guidelines 
     identified by the Secretary, will require dialysis or a 
     kidney transplant;
       ``(B) furnished, upon the referral of the physician 
     managing the individual's kidney condition, by a qualified 
     person (as defined in paragraph (2)); and
       ``(C) designed--
       ``(i) to provide comprehensive information (consistent with 
     the standards developed under paragraph (3)) regarding--
       ``(I) the management of comorbidities, including for 
     purposes of delaying the need for dialysis;
       ``(II) the prevention of uremic complications; and
       ``(III) each option for renal replacement therapy 
     (including hemodialysis and peritoneal dialysis at home and 
     in-center as well as vascular access options and 
     transplantation);
       ``(ii) to ensure that the individual has the opportunity to 
     actively participate in the choice of therapy; and
       ``(iii) to be tailored to meet the needs of the individual 
     involved.
       ``(2) The term `qualified person' means a physician, 
     physician assistant, nurse practitioner, or clinical nurse 
     specialist who furnishes services for which payment may be

[[Page 22212]]

     made under the fee schedule established under section 1848. 
     Such term does not include a renal dialysis facility.
       ``(3) The Secretary shall set standards for the content of 
     such information to be provided under paragraph (1)(C)(i) 
     after consulting with physicians, other health professionals, 
     health educators, professional organizations, accrediting 
     organizations, kidney patient organizations, dialysis 
     facilities, transplant centers, network organizations 
     described in section 1881(c)(2), and other knowledgeable 
     persons. To the extent possible the Secretary shall consult 
     with a person or entity described in the previous sentence, 
     other than a dialysis facility, that has not received 
     industry funding from a drug or biological manufacturer or 
     dialysis facility.
       ``(4) In promulgating regulations to carry out this 
     subsection, the Secretary shall ensure that each individual 
     who is eligible for benefits for kidney disease education 
     services under this title receives such services in a timely 
     manner to maximize the benefit of those services.
       ``(5) The Secretary shall monitor the implementation of 
     this subsection to ensure that individuals who are eligible 
     for benefits for kidney disease education services receive 
     such services in the manner described in paragraph (4).
       ``(6) No individual shall be eligible to be provided more 
     than 6 sessions of kidney disease education services under 
     this title.''.
       (3) Payment under the physician fee schedule.--Section 
     1848(j)(3) of the Social Security Act (42 U.S.C. 1395w-
     4(j)(3)) is amended by inserting ``(2)(BB),'' after 
     ``(2)(AA),''.
       (4) Limitation on number of sessions.--Section 1862(a)(1) 
     of the Social Security Act (42 U.S.C. 1395y(a)(1)) is 
     amended--
       (A) in subparagraph (M), by striking ``and'' at the end;
       (B) in subparagraph (N), by striking the semicolon at the 
     end and inserting ``, and''; and
       (C) by adding at the end the following new subparagraph:
       ``(O) in the case of kidney disease education services (as 
     defined in section 1861(ccc)), which are furnished in excess 
     of the number of sessions covered under such section;''.
       (5) GAO report.--Not later than September 1, 2010, the 
     Comptroller General of the United States shall submit to 
     Congress a report on the following:
       (A) The number of Medicare beneficiaries who are eligible 
     to receive benefits for kidney disease education services (as 
     defined in section 1861(ccc) of the Social Security Act, as 
     added by paragraph (2)) under title XVIII of such Act and who 
     receive such services.
       (B) The extent to which there is a sufficient amount of 
     physicians, physician assistants, nurse practitioners, and 
     clinical nurse specialists to furnish kidney disease 
     education services (as so defined) under such title and 
     whether or not renal dialysis facilities (and appropriate 
     employees of such facilities) should be included as an entity 
     eligible under such section to furnish such services.
       (C) Recommendations, if appropriate, for renal dialysis 
     facilities (and appropriate employees of such facilities) to 
     structure kidney disease education services (as so defined) 
     in a manner that is objective and unbiased and that provides 
     a range of options and alternative locations for renal 
     replacement therapy and management of co-morbidities that may 
     delay the need for dialysis.
       (b) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after January 1, 
     2009.

     SEC. 633. REQUIRED TRAINING FOR PATIENT CARE DIALYSIS 
                   TECHNICIANS.

       Section 1881 of the Social Security Act (42 U.S.C. 1395rr) 
     is amended by adding the following new subsection:
       ``(h)(1) Except as provided in paragraph (2), a provider of 
     services or a renal dialysis facility may not use, for more 
     than 12 months during 2009, or for any period beginning on 
     January 1, 2010, any individual as a patient care dialysis 
     technician unless the individual--
       ``(A) has completed a training program in the care and 
     treatment of an individual with chronic kidney failure who is 
     undergoing dialysis treatment; and
       ``(B) has been certified by a nationally recognized 
     certification entity for dialysis technicians.
       ``(2)(A) A provider of services or a renal dialysis 
     facility may permit an individual enrolled in a training 
     program described in paragraph (1)(A) to serve as a patient 
     care dialysis technician while they are so enrolled.
       ``(B) The requirements described in subparagraphs (A), (B), 
     and (C) of paragraph (1) do not apply to an individual who 
     has performed dialysis-related services for at least 5 years.
       ``(3) For purposes of paragraph (1), if, since the most 
     recent completion by an individual of a training program 
     described in paragraph (1)(A), there has been a period of 24 
     consecutive months during which the individual has not 
     furnished dialysis-related services for monetary 
     compensation, such individual shall be required to complete a 
     new training program or become recertified as described in 
     paragraph (1)(B).
       ``(4) A provider of services or a renal dialysis facility 
     shall provide such regular performance review and regular in-
     service education as assures that individuals serving as 
     patient care dialysis technicians for the provider or 
     facility are competent to perform dialysis-related 
     services.''.

     SEC. 634. MEDPAC REPORT ON TREATMENT MODALITIES FOR PATIENTS 
                   WITH KIDNEY FAILURE.

       (a) Evaluation.--
       (1) In general.--Not later than March 1, 2009, the Medicare 
     Payment Advisory Commission (established under section 1805 
     of the Social Security Act) shall submit to the Secretary and 
     Congress a report evaluating the barriers that exist to 
     increasing the number of individuals with end-stage renal 
     disease who elect to receive home dialysis services under the 
     Medicare program under title XVIII of the Social Security Act 
     (42 U.S.C. 1395 et seq.).
       (2) Report details.--The report shall include the 
     following:
       (A) A review of Medicare home dialysis demonstration 
     projects initiated before the date of the enactment of this 
     Act, and the results of such demonstration projects and 
     recommendations for future Medicare home dialysis 
     demonstration projects or Medicare program changes that will 
     test models that can improve Medicare beneficiary access to 
     home dialysis.
       (B) A comparison of current Medicare home dialysis costs 
     and payments with current in-center and hospital dialysis 
     costs and payments.
       (C) An analysis of the adequacy of Medicare reimbursement 
     for patient training for home dialysis (including 
     hemodialysis and peritoneal dialysis) and recommendations for 
     ensuring appropriate payment for such home dialysis training.
       (D) A catalogue and evaluation of the incentives and 
     disincentives in the current reimbursement system that 
     influence whether patients receive home dialysis services or 
     other treatment modalities.
       (E) An evaluation of patient education services and how 
     such services impact the treatment choices made by patients.
       (F) Recommendations for implementing incentives to 
     encourage patients to elect to receive home dialysis services 
     or other treatment modalities under the Medicare program
       (3) Scope of review.--In preparing the report under 
     paragraph (1), the Medicare Payment Advisory Commission shall 
     consider a variety of perspectives, including the 
     perspectives of physicians, other health care professionals, 
     hospitals, dialysis facilities, health plans, purchasers, and 
     patients.

     SEC. 635. ADJUSTMENT FOR ERYTHROPOIETIN STIMULATING AGENTS 
                   (ESAS).

       (a) In General.--Subsection (b)(13) of section 1881 of the 
     Social Security Act (42 U.S.C. 1395rr) is amended--
       (1) in subparagraph (A)(iii), by striking ``For such 
     drugs'' and inserting ``Subject to subparagraph (C), for such 
     drugs''; and
       (2) by adding at the end the following new subparagraph:
       ``(C)(i) The payment amounts under this title for 
     erythropoietin furnished during 2008 or 2009 to an individual 
     with end stage renal disease by a large dialysis facility (as 
     defined in subparagraph (D)) (whether to individuals in the 
     facility or at home), in an amount equal to $8.75 per 
     thousand units (rounded to the nearest 100 units) or, if 
     less, 102 percent of the average sales price (as determined 
     under section 1847A) for such drug or biological.
       ``(ii) The payment amounts under this title for darbepoetin 
     alfa furnished during 2008 or 2009 to an individual with end 
     stage renal disease by a large dialysis facility (as defined 
     in clause (iii)) (whether to individuals in the facility or 
     at home), in an amount equal to $2.92 per microgram or, if 
     less, 102 percent of the average sales price (as determined 
     under section 1847A) for such drug or biological.
       ``(iii) For purposes of this subparagraph, the term `large 
     dialysis facility' means a provider of services or renal 
     dialysis facility that is owned or managed by a corporate 
     entity that, as of July 24, 2007, owns or manages 300 or more 
     such providers or facilities, and includes a successor to 
     such a corporate entity''.
       (b) No Impact on Drug Add-On Payment.--Nothing in the 
     amendments made by subsection (a) shall be construed to 
     affect the amount of any payment adjustment made under 
     section 1881(b)(12)(B)(ii) of the Social Security Act (42 
     U.S.C. 1395rr(b)(12)(B)(ii)).

     SEC. 636. SITE NEUTRAL COMPOSITE RATE.

       Subsection (b)(12)(A) of section 1881 of the Social 
     Security Act (42 U.S.C. 1395rr) is amended by adding at the 
     end the following new sentence: ``Under such system the 
     payment rate for dialysis services furnished on or after 
     January 1, 2008, by providers of such services for hospital-
     based facilities shall be the same as the payment rate 
     (computed without regard to this sentence) for such services 
     furnished by renal dialysis facilities that are not hospital-
     based, except that in applying the geographic index under 
     subparagraph (D) to hospital-based facilities, the labor 
     share shall be based on the labor share otherwise applied for 
     such facilities.''.

     SEC. 637. DEVELOPMENT OF ESRD BUNDLING SYSTEM AND QUALITY 
                   INCENTIVE PAYMENTS.

       (a) Development of ESRD Bundling System.--Subsection (b) of 
     section 1881 of the

[[Page 22213]]

     Social Security Act (42 U.S.C. 1395rr) is further amended--
       (1) in paragraph (12)(A), by striking ``In lieu of 
     payment'' and inserting ``Subject to paragraph (14), in lieu 
     of payment'';
       (2) in the second sentence of paragraph (12)(F)--
       (A) by inserting ``or paragraph (14)'' after ``this 
     paragraph''; and
       (B) by inserting ``or under the system under paragraph 
     (14)'' after ``subparagraph (B)'';
       (3) in paragraph (12)(H)--
       (A) by inserting ``or paragraph (14)'' after ``under this 
     paragraph'' the first place it appears; and
       (B) by inserting before the period at the end the 
     following: ``or, under paragraph (14), the identification of 
     renal dialysis services included in the bundled payment, the 
     adjustment for outliers, the identification of facilities to 
     which the phase-in may apply, and the determination of 
     payment amounts under subparagraph (A) under such paragraph, 
     and the application of paragraph (13)(C)(iii))'';
       (4) in paragraph (13)--
       (A) in subparagraph (A), by striking ``The payment 
     amounts'' and inserting ``subject to paragraph (14), the 
     payment amounts''; and
       (B) in subparagraph (B)--
       (i) in clause (i), by striking ``(i)'' after ``(B)'' and by 
     inserting ``, subject to paragraph (14)'' before the period 
     at the end; and
       (ii) by striking clause (ii); and
       (5) by adding at the end the following new paragraph:
       ``(14)(A) Subject to subparagraph (E), for services 
     furnished on or after January 1, 2010, the Secretary shall 
     implement a payment system under which a single payment is 
     made under this title for renal dialysis services (as defined 
     in subparagraph (B)) in lieu of any other payment (including 
     a payment adjustment under paragraph (12)(B)(ii)) for such 
     services and items furnished pursuant to paragraph (4). In 
     implementing the system the Secretary shall ensure that the 
     estimated total amount of payments under this title for 2010 
     for renal dialysis services shall equal 96 percent of the 
     estimated amount of payments for such services, including 
     payments under paragraph (12)(B)(ii), that would have been 
     made if such system had not been implemented.
       ``(B) For purposes of this paragraph, the term `renal 
     dialysis services' includes--
       ``(i) items and services included in the composite rate for 
     renal dialysis services as of December 31, 2009;
       ``(ii) erythropoietin stimulating agents furnished to 
     individuals with end stage renal disease;
       ``(iii) other drugs and biologicals and diagnostic 
     laboratory tests, that the Secretary identifies as commonly 
     used in the treatment of such patients and for which payment 
     was (before the application of this paragraph) made 
     separately under this title, and any oral equivalent form of 
     such drugs and biologicals or of drugs and biologicals 
     described in clause (ii); and
       ``(iv) home dialysis training for which payment was (before 
     the application of this paragraph) made separately under this 
     section.

     Such term does not include vaccines.
       ``(C) The system under this paragraph may provide for 
     payment on the basis of services furnished during a week or 
     month or such other appropriate unit of payment as the 
     Secretary specifies.
       ``(D) Such system--
       ``(i) shall include a payment adjustment based on case mix 
     that may take into account patient weight, body mass index, 
     comorbidities, length of time on dialysis, age, race, 
     ethnicity, and other appropriate factors;
       ``(ii) shall include a payment adjustment for high cost 
     outliers due to unusual variations in the type or amount of 
     medically necessary care, including variations in the amount 
     of erythropoietin stimulating agents necessary for anemia 
     management; and
       ``(iii) may include such other payment adjustments as the 
     Secretary determines appropriate, such as a payment 
     adjustment--
       ``(I) by a geographic index, such as the index referred to 
     in paragraph (12)(D), as the Secretary determines to be 
     appropriate;
       ``(II) for pediatric providers of services and renal 
     dialysis facilities;
       ``(III) for low volume providers of services and renal 
     dialysis facilities;
       ``(IV) for providers of services or renal dialysis 
     facilities located in rural areas; and
       ``(V) for providers of services or renal dialysis 
     facilities that are not large dialysis facilities.
       ``(E) The Secretary may provide for a phase-in of the 
     payment system described in subparagraph (A) for services 
     furnished by a provider of services or renal dialysis 
     facility described in any of subclauses (II) through (V) of 
     subparagraph (D)(iii), but such payment system shall be fully 
     implemented for services furnished in the case of any such 
     provider or facility on or after January 1, 2013.
       ``(F) The Secretary shall apply the annual increase that 
     would otherwise apply under subparagraph (F) of paragraph 
     (12) to payment amounts established under such paragraph (if 
     this paragraph did not apply) in an appropriate manner under 
     this paragraph.''.
       (6) Prohibition of unbundling.--Section 1862(a) of such Act 
     (42 U.S.C. 1395y(a)) is amended--
       (A) by striking ``or'' at the end of paragraph (21);
       (B) by striking the period at the end of paragraph (22) and 
     inserting ``; or''; and
       (C) by inserting after paragraph (22) the following new 
     paragraph:
       ``(23) where such expenses are for renal dialysis services 
     (as defined in subparagraph (B) of section 1881(b)(14)) for 
     which payment is made under such section (other than under 
     subparagraph (E) of such section) unless such payment is made 
     under such section to a provider of services or a renal 
     dialysis facility for such services.''.
       (b) Quality Incentive Payments.--Section 1881 of such Act 
     is amended by adding at the end the following new subsection:
       ``(i) Quality Incentive Payments in the End-Stage Renal 
     Disease Program.--
       ``(1) Quality incentive payments for services furnished in 
     2008, 2009, and 2010.--
       ``(A) In general.--With respect to renal dialysis services 
     furnished during a performance period (as defined in 
     subparagraph (B)) by a provider of services or renal dialysis 
     facility that the Secretary determines meets the applicable 
     performance standard for the period under subparagraph (C) 
     and reports on measures for 2009 and 2010 under subparagraph 
     (D) for such services, in addition to the amount otherwise 
     paid under this section, subject to subparagraph (G), there 
     also shall be paid to the provider or facility an amount 
     equal to the applicable percentage (specified in subparagraph 
     (E) for the period) of the Secretary's estimate (based on 
     claims submitted not later than two months after the end of 
     the performance period) of the amount specified in 
     subparagraph (F) for such period.
       ``(B) Performance period.--In this paragraph, the term 
     `performance period' means each of the following:
       ``(i) The period beginning on July 1, 2008, and ending on 
     December 31, 2008.
       ``(ii) 2009.
       ``(iii) 2010.
       ``(C) Performance standard.--
       ``(i) 2008.--For the performance period occurring in 2008, 
     the applicable performance standards for a provider or 
     facility under this subparagraph are--

       ``(I) 92 percent or more of individuals with end stage 
     renal disease receiving erythopoetin stimulating agents who 
     have an average hematocrit of 33.0 percent or more; and
       ``(II) less than a percentage, specified by the Secretary, 
     of individuals with end stage renal disease receiving 
     erythopoetin stimulating agents who have an average 
     hematocrit of 39.0 percent or more.

       ``(ii) 2009 and 2010.--For the 2009 and 2010 performance 
     periods, the applicable performance standard for a provider 
     or facility under this subparagraph is successful performance 
     (relative to national average) on--

       ``(I) such measures of anemia management as the Secretary 
     shall specify, including measures of hemoglobin levels or 
     hematocrit levels for erythropoietin stimulating agents that 
     are consistent with the labeling for dosage of erythropoietin 
     stimulating agents approved by the Food and Drug 
     Administration for treatment of anemia in patients with end 
     stage renal disease, taking into account variations in 
     hemoglobin ranges or hematocrit levels of patients; and
       ``(II) such other measures, relating to subjects described 
     in subparagraph (D)(i), as the Secretary may specify.

       ``(D) Reporting performance measures.--The performance 
     measures under this subparagraph to be reported shall 
     include--
       ``(i) such measures as the Secretary specifies, before the 
     beginning of the performance period involved and taking into 
     account measures endorsed by the National Quality Forum, 
     including, to the extent feasible measures on--

       ``(I) iron management;
       ``(II) dialysis adequacy; and
       ``(III) vascular access, including for maximizing the 
     placement of arterial venous fistula; and

       ``(ii) to the extent feasible, such measure (or measures) 
     of patient satisfaction as the Secretary shall specify.

     The provider or facility submitting information on such 
     measures shall attest to the completeness and accuracy of 
     such information.
       ``(E) Applicable percentage.--The applicable percentage 
     specified in this subparagraph for--
       ``(i) the performance period occurring in 2008, is 1.0 
     percent;
       ``(ii) the 2009 performance period, is 2.0 percent; and
       ``(iii) the 2010 performance period, is 2.0 percent.

     In the case of any performance period which is less than an 
     entire year, the applicable percentage specified in this 
     subparagraph shall be multiplied by the ratio of the number 
     of months in the year to the number of months in such 
     performance period. In the case of 2010, the applicable 
     percentage specified in this subparagraph shall be multiplied 
     by the Secretary's estimate of the ratio of the aggregate 
     payment amount described in subparagraph (F)(i) that would 
     apply in 2010

[[Page 22214]]

     if paragraph (14) did not apply, to the aggregate payment 
     base under subparagraph (F)(ii) for 2010.
       ``(F) Payment base.--The payment base described in this 
     subparagraph for a provider or facility is--
       ``(i) for performance periods before 2010, the payment 
     amount determined under paragraph (12) for services furnished 
     by the provider or facility during the performance period, 
     including the drug payment adjustment described in 
     subparagraph (B)(ii) of such paragraph; and
       ``(ii) for the 2010 performance period is the amount 
     determined under paragraph (14) for services furnished by the 
     provider or facility during the period.
       ``(G) Limitation on funding.--
       ``(i) In general.--If the Secretary determines that the 
     total payments under this paragraph for a performance period 
     is projected to exceed the dollar amount specified in clause 
     (ii) for such period, the Secretary shall reduce, in a pro 
     rata manner, the amount of such payments for each provider or 
     facility for such period to eliminate any such projected 
     excess for the period.
       ``(ii) Dollar amount.--The dollar amount specified in this 
     clause--

       ``(I) for the performance period occurring in 2008, is 
     $50,000,000;
       ``(II) for the 2009 performance period is $100,000,000; and
       ``(III) for the 2010 performance period is $150,000,000.

       ``(H) Form of payment.--The payment under this paragraph 
     shall be in the form of a single consolidated payment.
       ``(2) Quality incentive payments for facilities and 
     providers for 2011.--
       ``(A) Increased payment.--For 2011, in the case of a 
     provider or facility that, for the performance period (as 
     defined in subparagraph (B))--
       ``(i) meets (or exceeds) the performance standard for 
     anemia management specified in paragraph (1)(C)(ii)(I);
       ``(ii) has substantially improved performance or exceeds a 
     performance standard (as determined under subparagraph (E)); 
     and
       ``(iii) reports measures specified in paragraph (1)(D),

     with respect to renal dialysis services furnished by the 
     provider or facility during the quality bonus payment period 
     (as specified in subparagraph (C)) the payment amount 
     otherwise made to such provider or facility under subsection 
     (b)(14) shall be increased, subject to subparagraph (F), by 
     the applicable percentage specified in subparagraph (D). 
     Payment amounts under paragraph (1) shall not be counted for 
     purposes of applying the previous sentence.
       ``(B) Performance period.--In this paragraph, the term 
     `performance period' means a multi-month period specified by 
     the Secretary .
       ``(C) Quality bonus payment period.--In this paragraph, the 
     term `quality bonus payment period' means, with respect to a 
     performance period, a multi-month period beginning on January 
     1, 2011, specified by the Secretary that begins at least 3 
     months (but not more than 9 months) after the end of the 
     performance period.
       ``(D) Applicable percentage.--The applicable percentage 
     specified in this subparagraph is a percentage, not to exceed 
     the 2.0 percent, specified by the Secretary consistent with 
     subparagraph (F). Such percentage may vary based on the level 
     of performance and improvement. The applicable percentage 
     specified in this subparagraph shall be multiplied by the 
     ratio applied under the third sentence of paragraph (1)(E) 
     for 2010.
       ``(E) Performance standard.--Based on performance of a 
     provider of services or a renal dialysis facility on 
     performance measures described in paragraph (1)(D) for a 
     performance period, the Secretary shall determine a composite 
     score for such period.
       ``(F) Limitation on funding.--If the Secretary determines 
     that the total amount to be paid under this paragraph for a 
     quality bonus payment period is projected to exceed 
     $200,000,000, the Secretary shall reduce, in a uniform 
     manner, the applicable percentage otherwise applied under 
     subparagraph (D) for services furnished during the period to 
     eliminate any such projected excess.
       ``(3) Application.--
       ``(A) Implementation.--Notwithstanding any other provision 
     of law, the Secretary may implement by program instruction or 
     otherwise this subsection.
       ``(B) Limitations on review.--
       ``(i) In general.--There shall be no administrative or 
     judicial review under section 1869 or 1878 or otherwise of--

       ``(I) the determination of performance measures and 
     standards under this subsection;
       ``(II) the determination of successful reporting, including 
     a determination of composite scores; and
       ``(III) the determination of the quality incentive payments 
     made under this subsection.

       ``(ii) Treatment of determinations.--A determination under 
     this subparagraph shall not be treated as a determination for 
     purposes of section 1869.
       ``(4) Technical assistance.--The Secretary shall identify 
     or establish an appropriately skilled group or organization, 
     such as the ESRD Networks, to provide technical assistance to 
     consistently low-performing facilities or providers that are 
     in the bottom quintile.
       ``(5) Public reporting.--
       ``(A) Annual notice.--The Secretary shall provide an annual 
     written notification to each individual who is receiving 
     renal dialysis services from a provider of services or renal 
     dialysis facility that--
       ``(i) informs such individual of the composite scores 
     described in subparagraph (A) and other relevant quality 
     measures with respect to providers of services or renal 
     dialysis facilities in the local area;
       ``(ii) compares such scores and measures to the average 
     local and national scores and measures; and
       ``(iii) provides information on how to access additional 
     information on quality of such services furnished and options 
     for alternative providers and facilities.
       ``(B) Certificates.--The Secretary shall provide 
     certificates to facilities and providers who provide services 
     to individuals with end-stage renal disease under this title 
     to display in patient areas. The certificate shall indicate 
     the composite score obtained by the facility or provider 
     under the quality initiative.
       ``(C) Web-based quality list.--The Secretary shall 
     establish a web-based list of facilities and providers who 
     furnish renal dialysis services under this section that 
     indicates their composite score of each provider and 
     facility.
       ``(6) Recommendations for reporting and quality incentive 
     intitiative for physicians.--The Secretary shall develop 
     recommendations for applying quality incentive payments under 
     this subsection to physicians who receive the monthly 
     capitated payment under this title. Such recommendations 
     shall include the following:
       ``(A) Recommendations to include pediatric specific 
     measures for physicians with at least 50 percent of their 
     patients with end stage renal disease being individuals under 
     18 years of age.
       ``(B) Recommendations on how to structure quality incentive 
     payments for physicians who demonstrate improvements in 
     quality or who attain quality standards, as specified by the 
     Secretary.
       ``(7) Reports.--
       ``(A) Initial report.--Not later than January 1, 2013, the 
     Secretary shall submit to Congress a report on the 
     implementation of the bundled payment system under subsection 
     (b)(14) and the quality initiative under this subsection. 
     Such report shall include the following information:
       ``(i) A comparison of the aggregate payments under 
     subsection (b)(14) for items and services to the cost of such 
     items and services.
       ``(ii) The changes in utilization rates for erythropoietin 
     stimulating agents.
       ``(iii) The mode of administering such agents, including 
     information on the proportion of such individuals receiving 
     such agents intravenously as compared to subcutaneously.
       ``(iv) The frequency of dialysis.
       ``(v) Other differences in practice patterns, such as the 
     adoption of new technology, different modes of practice, and 
     variations in use of drugs other than drugs described in 
     clause (iii).
       ``(vi) The performance of facilities and providers under 
     paragraph (2).
       ``(vii) Other recommendations for legislative and 
     administrative actions determined appropriate by the 
     Secretary.
       ``(B) Subsequent report.--Not later than January 1, 2015, 
     the Secretary shall submit to Congress a report that contains 
     the information described in each of clauses (ii) through 
     (vii) of subparagraph (A) and a comparison of the results of 
     the payment system under subsection (b)(14) for renal 
     dialysis services furnished during the 2-year period 
     beginning on January 1, 2013, and the results of such payment 
     system for such services furnished during the previous two-
     year period.''.

     SEC. 638. MEDPAC REPORT ON ESRD BUNDLING SYSTEM.

       Not later than March 1, 2012, the Medicare Payment Advisory 
     Commission (established under section 1805 of the Social 
     Security Act) shall submit to Congress a report on the 
     implementation of the payment system under section 
     1881(b)(14) of the Social Security Act (as added by section 
     7) for renal dialysis services and related services (defined 
     in subparagraph (B) of such section). Such report shall 
     include, with respect to such payment system for such 
     services, an analysis of each of the following:
       (1) An analysis of the overall adequacy of payment under 
     such system for all such services.
       (2) An analysis that compares the adequacy of payment under 
     such system for services furnished by--
       (A) a provider of services or renal dialysis facility that 
     is described in section 1881(b)(13)(C)(iv) of the Social 
     Security Act;
       (B) a provider of services or renal dialysis facility not 
     described in such section;
       (C) a hospital-based facility;
       (D) a freestanding renal dialysis facility;
       (E) a renal dialysis facility located in an urban area; and
       (F) a renal dialysis facility located in a rural area.

[[Page 22215]]

       (3) An analysis of the financial status of providers of 
     such services and renal dialysis facilities, including access 
     to capital, return on equity, and return on capital.
       (4) An analysis of the adequacy of payment under such 
     method and the adequacy of the quality improvement payments 
     under section 1881(i) of the Social Security Act in ensuring 
     that payments for such services under the Medicare program 
     are consistent with costs for such services.
       (5) Recommendations, if appropriate, for modifications to 
     such payment system.

     SEC. 639. OIG STUDY AND REPORT ON ERYTHROPOIETIN.

       (a) Study.--The Inspector General of the Department of 
     Health and Human Services shall conduct a study on the 
     following:
       (1) The dosing guidelines, standards, protocols, and 
     alogorithms for erythropoietin stimulating agents recommended 
     or used by providers of services and renal dialysis 
     facilities that are described in section 1881(b)(13)(C)(iv) 
     of the Social Security Act and providers and facilities that 
     are not described in such section.
       (2) The extent to which such guidelines, standards, 
     protocols, and algorithms are consistent with the labeling of 
     the Food and Drug Administration for such agents.
       (3) The extent to which physicians sign standing orders for 
     such agents that are consistent with such guidelines, 
     standards, protocols, and algorithms recommended or used by 
     the provider or facility involved.
       (4) The extent to which the prescribing decisions of 
     physicians, with respect to such agents, are independent of--
       (A) such relevant guidelines, standards, protocols, and 
     algorithms; or
       (B) recommendations of an anemia management nurse or other 
     appropriate employee of the provider or facility involved.
       (5) The role of medical directors of providers of services 
     and renal dialysis facilities and the financial relationships 
     between such providers and facilities and the physicians 
     hired as medical directors of such providers and facilities, 
     respectively.
       (b) Report.--Not later than January 1, 2009, the Inspector 
     General of the Department of Health and Human Services shall 
     submit to Congress a report on the study conducted under 
     subsection (a), together with such recommendations as the 
     Inspector General determines appropriate.

                       Subtitle D--Miscellaneous

     SEC. 651. LIMITATION ON EXCEPTION TO THE PROHIBITION ON 
                   CERTAIN PHYSICIAN REFERRALS FOR HOSPITALS.

       (a) In General.--Section 1877 of the Social Security Act 
     (42 U.S.C. 1395) is amended--
       (1) in subsection (d)(2)--
       (A) in subparagraph (A), by striking ``and'' at the end;
       (B) in subparagraph (B), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(C) if the entity is a hospital, the hospital meets the 
     requirements of paragraph (3)(D).'';
       (2) in subsection (d)(3)--
       (A) in subparagraph (B), by striking ``and'' at the end;
       (B) in subparagraph (C), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(D) the hospital meets the requirements described in 
     subsection (i)(1) not later than 18 months after the date of 
     the enactment of this subparagraph.''; and
       (3) by adding at the end the following new subsection:
       ``(i) Requirements for Hospitals To Qualify for Hospital 
     Exception to Ownership or Investment Prohibition.--
       ``(1) Requirements described.--For purposes of paragraphs 
     subsection (d)(3)(D), the requirements described in this 
     paragraph for a hospital are as follows:
       ``(A) Provider agreement.--The hospital had a provider 
     agreement under section 1866 in effect on July 24, 2007.
       ``(B) Prohibition of expansion of facility capacity.--The 
     number of operating rooms and beds of the hospital at any 
     time on or after the date of the enactment of this subsection 
     are no greater than the number of operating rooms and beds as 
     of such date.
       ``(C) Preventing conflicts of interest.--
       ``(i) The hospital submits to the Secretary an annual 
     report containing a detailed description of--

       ``(I) the identity of each physician owner and any other 
     owners of the hospital; and
       ``(II) the nature and extent of all ownership interests in 
     the hospital.

       ``(ii) The hospital has procedures in place to require that 
     any referring physician owner discloses to the patient being 
     referred, by a time that permits the patient to make a 
     meaningful decision regarding the receipt of care ,as 
     determined by the Secretary--

       ``(I) the ownership interest of such referring physician in 
     the hospital; and
       ``(II) if applicable, any such ownership interest of the 
     treating physician.

       ``(iii) The hospital does not condition any physician 
     ownership interests either directly or indirectly on the 
     physician owner making or influencing referrals to the 
     hospital or otherwise generating business for the hospital.
       ``(D) Ensuring bona fide investment.--
       ``(i) Physician owners in the aggregate do not own more 
     than 40 percent of the total value of the investment 
     interests held in the hospital or in an entity whose assets 
     include the hospital.
       ``(ii) The investment interest of any individual physician 
     owner does not exceed 2 percent of the total value of the 
     investment interests held in the hospital or in an entity 
     whose assets include the hospital.
       ``(iii) Any ownership or investment interests that the 
     hospital offers to a physician owner are not offered on more 
     favorable terms than the terms offered to a person who is not 
     a physician owner.
       ``(iv) The hospital does not directly or indirectly provide 
     loans or financing for any physician owner investments in the 
     hospital.
       ``(v) The hospital does not directly or indirectly 
     guarantee a loan, make a payment toward a loan, or otherwise 
     subsidize a loan, for any individual physician owner or group 
     of physician owners that is related to acquiring any 
     ownership interest in the hospital.
       ``(vi) Investment returns are distributed to investors in 
     the hospital in an amount that is directly proportional to 
     the investment of capital by the physician owner in the 
     hospital.
       ``(vii) Physician owners do not receive, directly or 
     indirectly, any guaranteed receipt of or right to purchase 
     other business interests related to the hospital, including 
     the purchase or lease of any property under the control of 
     other investors in the hospital or located near the premises 
     of the hospital.
       ``(viii) The hospital does not offer a physician owner the 
     opportunity to purchase or lease any property under the 
     control of the hospital or any other investor in the hospital 
     on more favorable terms than the terms offered to an 
     individual who is not a physician owner.
       ``(E) Patient safety.--
       ``(i) Insofar as the hospital admits a patient and does not 
     have any physician available on the premises to provide 
     services during all hours in which the hospital is providing 
     services to such patient, before admitting the patient--

       ``(I) the hospital discloses such fact to a patient; and
       ``(II) following such disclosure, the hospital receives 
     from the patient a signed acknowledgment that the patient 
     understands such fact.

       ``(ii) The hospital has the capacity to--

       ``(I) provide assessment and initial treatment for 
     patients; and
       ``(II) refer and transfer patients to hospitals with the 
     capability to treat the needs of the patient involved.

       ``(2) Publication of information reported.--The Secretary 
     shall publish, and update on an annual basis, the information 
     submitted by hospitals under paragraph (1)(A)(i) on the 
     public Internet website of the Centers for Medicare & 
     Medicaid Services.
       ``(3) Collection of ownership and investment information.--
     For purposes of clauses (i) and (ii) of paragraph (1)(D), the 
     Secretary shall collect physician ownership and investment 
     information for each hospital as it existed on the date of 
     the enactment of this subsection.
       ``(4) Physician owner defined.--For purposes of this 
     subsection, the term `physician owner' means a physician (or 
     an immediate family member of such physician) with a direct 
     or an indirect ownership interest in the hospital.''.
       (b) Enforcement.--
       (1) Ensuring compliance.--The Secretary of Health and Human 
     Services shall establish policies and procedures to ensure 
     compliance with the requirements described in such section 
     1877(i)(1) of the Social Security Act, as added by subsection 
     (a)(3), beginning on the date such requirements first apply. 
     Such policies and procedures may include unannounced site 
     reviews of hospitals.
       (2) Audits.--Beginning not later than 18 months after the 
     date of the enactment of this Act, the Secretary of Health 
     and Human Services shall conduct audits to determine if 
     hospitals violate the requirements referred to in paragraph 
     (1).

        TITLE VII--PROVISIONS RELATING TO MEDICARE PARTS A AND B

     SEC. 701. HOME HEALTH PAYMENT UPDATE FOR 2008.

       Section 1895(b)(3)(B)(ii) of the Social Security Act (42 
     U.S.C. 1395fff(b)(3)(B)(ii)) is amended--
       (1) in subclause (IV) at the end, by striking ``and'';
       (2) by redesignating subclause (V) as subclause (VII); and
       (3) by inserting after subclause (IV) the following new 
     subclauses:

       ``(V) 2007, subject to clause (v), the home health market 
     basket percentage increase;
       ``(VI) 2008, subject to clause (v), 0 percent; and''.

     SEC. 702. 2-YEAR EXTENSION OF TEMPORARY MEDICARE PAYMENT 
                   INCREASE FOR HOME HEALTH SERVICES FURNISHED IN 
                   A RURAL AREA.

       Section 421 of the Medicare Prescription Drug, Improvement, 
     and Modernization Act of 2003 (Public Law 108-173; 117 Stat. 
     2283; 42 U.S.C. 1395fff note), as amended by section 5201(b) 
     of the Deficit Reduction Act of 2005, is amended--
       (1) in the heading, by striking ``ONE-YEAR'' and inserting 
     ``TEMPORARY''; and

[[Page 22216]]

       (2) in subsection (a), by striking ``and episodes and 
     visits beginning on or after January 1, 2006, and before 
     January 1, 2007'' and inserting ``episodes and visits 
     beginning on or after January 1, 2006, and before January 1, 
     2007, and episodes and visits beginning on or after January 
     1, 2008, and before January 1, 2010''.

     SEC. 703. EXTENSION OF MEDICARE SECONDARY PAYER FOR 
                   BENEFICIARIES WITH END STAGE RENAL DISEASE FOR 
                   LARGE GROUP PLANS.

       (a) In General.--Section 1862(b)(1)(C) of the Social 
     Security Act (42 U.S.C. 1395y(b)(1)(C)) is amended--
       (1) by redesignating clauses (i) and (ii) as subclauses (I) 
     and (II), respectively, and indenting accordingly;
       (2) by amending the text preceding subclause (I), as so 
     redesignated, to read as follows:
       ``(C) Individuals with end stage renal disease.--
       ``(i) In general.--A group health plan (as defined in 
     subparagraph
     (A)(v))--'';
       (3) in the matter following subclause (II), as so 
     redesignated--
       (A) by striking ``clause (i)'' and inserting ``subclause 
     (I)'';
       (B) by striking ``clause (ii)'' and inserting ``subclause 
     (II)''; and
       (C) by striking ``clauses (i) and (ii)'' and inserting 
     ``subclauses (I) and (II)''; and
       (D) in the last sentence, by striking ``Effective for 
     items'' and inserting ``Subject to clause (ii), effective for 
     items''; and
       (4) by adding at the end the following new clause:
       ``(ii) Special Rule for Large Group Plans.--In applying 
     clause (i) to a large group health plan (as defined in 
     subparagraph (B)(iii)). with respect to periods beginning on 
     or after the date that is 30 months prior to January 1, 2008, 
     subclauses (I) and (II) of such clause shall be applied by 
     substituting `42-month' for `12-month' each place it 
     appears.''.

     SEC. 704. PLAN FOR MEDICARE PAYMENT ADJUSTMENTS FOR NEVER 
                   EVENTS.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     develop a plan (in this section referred to as the ``never 
     events plan'') to implement, beginning in fiscal year 2010, a 
     policy to reduce or eliminate payments under title XVIII of 
     the Social Security Act for never events.
       (b) Never Event Defined.--For purposes of this section, the 
     term ``never event'' means an event involving the delivery of 
     (or failure to deliver) physicians' services, inpatient or 
     outpatient hospital services, or facility services furnished 
     in an ambulatory surgical facility in which there is an error 
     in medical care that is clearly identifiable, usually 
     preventable, and serious in consequences to patients, and 
     that indicates a deficiency in the safety and process 
     controls of the services furnished with respect to the 
     physician, hospital, or ambulatory surgical center involved.
       (c) Plan Details.--
       (1) Defining never events.--With respect to criteria for 
     identifying never events under the never events plan, the 
     Secretary should consider whether the event meets the 
     following characteristics:
       (A) Clearly identifiable.--The event is clearly 
     identifiable and measurable and feasible to include in a 
     reporting system for never events.
       (B) Usually preventable.--The event is usually preventable 
     taking into consideration that, because of the complexity of 
     medical care, certain medical events are not always 
     avoidable.
       (C) Serious.--The event is serious and could result in 
     death or loss of a body part, disability, or more than 
     transient loss of a body function.
       (D) Deficiency in safety and process controls.--The event 
     is indicative of a problem in safety systems and process 
     controls used by the physician, hospital, or ambulatory 
     surgical center involved and is indicative of the reliability 
     of the quality of services provided by the physician, 
     hospital, or ambulatory surgical center, respectively.
       (2) Identification and payment issues.--With respect to 
     policies under the never events plan for identifying and 
     reducing (or eliminating) payment for never events, the 
     Secretary shall consider--
       (A) mechanisms used by hospitals and physicians in 
     reporting and coding of services that would reliably identify 
     never events; and
       (B) modifications in billing and payment mechanisms that 
     would enable the Secretary to efficiently and accurately 
     reduce or eliminate payments for never events.
       (3) Priorities.--Under the never events plan the Secretary 
     shall identify priorities regarding the services to focus on 
     and, among those, the never events for which payments should 
     be reduced or eliminated.
       (4) Consultation.--In developing the never events plan, the 
     Secretary shall consult with affected parties that are 
     relevant to payment reductions in response to never events.
       (d) Congressional Report.--By not later than June 1, 2008, 
     the Secretary shall submit a report to Congress on the never 
     events plan developed under this subsection and shall include 
     in the report recommendations on specific methods for 
     implementation of the plan on a timely basis.

     SEC. 705. TREATMENT OF MEDICARE HOSPITAL RECLASSIFICATIONS.

       (a) Extending Certain Medicare Hospital Wage Index 
     Reclassifications Through Fiscal Year 2009.--
       (1) In general.--Section 106(a) of the Medicare 
     Improvements and Extension Act of 2006 (division B of public 
     Law 109-432) is amended by striking ``September 30, 2007'' 
     and inserting ``September 30, 2009''.
       (2) Special exception reclassifications.--The Secretary of 
     Health and Human Services shall extend for discharges 
     occurring through September 30, 2009, the special exception 
     reclassification made under the authority of section 
     1886(d)(5)(I)(i) of the Social Security Act (42 U.S.C. 
     1395ww(d)(5)(I)(i)) and contained in the final rule 
     promulgated by the Secretary in the Federal Register on 
     August 11, 2004 (69 Fed. Reg. 49105, 49107).
       (b) Disregarding Section 508 Hospital Reclassifications for 
     Purposes of Group Reclassifications.--Section 508 of the 
     Medicare Prescription Drug, Improvement, and Modernization 
     Act of 2003 (Public Law 108-173, 42 U.S.C. 1395ww note) is 
     amended by adding at the end the following new subsection:
       ``(g) Disregarding Hospital Reclassifications for Purposes 
     of Group Reclassifications.--For purposes of the 
     reclassification of a group of hospitals in a geographic area 
     under section 1886(d), a hospital reclassified under this 
     section (including any such reclassification which is 
     extended under section 106(a) of the Medicare Improvements 
     and Extension Act of 2006) shall not be taken into account 
     and shall not prevent the other hospitals in such area from 
     establishing such a group for such purpose.''.

                          TITLE VIII--MEDICAID

                Subtitle A--Protecting Existing Coverage

     SEC. 801. MODERNIZING TRANSITIONAL MEDICAID.

       (a) Two-Year Extension.--
       (1) In general.--Sections 1902(e)(1)(B) and 1925(f) of the 
     Social Security Act (42 U.S.C. 1396a(e)(1)(B), 1396r-6(f)) 
     are each amended by striking ``September 30, 2003'' and 
     inserting ``September 30, 2009''.
       (2) Effective date.--The amendments made by this subsection 
     shall take effect on October 1, 2007.
       (b) State Option of Initial 12-Month Eligibility.--Section 
     1925 of the Social Security Act (42 U.S.C. 1396r-6) is 
     amended--
       (1) in subsection (a)(1), by inserting ``but subject to 
     paragraph (5)'' after ``Notwithstanding any other provision 
     of this title'';
       (2) by adding at the end of subsection (a) the following:
       ``(5) Option of 12-month initial eligibility period.--A 
     State may elect to treat any reference in this subsection to 
     a 6-month period (or 6 months) as a reference to a 12-month 
     period (or 12 months). In the case of such an election, 
     subsection (b) shall not apply.''; and
       (3) in subsection (b)(1), by inserting ``but subject to 
     subsection (a)(5)'' after ``Notwithstanding any other 
     provision of this title''.
       (c) Removal of Requirement for Previous Receipt of Medical 
     Assistance.--Section 1925(a)(1) of such Act (42 U.S.C. 1396r-
     6(a)(1)), as amended by subsection (b)(1), is further 
     amended--
       (1) by inserting ``subparagraph (B) and'' before 
     ``paragraph (5)'';
       (2) by redesignating the matter after ``Requirement.--'' as 
     a subparagraph (A) with the heading ``In general.--'' and 
     with the same indentation as subparagraph (B) (as added by 
     paragraph (3)); and
       (3) by adding at the end the following:
       ``(B) State option to waive requirement for 3 months before 
     receipt of medical assistance.--A State may, at its option, 
     elect also to apply subparagraph (A) in the case of a family 
     that was receiving such aid for fewer than three months or 
     that had applied for and was eligible for such aid for fewer 
     than 3 months during the 6 immediately preceding months 
     described in such subparagraph.''.
       (d) CMS Report on Enrollment and Participation Rates Under 
     TMA.--Section 1925 of such Act (42 U.S.C. 1396r-6), as 
     amended by this section, is further amended by adding at the 
     end the following new subsection:
       ``(g) Collection and Reporting of Participation 
     Information.--
       ``(1) Collection of information from states.--Each State 
     shall collect and submit to the Secretary (and make publicly 
     available), in a format specified by the Secretary, 
     information on average monthly enrollment and average monthly 
     participation rates for adults and children under this 
     section and of the number and percentage of children who 
     become ineligible for medical assistance under this section 
     whose medical assistance is continued under another 
     eligibility category or who are enrolled under the State's 
     child health plan under title XXI. Such information shall be 
     submitted at the same time and frequency in which other 
     enrollment information under this title is submitted to the 
     Secretary.
       ``(2) Annual reports to congress.--Using the information 
     submitted under paragraph (1), the Secretary shall submit to 
     Congress annual reports concerning enrollment and 
     participation rates described in such paragraph.''.

[[Page 22217]]

       (e) Effective Date.--The amendments made by subsections (b) 
     through (d) shall take effect on the date of the enactment of 
     this Act.

     SEC. 802. FAMILY PLANNING SERVICES.

       (a) Coverage as Optional Categorically Needy Group.--
       (1) In general.--Section 1902(a)(10)(A)(ii) of the Social 
     Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is amended--
       (A) in subclause (XVIII), by striking ``or'' at the end;
       (B) in subclause (XIX), by adding ``or'' at the end; and
       (C) by adding at the end the following new subclause:
       ``(XX) who are described in subsection (ee) (relating to 
     individuals who meet certain income standards);''.
       (2) Group described.--Section 1902 of the Social Security 
     Act (42 U.S.C. 1396a), as amended by section 112(c), is 
     amended by adding at the end the following new subsection:
       ``(ee)(1) Individuals described in this subsection are 
     individuals
       ``(A) whose income does not exceed an income eligibility 
     level established by the State that does not exceed the 
     highest income eligibility level established under the State 
     plan under this title (or under its State child health plan 
     under title XXI) for pregnant women; and
       ``(B) who are not pregnant.
       ``(2) At the option of a State, individuals described in 
     this subsection may include individuals who are determined to 
     meet the eligibility requirements referred to in paragraph 
     (1) under the terms, conditions, and procedures applicable to 
     making eligibility determinations for medical assistance 
     under this title under a waiver to provide the benefits 
     described in clause (XV) of the matter following subparagraph 
     (G) of section 1902(a)(10) granted to the State under section 
     1115 as of January 1, 2007.''.
       (3) Limitation on benefits.--Section 1902(a)(10) of the 
     Social Security Act (42 U.S.C. 1396a(a)(10)) is amended in 
     the matter following subparagraph (G)--
       (A) by striking ``and (XIV)'' and inserting ``(XIV)''; and
       (B) by inserting ``, and (XV) the medical assistance made 
     available to an individual described in subsection (ee) shall 
     be limited to family planning services and supplies described 
     in section 1905(a)(4)(C) including medical diagnosis or 
     treatment services that are provided pursuant to a family 
     planning service in a family planning setting provided during 
     the period in which such an individual is eligible;'' after 
     ``cervical cancer''.
       (4) Conforming amendments.--Section 1905(a) of the Social 
     Security Act (42 U.S.C. 1396d(a)) is amended in the matter 
     preceding paragraph (1)--
       (A) in clause (xii), by striking ``or'' at the end;
       (B) in clause (xii), by adding ``or'' at the end; and
       (C) by inserting after clause (xiii) the following:
       ``(xiv) individuals described in section 1902(ee),''.
       (b) Presumptive Eligibility.--
       (1) In general.--Title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.) is amended by inserting after section 
     1920B the following:


         ``PRESUMPTIVE ELIGIBILITY FOR FAMILY PLANNING SERVICES

       ``Sec. 1920C.  (a) State Option.-- State plan approved 
     under section 1902 may provide for making medical assistance 
     available to an individual described in section 1902(ee) 
     (relating to individuals who meet certain income eligibility 
     standard) during a presumptive eligibility period. In the 
     case of an individual described in section 1902(ee), such 
     medical assistance shall be limited to family planning 
     services and supplies described in 1905(a)(4)(C) and, at the 
     State's option, medical diagnosis or treatment services that 
     are provided in conjunction with a family planning service in 
     a family planning setting provided during the period in which 
     such an individual is eligible.
       ``(b) Definitions.--For purposes of this section:
       ``(1) Presumptive eligibility period.--The term 
     `presumptive eligibility period' means, with respect to an 
     individual described in subsection (a), the period that--
       ``(A) begins with the date on which a qualified entity 
     determines, on the basis of preliminary information, that the 
     individual is described in section 1902(ee); and
       ``(B) ends with (and includes) the earlier of--
       ``(i) the day on which a determination is made with respect 
     to the eligibility of such individual for services under the 
     State plan; or
       ``(ii) in the case of such an individual who does not file 
     an application by the last day of the month following the 
     month during which the entity makes the determination 
     referred to in subparagraph (A), such last day.
       ``(2) Qualified entity.--
       ``(A) In general.--Subject to subparagraph (B), the term 
     `qualified entity' means any entity that--
       ``(i) is eligible for payments under a State plan approved 
     under this title; and
       ``(ii) is determined by the State agency to be capable of 
     making determinations of the type described in paragraph 
     (1)(A).
       ``(B) Rule of construction.--Nothing in this paragraph 
     shall be construed as preventing a State from limiting the 
     classes of entities that may become qualified entities in 
     order to prevent fraud and abuse.
       ``(c) Administration.--
       ``(1) In general.--The State agency shall provide qualified 
     entities with--
       ``(A) such forms as are necessary for an application to be 
     made by an individual described in subsection (a) for medical 
     assistance under the State plan; and
       ``(B) information on how to assist such individuals in 
     completing and filing such forms.
       ``(2) Notification requirements.--A qualified entity that 
     determines under subsection (b)(1)(A) that an individual 
     described in subsection (a) is presumptively eligible for 
     medical assistance under a State plan shall--
       ``(A) notify the State agency of the determination within 5 
     working days after the date on which determination is made; 
     and
       ``(B) inform such individual at the time the determination 
     is made that an application for medical assistance is 
     required to be made by not later than the last day of the 
     month following the month during which the determination is 
     made.
       ``(3) Application for medical assistance.--In the case of 
     an individual described in subsection (a) who is determined 
     by a qualified entity to be presumptively eligible for 
     medical assistance under a State plan, the individual shall 
     apply for medical assistance by not later than the last day 
     of the month following the month during which the 
     determination is made.
       ``(d) Payment.--Notwithstanding any other provision of this 
     title, medical assistance that--
       ``(1) is furnished to an individual described in subsection 
     (a)--
       ``(A) during a presumptive eligibility period;
       ``(B) by a entity that is eligible for payments under the 
     State plan; and
       ``(2) is included in the care and services covered by the 
     State plan, shall be treated as medical assistance provided 
     by such plan for purposes of clause (4) of the first sentence 
     of section 1905(b).''.
       (2) Conforming amendments.--
       (A) Section 1902(a)(47) of the Social Security Act (42 
     U.S.C. 1396a(a)(47)) is amended by inserting before the 
     semicolon at the end the following: ``and provide for making 
     medical assistance available to individuals described in 
     subsection (a) of section 1920C during a presumptive 
     eligibility period in accordance with such section.''.
       (B) Section 1903(u)(1)(D)(v) of such Act (42 U.S.C. 
     1396b(u)(1)(D)(v)) is amended--
       (i) by striking ``or for'' and inserting ``, for''; and
       (ii) by inserting before the period the following: ``, or 
     for medical assistance provided to an individual described in 
     subsection (a) of section 1920C during a presumptive 
     eligibility period under such section''.
       (e) Clarification of Coverage of Family Planning Services 
     and Supplies.--Section 1937(b) of the Social Security Act (42 
     U.S.C. 1396u-7(b)) is amended by adding at the end the 
     following:
       ``(5) Coverage of family planning services and supplies.--
     Notwithstanding the previous provisions of this section, a 
     State may not provide for medical assistance through 
     enrollment of an individual with benchmark coverage or 
     benchmark-equivalent coverage under this section unless such 
     coverage includes for any individual described in section 
     1905(a)(4)(C), medical assistance for family planning 
     services and supplies in accordance with such section.''.
       (f) Effective Date.--The amendments made by this section 
     take effect on October 1, 2007.

     SEC. 803. AUTHORITY TO CONTINUE PROVIDING ADULT DAY HEALTH 
                   SERVICES APPROVED UNDER A STATE MEDICAID PLAN.

       (a) In General.--During the period described in subsection 
     (b), the Secretary of Health and Human Services shall not--
       (1) withhold, suspend, disallow, or otherwise deny Federal 
     financial participation under section 1903(a) of the Social 
     Security Act (42 U.S.C. 1396b(a)) for the provision of adult 
     day health care services, day activity and health services, 
     or adult medical day care services, as defined under a State 
     Medicaid plan approved during or before 1994, during such 
     period if such services are provided consistent with such 
     definition and the requirements of such plan; or
       (2) withdraw Federal approval of any such State plan or 
     part thereof regarding the provision of such services (by 
     regulation or otherwise).
       (b) Period Described.--The period described in this 
     subsection is the period that begins on November 3, 2005, and 
     ends on March 1, 2009.

     SEC. 804. STATE OPTION TO PROTECT COMMUNITY SPOUSES OF 
                   INDIVIDUALS WITH DISABILITIES.

        Section 1924(h)(1)(A) of the Social Security Act (42 
     U.S.C. 1396r-5(h)(1)(A)) is amended by striking ``is 
     described in section 1902(a)(10)(A)(ii)(VI)'' and inserting 
     ``is being provided medical assistance for home and 
     community-based services under subsection (c), (d), (e), (i), 
     or (j) of section 1915 or pursuant to section 1115''.

[[Page 22218]]



     SEC. 805. COUNTY MEDICAID HEALTH INSURING ORGANIZATIONS .

       (a) In General.--Section 9517(c)(3) of the Consolidated 
     Omnibus Budget Reconciliation Act of 1985 (42 U.S.C. 1396b 
     note), as added by section 4734 of the Omnibus Budget 
     Reconciliation Act of 1990 and as amended by section 704 of 
     the Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000, is amended--
       (1) in subparagraph (A), by inserting ``, in the case of 
     any health insuring organization described in such 
     subparagraph that is operated by a public entity established 
     by Ventura County, and in the case of any health insuring 
     organization described in such subparagraph that is operated 
     by a public entity established by Merced County'' after 
     ``described in subparagraph (B)''; and
       (2) in subparagraph (C), by striking ``14 percent'' and 
     inserting ``16 percent''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

                          Subtitle B--Payments

     SEC. 811. PAYMENTS FOR PUERTO RICO AND TERRITORIES.

       (a) Payment Ceiling.--Section 1108(g) of the Social 
     Security Act (42 U.S.C. 1308(g)) is amended--
       (1) in paragraph (2), by striking ``paragraph (3)'' and 
     inserting ``paragraphs (3) and (4)''; and
       (2) by adding at the end the following new paragraph:
       ``(4) Fiscal years 2009 through 2012 for certain insular 
     areas.--The amounts otherwise determined under this 
     subsection for Puerto Rico, the Virgin Islands, Guam, the 
     Northern Mariana Islands, and American Samoa for fiscal years 
     2009 through 2012 shall be increased by the following 
     amounts:
       ``(A) Puerto rico.--For Puerto Rico, $250,000,000 for 
     fiscal year 2009, $350,000,000 for fiscal year 2010, 
     $500,000,000 for fiscal year 2011, and $600,000,000 for 
     fiscal year 2012.
       ``(B) Virgin islands.--For the Virgin Islands, $5,000,000 
     for each of fiscal years 2009 through 2012.
       ``(C) Guam.--For Guam, $5,000,000 for each of fiscal years 
     2009 through 2012.
       ``(D) Northern mariana islands.--For the Northern Mariana 
     Islands, $4,000,000 for each of fiscal years 2009 through 
     2012.
       ``(E) American samoa.--For American Samoa, $4,000,000 for 
     each of fiscal years 2009 through 2012.

     Such amounts shall not be taken into account in applying 
     paragraph (2) for fiscal years 2009 through 2012 but shall be 
     taken into account in applying such paragraph for fiscal year 
     2013 and subsequent fiscal years.''.
       (b) Removal of Federal Matching Payments for Improving Data 
     Reporting Systems From the Overall Limit on Payments to 
     Territories Under Title XIX.--Such section is further amended 
     by adding at the end the following new paragraph:
       ``(5) Exclusion of certain expenditures from payment 
     limits.-- With respect to fiscal year 2008 and each fiscal 
     year thereafter, if Puerto Rico, the Virgin Islands, Guam, 
     the Northern Mariana Islands, or American Samoa qualify for a 
     payment under subparagraph (A)(i) or (B) of section 
     1903(a)(3) for a calendar quarter of such fiscal year with 
     respect to expenditures for improvements in data reporting 
     systems described in such subparagraph, the limitation on 
     expenditures under title XIX for such commonwealth or 
     territory otherwise determined under subsection (f) and this 
     subsection for such fiscal year shall be determined without 
     regard to payment for such expenditures.''.

     SEC. 812. MEDICAID DRUG REBATE.

       (a) Brand.--Paragraph (1)(B)(i) of section 1927(c) of the 
     Social Security Act (42 U.S.C. 1396r-8(c)) is amended--
       (1) by striking ``and'' at the end of subclause (IV);
       (2) in subclause (V)--
       (A) by inserting ``and before January 1, 2008,'' after 
     ``December 31, 1995''; and
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (3) by adding at the end the following new subclause:

       ``(VI) after December 31, 2007, is 20.1 percent.''.

       (b) PBMs to Best Price Definition.--
       (1) In general.--Section 1927(c)(1)(C)(ii)(I) of the Social 
     Security Act (42 U.S.C. 1396r-8(c)(1)(C)(ii)(I)) is amended--
       (A) by striking ``and'' before ``rebates''; and
       (B) by inserting before the semicolon at the end the 
     following: ``, and rebates, discounts, and other price 
     concessions to pharmaceutical benefit managers (PBMs)''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply to calendar quarters beginning on or after 
     January 1, 2008.

     SEC. 813. ADJUSTMENT IN COMPUTATION OF MEDICAID FMAP TO 
                   DISREGARD AN EXTRAORDINARY EMPLOYER PENSION 
                   CONTRIBUTION.

       (a) In General.--Only for purposes of computing the Federal 
     medical assistance percentage under section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b)) for a State for a 
     fiscal year (beginning with fiscal year 2006), any 
     significantly disproportionate employer pension contribution 
     described in subsection (b) shall be disregarded in computing 
     the per capita income of such State, but shall not be 
     disregarded in computing the per capita income for the 
     continental United States (and Alaska) and Hawaii.
       (b) Significantly Disproportionate Employer Pension 
     Contribution.--For purposes of subsection (a), a 
     significantly disproportionate employer pension contribution 
     described in this subsection with respect to a State for a 
     fiscal year is an employer contribution towards pensions that 
     is allocated to such State for a period if the aggregate 
     amount so allocated exceeds 25 percent of the total increase 
     in personal income in that State for the period involved.

     SEC. 814. MORATORIUM ON CERTAIN PAYMENT RESTRICTIONS.

       Notwithstanding any other provision of law, the Secretary 
     of Health and Human Services shall not, prior to the date 
     that is 1 year after the date of enactment of this Act, take 
     any action (through promulgation of regulation, issuance of 
     regulatory guidance, use of federal payment audit procedures, 
     or other administrative action, policy, or practice, 
     including a Medical Assistance Manual transmittal or letter 
     to State Medicaid directors) to restrict coverage or payment 
     under title XIX of the Social Security Act for rehabilitation 
     services, or school-based administration, transportation, or 
     medical services if such restrictions are more restrictive in 
     any aspect than those applied to such coverage or payment as 
     of July 1, 2007.

     SEC. 815. TENNESSEE DSH.

       The DSH allotments for Tennessee for each fiscal year 
     beginning with fiscal year 2008 under subsection (f)(3) of 
     section 1923 of the Social Security Act (42 U.S.C. 13961396r-
     4) are deemed to be $30,000,000. The Secretary of Health and 
     Human Services may impose a limitation on the total amount of 
     payments made to hospitals under the TennCare Section 1115 
     waiver only to the extent that such limitation is necessary 
     to ensure that a hospital does not receive payment in excess 
     of the amounts described in subsection (f) of such section or 
     as necessary to ensure that the waiver remains budget 
     neutral.

     SEC. 816. CLARIFICATION TREATMENT OF REGIONAL MEDICAL CENTER.

       (a) In General.--Nothing in section 1903(w) of the Social 
     Security Act (42 U.S.C. 1396b(w)) shall be construed by the 
     Secretary of Health and Human Services as prohibiting a 
     State's use of funds as the non-Federal share of expenditures 
     under title XIX of such Act where such funds are transferred 
     from or certified by a publicly-owned regional medical center 
     located in another State and described in subsection (b), so 
     long as the Secretary determines that such use of funds is 
     proper and in the interest of the program under title XIX.
       (b) Center Described.--A center described in this 
     subsection is a publicly-owned regional medical center that--
       (1) provides level 1 trauma and burn care services;
       (2) provides level 3 neonatal care services;
       (3) is obligated to serve all patients, regardless of 
     ability to pay;
       (4) is located within a Standard Metropolitan Statistical 
     Area (SMSA) that includes at least 3 States;
       (5) provides services as a tertiary care provider for 
     patients residing within a 125-mile radius; and
       (6) meets the criteria for a disproportionate share 
     hospital under section 1923 of such Act (42 U.S.C. 1396r-4) 
     in at least one State other than the State in which the 
     center is located.

                       Subtitle C--Miscellaneous

     SEC. 821. DEMONSTRATION PROJECT FOR EMPLOYER BUY-IN.

       Title XXI of the Social Security Act, as amended by section 
     115(a)(1), is further amended by adding at the end the 
     following new section:

     ``SEC. 2112. DEMONSTRATION PROJECT FOR EMPLOYER BUY-IN.

       ``(a) Authority.--
       ``(1) In general.--The Secretary shall establish a 
     demonstration project under which up to 10 States (each 
     referred to in this section as a `participating State') that 
     meets the conditions of paragraph (2) may provide, under its 
     State child health plan (notwithstanding section 
     2102(b)(3)(C)) for a period of 5 years, for child health 
     assistance in relation to family coverage described in 
     subsection (d) for children who would be targeted low-income 
     children but for coverage as beneficiaries under a group 
     health plan as the children of participants by virtue of a 
     qualifying employer's contribution under subsection (b)(2). :
       ``(2) Conditions.--The conditions described in this 
     paragraph for a State are as follows:
       ``(A) No waiting lists.--The State does not impose any 
     waiting list, enrollment cap, or similar limitation on 
     enrollment of targeted low-income children under the State 
     child health plan.
       ``(B) Eligibility of all children under 200 percent of 
     poverty line.--The State is applying an income eligibility 
     level under section 2110(b)(1)(B)(ii)(I) that is at least 200 
     percent of the poverty line.
       ``(3) Qualifying employer defined.--In this section, the 
     term `qualifying employer' means an employer that has a 
     majority of its workforce composed of full-time workers with 
     family incomes reasonably estimated by the employer (based on 
     wage information

[[Page 22219]]

     available to the employer) at or below 200 percent of the 
     poverty line. In applying the previous sentence, two part-
     time workers shall be treated as a single full-time worker.
       ``(b) Funding.--A demonstration project under this section 
     in a participating State shall be funded, with respect to 
     assistance provided to children described in subsection 
     (a)(1), consistent with the following:
       ``(1) Limited family contribution.--The family involved 
     shall be responsible for providing payment towards the 
     premium for such assistance of such amount as the State may 
     specify, except that the limitations on cost-sharing 
     (including premiums) under paragraphs (2) and (3) of section 
     2103(e) shall apply to all cost-sharing of such family under 
     this section.
       ``(2) Minimum employer contribution.--The qualifying 
     employer involved shall be responsible for providing payment 
     to the State child health plan in the State of at least 50 
     percent of the portion of the cost (as determined by the 
     State) of the family coverage in which the employer is 
     enrolling the family that exceeds the amount of the family 
     contribution under paragraph (1) applied towards such 
     coverage.
       ``(3) Limitation on federal financial participation.--In no 
     case shall the Federal financial participation under section 
     2105 with respect to a demonstration project under this 
     section be made for any portion of the costs of family 
     coverage described in subsection (d) (including the costs of 
     administration of such coverage) that are not attributable to 
     children described in subsection (a)(1).
       ``(c) Uniform Eligibility Rules.--In providing assistance 
     under a demonstration project under this section--
       ``(1) a State shall establish uniform rules of eligibility 
     for families to participate; and
       ``(2) a State shall not permit a qualifying employer to 
     select, within those families that meet such eligibility 
     rules, which families may participate.
       ``(d) Terms and Conditions.--The family coverage offered to 
     families of qualifying employers under a demonstration 
     project under this section in a State shall be the same as 
     the coverage and benefits provided under the State child 
     health plan in the State for targeted low-income children 
     with the highest family income level permitted.''.

     SEC. 822. DIABETES GRANTS.

       Section 2104 of the Social Security Act (42 U.C.C 1397dd), 
     as amended by section 101, is further amended--
       (1) in subsection (a)(11), by inserting before the period 
     at the end the following: ``plus for fiscal year 2009 the 
     total of the amount specified in subsection (j)''; and
       (2) by adding at the end the following new subsection:
       ``(j) Funding for Diabetes Grants.--From the amounts 
     appropriated under subsection (a)(11), for fiscal year 2009 
     from the amounts--
       ``(1) $150,000,000 is hereby transferred and made available 
     in such fiscal year for grants under section 330B of the 
     Public Health Service Act; and
       ``(2) $150,000,000 is hereby transferred and made available 
     in such fiscal year for grants under section 330C of such 
     Act.''.

     SEC. 823. TECHNICAL CORRECTION.

       (a) Correction of Reference to Children in Foster Care 
     Receiving Child Welfare Services.--Section 
     1937(a)(2)(B)(viii) of the Social Security Act (42 U.S.C. 
     1396u-7(a)(2)(B) is amended by striking ``aid or assistance 
     is made available under part B of title IV to children in 
     foster care'' and inserting ``child welfare services are made 
     available under part B of title IV on the basis of being a 
     child in foster care''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the amendment made by 
     section 6044(a) of the Deficit Reduction Act of 2005.

                        TITLE IX--MISCELLANEOUS

     SEC. 901. MEDICARE PAYMENT ADVISORY COMMISSION STATUS.

       Section 1805(a) of the Social Security Act (42 U.S.C. 
     1395b-6(a)) is amended by inserting ``as an agency of 
     Congress'' after ``established''.

     SEC. 902. REPEAL OF TRIGGER PROVISION.

       Subtitle A of title VIII of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (Public Law 108-
     173) is repealed and the provisions of law amended by such 
     subtitle are restored as if such subtitle had never been 
     enacted.

     SEC. 903. REPEAL OF COMPARATIVE COST ADJUSTMENT (CCA) 
                   PROGRAM.

        Section 1860C-1 of the Social Security Act (42 U.S.C. 
     1395w-29), as added by section 241(a) of the Medicare 
     Prescription Drug, Improvement, and Modernization Act of 2003 
     (Public Law 108-173), is repealed.

     SEC. 904. COMPARATIVE EFFECTIVENESS RESEARCH.

       (a) In General.--Part A of title XVIII of the Social 
     Security Act is amended by adding at the end the following 
     new section:


                  ``COMPARATIVE EFFECTIVENESS RESEARCH

       ``Sec. 1822.  (a) Center for Comparative Effectiveness 
     Research Established.--
       ``(1) In general.--The Secretary shall establish within the 
     Agency of Healthcare Research and Quality a Center for 
     Comparative Effectiveness Research (in this section referred 
     to as the `Center') to conduct, support, and synthesize 
     research (including research conducted or supported under 
     section 1013 of the Medicare Prescription Drug, Improvement, 
     and Modernization Act of 2003) with respect to the outcomes, 
     effectiveness, and appropriateness of health care services 
     and procedures in order to identify the manner in which 
     diseases, disorders, and other health conditions can most 
     effectively and appropriately be prevented, diagnosed, 
     treated, and managed clinically.
       ``(2) Duties.--The Center shall--
       ``(A) conduct, support, and synthesize research relevant to 
     the comparative clinical effectiveness of the full spectrum 
     of health care treatments, including pharmaceuticals, medical 
     devices, medical and surgical procedures, and other medical 
     interventions;
       ``(B) conduct and support systematic reviews of clinical 
     research, including original research conducted subsequent to 
     the date of the enactment of this section;
       ``(C) use methodologies such as randomized controlled 
     clinical trials as well as other various types of clinical 
     research, such as observational studies;
       ``(D) submit to the Comparative Effectiveness Research 
     Commission, the Secretary, and Congress appropriate relevant 
     reports described in subsection (d)(2);
       ``(E) encourage, as appropriate, the development and use of 
     clinical registries and the development of clinical 
     effectiveness research data networks from electronic health 
     records, post marketing drug and medical device surveillance 
     efforts, and other forms of electronic health data; and
       ``(F) not later than 180 days after the date of the 
     enactment of this section, develop methodological standards 
     to be used when conducting studies of comparative clinical 
     effectiveness and value (and procedures for use of such 
     standards) in order to help ensure accurate and effective 
     comparisons and update such standards at least biennially.
       ``(b) Oversight by Comparative Effectiveness Research 
     Commission.--
       ``(1) In general.--The Secretary shall establish an 
     independent Comparative Effectiveness Research Commission (in 
     this section referred to as the `Commission') to oversee and 
     evaluate the activities carried out by the Center under 
     subsection (a) to ensure such activities result in highly 
     credible research and information resulting from such 
     research.
       ``(2) Duties.--The Commission shall--
       ``(A) determine national priorities for research described 
     in subsection (a) and in making such determinations consult 
     with patients and health care providers and payers;
       ``(B) monitor the appropriateness of use of the CERTF 
     described in subsection (f) with respect to the timely 
     production of comparative effectiveness research determined 
     to be a national priority under subparagraph (A);
       ``(C) identify highly credible research methods and 
     standards of evidence for such research to be considered by 
     the Center;
       ``(D) review and approve the methodological standards (and 
     updates to such standards) developed by the Center under 
     subsection (a)(2)(F);
       ``(E) enter into an arrangement under which the Institute 
     of Medicine of the National Academy of Sciences shall conduct 
     an evaluation and report on standards of evidence for such 
     research;
       ``(F) support forums to increase stakeholder awareness and 
     permit stakeholder feedback on the efforts of the Agency of 
     Healthcare Research and Quality to advance methods and 
     standards that promote highly credible research;
       ``(G) make recommendations for public data access policies 
     of the Center that would allow for access of such data by the 
     public while ensuring the information produced from research 
     involved is timely and credible;
       ``(H) appoint a clinical perspective advisory panel for 
     each research priority determined under subparagraph (A), 
     which shall frame the specific research inquiry to be 
     examined with respect to such priority to ensure that the 
     information produced from such research is clinically 
     relevant to decisions made by clinicians and patients at the 
     point of care;
       ``(I) make recommendations for the priority for periodic 
     reviews of previous comparative effectiveness research and 
     studies conducted by the Center under subsection (a);
       ``(J) routinely review processes of the Center with respect 
     to such research to confirm that the information produced by 
     such research is objective, credible, consistent with 
     standards of evidence established under this section, and 
     developed through a transparent process that includes 
     consultations with appropriate stakeholders;
       ``(K) at least annually, provide guidance or 
     recommendations to health care providers and consumers for 
     the use of information on the comparative effectiveness of 
     health care services by consumers, providers (as defined for 
     purposes of regulations promulgated under section 264(c) of 
     the Health Insurance Portability and Accountability Act of 
     1996) and public and private purchasers;
       ``(L) make recommendations for a strategy to disseminate 
     the findings of research conducted and supported under this 
     section that enables clinicians to improve performance,

[[Page 22220]]

     consumers to make more informed health care decisions, and 
     payers to set medical policies that improve quality and 
     value;
       ``(M) provide for the public disclosure of relevant reports 
     described in subsection (d)(2); and
       ``(N) submit to Congress an annual report on the progress 
     of the Center in achieving national priorities determined 
     under subparagraph (A) for the provision of credible 
     comparative effectiveness information produced from such 
     research to all interested parties.
       ``(3) Composition of commission.--
       ``(A) In general.--The members of the Commission shall 
     consist of--
       ``(i) the Director of the Agency for Healthcare Research 
     and Quality;
       ``(ii) the Chief Medical Officer of the Centers for 
     Medicare & Medicaid Services; and
       ``(iii) up to 15 additional members who shall represent 
     broad constituencies of stakeholders including clinicians, 
     patients, researchers, third-party payers, consumers of 
     Federal and State beneficiary programs. .
       ``(B) Qualifications.--
       ``(i) Diverse representation of perspectives.--The members 
     of the Commission shall represent a broad range of 
     perspectives and shall collectively have experience in the 
     following areas:

       ``(I) Epidemiology.
       ``(II) Health services research.
       ``(III) Bioethics.
       ``(IV) Decision sciences.
       ``(V) Economics.

       ``(ii) Diverse representation of health care community.--At 
     least one member shall represent each of the following health 
     care communities:

       ``(I) Consumers.
       ``(II) Practicing physicians, including surgeons.
       ``(III) Employers.
       ``(IV) Public payers.
       ``(V) Insurance plans.
       ``(VI) Clinical researchers who conduct research on behalf 
     of pharmaceutical or device manufacturers.

       ``(4) Appointment.--The Comptroller General of the United 
     States, in consultation with the chairs of the committees of 
     jurisdiction of the House of Representatives and the Senate, 
     shall appoint the members of the Commission.
       ``(5) Chairman; vice chairman.--The Comptroller General of 
     the United States shall designate a member of the Commission, 
     at the time of appointment of the member, as Chairman and a 
     member as Vice Chairman for that term of appointment, except 
     that in the case of vacancy of the Chairmanship or Vice 
     Chairmanship, the Comptroller General may designate another 
     member for the remainder of that member's term.
       ``(6) Terms.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     each member of the Commission shall be appointed for a term 
     of 4 years.
       ``(B) Terms of initial appointees.--Of the members first 
     appointed--
       ``(i) 10 shall be appointed for a term of 4 years; and
       ``(ii) 9 shall be appointed for a term of 3 years.
       ``(7) Coordination.--To enhance effectiveness and 
     coordination, the Comptroller General is encouraged, to the 
     greatest extent possible, to seek coordination between the 
     Commission and the National Advisory Council of the Agency 
     for Healthcare Research and Quality.
       ``(8) Conflicts of interest.--In appointing the members of 
     the Commission or a clinical perspective advisory panel 
     described in paragraph (2)(G), the Comptroller General of the 
     United States or the Commission, respectively, shall take 
     into consideration any financial conflicts of interest.
       ``(9) Compensation.--While serving on the business of the 
     Commission (including traveltime), a member of the Commission 
     shall be entitled to compensation at the per diem equivalent 
     of the rate provided for level IV of the Executive Schedule 
     under section 5315 of title 5, United States Code; and while 
     so serving away from home and the member's regular place of 
     business, a member may be allowed travel expenses, as 
     authorized by the Director of the Commission.
       ``(10) Availability of reports.--The Commission shall 
     transmit to the Secretary a copy of each report submitted 
     under this subsection and shall make such reports available 
     to the public.
       ``(11) Director and staff; experts and consultants.--
     Subject to such review as the Secretary, in consultation with 
     the Comptroller General deems necessary to assure the 
     efficient administration of the Commission, the Commission 
     may--
       ``(A) employ and fix the compensation of an Executive 
     Director (subject to the approval of the Secretary, in 
     consultation with the Comptroller General) and such other 
     personnel as may be necessary to carry out its duties 
     (without regard to the provisions of title 5, United States 
     Code, governing appointments in the competitive service);
       ``(B) seek such assistance and support as may be required 
     in the performance of its duties from appropriate Federal 
     departments and agencies;
       ``(C) enter into contracts or make other arrangements, as 
     may be necessary for the conduct of the work of the 
     Commission (without regard to section 3709 of the Revised 
     Statutes (41 U.S.C. 5));
       ``(D) make advance, progress, and other payments which 
     relate to the work of the Commission;
       ``(E) provide transportation and subsistence for persons 
     serving without compensation; and
       ``(F) prescribe such rules and regulations as it deems 
     necessary with respect to the internal organization and 
     operation of the Commission.
       ``(12) Powers.--
       ``(A) Obtaining official data.--The Commission may secure 
     directly from any department or agency of the United States 
     information necessary to enable it to carry out this section. 
     Upon request of the Executive Director, the head of that 
     department or agency shall furnish that information to the 
     Commission on an agreed upon schedule.
       ``(B) Data collection.--In order to carry out its 
     functions, the Commission shall--
       ``(i) utilize existing information, both published and 
     unpublished, where possible, collected and assessed either by 
     its own staff or under other arrangements made in accordance 
     with this section,
       ``(ii) carry out, or award grants or contracts for, 
     original research and experimentation, where existing 
     information is inadequate, and
       ``(iii) adopt procedures allowing any interested party to 
     submit information for the Commission's use in making reports 
     and recommendations.
       ``(C) Access of gao to information.--The Comptroller 
     General shall have unrestricted access to all deliberations, 
     records, and nonproprietary data of the Commission, 
     immediately upon request.
       ``(D) Periodic audit.--The Commission shall be subject to 
     periodic audit by the Comptroller General.
       ``(c) Research Requirements.--Any research conducted, 
     supported, or synthesized under this section shall meet the 
     following requirements:
       ``(1) Ensuring transparency, credibility, and access.--
       ``(A) The establishment of the agenda and conduct of the 
     research shall be insulated from inappropriate political or 
     stakeholder influence.
       ``(B) Methods of conducting such research shall be 
     scientifically based.
       ``(C) All aspects of the prioritization of research, 
     conduct of the research, and development of conclusions based 
     on the research shall be transparent to all stakeholders.
       ``(D) The process and methods for conducting such research 
     shall be publicly documented and available to all 
     stakeholders.
       ``(E) Throughout the process of such research, the Center 
     shall provide opportunities for all stakeholders involved to 
     review and provide comment on the methods and findings of 
     such research.
       ``(2) Use of clinical perspective advisory panels.--The 
     research shall meet a national research priority determined 
     under subsection (b)(2)(A) and shall examine the specific 
     research inquiry framed by the clinical perspective advisory 
     panel for the national research priority.
       ``(3) Stakeholder input.--The priorities of the research, 
     the research, and the dissemination of the research shall 
     involve the consultation of patients, health care providers, 
     and health care consumer representatives through transparent 
     mechanisms recommended by the Commission.
       ``(d) Public Access to Comparative Effectiveness 
     Information.--
       ``(1) In general.--Not later than 90 days after receipt by 
     the Center or Commission, as applicable, of a relevant report 
     described in paragraph (2) made by the Center, Commission, or 
     clinical perspective advisory panel under this section, 
     appropriate information contained in such report shall be 
     posted on the official public Internet site of the Center and 
     of the Commission, as applicable.
       ``(2) Relevant reports described.--For purposes of this 
     section, a relevant report is each of the following submitted 
     by a grantee or contractor of the Center:
       ``(A) An interim progress report.
       ``(B) A draft final comparative effectiveness review.
       ``(C) A final progress report on new research submitted for 
     publication by a peer review journal.
       ``(D) Stakeholder comments.
       ``(E) A final report.
       ``(3) Access by congress and the commission to the center's 
     information.--Congress and the Commission shall each have 
     unrestricted access to all deliberations, records, and 
     nonproprietary data of the Center, immediately upon request.
       ``(e) Dissemination and Incorporation of Comparative 
     Effectiveness Information.--
       ``(1) Dissemination.--The Center shall provide for the 
     dissemination of appropriate findings produced by research 
     supported, conducted, or synthesized under this section to 
     health care providers, patients, vendors of health 
     information technology focused on clinical decision support, 
     appropriate professional associations, and Federal and 
     private health plans.
       ``(2) Incorporation.--The Center shall assist users of 
     health information technology

[[Page 22221]]

     focused on clinical decision support to promote the timely 
     incorporation of the findings described in paragraph (1) into 
     clinical practices and to promote the ease of use of such 
     incorporation.
       ``(f) Reports to Congress.--
       ``(1) Annual reports.--Beginning not later than one year 
     after the date of the enactment of this section, the Director 
     of the Agency of Healthcare Research and Quality and the 
     Center for Comparative Effectiveness Research shall submit to 
     Congress an annual report on the activities of the Center and 
     the Commission, as well as the research, conducted under this 
     section.
       ``(2) Recommendation for fair share per capita amount for 
     all-payer financing.--Beginning not later than December 31, 
     2009, the Secretary shall submit to Congress an annual 
     recommendation for a fair share per capita amount described 
     in subsection (c)(1) of section 9511 of the Internal Revenue 
     Code of 1986 for purposes of funding the CERTF under such 
     section.
       ``(3) Analysis and review.--Not later than December 31, 
     2011, the Secretary, in consultation with the Commission, 
     shall submit to Congress a report on all activities conducted 
     or supported under this section as of such date. Such report 
     shall include an evaluation of the return on investment 
     resulting from such activities, the overall costs of such 
     activities, and an analysis of the backlog of any research 
     proposals approved by the Commission but not funded. Such 
     report shall also address whether Congress should expand the 
     responsibilities of the Center and of the Commission to 
     include studies of the effectiveness of various aspects of 
     the health care delivery system, including health plans and 
     delivery models, such as health plan features, benefit 
     designs and performance, and the ways in which health 
     services are organized, managed, and delivered.
       ``(g) Coordinating Council for Health Services Research.--
       ``(1) Establishment.--The Secretary shall establish a 
     permanent council (in this section referred to as the 
     `Council') for the purpose of--
       ``(A) assisting the offices and agencies of the Department 
     of Health and Human Services, the Department of Veterans 
     Affairs, the Department of Defense, and any other Federal 
     department or agency to coordinate the conduct or support of 
     health services research; and
       ``(B) advising the President and Congress on--
       ``(i) the national health services research agenda;
       ``(ii) strategies with respect to infrastructure needs of 
     health services research; and
       ``(iii) appropriate organizational expenditures in health 
     services research by relevant Federal departments and 
     agencies.
       ``(2) Membership.--
       ``(A) Number and appointment.--The Council shall be 
     composed of 20 members. One member shall be the Director of 
     the Agency for Healthcare Research and Quality. The Director 
     shall appoint the other members not later than 30 days after 
     the enactment of this Act.
       ``(B) Terms.--
       ``(i) In general.--Except as provided in clause (ii), each 
     member of the Council shall be appointed for a term of 4 
     years.
       ``(ii) Terms of initial appointees.--Of the members first 
     appointed--

       ``(I) 8 shall be appointed for a term of 4 years; and
       ``(II) 7 shall be appointed for a term of 3 years.

       ``(iii) Vacancies.--Any vacancies shall not affect the 
     power and duties of the Council and shall be filled in the 
     same manner as the original appointment.
       ``(C) Qualifications.--
       ``(i) In general.--The members of the Council shall include 
     one senior official from each of the following agencies:

       ``(I) The Veterans Health Administration.
       ``(II) The Department of Defense Military Health Care 
     System.
       ``(III) The Centers for Disease Control and Prevention.
       ``(IV) The National Center for Health Statistics.
       ``(V) The National Institutes of Health.
       ``(VI) The Center for Medicare & Medicaid Services.
       ``(VII) The Federal Employees Health Benefits Program.

       ``(ii) National, philanthropic foundations.--The members of 
     the Council shall include 4 senior leaders from major 
     national, philanthropic foundations that fund and use health 
     services research.
       ``(iii) Stakeholders.--The remaining members of the Council 
     shall be representatives of other stakeholders in health 
     services research, including private purchasers, health 
     plans, hospitals and other health facilities, and health 
     consumer groups.
       ``(3) Annual report.--The Council shall submit to Congress 
     an annual report on the progress of the implementation of the 
     national health services research agenda.
       ``(h) Funding of Comparative Effectiveness Research.--For 
     fiscal year 2009 and each subsequent fiscal year, amounts in 
     the Comparative Effectiveness Research Trust Fund (referred 
     to in this section as the `CERTF') under section 9511 of the 
     Internal Revenue Code of 1986 shall be available to the 
     Secretary to carry out this section.''.
       (b) Comparative Effectiveness Research Trust Fund; 
     Financing for Trust Fund.--
       (1) Establishment of trust fund.--
       (A) In general.--Subchapter A of chapter 98 of the Internal 
     Revenue Code of 1986 (relating to trust fund code) is amended 
     by adding at the end the following new section:

     ``SEC. 9511. HEALTH CARE COMPARATIVE EFFECTIVENESS RESEARCH 
                   TRUST FUND.

       ``(a) Creation of Trust Fund.--There is established in the 
     Treasury of the United States a trust fund to be known as the 
     `Health Care Comparative Effectiveness Research Trust Fund' 
     (hereinafter in this section referred to as the `CERTF'), 
     consisting of such amounts as may be appropriated or credited 
     to such Trust Fund as provided in this section and section 
     9602(b).
       ``(b) Transfers to Fund.--There are hereby appropriated to 
     the Trust Fund the following:
       ``(1) For fiscal year 2008, $90,000,000.
       ``(2) For fiscal year 2009, $100,000,000.
       ``(3) For fiscal year 2010, $110,000,000.
       ``(4) For each fiscal year beginning with fiscal year 
     2011--
       ``(A) an amount equivalent to the net revenues received in 
     the Treasury from the fees imposed under subchapter B of 
     chapter 34 (relating to fees on health insurance and self-
     insured plans) for such fiscal year; and
       ``(B) subject to subsection (c)(2), amounts determined by 
     the Secretary of Health and Human Services to be equivalent 
     to the fair share per capita amount computed under subsection 
     (c)(1) for the fiscal year multiplied by the average number 
     of individuals entitled to benefits under part A, or enrolled 
     under part B, of title XVIII of the Social Security Act 
     during such fiscal year.

     The amounts appropriated under paragraphs (1), (2), (3), and 
     (4)(B) shall be transferred from the Federal Hospital 
     Insurance Trust Fund and from the Federal Supplementary 
     Medical Insurance Trust Fund (established under section 1841 
     of such Act), and from the Medicare Prescription Drug Account 
     within such Trust Fund, in proportion (as estimated by the 
     Secretary) to the total expenditures during such fiscal year 
     that are made under title XVIII of such Act from the 
     respective trust fund or account.
       ``(c) Fair Share Per Capita Amount.--
       ``(1) Computation.--
       ``(A) In general.--Subject to subparagraph (B), the fair 
     share per capita amount under this paragraph for a fiscal 
     year (beginning with fiscal year 2011) is an amount computed 
     by the Secretary of Health and Human Services for such fiscal 
     year that, when applied under this section and subchapter B 
     of chapter 34 of the Internal Revenue Code of 1986, will 
     result in revenues to the CERTF of $375,000,000 for the 
     fiscal year.
       ``(B) Alternative computation.--
       ``(i) In general.--If the Secretary is unable to compute 
     the fair share per capita amount under subparagraph (A) for a 
     fiscal year, the fair share per capita amount under this 
     paragraph for the fiscal year shall be the default amount 
     determined under clause (ii) for the fiscal year.
       ``(ii) Default amount.--The default amount under this 
     clause for--

       ``(I) fiscal year 2011 is equal to $2; or
       ``(II) a subsequent year is equal to the default amount 
     under this clause for the preceeding fiscal year increased by 
     the annual percentage increase in the medical care component 
     of the consumer price index (United States city average) for 
     the 12-month period ending with April of the preceding fiscal 
     year.

     Any amount determined under subclause (II) shall be rounded 
     to the nearest penny.
       ``(2) Limitation on medicare funding.--In no case shall the 
     amount transferred under subsection (b)(4)(B) for any fiscal 
     year exceed $90,000,000.
       ``(d) Expenditures From Fund.--
       ``(1) In general.--Subject to paragraph (2), amounts in the 
     CERTF are available to the Secretary of Health and Human 
     Services for carrying out section 1822 of the Social Security 
     Act.
       ``(2) Allocation for commission.--The following amounts in 
     the CERTF for a fiscal year shall be available to carry out 
     the activities of the Comparative Effectiveness Research 
     Commission established under section 1822(b) of the Social 
     Security Act for such fiscal year:
       ``(A) For fiscal year 2008, $7,000,000.
       ``(B) For fiscal year 2009, $9,000,000.
       ``(C) For each fiscal year beginning with 2010, 
     $10,000,000.

     Nothing in this paragraph shall be construed as preventing 
     additional amounts in the CERTF from being made available to 
     the Comparative Effectiveness Research Commission for such 
     activities.
       ``(e) Net Revenues.--For purposes of this section, the term 
     `net revenues' means the amount estimated by the Secretary 
     based on the excess of--
       ``(1) the fees received in the Treasury under subchapter B 
     of chapter 34, over
       ``(2) the decrease in the tax imposed by chapter 1 
     resulting from the fees imposed by such subchapter.''.
       (B) Clerical amendment.--The table of sections for such 
     subchapter A is amended by adding at the end thereof the 
     following new item:


[[Page 22222]]


``Sec. 9511. Health Care Comparative Effectiveness Research Trust 
              Fund.''.

       (2) Financing for fund from fees on insured and self-
     insured health plans.--
       (A) General rule.--Chapter 34 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     subchapter:

         ``Subchapter B--Insured and Self-Insured Health Plans

``Sec. 4375. Health insurance.
``Sec. 4376. Self-insured health plans.
``Sec. 4377. Definitions and special rules.

     ``SEC. 4375. HEALTH INSURANCE.

       ``(a) Imposition of Fee.--There is hereby imposed on each 
     specified health insurance policy for each policy year a fee 
     equal to the fair share per capita amount determined under 
     section 9511(c)(1) multiplied by the average number of lives 
     covered under the policy.
       ``(b) Liability for Fee.--The fee imposed by subsection (a) 
     shall be paid by the issuer of the policy.
       ``(c) Specified Health Insurance Policy.--For purposes of 
     this section--
       ``(1) In general.--Except as otherwise provided in this 
     section, the term `specified health insurance policy' means 
     any accident or health insurance policy issued with respect 
     to individuals residing in the United States.
       ``(2) Exemption of certain policies.--The term `specified 
     health insurance policy' does not include any insurance 
     policy if substantially all of the coverage provided under 
     such policy relates to--
       ``(A) liabilities incurred under workers' compensation 
     laws,
       ``(B) tort liabilities,
       ``(C) liabilities relating to ownership or use of property,
       ``(D) credit insurance,
       ``(E) medicare supplemental coverage, or
       ``(F) such other similar liabilities as the Secretary may 
     specify by regulations.
       ``(3) Treatment of prepaid health coverage arrangements.--
       ``(A) In general.--In the case of any arrangement described 
     in subparagraph (B)--
       ``(i) such arrangement shall be treated as a specified 
     health insurance policy, and
       ``(ii) the person referred to in such subparagraph shall be 
     treated as the issuer.
       ``(B) Description of arrangements.--An arrangement is 
     described in this subparagraph if under such arrangement 
     fixed payments or premiums are received as consideration for 
     any person's agreement to provide or arrange for the 
     provision of accident or health coverage to residents of the 
     United States, regardless of how such coverage is provided or 
     arranged to be provided.

     ``SEC. 4376. SELF-INSURED HEALTH PLANS.

       ``(a) Imposition of Fee.--In the case of any applicable 
     self-insured health plan for each plan year, there is hereby 
     imposed a fee equal to the fair share per capita amount 
     determined under section 9511(c)(1) multiplied by the average 
     number of lives covered under the plan.
       ``(b) Liability for Fee.--
       ``(1) In general.--The fee imposed by subsection (a) shall 
     be paid by the plan sponsor.
       ``(2) Plan sponsor.--For purposes of paragraph (1) the term 
     `plan sponsor' means--
       ``(A) the employer in the case of a plan established or 
     maintained by a single employer,
       ``(B) the employee organization in the case of a plan 
     established or maintained by an employee organization,
       ``(C) in the case of--
       ``(i) a plan established or maintained by 2 or more 
     employers or jointly by 1 or more employers and 1 or more 
     employee organizations,
       ``(ii) a multiple employer welfare arrangement, or
       ``(iii) a voluntary employees' beneficiary association 
     described in section 501(c)(9),
     the association, committee, joint board of trustees, or other 
     similar group of representatives of the parties who establish 
     or maintain the plan, or
       ``(D) the cooperative or association described in 
     subsection (c)(2)(F) in the case of a plan established or 
     maintained by such a cooperative or association.
       ``(c) Applicable Self-Insured Health Plan.--For purposes of 
     this section, the term `applicable self-insured health plan' 
     means any plan for providing accident or health coverage if--
       ``(1) any portion of such coverage is provided other than 
     through an insurance policy, and
       ``(2) such plan is established or maintained--
       ``(A) by one or more employers for the benefit of their 
     employees or former employees,
       ``(B) by one or more employee organizations for the benefit 
     of their members or former members,
       ``(C) jointly by 1 or more employers and 1 or more employee 
     organizations for the benefit of employees or former 
     employees,
       ``(D) by a voluntary employees' beneficiary association 
     described in section 501(c)(9),
       ``(E) by any organization described in section 501(c)(6), 
     or
       ``(F) in the case of a plan not described in the preceding 
     subparagraphs, by a multiple employer welfare arrangement (as 
     defined in section 3(40) of Employee Retirement Income 
     Security Act of 1974), a rural electric cooperative (as 
     defined in section 3(40)(B)(iv) of such Act), or a rural 
     telephone cooperative association (as defined in section 
     3(40)(B)(v) of such Act).

     ``SEC. 4377. DEFINITIONS AND SPECIAL RULES.

       ``(a) Definitions.--For purposes of this subchapter--
       ``(1) Accident and health coverage.--The term `accident and 
     health coverage' means any coverage which, if provided by an 
     insurance policy, would cause such policy to be a specified 
     health insurance policy (as defined in section 4375(c)).
       ``(2) Insurance policy.--The term `insurance policy' means 
     any policy or other instrument whereby a contract of 
     insurance is issued, renewed, or extended.
       ``(3) United states.--The term `United States' includes any 
     possession of the United States.
       ``(b) Treatment of Governmental Entities.--
       ``(1) In general.--For purposes of this subchapter--
       ``(A) the term `person' includes any governmental entity, 
     and
       ``(B) notwithstanding any other law or rule of law, 
     governmental entities shall not be exempt from the fees 
     imposed by this subchapter except as provided in paragraph 
     (2).
       ``(2) Treatment of exempt governmental programs.--In the 
     case of an exempt governmental program, no fee shall be 
     imposed under section 4375 or section 4376 on any covered 
     life under such program.
       ``(3) Exempt governmental program defined.--For purposes of 
     this subchapter, the term `exempt governmental program' 
     means--
       ``(A) any insurance program established under title XVIII 
     of the Social Security Act,
       ``(B) the medical assistance program established by title 
     XIX or XXI of the Social Security Act,
       ``(C) any program established by Federal law for providing 
     medical care (other than through insurance policies) to 
     individuals (or the spouses and dependents thereof) by reason 
     of such individuals being--
       ``(i) members of the Armed Forces of the United States, or
       ``(ii) veterans, and
       ``(D) any program established by Federal law for providing 
     medical care (other than through insurance policies) to 
     members of Indian tribes (as defined in section 4(d) of the 
     Indian Health Care Improvement Act).
       ``(c) Treatment as Tax.--For purposes of subtitle F, the 
     fees imposed by this subchapter shall be treated as if they 
     were taxes.
       ``(d) No Cover Over to Possessions.--Notwithstanding any 
     other provision of law, no amount collected under this 
     subchapter shall be covered over to any possession of the 
     United States.''
       (B) Clerical amendment.--Chapter 34 of such Code is amended 
     by striking the chapter heading and inserting the following:

           ``CHAPTER 34--TAXES ON CERTAIN INSURANCE POLICIES

          ``subchapter a. policies issued by foreign insurers

         ``subchapter b. insured and self-insured health plans

         ``Subchapter A--Policies Issued By Foreign Insurers''.

       (C) Effective date.--The amendments made by this subsection 
     shall apply with respect to policies and plans for portions 
     of policy or plan years beginning on or after October 1, 
     2010.

     SEC. 905. IMPLEMENTATION OF HEALTH INFORMATION TECHNOLOGY 
                   (IT) UNDER MEDICARE.

       (a) In General.--Not later than January 1, 2010, the 
     Secretary of Health and Human Services shall submit to 
     Congress a report that includes--
       (1) a plan to develop and implement a health information 
     technology (health IT) system for all health care providers 
     under the Medicare program that meets the specifications 
     described in subsection (b); and
       (2) an analysis of the impact, feasibility, and costs 
     associated with the use of health information technology in 
     medically underserved communities.
       (b) Plan Specification.--The specifications described in 
     this subsection, with respect to a health information 
     technology system described in subsection (a), are the 
     following:
       (1) The system protects the privacy and security of 
     individually identifiable health information.
       (2) The system maintains and provides permitted access to 
     health information in an electronic format (such as through 
     computerized patient records or a clinical data repository).
       (3) The system utilizes interface software that allows for 
     interoperability.
       (4) The system includes clinical decision support.
       (5) The system incorporates e-prescribing and computerized 
     physician order entry.
       (6) The system incorporates patient tracking and reminders.
       (7) The system utilizes technology that is open source (if 
     available) or technology that has been developed by the 
     government.


[[Page 22223]]


     The report shall include an analysis of the financial and 
     administrative resources necessary to develop such system and 
     recommendations regarding the level of subsidies needed for 
     all such health care providers to adopt the system.

     SEC. 906. DEVELOPMENT, REPORTING, AND USE OF HEALTH CARE 
                   MEASURES.

       (a) In General.--Part E of title XVIII of the Social 
     Security Act (42 U.S.C. 1395x et seq.) is amended by 
     inserting after section 1889 the following:


       ``DEVELOPMENT, REPORTING, AND USE OF HEALTH CARE MEASURES

       ``Sec. 1890.  (a) Fostering Development of Health Care 
     Measures.--The Secretary shall designate, and have in effect 
     an arrangement with, a single organization (such as the 
     National Quality Forum) that meets the requirements described 
     in subsection (c), under which such organization provides the 
     Secretary with advice on, and recommendations with respect 
     to, the key elements and priorities of a national system for 
     establishing health care measures. The arrangement shall be 
     effective beginning no sooner than January 1, 2008, and no 
     later than September 30, 2008.
       ``(b) Duties.--The duties of the organization designated 
     under subsection (a) (in this title referred to as the 
     `designated organization') shall, in accordance with 
     subsection (d), include--
       ``(1) establishing and managing an integrated national 
     strategy and process for setting priorities and goals in 
     establishing health care measures;
       ``(2) coordinating the development and specifications of 
     such measures;
       ``(3) establishing standards for the development and 
     testing of such measures;
       ``(4) endorsing national consensus health care measures; 
     and
       ``(5) advancing the use of electronic health records for 
     automating the collection, aggregation, and transmission of 
     measurement information.
       ``(c) Requirements Described.--For purposes of subsection 
     (a), the requirements described in this subsection, with 
     respect to an organization, are the following:
       ``(1) Private nonprofit.--The organization is a private 
     nonprofit entity governed by a board and an individual 
     designated as president and chief executive officer.
       ``(2) Board membership.--The members of the board of the 
     organization include representatives of--
       ``(A) health care providers or groups representing such 
     providers;
       ``(B) health plans or groups representing health plans;
       ``(C) groups representing health care consumers;
       ``(D) health care purchasers and employers or groups 
     representing such purchasers or employers; and
       ``(E) health care practitioners or groups representing 
     practitioners.
       ``(3) Other membership requirements.--The membership of the 
     organization is representative of individuals with experience 
     with--
       ``(A) urban health care issues;
       ``(B) safety net health care issues;
       ``(C) rural and frontier health care issues; and
       ``(D) health care quality and safety issues.
       ``(4) Open and transparent.--With respect to matters 
     related to the arrangement described in subsection (a), the 
     organization conducts its business in an open and transparent 
     manner and provides the opportunity for public comment.
       ``(5) Voluntary consensus standards setting organization.--
     The organization 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).
       ``(6) Experience.--The organization has at least 7 years 
     experience in establishing national consensus standards.
       ``(d) Requirements for Effectiveness Measures.--In carrying 
     out its duties under subsection (b), the designated 
     organization shall ensure the following:
       ``(1) Measures.--The designated organization shall ensure 
     that the measures established or endorsed under subsection 
     (b) are evidence-based, reliable, and valid; and include--
       ``(A) measures of clinical processes and outcomes, patient 
     experience, efficiency, and equity;
       ``(B) measures to assess effectiveness, timeliness, patient 
     self-management, patient centeredness, and safety; and
       ``(C) measures of under use and over use.
       ``(2) Priorities.--
       ``(A) In general.--The designated organization shall ensure 
     that priority is given to establishing and endorsing--
       ``(i) measures with the greatest potential impact for 
     improving the effectiveness and efficiency of health care;
       ``(ii) measures that may be rapidly implemented by group 
     health plans, health insurance issuers, physicians, 
     hospitals, nursing homes, long-term care providers, and other 
     providers;
       ``(iii) measures which may inform health care decisions 
     made by consumers and patients; and
       ``(iv) measures that apply to multiple services furnished 
     by different providers during an episode of care.
       ``(B) Annual report on priorities; secretarial publication 
     and comment.--
       ``(i) Annual report.--The designated organization shall 
     issue and submit to the Secretary a report by March 31 of 
     each year (beginning with 2009) on the organization's 
     recommendations for priorities and goals in establishing and 
     endorsing health care measures under this section over the 
     next five years.
       ``(ii) Secretarial review and comment.--After receipt of 
     the report under clause (i) for a year, the Secretary shall 
     publish the report in the Federal Register, including any 
     comments of the Secretary on the priorities and goals set 
     forth in the report.
       ``(3) Risk adjustment.--The designated organization, in 
     consultation with health care measure developers and other 
     stakeholders, shall establish procedures to assure that 
     health care measures established and endorsed under this 
     section account for differences in patient health status, 
     patient characteristics, and geographic location, as 
     appropriate.
       ``(4) Maintenance.--The designated organization, in 
     consultation with owners and developers of health care 
     measures, shall require the owners or developers of such 
     measures to update and enhance such measures, including the 
     development of more accurate and precise specifications, and 
     retire existing outdated measures. Such updating shall occur 
     not more often than once during each 12-month period, except 
     in the case of emergent circumstances requiring a more 
     immediate update to a measure.
       ``(e) Use of Health Care Measures; Reporting.--
       ``(1) Use of measures.--For purposes of activities 
     authorized or required under this title, the Secretary shall 
     select from health care measures--
       ``(A) recommended by multi-stakeholder groups; and
       ``(B) endorsed by the designated organization under 
     subsection (b)(4).
       ``(2) Reporting.--The Secretary shall implement procedures, 
     consistent with generally accepted standards, to enable the 
     Department of Health and Human Services to accept the 
     electronic submission of data for purposes of--
       ``(A) effectiveness measurement using the health care 
     measures developed pursuant to this section; and
       ``(B) reporting to the Secretary measures used to make 
     value-based payments under this title.
       ``(f) Contracts.--The Secretary, acting through the Agency 
     for Healthcare Research and Quality, may contract with 
     organizations to support the development and testing of 
     health care measures meeting the standards established by the 
     designated organization.
       ``(g) Dissemination of Information.--In order to make 
     comparative effectiveness information available to health 
     care consumers, health professionals, public health 
     officials, oversight organizations, researchers, and other 
     appropriate individuals and entities, the Secretary shall 
     work with multi-stakeholder groups to provide for the 
     dissemination of effectiveness information developed pursuant 
     to this title.
       ``(h) Funding.--For purposes of carrying out subsections 
     (a), (b), (c), and (d), including for expenses incurred for 
     the arrangement under subsection (a) with the designated 
     organization, there is payable from the Federal Hospital 
     Insurance Trust Fund (established under section 1817) and the 
     Federal Supplementary Medical Insurance Trust Fund 
     (established under section 1841)--
       ``(1) for fiscal year 2008, $15,000,000, multiplied by the 
     ratio of the total number of months in the year to the number 
     of months (and portions of months) of such year during which 
     the arrangement under subsection (a) is effective; and
       ``(2) for each of the fiscal years, 2009 through 2012, 
     $15,000,000.''.

     SEC. 907. IMPROVEMENTS TO THE MEDIGAP PROGRAM.

       (a) Implementation of NAIC Recommendations.--The Secretary 
     of Health and Human Services shall provide, under subsections 
     (p)(1)(E) of section 1882 of the Social Security Act (42 
     U.S.C. 1395s), for implementation of the changes in the NAIC 
     model law and regulations recommended by the National 
     Association of Insurance Commissioners in its Model #651 
     (``Model Regulation to Implement the NAIC Medicare Supplement 
     Insurance Minimum Standards Model Act'') on March 11, 2007, 
     as modified to reflect the changes made under this Act. In 
     carrying out the previous sentence, the benefit packages 
     classified as ``K'' and ``L'' shall be eliminated and such 
     NAIC recommendations shall be treated as having been adopted 
     by such Association as of January 1, 2008.
       (b) Required Offering of a Range of Policies.--
       (1) In general.--Subsection (o) of such section is amended 
     by adding at the end the following new paragraph:
       ``(4) In addition to the requirement of paragraph (2), the 
     issuer of the policy must make available to the individual at 
     least medicare supplemental policies with benefit packages 
     classified as `C' or `F'.''.

[[Page 22224]]

       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to medicare supplemental policies issued on or 
     after January 1, 2008.
       (c) Removal of New Benefit Packages.--Such section is 
     further amended--
       (1) in subsection (o)(1), by striking ``(p), (v), and (w)'' 
     and inserting ``(p) and (v)'';
       (2) in subsection (v)(3)(A)(i), by striking ``or a benefit 
     package described in subparagraph (A) or (B) of subsection 
     (w)(2)''; and
       (3) in subsection (w)--
       (A) by striking ``Policies'' and all that follows through 
     ``The Secretary'' and inserting ``Policies.--The Secretary'';
       (B) by striking the second sentence; and
       (C) by striking paragraph (2) .

                           TITLE X--REVENUES

     SEC. 1001. INCREASE IN RATE OF EXCISE TAXES ON TOBACCO 
                   PRODUCTS AND CIGARETTE PAPERS AND TUBES.

       (a) Small Cigarettes.--Paragraph (1) of section 5701(b) of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``$19.50 per thousand ($17 per thousand on cigarettes removed 
     during 2000 or 2001)'' and inserting ``$42 per thousand''.
       (b) Large Cigarettes.--Paragraph (2) of section 5701(b) of 
     such Code is amended by striking ``$40.95 per thousand 
     ($35.70 per thousand on cigarettes removed during 2000 or 
     2001)'' and inserting ``$88.20 per thousand''.
       (c) Small Cigars.--Paragraph (1) of section 5701(a) of such 
     Code is amended by striking ``$1.828 cents per thousand 
     ($1.594 cents per thousand on cigars removed during 2000 or 
     2001)'' and inserting ``$42 per thousand''.
       (d) Large Cigars.--Paragraph (2) of section 5701(a) of such 
     Code is amended--
       (1) by striking ``20.719 percent (18.063 percent on cigars 
     removed during 2000 or 2001)'' and inserting ``44.63 
     percent'', and
       (2) by striking ``$48.75 per thousand ($42.50 per thousand 
     on cigars removed during 2000 or 2001)'' and inserting ``$1 
     per cigar''.
       (e) Cigarette Papers.--Subsection (c) of section 5701 of 
     such Code is amended by striking ``1.22 cents (1.06 cents on 
     cigarette papers removed during 2000 or 2001)'' and inserting 
     ``2.63 cents''.
       (f) Cigarette Tubes.--Subsection (d) of section 5701 of 
     such Code is amended by striking ``2.44 cents (2.13 cents on 
     cigarette tubes removed during 2000 or 2001)'' and inserting 
     ``5.26 cents''.
       (g) Snuff.--Paragraph (1) of section 5701(e) of such Code 
     is amended by striking ``58.5 cents (51 cents on snuff 
     removed during 2000 or 2001)'' and inserting ``$1.26''.
       (h) Chewing Tobacco.--Paragraph (2) of section 5701(e) of 
     such Code is amended by striking ``19.5 cents (17 cents on 
     chewing tobacco removed during 2000 or 2001)'' and inserting 
     ``42 cents''.
       (i) Pipe Tobacco.--Subsection (f) of section 5701 of such 
     Code is amended by striking ``$1.0969 cents (95.67 cents on 
     pipe tobacco removed during 2000 or 2001)'' and inserting 
     ``$2.36''.
       (j) Roll-Your-Own Tobacco.--
       (1) In general.--Subsection (g) of section 5701 of such 
     Code is amended by striking ``$1.0969 cents (95.67 cents on 
     roll-your-own tobacco removed during 2000 or 2001)'' and 
     inserting ``$7.4667''.
       (2) Inclusion of cigar tobacco.--Subsection (o) of section 
     5702 of such Code is amended by inserting ``or cigars, or for 
     use as wrappers for making cigars'' before the period at the 
     end.
       (k) Effective Date.--The amendments made by this section 
     shall apply to articles removed after December 31, 2007.
       (l) Floor Stocks Taxes.--
       (1) Imposition of tax.--On cigarettes manufactured in or 
     imported into the United States which are removed before 
     January 1, 2008, and held on such date for sale by any 
     person, there is hereby imposed a tax in an amount equal to 
     the excess of--
       (A) the tax which would be imposed under section 5701 of 
     the Internal Revenue Code of 1986 on the article if the 
     article had been removed on such date, over
       (B) the prior tax (if any) imposed under section 5701 of 
     such Code on such article.
       (2) Authority to exempt cigarettes held in vending 
     machines.--To the extent provided in regulations prescribed 
     by the Secretary, no tax shall be imposed by paragraph (1) on 
     cigarettes held for retail sale on January 1, 2008, by any 
     person in any vending machine. If the Secretary provides such 
     a benefit with respect to any person, the Secretary may 
     reduce the $500 amount in paragraph (3) with respect to such 
     person.
       (3) Credit against tax.--Each person shall be allowed as a 
     credit against the taxes imposed by paragraph (1) an amount 
     equal to $500. Such credit shall not exceed the amount of 
     taxes imposed by paragraph (1) for which such person is 
     liable.
       (4) Liability for tax and method of payment.--
       (A) Liability for tax.--A person holding cigarettes on 
     January 1, 2008, to which any tax imposed by paragraph (1) 
     applies shall be liable for such tax.
       (B) Method of payment.--The tax imposed by paragraph (1) 
     shall be paid in such manner as the Secretary shall prescribe 
     by regulations.
       (C) Time for payment.--The tax imposed by paragraph (1) 
     shall be paid on or before April 14, 2008.
       (5) Articles in foreign trade zones.--- Notwithstanding the 
     Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a) and any 
     other provision of law, any article which is located in a 
     foreign trade zone on January 1, 2008, shall be subject to 
     the tax imposed by paragraph (1) if--
       (A) internal revenue taxes have been determined, or customs 
     duties liquidated, with respect to such article before such 
     date pursuant to a request made under the 1st proviso of 
     section 3(a) of such Act, or
       (B) such article is held on such date under the supervision 
     of a customs officer pursuant to the 2d proviso of such 
     section 3(a).
       (6) Definitions.--For purposes of this subsection--
       (A) In general.--Terms used in this subsection which are 
     also used in section 5702 of the Internal Revenue Code of 
     1986 shall have the respective meanings such terms have in 
     such section.
       (B) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury or the Secretary's delegate.
       (7) Controlled groups.--Rules similar to the rules of 
     section 5061(e)(3) of such Code shall apply for purposes of 
     this subsection.
       (8) Other laws applicable.--All provisions of law, 
     including penalties, applicable with respect to the taxes 
     imposed by section 5701 of such Code shall, insofar as 
     applicable and not inconsistent with the provisions of this 
     subsection, apply to the floor stocks taxes imposed by 
     paragraph (1), to the same extent as if such taxes were 
     imposed by such section 5701. The Secretary may treat any 
     person who bore the ultimate burden of the tax imposed by 
     paragraph (1) as the person to whom a credit or refund under 
     such provisions may be allowed or made.

     SEC. 1002. EXEMPTION FOR EMERGENCY MEDICAL SERVICES 
                   TRANSPORTATION.

       (a) In General.--Subsection (l) of section 4041 of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(l) Exemption for Certain Uses.--
       ``(1) Certain aircraft.--No tax shall be imposed under this 
     section on any liquid sold for use in, or used in, a 
     helicopter or a fixed-wing aircraft for purposes of providing 
     transportation with respect to which the requirements of 
     subsection (f) or (g) of section 4261 are met.
       ``(2) Emergency medical services.--No tax shall be imposed 
     under this section on any liquid sold for use in, or used in, 
     any ambulance for purposes of providing transportation for 
     emergency medical services. The preceding sentence shall not 
     apply to any liquid used after December 31, 2009.''.
       (b) Fuels Not Used for Taxable Purposes.--Section 6427 of 
     such Code is amended by inserting after subsection (e) the 
     following new subsection:
       ``(f) Use To Provide Emergency Medical Services.--Except as 
     provided in subsection (k), if any fuel on which tax was 
     imposed by section 4081 or 4041 is used in an ambulance for a 
     purpose described in section 4041(l)(2), the Secretary shall 
     pay (without interest) to the ultimate purchaser of such fuel 
     an amount equal to the aggregate amount of the tax imposed on 
     such fuel. The preceding sentence shall not apply to any 
     liquid used after December 31, 2009.''.
       (c) Time for Filing Claims; Period Covered.--Paragraphs (1) 
     and (2)(A) of section 6427(i) of such Code are each amended 
     by inserting ``(f),'' after ``(d),''.
       (d) Conforming Amendment.--Section 6427(d) of such Code is 
     amended by striking ``4041(l)'' and inserting ``4041(l)(1)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to fuel used in transportation provided in 
     quarters beginning after the date of the enactment of this 
     Act.

  The SPEAKER pro tempore (Mr. Tierney). Pursuant to House Resolution 
594, the amendment in the nature of a substitute printed in the bill, 
modified by the amendment printed in House Report 110-285, is adopted 
and the bill, as amended, is considered read.
  The text of the bill, as amended, is as follows:

       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 ``Children's 
     Health and Medicare Protection Act of 2007''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

              TITLE I--CHILDREN'S HEALTH INSURANCE PROGRAM

Sec. 100.  Purpose.

                          Subtitle A--Funding

Sec. 101. Establishment of new base CHIP allotments.
Sec. 102. 2-year initial availability of CHIP allotments.
Sec. 103. Redistribution of unused allotments to address State funding 
              shortfalls.
Sec. 104. Extension of option for qualifying States.

[[Page 22225]]

  Subtitle B--Improving Enrollment and Retention of Eligible Children

Sec. 111. CHIP performance bonus payment to offset additional 
              enrollment costs resulting from enrollment and retention 
              efforts.
Sec. 112. State option to rely on findings from an express lane agency 
              to conduct simplified eligibility determinations.
Sec. 113. Application of medicaid outreach procedures to all children 
              and pregnant women.
Sec. 114. Encouraging culturally appropriate enrollment and retention 
              practices.
Sec. 115. Continuous coverage under CHIP.

                          Subtitle C--Coverage

Sec. 121. Ensuring child-centered coverage.
Sec. 122. Improving benchmark coverage options.
Sec. 123. Premium grace period.

                        Subtitle D--Populations

Sec. 131. Optional coverage of children up to age 21 under CHIP.
Sec. 132. Optional coverage of legal immigrants under the Medicaid 
              program and CHIP.
Sec. 133. State option to expand or add coverage of certain pregnant 
              women under CHIP.
Sec. 134. Limitation on waiver authority to cover adults.
Sec. 135. No Federal funding for illegal aliens.
Sec. 136. Awaiting requirement to enforce citizenship restrictions on 
              eligibility for Medicaid and CHIP benefits.

                           Subtitle E--Access

Sec. 141. Children's Access, Payment, and Equality Commission.
Sec. 142. Model of Interstate coordinated enrollment and coverage 
              process.
Sec. 143. Medicaid citizenship documentation requirements.
Sec. 144. Access to dental care for children.
Sec. 145. Prohibiting initiation of new health opportunity account 
              demonstration programs.

               Subtitle F--Quality and Program Integrity

Sec. 151. Pediatric health quality measurement program.
Sec. 152. Application of certain managed care quality safeguards to 
              CHIP.
Sec. 153. Updated Federal evaluation of CHIP.
Sec. 154. Access to records for IG and GAO audits and evaluations.
Sec. 155. References to title XXI.
Sec. 156. Reliance on law; exception for State legislation.

              TITLE II--MEDICARE BENEFICIARY IMPROVEMENTS

                  Subtitle A--Improvements in Benefits

Sec. 201. Coverage and waiver of cost-sharing for preventive services.
Sec. 202. Waiver of deductible for colorectal cancer screening tests 
              regardless of coding, subsequent diagnosis, or ancillary 
              tissue removal.
Sec. 203. Parity for mental health coinsurance.

Subtitle B--Improving, Clarifying, and Simplifying Financial Assistance 
                 for Low Income Medicare Beneficiaries

Sec. 211. Improving assets tests for Medicare Savings Program and low-
              income subsidy program.
Sec. 212. Making QI program permanent and expanding eligibility.
Sec. 213. Eliminating barriers to enrollment.
Sec. 214. Eliminating application of estate recovery.
Sec. 215. Elimination of part D cost-sharing for certain non-
              institutionalized full-benefit dual eligible individuals.
Sec. 216. Exemptions from income and resources for determination of 
              eligibility for low-income subsidy.
Sec. 217. Cost-sharing protections for low-income subsidy-eligible 
              individuals.
Sec. 218. Intelligent assignment in enrollment.

              Subtitle C--Part D Beneficiary Improvements

Sec. 221. Including costs incurred by AIDS drug assistance programs and 
              Indian Health Service in providing prescription drugs 
              toward the annual out of pocket threshold under Part D.
Sec. 222. Permitting mid-year changes in enrollment for formulary 
              changes adversely impact an enrollee.
Sec. 223. Removal of exclusion of benzodiazepines from required 
              coverage under the Medicare prescription drug program.
Sec. 224. Permitting updating drug compendia under part D using part B 
              update process.
Sec. 225. Codification of special protections for six protected drug 
              classifications.
Sec. 226. Elimination of Medicare part D late enrollment penalties paid 
              by low-income subsidy-eligible individuals.
Sec. 227. Special enrollment period for subsidy eligible individuals.

                Subtitle D--Reducing Health Disparities

Sec. 231. Medicare data on race, ethnicity, and primary language.
Sec. 232. Ensuring effective communication in Medicare.
Sec. 233. Demonstration to promote access for Medicare beneficiaries 
              with limited English proficiency by providing 
              reimbursement for culturally and linguistically 
              appropriate services.
Sec. 234. Demonstration to improve care to previously uninsured.
Sec. 235. Office of the Inspector General report on compliance with and 
              enforcement of national standards on culturally and 
              linguistically appropriate services (CLAS) in medicare.
Sec. 236. IOM report on impact of language access services.
Sec. 237. Definitions.

             TITLE III--PHYSICIANS' SERVICE PAYMENT REFORM

Sec. 301. Establishment of separate target growth rates for service 
              categories.
Sec. 302. Improving accuracy of relative values under the Medicare 
              physician fee schedule.
Sec. 303. Feedback mechanism on practice patterns.
Sec. 304. Payments for efficient areas.
Sec. 305. Recommendations on refining the physician fee schedule.
Sec. 306. Improved and expanded medical home demonstration project.
Sec. 307. Repeal of Physician Assistance and Quality Initiative Fund.
Sec. 308. Adjustment to Medicare payment localities.
Sec. 309. Payment for imaging services.
Sec. 310. Reducing frequency of meetings of the Practicing Physicians 
              Advisory Council.

                  TITLE IV--MEDICARE ADVANTAGE REFORMS

                       Subtitle A--Payment Reform

Sec. 401. Equalizing payments between Medicare Advantage plans and fee-
              for-service Medicare.

                  Subtitle B--Beneficiary Protections

Sec. 411. NAIC development of marketing, advertising, and related 
              protections.
Sec. 412. Limitation on out-of-pocket costs for individual health 
              services.
Sec. 413. MA plan enrollment modifications.
Sec. 414. Information for beneficiaries on MA plan administrative 
              costs.

                Subtitle C--Quality and Other Provisions

Sec. 421. Requiring all MA plans to meet equal standards.
Sec. 422. Development of new quality reporting measures on racial 
              disparities.
Sec. 423. Strengthening audit authority.
Sec. 424. Improving risk adjustment for MA payments.
Sec. 425. Eliminating special treatment of private fee-for-service 
              plans.
Sec. 426. Renaming of Medicare Advantage program.

                  Subtitle D--Extension of Authorities

Sec. 431. Extension and revision of authority for special needs plans 
              (SNPs).
Sec. 432. Extension and revision of authority for Medicare reasonable 
              cost contracts.

            TITLE V--PROVISIONS RELATING TO MEDICARE PART A

Sec. 501. Inpatient hospital payment updates.
Sec. 502. Payment for inpatient rehabilitation facility (IRF) services.
Sec. 503. Long-term care hospitals.
Sec. 504. Increasing the DSH adjustment cap.
Sec. 505. PPS-exempt cancer hospitals.
Sec. 506. Skilled nursing facility payment update.
Sec. 507. Revocation of unique deeming authority of the Joint 
              Commission for the Accreditation of Healthcare 
              Organizations.
Sec. 508. Treatment of Medicare hospital reclassifications.
Sec. 509. Medicare critical access hospital designations.

         TITLE VI--OTHER PROVISIONS RELATING TO MEDICARE PART B

             Subtitle A--Payment and Coverage Improvements

Sec. 601. Payment for therapy services.
Sec. 602. Medicare separate definition of outpatient speech-language 
              pathology services.
Sec. 603. Increased reimbursement rate for certified nurse-midwives.
Sec. 604. Adjustment in outpatient hospital fee schedule increase 
              factor.
Sec. 605. Exception to 60-day limit on Medicare substitute billing 
              arrangements in case of physicians ordered to active duty 
              in the Armed Forces.
Sec. 606. Excluding clinical social worker services from coverage under 
              the medicare skilled nursing facility prospective payment 
              system and consolidated payment.
Sec. 607. Coverage of marriage and family therapist services and mental 
              health counselor services.
Sec. 608. Rental and purchase of power-driven wheelchairs.
Sec. 609. Rental and purchase of oxygen equipment.
Sec. 610. Adjustment for Medicare mental health services.
Sec. 611. Extension of brachytherapy special rule.
Sec. 612. Payment for part B drugs.

       Subtitle B--Extension of Medicare Rural Access Protections

Sec. 621. 2-year extension of floor on medicare work geographic 
              adjustment.

[[Page 22226]]

Sec. 622. 2-year extension of special treatment of certain physician 
              pathology services under Medicare.
Sec. 623. 2-year extension of medicare reasonable costs payments for 
              certain clinical diagnostic laboratory tests furnished to 
              hospital patients in certain rural areas.
Sec. 624. 2-year extension of Medicare incentive payment program for 
              physician scarcity areas .
Sec. 625. 2-year extension of medicare increase payments for ground 
              ambulance services in rural areas.
Sec. 626. Extending hold harmless for small rural hospitals under the 
              HOPD prospective payment system.

              Subtitle C--End Stage Renal Disease Program

Sec. 631. Chronic kidney disease demonstration projects.
Sec. 632. Medicare coverage of kidney disease patient education 
              services.
Sec. 633. Required training for patient care dialysis technicians.
Sec. 634. MedPAC report on treatment modalities for patients with 
              kidney failure.
Sec. 635. Adjustment for erythropoietin stimulating agents (ESAs).
Sec. 636. Site neutral composite rate.
Sec. 637. Development of ESRD bundling system and quality incentive 
              payments.
Sec. 638. MedPAC report on ESRD bundling system.
Sec. 639. OIG study and report on erythropoietin.

                       Subtitle D--Miscellaneous

Sec. 651. Limitation on exception to the prohibition on certain 
              physician referrals for hospitals.

        TITLE VII--PROVISIONS RELATING TO MEDICARE PARTS A AND B

Sec. 701. Home health payment update for 2008.
Sec. 702. 2-year extension of temporary Medicare payment increase for 
              home health services furnished in a rural area.
Sec. 703. Extension of Medicare secondary payer for beneficiaries with 
              end stage renal disease for large group plans.
Sec. 704. Plan for Medicare payment adjustments for never events.
Sec. 705. Reinstatement of residency slots.
Sec. 706. Studies relating to home health.
Sec. 707. Rural home health quality demonstration products.

                          TITLE VIII--MEDICAID

                Subtitle A--Protecting Existing Coverage

Sec. 801. Modernizing transitional Medicaid.
Sec. 802. Family planning services.
Sec. 803. Authority to continue providing adult day health services 
              approved under a State Medicaid plan.
Sec. 804. State option to protect community spouses of individuals with 
              disabilities.
Sec. 805. County medicaid health insuring organizations.

                          Subtitle B--Payments

Sec. 811. Payments for Puerto Rico and territories.
Sec. 812. Medicaid drug rebate.
Sec. 813. Adjustment in computation of Medicaid FMAP to disregard an 
              extraordinary employer pension contribution.
Sec. 814. Moratorium on certain payment restrictions.
Sec. 815. Tennessee DSH.
Sec. 816. Clarification treatment of regional medical center.
Sec. 817. Extension of SSI web-based asset demonstration project to the 
              Medicaid program.

                       Subtitle C--Miscellaneous

Sec. 821. Demonstration project for employer buy-in.
Sec. 822. Diabetes grants.
Sec. 823. Technical correction.

                        TITLE IX--MISCELLANEOUS

Sec. 901.  Medicare Payment Advisory Commission status.
Sec. 902. Repeal of trigger provision.
Sec. 903. Repeal of comparative cost adjustment (CCA) program.
Sec. 904. Comparative effectiveness research.
Sec. 905. Implementation of health information technology (IT) under 
              Medicare.
Sec. 906. Development, reporting, and use of health care measures.
Sec. 907. Improvements to the Medigap program.
Sec. 908. Implementation funding.
Sec. 909. Access to data on prescription drug plans and Medicare 
              advantage plans.
Sec. 910. Abstinence education.

                           TITLE X--REVENUES

Sec. 1001. Increase in rate of excise taxes on tobacco products and 
              cigarette papers and tubes.
Sec. 1002. Exemption for emergency medical services transportation.

              TITLE I--CHILDREN'S HEALTH INSURANCE PROGRAM

     SEC. 100. PURPOSE.

       It is the purpose of this title to provide dependable and 
     stable funding for children's health insurance under titles 
     XXI and XIX of the Social Security Act in order to enroll all 
     six million uninsured children who are eligible, but not 
     enrolled, for coverage today through such titles.

                          Subtitle A--Funding

     SEC. 101. ESTABLISHMENT OF NEW BASE CHIP ALLOTMENTS.

       Section 2104 of the Social Security Act (42 U.S.C. 1397dd) 
     is amended--
       (1) in subsection (a)--
       (A) in paragraph (9), by striking ``and'' at the end;
       (B) in paragraph (10), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following new paragraph:
       ``(11) for fiscal year 2008 and each succeeding fiscal 
     year, the sum of the State allotments provided under 
     subsection (i) for such fiscal year.''; and
       (2) in subsections (b)(1) and (c)(1), by striking 
     ``subsection (d)'' and inserting ``subsections (d) and (i)''; 
     and
       (3) by adding at the end the following new subsection:
       ``(i) Allotments for States and Territories Beginning With 
     Fiscal Year 2008.--
       ``(1) General allotment computation.--Subject to the 
     succeeding provisions of this subsection, the Secretary shall 
     compute a State allotment for each State for each fiscal year 
     as follows:
       ``(A) For fiscal year 2008.--For fiscal year 2008, the 
     allotment of a State is equal to the greater of--
       ``(i) the State projection (in its submission on forms CMS-
     21B and CMS-37 for May 2007) of Federal payments to the State 
     under this title for such fiscal year, except that, in the 
     case of a State that has enacted legislation to modify its 
     State child health plan during 2007, the State may substitute 
     its projection in its submission on forms CMS-21B and CMS-37 
     for August 2007, instead of such forms for May 2007; or
       ``(ii) the allotment of the State under this section for 
     fiscal year 2007 multiplied by the allotment increase factor 
     under paragraph (2) for fiscal year 2008.
       ``(B) Inflation update for fiscal year 2009 and each second 
     succeeding fiscal year.--For fiscal year 2009 and each second 
     succeeding fiscal year, the allotment of a State is equal to 
     the amount of the State allotment under this paragraph for 
     the previous fiscal year multiplied by the allotment increase 
     factor under paragraph (2) for the fiscal year involved.
       ``(C) Rebasing in fiscal year 2010 and each second 
     succeeding fiscal year.--For fiscal year 2010 and each second 
     succeeding fiscal year, the allotment of a State is equal to 
     the Federal payments to the State that are attributable to 
     (and countable towards) the total amount of allotments 
     available under this section to the State (including 
     allotments made available under paragraph (3) as well as 
     amounts redistributed to the State) in the previous fiscal 
     year multiplied by the allotment increase factor under 
     paragraph (2) for the fiscal year involved.
       ``(D) Special rules for territories.--Notwithstanding the 
     previous subparagraphs, the allotment for a State that is not 
     one of the 50 States or the District of Columbia for fiscal 
     year 2008 and for a succeeding fiscal year is equal to the 
     Federal payments provided to the State under this title for 
     the previous fiscal year multiplied by the allotment increase 
     factor under paragraph (2) for the fiscal year involved (but 
     determined by applying under paragraph (2)(B) as if the 
     reference to `in the State' were a reference to `in the 
     United States').
       ``(2) Allotment increase factor.--The allotment increase 
     factor under this paragraph for a fiscal year is equal to the 
     product of the following:
       ``(A) Per capita health care growth factor.--1 plus the 
     percentage increase in the projected per capita amount of 
     National Health Expenditures from the calendar year in which 
     the previous fiscal year ends to the calendar year in which 
     the fiscal year involved ends, as most recently published by 
     the Secretary before the beginning of the fiscal year.
       ``(B) Child population growth factor.--1 plus the 
     percentage increase (if any) in the population of children 
     under 19 years of age in the State from July 1 in the 
     previous fiscal year to July 1 in the fiscal year involved, 
     as determined by the Secretary based on the most recent 
     published estimates of the Bureau of the Census before the 
     beginning of the fiscal year involved, plus 1 percentage 
     point.
       ``(3) Performance-based shortfall adjustment.--
       ``(A) In general.--If a State's expenditures under this 
     title in a fiscal year (beginning with fiscal year 2008) 
     exceed the total amount of allotments available under this 
     section to the State in the fiscal year (determined without 
     regard to any redistribution it receives under subsection (f) 
     that is available for expenditure during such fiscal year, 
     but including any carryover from a previous fiscal year) and 
     if the average monthly unduplicated number of children 
     enrolled under the State plan under this title (including 
     children receiving health care coverage through funds under 
     this title pursuant to a waiver under section 1115) during 
     such fiscal year exceeds its target average number of such 
     enrollees (as determined under subparagraph (B)) for that 
     fiscal year, the allotment under this section for the State 
     for the subsequent fiscal year (or, pursuant to subparagraph 
     (F), for the fiscal year involved) shall be increased by the 
     product of--
       ``(i) the amount by which such average monthly caseload 
     exceeds such target number of enrollees; and

[[Page 22227]]

       ``(ii) the projected per capita expenditures under the 
     State child health plan (as determined under subparagraph (C) 
     for the original fiscal year involved), multiplied by the 
     enhanced FMAP (as defined in section 2105(b)) for the State 
     and fiscal year involved.
       ``(B) Target average number of child enrollees.--In this 
     subsection, the target average number of child enrollees for 
     a State--
       ``(i) for fiscal year 2008 is equal to the monthly average 
     unduplicated number of children enrolled in the State child 
     health plan under this title (including such children 
     receiving health care coverage through funds under this title 
     pursuant to a waiver under section 1115) during fiscal year 
     2007 increased by the population growth for children in that 
     State for the year ending on June 30, 2006 (as estimated by 
     the Bureau of the Census) plus 1 percentage point; or
       ``(ii) for a subsequent fiscal year is equal to the target 
     average number of child enrollees for the State for the 
     previous fiscal year increased by the population growth for 
     children in that State for the year ending on June 30 before 
     the beginning of the fiscal year (as estimated by the Bureau 
     of the Census) plus 1 percentage point.
       ``(C) Projected per capita expenditures.--For purposes of 
     subparagraph (A)(ii), the projected per capita expenditures 
     under a State child health plan--
       ``(i) for fiscal year 2008 is equal to the average per 
     capita expenditures (including both State and Federal 
     financial participation) under such plan for the targeted 
     low-income children counted in the average monthly caseload 
     for purposes of this paragraph during fiscal year 2007, 
     increased by the annual percentage increase in the per capita 
     amount of National Health Expenditures (as estimated by the 
     Secretary) for 2008; or
       ``(ii) for a subsequent fiscal year is equal to the 
     projected per capita expenditures under such plan for the 
     previous fiscal year (as determined under clause (i) or this 
     clause) increased by the annual percentage increase in the 
     per capita amount of National Health Expenditures (as 
     estimated by the Secretary) for the year in which such 
     subsequent fiscal year ends.
       ``(D) Availability.--Notwithstanding subsection (e), an 
     increase in allotment under this paragraph shall only be 
     available for expenditure during the fiscal year in which it 
     is provided.
       ``(E) No redistribution of performance-based shortfall 
     adjustment.--In no case shall any increase in allotment under 
     this paragraph for a State be subject to redistribution to 
     other States.
       ``(F) Interim allotment adjustment.--The Secretary shall 
     develop a process to administer the performance-based 
     shortfall adjustment in a manner so it is applied to (and 
     before the end of) the fiscal year (rather than the 
     subsequent fiscal year) involved for a State that the 
     Secretary estimates will be in shortfall and will exceed its 
     enrollment target for that fiscal year.
       ``(G) Periodic auditing.--The Comptroller General of the 
     United States shall periodically audit the accuracy of data 
     used in the computation of allotment adjustments under this 
     paragraph. Based on such audits, the Comptroller General 
     shall make such recommendations to the Congress and the 
     Secretary as the Comptroller General deems appropriate.
       ``(4) Continued reporting.--For purposes of paragraph (3) 
     and subsection (f), the State shall submit to the Secretary 
     the State's projected Federal expenditures, even if the 
     amount of such expenditures exceeds the total amount of 
     allotments available to the State in such fiscal year.''.

     SEC. 102. 2-YEAR INITIAL AVAILABILITY OF CHIP ALLOTMENTS.

       Section 2104(e) of the Social Security Act (42 U.S.C. 
     1397dd(e)) is amended to read as follows:
       ``(e) Availability of Amounts Allotted.--
       ``(1) In general.--Except as provided in paragraph (2) and 
     subsection (i)(3)(D), amounts allotted to a State pursuant to 
     this section--
       ``(A) for each of fiscal years 1998 through 2007, shall 
     remain available for expenditure by the State through the end 
     of the second succeeding fiscal year; and
       ``(B) for fiscal year 2008 and each fiscal year thereafter, 
     shall remain available for expenditure by the State through 
     the end of the succeeding fiscal year.
       ``(2) Availability of amounts redistributed.--Amounts 
     redistributed to a State under subsection (f) shall be 
     available for expenditure by the State through the end of the 
     fiscal year in which they are redistributed, except that 
     funds so redistributed to a State that are not expended by 
     the end of such fiscal year shall remain available after the 
     end of such fiscal year and shall be available in the 
     following fiscal year for subsequent redistribution under 
     such subsection.''.

     SEC. 103. REDISTRIBUTION OF UNUSED ALLOTMENTS TO ADDRESS 
                   STATE FUNDING SHORTFALLS.

       Section 2104(f) of the Social Security Act (42 U.S.C. 
     1397dd(f)) is amended--
       (1) by striking ``The Secretary'' and inserting the 
     following:
       ``(1) In general.--The Secretary'';
       (2) by striking ``States that have fully expended the 
     amount of their allotments under this section.'' and 
     inserting ``States that the Secretary determines with respect 
     to the fiscal year for which unused allotments are available 
     for redistribution under this subsection, are shortfall 
     States described in paragraph (2) for such fiscal year, but 
     not to exceed the amount of the shortfall described in 
     paragraph (2)(A) for each such State (as may be adjusted 
     under paragraph (2)(C)). The amount of allotments not 
     expended or redistributed under the previous sentence shall 
     remain available for redistribution in the succeeding fiscal 
     year.''; and
       (3) by adding at the end the following new paragraph:
       ``(2) Shortfall states described.--
       ``(A) In general.--For purposes of paragraph (1), with 
     respect to a fiscal year, a shortfall State described in this 
     subparagraph is a State with a State child health plan 
     approved under this title for which the Secretary estimates 
     on the basis of the most recent data available to the 
     Secretary, that the projected expenditures under such plan 
     for the State for the fiscal year will exceed the sum of--
       ``(i) the amount of the State's allotments for any 
     preceding fiscal years that remains available for expenditure 
     and that will not be expended by the end of the immediately 
     preceding fiscal year;
       ``(ii) the amount (if any) of the performance based 
     adjustment under subsection (i)(3)(A); and
       ``(iii) the amount of the State's allotment for the fiscal 
     year.
       ``(B) Proration rule.--If the amounts available for 
     redistribution under paragraph (1) for a fiscal year are less 
     than the total amounts of the estimated shortfalls determined 
     for the year under subparagraph (A), the amount to be 
     redistributed under such paragraph for each shortfall State 
     shall be reduced proportionally.
       ``(C) Retrospective adjustment.--The Secretary may adjust 
     the estimates and determinations made under paragraph (1) and 
     this paragraph with respect to a fiscal year as necessary on 
     the basis of the amounts reported by States not later than 
     November 30 of the succeeding fiscal year, as approved by the 
     Secretary.''.

     SEC. 104. EXTENSION OF OPTION FOR QUALIFYING STATES.

       Section 2105(g)(1)(A) of the Social Security Act (42 U.S.C. 
     1397ee(g)(1)(A)) is amended by inserting after ``or 2007'' 
     the following: ``or 100 percent of any allotment under 
     section 2104 for any subsequent fiscal year''.

  Subtitle B--Improving Enrollment and Retention of Eligible Children

     SEC. 111. CHIP PERFORMANCE BONUS PAYMENT TO OFFSET ADDITIONAL 
                   ENROLLMENT COSTS RESULTING FROM ENROLLMENT AND 
                   RETENTION EFFORTS.

       (a) In General.--Section 2105(a) of the Social Security Act 
     (42 U.S.C. 1397ee(a)) is amended by adding at the end the 
     following new paragraphs:
       (b) GAO Study.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study on the effectiveness of the 
     performance bonus payment program under the amendment made by 
     subsection (a) on the enrollment and retention of eligible 
     children under the Medicaid and CHIP programs and in reducing 
     the rate of uninsurance among such children.
       (2) Report.--Not later than January 1, 2013, the 
     Comptroller General shall submit a report to Congress on such 
     study and shall include in such report such recommendations 
     for extending or modifying such program as the Comptroller 
     General determines appropriate.
       ``(3) Performance bonus payment to offset additional 
     medicaid and chip child enrollment costs resulting from 
     enrollment and retention efforts.--
       ``(A) In general.--In addition to the payments made under 
     paragraph (1), for each fiscal year (beginning with fiscal 
     year 2008 and ending with fiscal year 2013) the Secretary 
     shall pay to each State that meets the condition under 
     paragraph (4) for the fiscal year, an amount equal to the 
     amount described in subparagraph (B) for the State and fiscal 
     year. The payment under this paragraph shall be made, to a 
     State for a fiscal year, as a single payment not later than 
     the last day of the first calendar quarter of the following 
     fiscal year.
       ``(B) Amount.--The amount described in this subparagraph 
     for a State for a fiscal year is equal to the sum of the 
     following amounts:
       ``(i) For above baseline medicaid child enrollment costs.--

       ``(I) First tier above baseline medicaid enrollees.--An 
     amount equal to the number of first tier above baseline child 
     enrollees (as determined under subparagraph (C)(i)) under 
     title XIX for the State and fiscal year multiplied by 35 
     percent of the projected per capita State Medicaid 
     expenditures (as determined under subparagraph (D)(i)) for 
     the State and fiscal year under title XIX.
       ``(II) Second tier above baseline medicaid enrollees .--An 
     amount equal to the number of second tier above baseline 
     child enrollees (as determined under subparagraph (C)(ii)) 
     under title XIX for the State and fiscal year multiplied by 
     90 percent of the projected per capita State Medicaid 
     expenditures (as determined under subparagraph (D)(i)) for 
     the State and fiscal year under title XIX.

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

       ``(I) First tier above baseline chip enrollees.--An amount 
     equal to the number of first tier above baseline child 
     enrollees under this title (as determined under subparagraph 
     (C)(i)) for the State and fiscal year multiplied by 5 percent 
     of the projected per capita State CHIP expenditures (as 
     determined under subparagraph (D)(ii)) for the State and 
     fiscal year under this title.
       ``(II) Second tier above baseline chip enrollees.--An 
     amount equal to the number of second tier above baseline 
     child enrollees under this title (as determined under 
     subparagraph (C)(ii)) for the State and fiscal year 
     multiplied

[[Page 22228]]

     by 75 percent of the projected per capita State CHIP 
     expenditures (as determined under subparagraph (D)(ii)) for 
     the State and fiscal year under this title.

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

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

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

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

       ``(iii) Baseline number of child enrollees.--The baseline 
     number of child enrollees for a State under this title or 
     title XIX--

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

       ``(D) Projected per capita state expenditures.--For 
     purposes of subparagraph (B)--
       ``(i) Projected per capita state medicaid expenditures.--
     The projected per capita State Medicaid expenditures for a 
     State and fiscal year under title XIX is equal to the average 
     per capita expenditures (including both State and Federal 
     financial participation) for children under the State plan 
     under such title, including under waivers but not including 
     such children eligible for assistance by virtue of the 
     receipt of benefits under title XVI, for the most recent 
     fiscal year for which actual data are available (as 
     determined by the Secretary), increased (for each subsequent 
     fiscal year up to and including the fiscal year involved) by 
     the annual percentage increase in per capita amount of 
     National Health Expenditures (as estimated by the Secretary) 
     for the calendar year in which the respective subsequent 
     fiscal year ends and multiplied by a State matching 
     percentage equal to 100 percent minus the Federal medical 
     assistance percentage (as defined in section 1905(b)) for the 
     fiscal year involved.
       ``(ii) Projected per capita state chip expenditures.--The 
     projected per capita State CHIP expenditures for a State and 
     fiscal year under this title is equal to the average per 
     capita expenditures (including both State and Federal 
     financial participation) for children under the State child 
     health plan under this title, including under waivers, for 
     the most recent fiscal year for which actual data are 
     available (as determined by the Secretary), increased (for 
     each subsequent fiscal year up to and including the fiscal 
     year involved) by the annual percentage increase in per 
     capita amount of National Health Expenditures (as estimated 
     by the Secretary) for the calendar year in which the 
     respective subsequent fiscal year ends and multiplied by a 
     State matching percentage equal to 100 percent minus the 
     enhanced FMAP (as defined in section 2105(b)) for the fiscal 
     year involved.
       ``(E) Qualifying children defined.--For purposes of this 
     subsection, the term `qualifying children' means, with 
     respect to this title or title XIX, children who meet the 
     eligibility criteria (including income, categorical 
     eligibility, age, and immigration status criteria) in effect 
     as of July 1, 2007, for enrollment under this title or title 
     XIX, respectively, taking into account crtieria applied as of 
     such date under this title or title XIX, respectively, 
     pursuant to a waiver under section 1115.
       ``(4) Enrollment and retention provisions for children.-- 
     For purposes of paragraph (3)(A), a State meets the condition 
     of this paragraph for a fiscal year if it is implementing at 
     least 4 of the following enrollment and retention provisions 
     (treating each subparagraph as a separate enrollment and 
     retention provision) throughout the entire fiscal year:
       ``(A) Continuous eligibility.--The State has elected the 
     option of continuous eligibility for a full 12 months for all 
     children described in section 1902(e)(12) under title XIX 
     under 19 years of age, as well as applying such policy under 
     its State child health plan under this title.
       ``(B) Liberalization of asset requirements.--The State 
     meets the requirement specified in either of the following 
     clauses:
       ``(i) Elimination of asset test.--The State does not apply 
     any asset or resource test for eligibility for children under 
     title XIX or this title.
       ``(ii) Administrative verification of assets.--The State--

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

       ``(C) Elimination of in-person interview requirement.--The 
     State does not require an application of a child for medical 
     assistance under title XIX (or for child health assistance 
     under this title), including an application for renewal of 
     such assistance, to be made in person nor does the State 
     require a face-to-face interview, unless there are 
     discrepancies or individual circumstances justifying an in-
     person application or face-to-face interview.
       ``(D) Use of joint application for medicaid and chip.--The 
     application form and supplemental forms (if any) and 
     information verification process is the same for purposes of 
     establishing and renewing eligibility for children for 
     medical assistance under title XIX and child health 
     assistance under this title.
       ``(E) Automatic renewal (use of administrative renewal).--
       ``(i) In general.--The State provides, in the case of 
     renewal of a child's eligibility for medical assistance under 
     title XIX or child health assistance under this title, a pre-
     printed form completed by the State based on the information 
     available to the State and notice to the parent or caretaker 
     relative of the child that eligibility of the child will be 
     renewed and continued based on such information unless the 
     State is provided other information. Nothing in this clause 
     shall be construed as preventing a State from verifying, 
     through electronic and other means, the information so 
     provided.
       ``(ii) Satisfaction through demonstrated use of ex parte 
     process.--A State shall be treated as satisfying the 
     requirement of clause (i) if renewal of eligibility of 
     children under title XIX or this title is determined without 
     any requirement for an in-person interview, unless sufficient 
     information is not in the State's possession and cannot be 
     acquired from other sources (including other State agencies) 
     without the participation of the applicant or the applicant's 
     parent or caretaker relative.
       ``(F) Presumptive eligibility for children.--The State is 
     implementing section 1920A under title XIX as well as, 
     pursuant to section 2107(e)(1), under this title .
       ``(G) Express lane.--The State is implementing the option 
     described in section 1902(e)(13) under title XIX as well as, 
     pursuant to section 2107(e)(1), under this title.''.

     SEC. 112. STATE OPTION TO RELY ON FINDINGS FROM AN EXPRESS 
                   LANE AGENCY TO CONDUCT SIMPLIFIED ELIGIBILITY 
                   DETERMINATIONS.

       (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) Express lane option.--
       ``(A) In general.--
       ``(i) Option to use a finding from an express lane 
     agency.--At the option of the State, the State plan may 
     provide that in determining eligibility under this title for 
     a child (as defined in subparagraph (F)), the State may rely 
     on a finding made within a reasonable period (as determined 
     by the State) from an Express Lane agency (as defined in 
     subparagraph (E)) when it determines whether a child 
     satisfies one or more components of eligibility for medical 
     assistance under this title. The State may rely on a finding 
     from an Express Lane agency notwithstanding sections 
     1902(a)(46)(B), 1903(x), and 1137(d) and any differences in 
     budget unit, disregard, deeming or other methodology, if the 
     following requirements are met:
       ``(I) Prohibition on determining children ineligible for 
     coverage.-- If a finding from an Express Lane agency would 
     result in a determination that a child does not satisfy an 
     eligibility requirement for medical assistance under this 
     title and for child health assistance under title XXI, the 
     State shall determine eligibility for assistance using its 
     regular procedures.
       ``(II) Notice requirement.--For any child who is found 
     eligible for medical assistance under the State plan under 
     this title or child health assistance under title XXI and who 
     is subject to premiums based on an Express Lane agency's 
     finding of such child's income level, the State shall provide 
     notice that the child may qualify for lower premium payments 
     if evaluated by the State using its regular policies and of 
     the procedures for requesting such an evaluation.
       ``(III) Compliance with screen and enroll requirement.--The 
     State shall satisfy the requirements under (A) and (B) of 
     section

[[Page 22229]]

     2102(b)(3) (relating to screen and enroll) before enrolling a 
     child in child health assistance under title XXI. At its 
     option, the State may fulfill such requirements in accordance 
     with either option provided under subparagraph (C) of this 
     paragraph.
       ``(ii) Option to apply to renewals and redeterminations.-- 
     The State may apply the provisions of this paragraph when 
     conducting initial determinations of eligibility, 
     redeterminations of eligibility, or both, as described in the 
     State plan.
       ``(B) Rules of construction.--Nothing in this paragraph 
     shall be construed--
       ``(i) to limit or prohibit a State from taking any actions 
     otherwise permitted under this title or title XXI in 
     determining eligibility for or enrolling children into 
     medical assistance under this title or child health 
     assistance under title XXI; or
       ``(ii) to modify the limitations in section 1902(a)(5) 
     concerning the agencies that may make a determination of 
     eligibility for medical assistance under this title.
       ``(C) Options for satisfying the screen and enroll 
     requirement.--
       ``(i) In general.--With respect to a child whose 
     eligibility for medical assistance under this title or for 
     child health assistance under title XXI has been evaluated by 
     a State agency using an income finding from an Express Lane 
     agency, a State may carry out its duties under subparagraphs 
     (A) and (B) of section 2102(b)(3) (relating to screen and 
     enroll) in accordance with either clause (ii) or clause 
     (iii).
       ``(ii) Establishing a screening threshold.--
       ``(I) In general.--Under this clause, the State establishes 
     a screening threshold set as a percentage of the Federal 
     poverty level that exceeds the highest income threshold 
     applicable under this title to the child by a minimum of 30 
     percentage points or, at State option, a higher number of 
     percentage points that reflects the value (as determined by 
     the State and described in the State plan) of any differences 
     between income methodologies used by the program administered 
     by the Express Lane agency and the methodologies used by the 
     State in determining eligibility for medical assistance under 
     this title.
       ``(II) Children with income not above threshold.--If the 
     income of a child does not exceed the screening threshold, 
     the child is deemed to satisfy the income eligibility 
     criteria for medical assistance under this title regardless 
     of whether such child would otherwise satisfy such criteria.
       ``(III) Children with income above threshold.--If the 
     income of a child exceeds the screening threshold, the child 
     shall be considered to have an income above the Medicaid 
     applicable income level described in section 2110(b)(4) and 
     to satisfy the requirement under section 2110(b)(1)(C) 
     (relating to the requirement that CHIP matching funds be used 
     only for children not eligible for Medicaid). If such a child 
     is enrolled in child health assistance under title XXI, the 
     State shall provide the parent, guardian, or custodial 
     relative with the following:

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

       ``(iii) Temporary enrollment in chip pending screen and 
     enroll.--
       ``(I) In general.--Under this clause, a State enrolls a 
     child in child health assistance under title XXI for a 
     temporary period if the child appears eligible for such 
     assistance based on an income finding by an Express Lane 
     agency.
       ``(II) Determination of eligibility.--During such temporary 
     enrollment period, the State shall determine the child's 
     eligibility for child health assistance under title XXI or 
     for medical assistance under this title in accordance with 
     this clause.
       ``(III) Prompt follow up.--In making such a determination, 
     the State shall take prompt action to determine whether the 
     child should be enrolled in medical assistance under this 
     title or child health assistance under title XXI pursuant to 
     subparagraphs (A) and (B) of section 2102(b)(3) (relating to 
     screen and enroll).
       ``(IV) Requirement for simplified determination.--In making 
     such a determination, the State shall use procedures that, to 
     the maximum feasible extent, reduce the burden imposed on the 
     individual of such determination. Such procedures may not 
     require the child's parent, guardian, or custodial relative 
     to provide or verify information that already has been 
     provided to the State agency by an Express Lane agency or 
     another source of information unless the State agency has 
     reason to believe the information is erroneous.
       ``(V) Availability of chip matching funds during temporary 
     enrollment period.--Medical assistance for items and services 
     that are provided to a child enrolled in title XXI during a 
     temporary enrollment period under this clause shall be 
     treated as child health assistance under such title.
       ``(D) Option for automatic enrollment.--
       ``(i) In general.-- At its option, a State may initiate an 
     evaluation of an individual's eligibility for medical 
     assistance under this title without an application and 
     determine the individual's eligibility for such assistance 
     using findings from one or more Express Lane agencies and 
     information from sources other than a child, if the 
     requirements of clauses (ii) and (iii) are met.
       ``(ii) Individual choice requirement.--The requirement of 
     this clause is that the child is enrolled in medical 
     assistance under this title or child health assistance under 
     title XXI only if the child (or a parent, caretaker relative, 
     or guardian on the behalf of the child) has affirmatively 
     assented to such enrollment.
       ``(iii) Information requirement.--The requirement of this 
     clause is that the State informs the parent, guardian, or 
     custodial relative of the child of the services that will be 
     covered, appropriate methods for using such services, premium 
     or other cost sharing charges (if any) that apply, medical 
     support obligations (under section 1912(a)) created by 
     enrollment (if applicable), and the actions the parent, 
     guardian, or relative must take to maintain enrollment and 
     renew coverage.
       ``(E) Express lane agency defined.--In this paragraph, the 
     term `express lane agency' means an agency that meets the 
     following requirements:
       ``(i) The agency determines eligibility for assistance 
     under the Food Stamp Act of 1977, the Richard B. Russell 
     National School Lunch Act, the Child Nutrition Act of 1966, 
     or the Child Care and Development Block Grant Act of 1990.
       ``(ii) The agency notifies the child (or a parent, 
     caretaker relative, or guardian on the behalf of the child)--
       ``(I) of the information which shall be disclosed;
       ``(II) that the information will be used by the State 
     solely for purposes of determining eligibility for and for 
     providing medical assistance under this title or child health 
     assistance under title XXI; and
       ``(III) that the child, or parent, caretaker relative, or 
     guardian, may elect to not have the information disclosed for 
     such purposes.
       ``(iii) The agency and the State agency are subject to an 
     interagency agreement limiting the disclosure and use of such 
     information to such purposes.
       ``(iv) The agency is determined by the State agency to be 
     capable of making the determinations described in this 
     paragraph and is identified in the State plan under this 
     title or title XXI.
     For purposes of this subparagraph, the term `State agency' 
     refers to the agency determining eligibility for medical 
     assistance under this title or child health assistance under 
     title XXI.
       ``(F) Child defined.--For purposes of this paragraph, the 
     term `child' means an individual under 19 years of age, or, 
     at the option of a State, such higher age, not to exceed 21 
     years of age, as the State may elect.''.
       (b) CHIP.--Section 2107(e)(1) of such Act (42 U.S.C. 
     1397gg(e)(1)) is amended by redesignating subparagraphs (B), 
     (C), and (D) as subparagraphs (E), (H), and (I), 
     respectively, and by inserting after subparagraph (A) the 
     following new subparagraph:
       ``(C) Section 1902(e)(13) (relating to the State option to 
     rely on findings from an Express Lane agency to help evaluate 
     a child's eligibility for medical assistance).''.
       (c) Electronic Transmission of Information.--Section 1902 
     of such Act (42 U.S.C. 1396a) is amended by adding at the end 
     the following new subsection:
       ``(dd) Electronic Transmission of Information.--If the 
     State agency determining eligibility for medical assistance 
     under this title or child health assistance under title XXI 
     verifies an element of eligibility based on information from 
     an Express Lane Agency (as defined in subsection (e)(13)(F)), 
     or from another public agency, then the applicant's signature 
     under penalty of perjury shall not be required as to such 
     element. Any signature requirement for an application for 
     medical assistance may be satisfied through an electronic 
     signature, as defined in section 1710(1) of the Government 
     Paperwork Elimination Act (44 U.S.C. 3504 note). The 
     requirements of subparagraphs (A) and (B) of section 
     1137(d)(2) may be met through evidence in digital or 
     electronic form.''.
       (d) Authorization of Information Disclosure.--
       (1) In general.--Title XIX of the Social Security Act is 
     amended--
       (A) by redesignating section 1939 as section 1940; and
       (B) by inserting after section 1938 the following new 
     section:

     ``SEC. 1939. AUTHORIZATION TO RECEIVE PERTINENT INFORMATION.

       ``(a) In General.--Notwithstanding any other provision of 
     law, a Federal or State agency or private entity in 
     possession of the sources of data potentially pertinent to 
     eligibility determinations under this title (including 
     eligibility files maintained by Express Lane agencies 
     described in section 1902(e)(13)(F), information described in 
     paragraph (2) or (3) of section 1137(a), vital records 
     information about births in any State, and information 
     described in sections 453(i) and 1902(a)(25)(I)) is 
     authorized to convey such data or information to the State 
     agency administering the State plan under this title, to the 
     extent such conveyance meets the requirements of subsection 
     (b).
       ``(b) Requirements for Conveyance.--Data or information may 
     be conveyed pursuant to subsection (a) only if the following 
     requirements are met:
       ``(1) The individual whose circumstances are described in 
     the data or information (or such individual's parent, 
     guardian, caretaker relative,

[[Page 22230]]

     or authorized representative) has either provided advance 
     consent to disclosure or has not objected to disclosure after 
     receiving advance notice of disclosure and a reasonable 
     opportunity to object.
       ``(2) Such data or information are used solely for the 
     purposes of--
       ``(A) identifying individuals who are eligible or 
     potentially eligible for medical assistance under this title 
     and enrolling or attempting to enroll such individuals in the 
     State plan; and
       ``(B) verifying the eligibility of individuals for medical 
     assistance under the State plan.
       ``(3) An interagency or other agreement, consistent with 
     standards developed by the Secretary--
       ``(A) prevents the unauthorized use, disclosure, or 
     modification of such data and otherwise meets applicable 
     Federal requirements safeguarding privacy and data security; 
     and
       ``(B) requires the State agency administering the State 
     plan to use the data and information obtained under this 
     section to seek to enroll individuals in the plan.
       ``(c) Criminal Penalty.--A private entity described in the 
     subsection (a) that publishes, discloses, or makes known in 
     any manner, or to any extent not authorized by Federal law, 
     any information obtained under this section shall be fined 
     not more than $1,000 or imprisoned not more than 1 year, or 
     both, for each such unauthorized publication or disclosure.
       ``(d) Rule of Construction.--The limitations and 
     requirements that apply to disclosure pursuant to this 
     section shall not be construed to prohibit the conveyance or 
     disclosure of data or information otherwise permitted under 
     Federal law (without regard to this section).''.
       (2) Conforming amendment to title xxi.--Section 2107(e)(1) 
     of such Act (42 U.S.C. 1397gg(e)(1)), as amended by 
     subsection (b), is amended by adding at the end the following 
     new subparagraph:
       ``(J) Section 1939 (relating to authorization to receive 
     data potentially pertinent to eligibility determinations).''.
       (3) Conforming amendment to provide access to data about 
     enrollment in insurance for purposes of evaluating 
     applications and for chip.--Section 1902(a)(25)(I)(i) of such 
     Act (42 U.S.C. 1396a(a)(25)(I)(i)) is amended--
       (A) by inserting ``(and, at State option, individuals who 
     are potentially eligible or who apply)'' after ``with respect 
     to individuals who are eligible''; and
       (B) by inserting ``under this title (and, at State option, 
     child health assistance under title XXI)'' after ``the State 
     plan''.
       (e) Effective Date.--The amendments made by this section 
     are effective on January 1, 2008.

     SEC. 113. APPLICATION OF MEDICAID OUTREACH PROCEDURES TO ALL 
                   CHILDREN AND PREGNANT WOMEN.

       (a) In General.--Section 1902(a)(55) of the Social Security 
     Act (42 U.S.C. 1396a(a)(55)) is amended--
       (1) in the matter before subparagraph (A), by striking 
     ``individuals for medical assistance under subsection 
     (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), (a)(10)(A)(i)(VII), or 
     (a)(10)(A)(ii)(IX)'' and inserting ``children and pregnant 
     women for medical assistance under any provision of this 
     title''; and
       (2) in subparagraph (B), by inserting before the semicolon 
     at the end the following: ``, which need not be the same 
     application form for all such individuals''.
       (b) Effective Date.--The amendments made by subsection (a) 
     take effect on January 1, 2008.

     SEC. 114. ENCOURAGING CULTURALLY APPROPRIATE ENROLLMENT AND 
                   RETENTION PRACTICES.

       (a) Use of Medicaid Funds.--Section 1903(a)(2) of the 
     Social Security Act (42 U.S.C. 1396b(a)(2)) is amended by 
     adding at the end the following new subparagraph:
       ``(E) an amount equal to 75 percent of so much of the sums 
     expended during such quarter (as found necessary by the 
     Secretary for the proper and efficient administration of the 
     State plan) as are attributable to translation or 
     interpretation services in connection with the enrollment and 
     retention under this title of children of families for whom 
     English is not the primary language; plus''.
       (b) Use of Community Health Workers for Outreach 
     Activities.--
       (1) In general.--Section 2102(c)(1) of such Act (42 U.S.C. 
     1397bb(c)(1)) is amended by inserting ``(through community 
     health workers and others)'' after ``Outreach''.
       (2) In federal evaluation.--Section 2108(c)(3)(B) of such 
     Act (42 U.S.C. 1397hh(c)(3)(B)) is amended by inserting 
     ``(such as through community health workers and others)'' 
     after ``including practices''.

     SEC. 115. CONTINUOUS COVERAGE UNDER CHIP.

       (a) In General.--Section 2102(b) of the Social Security Act 
     (42 U.S.C. 1397bb(b)) is amended by adding at the end the 
     following new paragraph:
       ``(5) 12-months continuous eligibility.--In the case of a 
     State child health plan that provides child health assistance 
     under this title through a means other than described in 
     section 2101(a)(2), the plan shall provide for implementation 
     under this title of the 12-months continuous eligibility 
     option described in section 1902(e)(12) for targeted low-
     income children whose family income is below 200 percent of 
     the poverty line.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to determinations (and redeterminations) of 
     eligibility made on or after January 1, 2008.

                          Subtitle C--Coverage

     SEC. 121. ENSURING CHILD-CENTERED COVERAGE.

       (a) Additional Required Services.--
       (1) Child-centered coverage.--Section 2103 of the Social 
     Security Act (42 U.S.C. 1397cc) is amended----
       (A) in subsection (a)--
       (i) in the matter before paragraph (1), by striking 
     ``subsection (c)(5)'' and inserting ``paragraphs (5) and (6) 
     of subsection (c)''; and
       (ii) in paragraph (1), by inserting ``at least'' after 
     ``that is''; and
       (B) in subsection (c)--
       (i) by redesignating paragraph (5) as paragraph (6); and
       (ii) by inserting after paragraph (4), the following:
       ``(5) Dental, fqhc, and rhc services.--The child health 
     assistance provided to a targeted low-income child (whether 
     through benchmark coverage or benchmark-equivalent coverage 
     or otherwise) shall include coverage of the following:
       ``(A) Dental services necessary to prevent disease and 
     promote oral health, restore oral structures to health and 
     function, and treat emergency conditions.
       ``(B) Federally-qualified health center services (as 
     defined in section 1905(l)(2)) and rural health clinic 
     services (as defined in section 1905(l)(1)).
     Nothing in this section shall be construed as preventing a 
     State child health plan from providing such services as part 
     of benchmark coverage or in addition to the benefits provided 
     through benchmark coverage.''.
       (2) Required payment for fqhc and rhc services.--Section 
     2107(e)(1) of such Act (42 U.S.C. 1397gg(e)(1)), as amended 
     by sections 112(b) and 112(d)(2), is amended by inserting 
     after subparagraph (C) the following new subparagraph:
       ``(D) Section 1902(bb) (relating to payment for services 
     provided by Federally-qualified health centers and rural 
     health clinics).''.
       (3) Mental health parity.--Section 2103(a)(2)(C) of such 
     Act (42 U.S.C. 1397aa(a)(2)(C)) is amended by inserting ``(or 
     100 percent in the case of the category of services described 
     in subparagraph (B) of such subsection)'' after ``75 
     percent''.
       (4) Effective date.--The amendments made by this subsection 
     and subsection (d) shall apply to health benefits coverage 
     provided on or after October 1, 2008.
       (b) Clarification of Requirement to Provide EPSDT Services 
     for All Children in Benchmark Benefit Packages Under 
     Medicaid.--
       (1) In general.--Section 1937(a)(1) of the Social Security 
     Act (42 U.S.C. 1396u-7(a)(1)) is amended--
       (A) in subparagraph (A)--
       (i) in the matter before clause (i), by striking 
     ``Notwithstanding any other provision of this title'' and 
     inserting ``Subject to subparagraph (E)''; and
       (ii) by striking ``enrollment in coverage that provides'' 
     and all that follows and inserting ``benchmark coverage 
     described in subsection (b)(1) or benchmark equivalent 
     coverage described in subsection (b)(2).'';
       (B) by striking subparagraph (C) and inserting the 
     following new subparagraph:
       ``(C) State option to provide additional benefits.--A 
     State, at its option, may provide such additional benefits to 
     benchmark coverage described in subsection (b)(1) or 
     benchmark equivalent coverage described in subsection (b)(2) 
     as the State may specify.''; and
       (C) by adding at the end the following new subparagraph:
       ``(E) Requiring coverage of epsdt services.--Nothing in 
     this paragraph shall be construed as affecting a child's 
     entitlement to care and services described in subsections 
     (a)(4)(B) and (r) of section 1905 and provided in accordance 
     with section 1902(a)(43) whether provided through benchmark 
     coverage, benchmark equivalent coverage, or otherwise.''.
       (c) Clarification of Coverage of Services in School-Based 
     Health Centers Included as Child Health Assistance.--
       (1) In general.--Section 2110(a)(5) of such Act (42 U.S.C. 
     1397jj(a)(5)) is amended by inserting after ``health center 
     services'' the following: ``and school-based health center 
     services for which coverage is otherwise provided under this 
     title when furnished by a school-based health center that is 
     authorized to furnish such services under State law''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to child health assistance furnished on or after 
     the date of the enactment of this Act.
       (d) Assuring Access to Care.--
       (1) State child health plan requirement.--Section 
     2102(a)(7)(B) of such Act (42 U.S.C. 1397bb(c)(2)) is amended 
     by inserting ``and services described in section 2103(c)(5)'' 
     after ``emergency services''.
       (2) Reference to effective date.--For the effective date 
     for the amendments made by this subsection, see subsection 
     (a)(5).

     SEC. 122. IMPROVING BENCHMARK COVERAGE OPTIONS.

       (a) Limitation on Secretary-Approved Coverage.--
       (1) Under chip.--Section 2103(a)(4) of the Social Security 
     Act (42 U.S.C. 1397cc(a)(4)) is amended by inserting before 
     the period at the end the following: ``if the health benefits 
     coverage is at least equivalent to the benefits coverage in a 
     benchmark benefit package described in subsection (b)''.
       (2) Under medicaid.--Section 1937(b)(1)(D) of the Social 
     Security Act (42 U.S.C. 1396u-7(b)(1)(D)) is amended by 
     inserting before the period at the end the following: ``if 
     the health

[[Page 22231]]

     benefits coverage is at least equivalent to the benefits 
     coverage in benchmark coverage described in subparagraph (A), 
     (B), or (C)''.
       (b) Requirement for Most Popular Family Coverage for State 
     Employee Coverage Benchmark.--
       (1) CHIP.--Section 2103(b)(2) of such Act (42 U.S.C. 
     1397(b)(2)) is amended by inserting ``and that has been 
     selected most frequently by employees seeking dependent 
     coverage, among such plans that provide such dependent 
     coverage, in either of the previous 2 plan years'' before the 
     period at the end.

     SEC. 123. PREMIUM GRACE PERIOD.

       (a) In General.--Section 2103(e)(3) of the Social Security 
     Act (42 U.S.C. 1397cc(e)(3)) is amended by adding at the end 
     the following new subparagraph:
       ``(C) Premium grace period.--The State child health plan--
       ``(i) shall afford individuals enrolled under the plan a 
     grace period of at least 30 days from the beginning of a new 
     coverage period to make premium payments before the 
     individual's coverage under the plan may be terminated; and
       ``(ii) shall provide to such an individual, not later than 
     7 days after the first day of such grace period, notice--

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

     For purposes of clause (i), the term `new coverage period' 
     means the month immediately following the last month for 
     which the premium has been paid.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to new coverage periods beginning on or after 
     January 1, 2009.

                        Subtitle D--Populations

     SEC. 131. OPTIONAL COVERAGE OF CHILDREN UP TO AGE 21 UNDER 
                   CHIP.

         (a) In General.--Section 2110(c)(1) of the Social 
     Security Act (42 U.S.C. 1397jj(c)(1)) is amended by inserting 
     ``(or, at the option of the State, under 20 or 21 years of 
     age)'' after ``19 years of age''.
         (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 2008.
       (F) Section 1932(a)(2)(A) of such Act (42 U.S.C. 1396u-
     2(a)(2)(A)) is amended by inserting ``(or under such higher 
     age as the State has elected under section 1902(l)(1)(D))'' 
     after ``19 years of age''.
       (b) Title XXI.--Section 2110(c)(1) of such Act (42 U.S.C. 
     1397jj(c)(1)) is amended by inserting ``(or, at the option of 
     the State and subject to section 131(d) of the Children's 
     Health and Medicare Protection Act of 2007, under such higher 
     age as the State has elected under section 1902(l)(1)(D))'' 
     after ``19 years of age''.
       (c) Effective Date.--Subject to subsection (d), the 
     amendments made by this section take effect on January 1, 
     2010.
       (d) Transition.--In carrying out the amendments made by 
     subsections (a) and (b)--
       (1) for 2010, a State election under section 1902(l)(1)(D) 
     shall only apply with respect to title XXI of such Act and 
     the age elected may not exceed 21 years of age;

     SEC. 132. OPTIONAL COVERAGE OF LEGAL IMMIGRANTS UNDER THE 
                   MEDICAID PROGRAM AND CHIP.

       (a) Medicaid Program.--Section 1903(v) of the Social 
     Security Act (42 U.S.C. 1396b(v)) is amended--
       (1) in paragraph (1), by striking ``paragraph (2)'' and 
     inserting ``paragraphs (2) and (4)''; and
       (2) by adding at the end the following new paragraph:
       ``(4)(A) A State may elect (in a plan amendment under this 
     title) to provide medical assistance under this title, 
     notwithstanding sections 401(a), 402(b), 403, and 421 of the 
     Personal Responsibility and Work Opportunity Reconciliation 
     Act of 1996, for aliens who are lawfully residing in the 
     United States (including battered aliens described in section 
     431(c) of such Act) and who are otherwise eligible for such 
     assistance, within either or both of the following 
     eligibility categories:
       ``(i) Pregnant women.--Women during pregnancy (and during 
     the 60-day period beginning on the last day of the 
     pregnancy).
       ``(ii) Children.--Individuals under age 19 (or such higher 
     age as the State has elected under section 1902(l)(1)(D)), 
     including optional targeted low-income children described in 
     section 1905(u)(2)(B).
       ``(B) In the case of a State that has elected to provide 
     medical assistance to a category of aliens under subparagraph 
     (A), no debt shall accrue under an affidavit of support 
     against any sponsor of such an alien on the basis of 
     provision of medical assistance to such category and the cost 
     of such assistance shall not be considered as an unreimbursed 
     cost.''.
       (b) CHIP.--Section 2107(e)(1) of such Act (42 U.S.C. 
     1397gg(e)(1)), as amended by section 112(b), 112(d)(2),and 
     121(a)(2), is amended by inserting after subparagraph (E) the 
     following new subparagraphs:
       ``(F) Section 1903(v)(4)(A) (relating to optional coverage 
     of certain categories of lawfully residing immigrants), 
     insofar as it relates to the category of pregnant women 
     described in clause (i) of such section, but only if the 
     State has elected to apply such section with respect to such 
     women under title XIX and the State has elected the option 
     under section 2111 to provide assistance for pregnant women 
     under this title.
       ``(G) Section 1903(v)(4)(A) (relating to optional coverage 
     of categories of lawfully residing immigrants), insofar as it 
     relates to the category of children described in clause (ii) 
     of such section, but only if the State has elected to apply 
     such section with respect to such children under title 
     XIX.''.
       (c) Effective Date.--The amendments made by this section 
     take effect on the date of the enactment of this Act.

     SEC. 133. STATE OPTION TO EXPAND OR ADD COVERAGE OF CERTAIN 
                   PREGNANT WOMEN UNDER CHIP.

       (a) CHIP.--
       (1) Coverage.--Title XXI (42 U.S.C. 1397aa et seq.) of the 
     Social Security Act is amended by adding at the end the 
     following new section:

     ``SEC. 2111. OPTIONAL COVERAGE OF TARGETED LOW-INCOME 
                   PREGNANT WOMEN.

       ``(a) Optional Coverage.--Notwithstanding any other 
     provision of this title, a State may provide for coverage, 
     through an amendment to its State child health plan under 
     section 2102, of assistance for pregnant women for targeted 
     low-income pregnant women in accordance with this section, 
     but only if--
       ``(1) the State has established an income eligibility 
     level--
       ``(A) for pregnant women, under any of clauses (i)(III), 
     (i)(IV), or (ii)(IX) of section 1902(a)(10)(A), that is at 
     least 185 percent (or such higher percent as the State has in 
     effect for pregnant women under this title) of the poverty 
     line applicable to a family of the size involved, but in no 
     case a percent lower than the percent in effect under any 
     such clause as of July 1, 2007; and
       ``(B) for children under 19 years of age under this title 
     (or title XIX) that is at least 200 percent of the poverty 
     line applicable to a family of the size involved; and
       ``(2) the State does not impose, with respect to the 
     enrollment under the State child health plan of targeted low-
     income children during the quarter, any enrollment cap or 
     other numerical limitation on enrollment, any waiting list, 
     any procedures designed to delay the consideration of 
     applications for enrollment, or similar limitation with 
     respect to enrollment.
       ``(b) Definitions.--For purposes of this title:
       ``(1) Assistance for pregnant women.--The term `assistance 
     for pregnant women' has the meaning given the term child 
     health assistance in section 2110(a) as if any reference to 
     targeted low-income children were a reference to targeted 
     low-income pregnant women.
       ``(2) Targeted low-income pregnant woman.--The term 
     `targeted low-income pregnant woman' means a woman--
       ``(A) during pregnancy and through the end of the month in 
     which the 60-day period (beginning on the last day of her 
     pregnancy) ends;
       ``(B) whose family income exceeds 185 percent (or, if 
     higher, the percent applied under subsection (a)(1)(A)) of 
     the poverty level applicable to a family of the size 
     involved, but does not exceed the income eligibility level 
     established under the State child health plan under this 
     title for a targeted low-income child; and
       ``(C) who satisfies the requirements of paragraphs (1)(A), 
     (1)(C), (2), and (3) of section 2110(b), applied as if any 
     reference to a child was a reference to a pregnant woman.
       ``(c) References to Terms and Special Rules.--In the case 
     of, and with respect to, a State providing for coverage of 
     assistance for pregnant women to targeted low-income pregnant 
     women under subsection (a), the following special rules 
     apply:
       ``(1) Any reference in this title (other than in subsection 
     (b)) to a targeted low-income child is deemed to include a 
     reference to a targeted low-income pregnant woman.
       ``(2) Any reference in this title to child health 
     assistance (other than with respect to the provision of early 
     and periodic screening, diagnostic, and treatment services) 
     with respect to such women is deemed a reference to 
     assistance for pregnant women.
       ``(3) Any such reference (other than in section 2105(d)) to 
     a child is deemed a reference to a woman during pregnancy and 
     the period described in subsection (b)(2)(A).
       ``(4) In applying section 2102(b)(3)(B), any reference to 
     children found through screening to be eligible for medical 
     assistance under the State medicaid plan under title XIX is 
     deemed a reference to pregnant women.
       ``(5) There shall be no exclusion of benefits for services 
     described in subsection (b)(1) based on any preexisting 
     condition and no waiting period (including any waiting period 
     imposed to carry out section 2102(b)(3)(C)) shall apply.
       ``(6) In applying section 2103(e)(3)(B) in the case of a 
     pregnant woman provided coverage under this section, the 
     limitation on total annual aggregate cost-sharing shall be 
     applied to such pregnant woman.
       ``(7) In applying section 2104(i)--
       ``(A) in the case of a State which did not provide for 
     coverage for pregnant women under this title (under a waiver 
     or otherwise) during fiscal year 2007, the allotment amount 
     otherwise computed for the first fiscal year in which the 
     State elects to provide coverage under this section shall be 
     increased by an amount (determined by the Secretary) equal to 
     the enhanced FMAP of the expenditures under this title for 
     such coverage, based upon projected enrollment and per capita 
     costs of such enrollment; and
       ``(B) in the case of a State which provided for coverage of 
     pregnant women under this title for the previous fiscal 
     year--
       ``(i) in applying paragraph (2)(B) of such section, there 
     shall also be taken into account (in an appropriate 
     proportion) the percentage increase in births in the State 
     for the relevant period; and

[[Page 22232]]

       ``(ii) in applying paragraph (3), pregnant women (and per 
     capita expenditures for such women) shall be accounted for 
     separately from children, but shall be included in the total 
     amount of any allotment adjustment under such paragraph.
       ``(d) Automatic Enrollment for Children Born to Women 
     Receiving Assistance for Pregnant Women.--If a child is born 
     to a targeted low-income pregnant woman who was receiving 
     assistance for pregnant women under this section on the date 
     of the child's birth, the child shall be deemed to have 
     applied for child health assistance under the State child 
     health plan and to have been found eligible for such 
     assistance under such plan or to have applied for medical 
     assistance under title XIX and to have been found eligible 
     for such assistance under such title on the date of such 
     birth, based on the mother's reported income as of the time 
     of her enrollment under this section and applicable income 
     eligibility levels under this title and title XIX, and to 
     remain eligible for such assistance until the child attains 1 
     year of age. During the period in which a child is deemed 
     under the preceding sentence to be eligible for child health 
     or medical assistance, the assistance for pregnant women or 
     medical assistance eligibility identification number of the 
     mother shall also serve as the identification number of the 
     child, and all claims shall be submitted and paid under such 
     number (unless the State issues a separate identification 
     number for the child before such period expires).''.
       (2) Additional amendment.--Section 2107(e)(1)(I) of such 
     Act (42 U.S.C. 1397gg(e)(1)(H)), as redesignated by section 
     112(b), is amended to read as follows:
       ``(I) Sections 1920 and 1920A (relating to presumptive 
     eligibility for pregnant women and children).''.
       (b) Amendments to Medicaid.--
       (1) Eligibility of a newborn.--Section 1902(e)(4) of the 
     Social Security Act (42 U.S.C. 1396a(e)(4)) is amended in the 
     first sentence by striking ``so long as the child is a member 
     of the woman's household and the woman remains (or would 
     remain if pregnant) eligible for such assistance''.
       (2) Application of qualified entities to presumptive 
     eligibility for pregnant women under medicaid.--Section 
     1920(b) of the Social Security Act (42 U.S.C. 1396r-1(b)) is 
     amended by adding after paragraph (2) the following flush 
     sentence:
     ``The term `qualified provider' also includes a qualified 
     entity, as defined in section 1920A(b)(3).''.

     SEC. 134. LIMITATION ON WAIVER AUTHORITY TO COVER ADULTS.

       Section 2102 of the Social Security Act (42 U.S.C. 1397bb) 
     is amended by adding at the end the following new subsection:
       ``(d) Limitation on Coverage of Adults.--Notwithstanding 
     any other provision of this title, the Secretary may not, 
     through the exercise of any waiver authority on or after 
     January 1, 2008, provide for Federal financial participation 
     to a State under this title for health care services for 
     individuals who are not targeted low-income children or 
     pregnant women unless the Secretary determines that no 
     eligible targeted low-income child in the State would be 
     denied coverage under this title for health care services 
     because of such eligibility. In making such determination, 
     the Secretary must receive assurances that--
       ``(1) there is no waiting list under this title in the 
     State for targeted low-income children to receive child 
     health assistance under this title; and
       ``(2) the State has in place an outreach program to reach 
     all targeted low-income children in families with incomes 
     less than 200 percent of the poverty line.''.

     SEC. 135. NO FEDERAL FUNDING FOR ILLEGAL ALIENS.

       Nothing in this Act allows Federal payment for individuals 
     who are not legal residents.

     SEC. 136. AUDITING REQUIREMENT TO ENFORCE CITIZENSHIP 
                   RESTRICTIONS ON ELIGIBILITY FOR MEDICAID AND 
                   CHIP BENEFITS.

       Section 1903(x) of the Social Security Act (as amended by 
     section 405(c)(1)(A) of division B of the Tax Relief and 
     Health Care Act of 2006 (Public Law 109-432)) is amended by 
     adding at the end the following new paragraph:
       ``(4)(A) Each State shall audit a statistically-based 
     sample of cases of individuals whose eligibility for medical 
     assistance (or child health assistance) is determined under 
     section 1902(a)(46)(B) or under subsection (v)(4)(A) in order 
     to demonstrate to the satisfaction of the Secretary that 
     Federal funds under this title or title XXI are not 
     unlawfully spent for benefits for individuals who are not 
     legal residents. In conducting such audits, a State may rely 
     on case reviews regularly conducted pursuant to its Medicaid 
     Quality Control or Payment Error Rate Measurement (PERM) 
     eligibility reviews under subsection (u) and the provisions 
     of subsection (e) of section 1137 shall apply under this 
     paragraph in the same manner as they apply under subsection 
     (b) of such section.
       ``(B) The State shall remit to the Secretary the Federal 
     share of any unlawful expenditures for benefits, for aliens 
     who are not legal residents, which are identified under an 
     audit conducted under subparagraph (A).''.

                           Subtitle E--Access

     SEC. 141. CHILDREN'S ACCESS, PAYMENT, AND EQUALITY 
                   COMMISSION.

       Title XIX of the Social Security Act is amended by 
     inserting before section 1901 the following new section:


         ``CHILDREN'S ACCESS, PAYMENT, AND EQUALITY COMMISSION

       ``Sec. 1900.  (a) Establishment.--There is hereby 
     established as an agency of Congress the Children's Access, 
     Payment, and Equality Commission (in this section referred to 
     as the `Commission').
       ``(b) Duties.--
       ``(1) Review of payment policies and annual reports.--The 
     Commission shall--
       ``(A) review Federal and State payment policies of the 
     Medicaid program established under this title (in this 
     section referred to as `Medicaid') and the State Children's 
     Health Insurance Program established under title XXI (in this 
     section referred to as `CHIP'), including topics described in 
     paragraph (2);
       ``(B) review access to, and affordability of, coverage and 
     services for enrollees under Medicaid and CHIP;
       ``(C) make recommendations to Congress concerning such 
     policies;
       ``(D) by not later than March 1 of each year, submit to 
     Congress a report containing the results of such reviews and 
     its recommendations concerning such policies; and
       ``(E) by not later than June 1 of each year, submit to 
     Congress a report containing an examination of issues 
     affecting Medicaid and CHIP, including the implications of 
     changes in health care delivery in the United States and in 
     the market for health care services on such programs.
       ``(2) Specific topics to be reviewed.--Specifically, the 
     Commission shall review the following:
       ``(A) The factors affecting expenditures for services in 
     different sectors (such as physician, hospital and other 
     sectors), payment methodologies, and their relationship to 
     access and quality of care for Medicaid and CHIP 
     beneficiaries.
       ``(B) The impact of Federal and State Medicaid and CHIP 
     payment policies on access to services (including dental 
     services) for children (including children with disabilities) 
     and other Medicaid and CHIP populations.
       ``(C) The impact of Federal and State Medicaid and CHIP 
     policies on reducing health disparities, including geographic 
     disparities and disparities among minority populations.
       ``(D) The overall financial stability of the health care 
     safety net, including Federally-qualified health centers, 
     rural health centers, school-based clinics, disproportionate 
     share hospitals, public hospitals, providers and grantees 
     under section 2612(a)(5) of the Public Health Service Act 
     (popularly known as the Ryan White CARE Act), and other 
     providers that have a patient base which includes a 
     disproportionate number of uninsured or low-income 
     individuals and the impact of CHIP and Medicaid policies on 
     such stability.
       ``(E) The relation (if any) between payment rates for 
     providers and improvement in care for children as measured 
     under the children's health quality measurement program 
     established under section 151 of the Children's Health and 
     Medicare Protection Act of 2007.
       ``(F) The affordability, cost effectiveness, and 
     accessibility of services needed by special populations under 
     Medicaid and CHIP as compared with private-sector coverage.
       ``(G) The extent to which the operation of Medicaid and 
     CHIP ensures access, comparable to access under employer-
     sponsored or other private health insurance coverage (or in 
     the case of federally-qualified health center services (as 
     defined in section 1905(l)(2)) and rural health clinic 
     services (as defined in section 1905(l)(1)), access 
     comparable to the access to such services under title XIX), 
     for targeted low-income children.
       ``(H) The effect of demonstrations under section 1115, 
     benchmark coverage under section 1937, and other coverage 
     under section 1938, on access to care, affordability of 
     coverage, provider ability to achieve children's health 
     quality performance measures, and access to safety net 
     services.
       ``(3) Comments on certain secretarial reports.--If the 
     Secretary submits to Congress (or a committee of Congress) a 
     report that is required by law and that relates to payment 
     policies under Medicaid or CHIP, the Secretary shall transmit 
     a copy of the report to the Commission. The Commission shall 
     review the report and, not later than 6 months after the date 
     of submittal of the Secretary's report to Congress, shall 
     submit to the appropriate committees of Congress written 
     comments on such report. Such comments may include such 
     recommendations as the Commission deems appropriate.
       ``(4) Agenda and additional reviews.--The Commission shall 
     consult periodically with the Chairmen and Ranking Minority 
     Members of the appropriate committees of Congress regarding 
     the Commission's agenda and progress towards achieving the 
     agenda. The Commission may conduct additional reviews, and 
     submit additional reports to the appropriate committees of 
     Congress, from time to time on such topics relating to the 
     program under this title or title XXI as may be requested by 
     such Chairmen and Members and as the Commission deems 
     appropriate.
       ``(5) Availability of reports.--The Commission shall 
     transmit to the Secretary a copy of each report submitted 
     under this subsection and shall make such reports available 
     to the public.
       ``(6) Appropriate committee of congress.--For purposes of 
     this section, the term `appropriate committees of Congress' 
     means the Committees on Energy and Commerce of the House of 
     Representatives and the Committee on Finance of the Senate.
       ``(7) Voting and reporting requirements.--With respect to 
     each recommendation contained

[[Page 22233]]

     in a report submitted under paragraph (1), each member of the 
     Commission shall vote on the recommendation, and the 
     Commission shall include, by member, the results of that vote 
     in the report containing the recommendation.
       ``(8) Examination of budget consequences.--Before making 
     any recommendations, the Commission shall examine the budget 
     consequences of such recommendations, directly or through 
     consultation with appropriate expert entities.
       ``(c) Application of Provisions.--The following provisions 
     of section 1805 shall apply to the Commission in the same 
     manner as they apply to the Medicare Payment Advisory 
     Commission:
       ``(1) Subsection (c) (relating to membership), except that 
     the membership of the Commission shall also include 
     representatives of children, pregnant women, individuals with 
     disabilities, seniors, low-income families, and other groups 
     of CHIP and Medicaid beneficiaries.
       ``(2) Subsection (d) (relating to staff and consultants).
       ``(3) Subsection (e) (relating to powers).
       ``(d) Authorization of Appropriations.--
       ``(1) Request for appropriations.--The Commission shall 
     submit requests for appropriations in the same manner as the 
     Comptroller General submits requests for appropriations, but 
     amounts appropriated for the Commission shall be separate 
     from amounts appropriated for the Comptroller General.
       ``(2) Authorization.--There are authorized to be 
     appropriated such sums as may be necessary to carry out the 
     provisions of this section.''.

     SEC. 142. MODEL OF INTERSTATE COORDINATED ENROLLMENT AND 
                   COVERAGE PROCESS.

       (a) In General.--In order to assure continuity of coverage 
     of low-income children under the Medicaid program and the 
     State Children's Health Insurance Program (CHIP), not later 
     than 18 months after the date of the enactment of this Act, 
     the Comptroller General of the United States, in consultation 
     with State Medicaid and CHIP directors and organizations 
     representing program beneficiaries, shall develop a model 
     process for the coordination of the enrollment, retention, 
     and coverage under such programs of children who, because of 
     migration of families, emergency evacuations, educational 
     needs, or otherwise, frequently change their State of 
     residency or otherwise are temporarily located outside of the 
     State of their residency.
       (b) Report to Congress.--After development of such model 
     process, the Comptroller General shall submit to Congress a 
     report describing additional steps or authority needed to 
     make further improvements to coordinate the enrollment, 
     retention, and coverage under CHIP and Medicaid of children 
     described in subsection (a).

     SEC. 143. MEDICAID CITIZENSHIP DOCUMENTATION REQUIREMENTS.

       (a) State Option To Require Children To Present 
     Satisfactory Documentary Evidence of Proof of Citizenship or 
     Nationality for Purposes of Eligibility for Medicaid; 
     Requirement for Auditing.--
       (1) In general.--Section 1902 of the Social Security Act 
     (42 U.S.C. 1396a) is amended--
       (A) in subsection (a)(46)--
       (i) by inserting ``(A)'' after ``(46)''; and
       (ii) by adding at the end the following new subparagraphs:
       ``(B) at the option of the State, require that, with 
     respect to a child under 21 years of age (other than an 
     individual described in section 1903(x)(2)) who declares to 
     be a citizen or national of the United States for purposes of 
     establishing initial eligibility for medical assistance under 
     this title (or, at State option, for purposes of renewing or 
     redetermining such eligibility to the extent that such 
     satisfactory documentary evidence of citizenship or 
     nationality has not yet been presented), there is presented 
     satisfactory documentary evidence of citizenship or 
     nationality of the individual (using criteria determined by 
     the State, which shall be no more restrictive than the 
     documentation specified in section 1903(x)(3)); and
       ``(C) comply with the auditing requirements of section 
     1903(x)(4);''; and
       (B) in subsection (b)(3), by inserting ``or any citizenship 
     documentation requirement for a child under 21 years of age 
     that is more restrictive than what a State may provide under 
     section 1903(x)'' before the period at the end.
       (2) Elimination of denial of payments for children.--
     Section 1903(i)(22) of such Act (42 U.S.C. 1396b(i)(22)) is 
     amended by inserting ``(other than a child under the age of 
     21)'' after ``for an individual''.
       (b) Clarification of Rules for Children Born in the United 
     States to Mothers Eligible for Medicaid.--Section 1903(x)(2) 
     of such Act (42 U.S.C. 1396b(x)(2)) is amended--
       (1) in subparagraph (C), by striking ``or'' at the end;
       (2) by redesignating subparagraph (D) as subparagraph (E); 
     and
       (3) by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) pursuant to the application of section 1902(e)(4) 
     (and, in the case of an individual who is eligible for 
     medical assistance on such basis, the individual shall be 
     deemed to have provided satisfactory documentary evidence of 
     citizenship or nationality and shall not be required to 
     provide further documentary evidence on any date that occurs 
     during or after the period in which the individual is 
     eligible for medical assistance on such basis; or''.
       (c) Documentation for Native Americans.
     --Section 1903(x)(3)(B) of such Act is amended--
       (1) by redesignating clause (v) as clause (vi); and
       (2) by inserting after clause (iv) the following new 
     clause:
       ``(v) For an individual who is a member of, or enrolled in 
     or affiliated with, a federally-recognized Indian tribe, a 
     document issued by such tribe evidencing such membership, 
     enrollment, or affiliation with the tribe (such as a tribal 
     enrollment card or certificate of degree of Indian blood), 
     and, only with respect to those federally-recognized Indian 
     tribes located within States having an international border 
     whose membership includes individuals who are not citizens of 
     the United States, such other forms of documentation 
     (including tribal documentation, if appropriate) as the 
     Secretary, after consulting with such tribes, determines to 
     be satisfactory documentary evidence of citizenship or 
     nationality for purposes of satisfying the requirement of 
     this subparagraph.''.
       (d) Reasonable Opportunity.--Section 1903(x) of such Act, 
     as amended by subsection (a)(2), is further amended by adding 
     at the end the following new paragraph:
       ``(5) In the case of an individual declaring to be a 
     citizen or national of the United States with respect to whom 
     a State requires the presentation of satisfactory documentary 
     evidence of citizenship or nationality under section 
     1902(a)(46)(B), the individual shall be provided at least the 
     reasonable opportunity to present satisfactory documentary 
     evidence of citizenship or nationality under this subsection 
     as is provided under clauses (i) and (ii) of section 
     1137(d)(4)(A) to an individual for the submittal to the State 
     of evidence indicating a satisfactory immigration status and 
     shall not be denied medical assistance on the basis of 
     failure to provide such documentation until the individual 
     has had such an opportunity.''.
       (e) Effective Date.--
       (1) Retroactive application.--The amendments made by this 
     section shall take effect as if included in the enactment of 
     the Deficit Reduction Act of 2005 (Public Law 109-171; 120 
     Stat. 4).
       (2) Restoration of eligibility.--In the case of an 
     individual who, during the period that began on July 1, 2006, 
     and ends on the date of the enactment of this Act, was 
     determined to be ineligible for medical assistance under a 
     State Medicaid program solely as a result of the application 
     of subsections (i)(22) and (x) of section 1903 of the Social 
     Security Act (as in effect during such period), but who would 
     have been determined eligible for such assistance if such 
     subsections, as amended by this section, had applied to the 
     individual, a State may deem the individual to be eligible 
     for such assistance as of the date that the individual was 
     determined to be ineligible for such medical assistance on 
     such basis.

     SEC. 144. ACCESS TO DENTAL CARE FOR CHILDREN.

       (a) Dental Education for Parents of Newborns.--The 
     Secretary of Health and Human Services shall develop and 
     implement, through entities that fund or provide perinatal 
     care services to targeted low-income children under a State 
     child health plan under title XXI of the Social Security Act, 
     a program to deliver oral health educational materials that 
     inform new parents about risks for, and prevention of, early 
     childhood caries and the need for a dental visit within their 
     newborn's first year of life.
       (b) Provision of Dental Services Through FQHCs.--
       (1) Medicaid.--Section 1902(a) of the Social Security Act 
     (42 U.S.C. 1396a(a)) is amended--
       (A) by striking ``and'' at the end of paragraph (69);
       (B) by striking the period at the end of paragraph (70) and 
     inserting ``; and''; and
       (C) by inserting after paragraph (70) the following new 
     paragraph:
       ``(71) provide that the State will not prevent a Federally-
     qualified health center from entering into contractual 
     relationships with private practice dental providers in the 
     provision of Federally-qualified health center services.''.
       (2) CHIP.--Section 2107(e)(1) of such Act (42 U.S.C. 
     1397g(e)(1)), as amended by section 112(b), is amended by 
     inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Section 1902(a)(71) (relating to limiting FQHC 
     contracting for provision of dental services).''.
       (3) Effective date.--The amendments made by this subsection 
     shall take effect on January 1, 2008.
       (c) Reporting Information on Dental Health.--
       (1) Medicaid.--Section 1902(a)(43)(D)(iii) of such Act (42 
     U.S.C. 1396a(a)(43)(D)(iii)) is amended by inserting ``and 
     other information relating to the provision of dental 
     services to such children described in section 2108(e)'' 
     after ``receiving dental services,''.
       (2) CHIP.--Section 2108 of such Act (42 U.S.C. 1397hh) is 
     amended by adding at the end the following new subsection:
       ``(e) Information on Dental Care for Children.--
       ``(1) In general.--Each annual report under subsection (a) 
     shall include the following information with respect to care 
     and services described in section 1905(r)(3) provided to 
     targeted low-income children enrolled in the State child 
     health plan under this title at any time during the year 
     involved:
       ``(A) The number of enrolled children by age grouping used 
     for reporting purposes under section 1902(a)(43).
       ``(B) For children within each such age grouping, 
     information of the type contained in

[[Page 22234]]

     questions 12(a)-(c) of CMS Form 416 (that consists of the 
     number of enrolled targeted low income children who receive 
     any, preventive, or restorative dental care under the State 
     plan).
       ``(C) For the age grouping that includes children 8 years 
     of age, the number of such children who have received a 
     protective sealant on at least one permanent molar tooth.
       ``(2) Inclusion of information on enrollees in managed care 
     plans.--The information under paragraph (1) shall include 
     information on children who are enrolled in managed care 
     plans and other private health plans and contracts with such 
     plans under this title shall provide for the reporting of 
     such information by such plans to the State.''.
       (3) Effective date.--The amendments made by this subsection 
     shall be effective for annual reports submitted for years 
     beginning after date of enactment.
       (d) GAO Study and Report.--
       (1) Study.--The Comptroller General of the United States 
     shall provide for a study that examines--
       (A) access to dental services by children in underserved 
     areas; and
       (B) the feasibility and appropriateness of using qualified 
     mid-level dental health providers, in coordination with 
     dentists, to improve access for children to oral health 
     services and public health overall.
       (2) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report on the study conducted under paragraph 
     (1).

     SEC. 145. PROHIBITING INITIATION OF NEW HEALTH OPPORTUNITY 
                   ACCOUNT DEMONSTRATION PROGRAMS.

       After the date of the enactment of this Act, the Secretary 
     of Health and Human Services may not approve any new 
     demonstration programs under section 1938 of the Social 
     Security Act (42 U.S.C. 1396u-8).

               Subtitle F--Quality and Program Integrity

     SEC. 151. PEDIATRIC HEALTH QUALITY MEASUREMENT PROGRAM.

       (a) Quality Measurement of Children's Health.--
       (1) Establishment of program to develop quality measures 
     for children's health.--The Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall establish a child health care quality measurement 
     program (in this subsection referred to as the ``children's 
     health quality measurement program'') to develop and 
     implement--
       (A) pediatric quality measures on children's health care 
     that may be used by public and private health care purchasers 
     (and a system for reporting such measures); and
       (B) measures of overall program performance that may be 
     used by public and private health care purchasers.
     The Secretary shall publish, not later than September 30, 
     2009, the recommended measures under the program for 
     application under the amendments made by subsection (b) for 
     years beginning with 2010.
       (2) Measures.--
       (A) Scope.--The measures developed under the children's 
     health quality measurement program shall--
       (i) provide comprehensive information with respect to the 
     provision and outcomes of health care for young children, 
     school age children, and older children.
       (ii) be designed to identify disparities by pediatric 
     characteristics (including, at a minimum, those specified in 
     subparagraph (C)) in child health and the provision of health 
     care;
       (iii) be designed to ensure that the data required for such 
     measures is collected and reported in a standard format that 
     permits comparison at a State, plan, and provider level, and 
     between insured and uninsured children;
       (iv) take into account existing measures of child health 
     quality and be periodically updated;
       (v) include measures of clinical health care quality which 
     meet the requirements for pediatric quality measures in 
     paragraph (1);
       (vi) improve and augment existing measures of clinical 
     health care quality for children's health care and develop 
     new and emerging measures; and
       (vii) increase the portfolio of evidence-based pediatric 
     quality measures available to public and private purchasers, 
     providers, and consumers.
       (B) Specific measures.--Such measures shall include 
     measures relating to at least the following aspects of health 
     care for children:
       (i) The proportion of insured (and uninsured) children who 
     receive age-appropriate preventive health and dental care 
     (including age appropriate immunizations) at each stage of 
     child health development.
       (ii) The proportion of insured (and uninsured) children who 
     receive dental care for restoration of teeth, relief of pain 
     and infection, and maintenance of dental health.
       (iii) The effectiveness of early health care interventions 
     for children whose assessments indicate the presence or risk 
     of physical or mental conditions that could adversely affect 
     growth and development.
       (iv) The effectiveness of treatment to ameliorate the 
     effects of diagnosed physical and mental health conditions, 
     including chronic conditions.
       (v) The proportion of children under age 21 who are 
     continuously insured for a period of 12 months or longer.
       (vi) The effectiveness of health care for children with 
     disabilities.
     In carrying out clause (vi), the Secretary shall develop 
     quality measures and best practices relating to cystic 
     fibrosis.
       (vii) Data on State efforts to reduce hospitalization rate 
     of premature infants under the age of 12 months who were born 
     prior to 35 weeks.
       (C) Reporting methodology for analysis by pediatric 
     characteristics.--The children's health quality measurement 
     program shall describe with specificity such measures and the 
     process by which such measures will be reported in a manner 
     that permits analysis based on each of the following 
     pediatric characteristics:
       (i) Age.
       (ii) Gender.
       (iii) Race.
       (iv) Ethnicity.
       (v) Primary language of the child's parents (or caretaker 
     relative).
       (vi) Disability or chronic condition (including cystic 
     fibrosis).
       (vii) Geographic location.
       (viii) Coverage status under public and private health 
     insurance programs.
       (D) Pediatric quality measure.--In this subsection, the 
     term ``pediatric quality measure'' means a measurement of 
     clinical care that assesses one or more aspects of pediatric 
     health care quality (in various settings) including the 
     structure of the clinical care system, the process and 
     outcome of care, or patient experience in such care.
       (3) Consultation in developing quality measures for 
     children's health services.--In developing and implementing 
     the children's health quality measurement program, the 
     Secretary shall consult with--
       (A) States;
       (B) pediatric hospitals, pediatricians, and other primary 
     and specialized pediatric health care professionals 
     (including members of the allied health professions) who 
     specialize in the care and treatment of children, 
     particularly children with special physical, mental, and 
     developmental health care needs;
       (C) dental professionals;
       (D) health care providers that furnish primary health care 
     to children and families who live in urban and rural 
     medically underserved communities or who are members of 
     distinct population sub-groups at heightened risk for poor 
     health outcomes;
       (E) national organizations representing children, including 
     children with disabilities and children with chronic 
     conditions;
       (F) national organizations and individuals with expertise 
     in pediatric health quality performance measurement; and
       (G) voluntary consensus standards setting organizations and 
     other organizations involved in the advancement of evidence 
     based measures of health care.
       (4) Use of grants and contracts.--In carrying out the 
     children's health quality measurement program, the Secretary 
     may award grants and contracts to develop, test, validate, 
     update, and disseminate quality measures under the program.
       (5) Technical assistance.--The Secretary shall provide 
     technical assistance to States to establish for the reporting 
     of quality measures under titles XIX and XXI of the Social 
     Security Act in accordance with the children's health quality 
     measurement program.
       (b) Dissemination of Information on the Quality of Program 
     Performance.--Not later than January 1, 2009, and annually 
     thereafter, the Secretary shall collect, analyze, and make 
     publicly available on a public website of the Department of 
     Health and Human Services in an online format--
       (1) a complete list of all measures in use by States as of 
     such date and used to measure the quality of medical and 
     dental health services furnished to children enrolled under 
     title XIX of XXI of the Social Security Act by participating 
     providers, managed care entities, and plan issuers; and
       (2) information on health care quality for children 
     contained in external quality review reports required under 
     section 1932(c)(2) of such Act (42 U.S.C. 1396u-2) or 
     produced by States that administer separate plans under title 
     XXI of such Act.
       (c) Reports to Congress on Program Performance.--Not later 
     than January 1, 2010, and every 2 years thereafter, the 
     Secretary shall report to Congress on--
       (1) the quality of health care for children enrolled under 
     title XIX and XXI of the Social Security Act under the 
     children's health quality measurement program; and
       (2) patterns of health care utilization with respect to the 
     measures specified in subsection (a)(2)(B) among children by 
     the pediatric characteristics listed in subsection (a)(2)(C).

     SEC. 152. APPLICATION OF CERTAIN MANAGED CARE QUALITY 
                   SAFEGUARDS TO CHIP.

       (a) In General.--Section 2103(f) of Social Security Act (42 
     U.S.C. 1397bb(f)) is amended by adding at the end the 
     following new paragraph:
       ``(3) Compliance with managed care requirements.--The State 
     child health plan shall provide for the application of 
     subsections (a)(4), (a)(5), (b), (c), (d), and (e) of section 
     1932 (relating to requirements for managed care) to coverage, 
     State agencies, enrollment brokers, managed care entities, 
     and managed care organizations under this title in the same 
     manner as such subsections apply to coverage and such 
     entities and organizations under title XIX.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to contract years for health plans beginning on 
     or after July 1, 2008.

[[Page 22235]]



     SEC. 153. UPDATED FEDERAL EVALUATION OF CHIP.

       Section 2108(c) of the Social Security Act (42 U.S.C. 
     1397hh(c)) is amended by striking paragraph (5) and inserting 
     the following:
       ``(5) Subsequent evaluation using updated information.--
       ``(A) In general.--The Secretary, directly or through 
     contracts or interagency agreements, shall conduct an 
     independent subsequent evaluation of 10 States with approved 
     child health plans.
       ``(B) Selection of states and matters included.--Paragraphs 
     (2) and (3) shall apply to such subsequent evaluation in the 
     same manner as such provisions apply to the evaluation 
     conducted under paragraph (1).
       ``(C) Submission to congress.--Not later than December 31, 
     2010, the Secretary shall submit to Congress the results of 
     the evaluation conducted under this paragraph.
       ``(D) Funding.--Out of any money in the Treasury of the 
     United States not otherwise appropriated, there are 
     appropriated $10,000,000 for fiscal year 2009 for the purpose 
     of conducting the evaluation authorized under this paragraph. 
     Amounts appropriated under this subparagraph shall remain 
     available for expenditure through fiscal year 2011.'' .

     SEC. 154. ACCESS TO RECORDS FOR IG AND GAO AUDITS AND 
                   EVALUATIONS.

       Section 2108(d) of the Social Security Act (42 U.S.C. 
     1397hh(d)) is amended to read as follows:
       ``(d) Access to Records for IG and GAO Audits and 
     Evaluations.--For the purpose of evaluating and auditing the 
     program established under this title, the Secretary, the 
     Office of Inspector General, and the Comptroller General 
     shall have access to any books, accounts, records, 
     correspondence, and other documents that are related to the 
     expenditure of Federal funds under this title and that are in 
     the possession, custody, or control of States receiving 
     Federal funds under this title or political subdivisions 
     thereof, or any grantee or contractor of such States or 
     political subdivisions.''.

     SEC. 155. REFERENCES TO TITLE XXI.

       Section 704 of the Medicare, Medicaid, and SCHIP Balanced 
     Budget Refinement Act of 1999 (Appendix F, 113 Stat. 1501A-
     321), as enacted into law by section 1000(a)(6) of Public Law 
     106-113) is repealed and the item relating to such section in 
     the table of contents of such Act is repealed.

     SEC. 156. RELIANCE ON LAW; EXCEPTION FOR STATE LEGISLATION.

       (a) Reliance on Law.--With respect to amendments made by 
     this title or title VIII that become effective as of a date--
       (1) such amendments are effective as of such date whether 
     or not regulations implementing such amendments have been 
     issued; and
       (2) Federal financial participation for medical assistance 
     or child health assistance furnished under title XIX or XXI, 
     respectively, of the Social Security Act on or after such 
     date by a State in good faith reliance on such amendments 
     before the date of promulgation of final regulations, if any, 
     to carry out such amendments (or before the date of guidance, 
     if any, regarding the implementation of such amendments) 
     shall not be denied on the basis of the State's failure to 
     comply with such regulations or guidance.
       (b) Exception for State Legislation.--In the case of a 
     State plan under title XIX or State child health plan under 
     XXI of the Social Security Act, which the Secretary of Health 
     and Human Services determines requires State legislation in 
     order for respective plan to meet one or more additional 
     requirements imposed by amendments made by this title or 
     title VIII, the respective State plan shall not be regarded 
     as failing to comply with the requirements of such title 
     solely on the basis of its failure to meet such an additional 
     requirement before the first day of the first calendar 
     quarter beginning after the close of the first regular 
     session of the State legislature that begins after the date 
     of enactment of this Act. For purposes of the previous 
     sentence, in the case of a State that has a 2-year 
     legislative session, each year of the session shall be 
     considered to be a separate regular session of the State 
     legislature.

              TITLE II--MEDICARE BENEFICIARY IMPROVEMENTS

                  Subtitle A--Improvements in Benefits

     SEC. 201. COVERAGE AND WAIVER OF COST-SHARING FOR PREVENTIVE 
                   SERVICES.

       (a) Preventive Services Defined; Coverage of Additional 
     Preventive Services.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x) is amended--
       (1) in subsection (s)(2)--
       (A) in subparagraph (Z), by striking ``and'' after the 
     semicolon at the end;
       (B) in subparagraph (AA), by adding ``and'' after the 
     semicolon at the end; and
       (C) by adding at the end the following new subparagraph:
       ``(BB) additional preventive services (described in 
     subsection (ccc)(1)(M));''; and
       (2) by adding at the end the following new subsection:

                         ``Preventive Services

       ``(ccc)(1) The term `preventive services' means the 
     following:
       ``(A) Prostate cancer screening tests (as defined in 
     subsection (oo)).
       ``(B) Colorectal cancer screening tests (as defined in 
     subsection (pp)).
       ``(C) Diabetes outpatient self-management training services 
     (as defined in subsection (qq)).
       ``(D) Screening for glaucoma for certain individuals (as 
     described in subsection (s)(2)(U)).
       ``(E) Medical nutrition therapy services for certain 
     individuals (as described in subsection (s)(2)(V)).
       ``(F) An initial preventive physical examination (as 
     defined in subsection (ww)).
       ``(G) Cardiovascular screening blood tests (as defined in 
     subsection (xx)(1)).
       ``(H) Diabetes screening tests (as defined in subsection 
     described in subsection (s)(2)(Y)).
       ``(I) Ultrasound screening for abdominal aortic aneurysm 
     for certain individuals (as described in described in 
     subsection (s)(2)(AA)).
       ``(J) Pneumococcal and influenza vaccine and their 
     administration (as described in subsection (s)(10)(A)).
       ``(K) Hepatitis B vaccine and its administration for 
     certain individuals (as described in subsection (s)(10)(B)).
       ``(L) Screening mammography (as defined in subsection 
     (jj)).
       ``(M) Screening pap smear and screening pelvic exam (as 
     described in subsection (s)(14)).
       ``(N) Bone mass measurement (as defined in subsection 
     (rr)).
       ``(O) Additional preventive services (as determined under 
     paragraph (2)).
       ``(2)(A) The term `additional preventive services' means 
     items and services, including mental health services, not 
     described in subparagraphs (A) through (N) of paragraph (1) 
     that the Secretary determines to be reasonable and necessary 
     for the prevention or early detection of an illness or 
     disability.
       ``(B) In making determinations under subparagraph (1), the 
     Secretary shall--
       ``(i) take into account evidence-based recommendations by 
     the United States Preventive Services Task Force and other 
     appropriate organizations; and
       ``(ii) use the process for making national coverage 
     determinations (as defined in section 1869(f)(1)(B)) under 
     this title.''.
       (b) Payment and Elimination of Cost-Sharing.--
       (1) In general.--
       (A) In general.--Section 1833(a)(1) of the Social Security 
     Act (42 U.S.C. 1395l(a)(1)) is amended--
       (i) in clause (T), by striking ``80 percent'' and inserting 
     ``100 percent''; and
       (ii) by striking ``and'' before ``(V)''; and
       (iii) by inserting before the semicolon at the end the 
     following: ``, and (W) with respect to additional preventive 
     services (as defined in section 1861(ccc)(2)) and other 
     preventive services for which a payment rate is not otherwise 
     established under this section, the amount paid shall be 100 
     percent of the lesser of the actual charge for the services 
     or the amount determined under a fee schedule established by 
     the Secretary for purposes of this clause''.
       (B) Application to sigmoidoscopies and colonoscopies.--
     Section 1834(d) of such Act (42 U.S.C. 1395m(d)) is amended--
       (i) in paragraph (2)(C), by amending clause (ii) to read as 
     follows:
       ``(ii) No coinsurance.--In the case of a beneficiary who 
     receives services described in clause (i), there shall be no 
     coinsurance applied.''; and.
       (ii) in paragraph (3)(C), by amending clause (ii) to read 
     as follows:
       ``(ii) No coinsurance.--In the case of a beneficiary who 
     receives services described in clause (i), there shall be no 
     coinsurance applied.''.
       (2) Elimination of coinsurance in outpatient hospital 
     settings.--
       (A) Exclusion from opd fee schedule.--Section 
     1833(t)(1)(B)(iv) of the Social Security Act (42 U.S.C. 
     1395l(t)(1)(B)(iv)) is amended by striking ``screening 
     mammography (as defined in section 1861(jj)) and diagnostic 
     mammography'' and inserting ``diagnostic mammography and 
     preventive services (as defined in section 1861(ccc)(1))''.
       (B) Conforming amendments.--Section 1833(a)(2) of the 
     Social Security Act (42 U.S.C. 1395l(a)(2)) is amended--
       (i) in subparagraph (F), by striking ``and'' after the 
     semicolon at the end;
       (ii) in subparagraph (G)(ii), by adding ``and'' at the end; 
     and
       (iii) by adding at the end the following new subparagraph:
       ``(H) with respect to additional preventive services (as 
     defined in section 1861(ccc)(2)) furnished by an outpatient 
     department of a hospital, the amount determined under 
     paragraph (1)(W);''.
       (3) Waiver of application of deductible for all preventive 
     services.--The first sentence of section 1833(b) of the 
     Social Security Act (42 U.S.C. 1395l(b)) is amended--
       (A) in clause (1), by striking ``items and services 
     described in section 1861(s)(10)(A)'' and inserting 
     ``preventive services (as defined in section 1861(ccc)(1))'';
       (B) by inserting ``and'' before ``(4)''; and
       (C) by striking clauses (5) through (8).
       (c) Inclusion as Part of Initial Preventive Physical 
     Examination.--Section 1861(ww)(2) of the Social Security Act 
     (42 U.S.C. 1395x(ww)(2)) is amended by adding at the end the 
     following new subparagraph:
       ``(M) Additional preventive services (as defined in 
     subsection (ccc)(2)).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after January 1, 
     2008.

     SEC. 202. WAIVER OF DEDUCTIBLE FOR COLORECTAL CANCER 
                   SCREENING TESTS REGARDLESS OF CODING, 
                   SUBSEQUENT DIAGNOSIS, OR ANCILLARY TISSUE 
                   REMOVAL.

       (a) In General.--Section 1833(b) of the Social Security Act 
     (42 U.S.C. 1395l(b)), as amended by section 201(b), is 
     amended by adding at the end

[[Page 22236]]

     the following new sentence: ``Clause (1) of the first 
     sentence of this subsection shall apply with respect to a 
     colorectal cancer screening test regardless of the code 
     applied, of the establishment of a diagnosis as a result of 
     the test, or of the removal of tissue or other matter or 
     other procedure that is performed in connection with and as a 
     result of the screening test.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to items and services furnished on or after 
     January 1, 2008.

     SEC. 203. PARITY FOR MENTAL HEALTH COINSURANCE.

       Section 1833(c) of the Social Security Act (42 U.S.C. 
     1395l(c)) is amended by inserting ``before 2008'' after ``in 
     any calendar year''.

Subtitle B--Improving, Clarifying, and Simplifying Financial Assistance 
                 for Low Income Medicare Beneficiaries

     SEC. 211. IMPROVING ASSETS TESTS FOR MEDICARE SAVINGS PROGRAM 
                   AND LOW-INCOME SUBSIDY PROGRAM.

       (a) Application of Highest Level Permitted Under LIS.--
       (1) To full-premium subsidy eligible individuals.--Section 
     1860D-14(a) of the Social Security Act (42 U.S.C. 1395w-
     114(a)) is amended--
       (A) in paragraph (1), in the matter before subparagraph 
     (A), by inserting ``(or, beginning with 2009, paragraph 
     (3)(E))'' after ``paragraph (3)(D)''; and
       (B) in paragraph (3)(A)(iii), by striking ``(D) or''.
       (2) Annual increase in lis resource test.--Section 1860D-
     14(a)(3)(E)(i) of such Act (42 U.S.C. 1395w-114(a)(3)(E)(i)) 
     is amended--
       (A) by striking ``and'' at the end of subclause (I);
       (B) in subclause (II), by inserting ``(before 2009)'' after 
     ``subsequent year'';
       (C) by striking the period at the end of subclause (II) and 
     inserting a semicolon;
       (D) by inserting after subclause (II) the following new 
     subclauses:

       ``(III) for 2009, $17,000 (or $34,000 in the case of the 
     combined value of the individual's assets or resources and 
     the assets or resources of the individual's spouse); and
       ``(IV) for a subsequent year, the dollar amounts specified 
     in this subclause (or subclause (III)) for the previous year 
     increased by the annual percentage increase in the consumer 
     price index (all items; U.S. city average) as of September of 
     such previous year; and,''

       (E) in the last sentence, by inserting ``or (IV)'' after 
     ``subclause (II)''.
       (3) Application of lis test under medicare savings 
     program.--Section 1905(p)(1)(C) of such Act (42 U.S.C. 
     1396d(p)(1)(C)) is amended by inserting before the period at 
     the end the following: ``or, effective beginning with January 
     1, 2009, whose resources (as so determined) do not exceed the 
     maximum resource level applied for the year under section 
     1860D-14(a)(3)(E) applicable to an individual or to the 
     individual and the individual's spouse (as the case may 
     be)''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to eligibility determinations for income-related 
     subsidies and medicare cost-sharing furnished for periods 
     beginning on or after January 1, 2009.

     SEC. 212. MAKING QI PROGRAM PERMANENT AND EXPANDING 
                   ELIGIBILITY.

       (a) Making Program Permanent.--
       (1) In general.--Section 1902(a)(10)(E)(iv) of the Social 
     Security Act (42 U.S.C. 1396b(a)(10)(E)(iv)) is amended--
       (A) by striking ``sections 1933 and'' and by inserting 
     ``section''; and
       (B) by striking ``(but only for'' and all that follows 
     through ``September 2007)''.
       (2) Elimination of funding limitation.--
       (A) In general.--Section 1933 of such Act (42 U.S.C. 1396u-
     3) is amended--
       (i) in subsection (a), by striking ``who are selected to 
     receive such assistance under subsection (b)''
       (ii) by striking subsections (b), (c), (e), and (g);
       (iii) in subsection (d), by striking ``furnished in a 
     State'' and all that follows and inserting ``the Federal 
     medical assistance percentage shall be equal to 100 
     percent.''; and
       (iv) by redesignating subsections (d) and (f) as 
     subsections (b) and (c), respectively.
       (B) Conforming amendment.--Section 1905(b) of such Act (42 
     U.S.C. 1396d(b)) is amended by striking ``1933(d)'' and 
     inserting ``1933(b)''.
       (C) Effective date.--The amendments made by subparagraph 
     (A) shall take effect on October 1, 2007.
       (b) Increase in Eligibility to 150 Percent of the Federal 
     Poverty Level.--Section 1902(a)(10)(E)(iv) of such Act is 
     further amended by inserting ``(or, effective January 1, 
     2008, 150 percent)'' after ``135 percent''.

     SEC. 213. ELIMINATING BARRIERS TO ENROLLMENT.

       (a) Administrative Verification of Income and Resources 
     Under the Low-Income Subsidy Program.--Clause (iii) of 
     section 1860D-14(a)(3)(E) of the Social Security Act (42 
     U.S.C. 1395w-114(a)(3)(E)) is amended to read as follows:
       ``(iii) Certification of income and resources.--For 
     purposes of applying this section--

       ``(I) an individual shall be permitted to apply on the 
     basis of self-certification of income and resources; and
       ``(II) matters attested to in the application shall be 
     subject to appropriate methods of verification without the 
     need of the individual to provide additional documentation, 
     except in extraordinary situations as determined by the 
     Commissioner.''.

       (b) Automatic Reenrollment Without Need to Reapply Under 
     Low-Income Subsidy Program.--Section 1860D-14(a)(3) of such 
     Act (42 U.S.C. 1395w-114(a)(3)), is amended by adding at the 
     end the following new subparagraph:
       ``(G) Automatic reenrollment.--For purposes of applying 
     this section, in the case of an individual who has been 
     determined to be a subsidy eligible individual (and within a 
     particular class of such individuals, such as a full-subsidy 
     eligible individual or a partial subsidy eligible 
     individual), the individual shall be deemed to continue to be 
     so determined without the need for any annual or periodic 
     application unless and until the individual notifies a 
     Federal or State official responsible for such determinations 
     that the individual's eligibility conditions have changed so 
     that the individual is no longer a subsidy eligible 
     individual (or is no longer within such class of such 
     individuals).''.
       (c) Encouraging Application of Procedures Under Medicare 
     Savings Program.--Section 1905(p) of such Act (42 U.S.C. 
     1396d(p)) is amended by adding at the end the following new 
     paragraph:
       ``(7) The Secretary shall take all reasonable steps to 
     encourage States to provide for administrative verification 
     of income and automatic reenrollment (as provided under 
     ``subparagraphs (c)(iii) and (G) of section 1860D-14(a)(3)'' 
     in the case of the low-income subsidy program).''.
       (d) SSA Assistance With Medicare Savings Program and Low-
     Income Subsidy Program Applications.--Section 1144 of such 
     Act (42 U.S.C. 1320b-14) is amended by adding at the end the 
     following new subsection:
       ``(c) Assistance With Medicare Savings Program and Low-
     Income Subsidy Program Applications.--
       ``(1) Distribution of applications to applicants for 
     medicare.--In the case of each individual applying for 
     hospital insurance benefits under section 226 or 226A, the 
     Commissioner shall provide the following:
       ``(A) Information describing the low-income subsidy program 
     under section 1860D-14 and the medicare savings program under 
     title XIX.
       ``(B) An application for enrollment under such low-income 
     subsidy program as well as a simplified application form 
     (developed under section 1905(p)(5)) for medical assistance 
     for medicare cost-sharing under title XIX.
       ``(C) Information on how the individual may obtain 
     assistance in completing such applications, including 
     information on how the individual may contact the State 
     health insurance assistance program (SHIP) for the State in 
     which the individual is located.

     The Commissioner shall make such application forms available 
     at local offices of the Social Security Administration.
       ``(2) Training personnel in assisting in completing 
     applications.--The Commissioner shall provide training to 
     those employees of the Social Security Administration who are 
     involved in receiving applications for benefits described in 
     paragraph (1) in assisting applicants in completing a 
     medicare savings program application described in paragraph 
     (1). Such employees who are so trained shall provide such 
     assistance upon request.
       ``(3) Transmittal of application.--If such an employee 
     assists in completing such an application, the employee, with 
     the consent of the applicant, shall transmit the application 
     to the appropriate State medicaid agency for processing.
       ``(4) Coordination with outreach.--The Commissioner shall 
     coordinate outreach activities under this subsection with 
     outreach activities conducted by States in connection with 
     the low-income subsidy program and the medicare savings 
     program.''.
       (e) Medicaid Agency Consideration of Applications.--Section 
     1935(a) of such Act (42 U.S.C. 1396u-5(a)) is amended by 
     adding at the end the following new paragraph:
       ``(4) Consideration of msp applications.--The State shall 
     accept medicare savings program applications transmitted 
     under section 1144(c)(3) and act on such applications in the 
     same manner and deadlines as if they had been submitted 
     directly by the applicant.''.
       (f) Translation of Model Form.--Section 1905(p)(5)(A) of 
     the Social Security Act (42 U.S.C. 1396d(p)(5)(A)) is amended 
     by adding at the end the following: ``The Secretary shall 
     provide for the translation of such application form into at 
     least the 10 languages (other than English) that are most 
     often used by individuals applying for hospital insurance 
     benefits under section 226 or 226A and shall make the 
     translated forms available to the States and to the 
     Commissioner of Social Security.''.
       (g) Disclosure of Tax Return Information for Purposes of 
     Providing Low-Income Subsidies Under Medicare.--
       (1) In general.--Subsection (l) of section 6103 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new paragraph:
       ``(21) Disclosure of return information for purposes of 
     providing low-income subsidies under medicare.--
       ``(A) Return information from internal revenue service to 
     social security administration.--The Secretary, upon written 
     request from the Commissioner of Social Security, shall 
     disclose to the officers and employees of the Social Security 
     Administration with respect to any individual identified by 
     the Commissioner as potentially eligible (based on 
     information other than return information) for low-income 
     subsidies under section 1860D-14 of the Social Security Act--

[[Page 22237]]

       ``(i) whether the adjusted gross income for the applicable 
     year is less than 135 percent of the poverty line (as 
     specified by the Commissioner in such request),
       ``(ii) whether such adjusted gross income is between 135 
     percent and 150 percent of the poverty line (as so 
     specified),
       ``(iii) whether any designated distributions (as defined in 
     section 3405(e)(1)) were reported with respect to such 
     individual under section 6047(d) for the applicable year, and 
     the amount (if any) of the distributions so reported,
       ``(iv) whether the return was a joint return for the 
     applicable year, and
       ``(v) the applicable year.
       ``(B) Applicable year.--
       ``(i) In general.--For the purposes of this paragraph, the 
     term `applicable year' means the most recent taxable year for 
     which information is available in the Internal Revenue 
     Service's taxpayer data information systems, or, if there is 
     no return filed for the individual for such year, the prior 
     taxable year.
       ``(ii) No return.--If no return is filed for such 
     individual for both taxable years referred to in clause (i), 
     the Secretary shall disclose the fact that there is no return 
     filed for such individual for the applicable year in lieu of 
     the information described in subparagraph (A).
       ``(C) Restriction on use of disclosed information.--Return 
     information disclosed under this paragraph may be used only 
     for the purpose of improving the efforts of the Social 
     Security Administration to contact and assist eligible 
     individuals for, and administering, low-income subsidies 
     under section 1860D-14 of the Social Security Act.
       ``(D) Termination.--No disclosure shall be made under this 
     paragraph after the 2-year period beginning on the date of 
     the enactment of this paragraph.''.
       (2) Procedures and recordkeeping related to disclosures.--
     Paragraph (4) of section 6103(p) of such Code is amended by 
     striking ``or (17)'' each place it appears and inserting 
     ``(17), or (21)''.
       (3) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Secretary of the Treasury, after 
     consultation with the Commissioner of Social Security, shall 
     submit a written report to Congress regarding the use of 
     disclosures made under section 6103(l)(21) of the Internal 
     Revenue Code of 1986, as added by this subsection, in 
     identifying individuals eligible for the low-income subsidies 
     under section 1860D-14 of the Social Security Act.
       (4) Effective date.--The amendment made by this subsection 
     shall apply to disclosures made after the date of the 
     enactment of this Act.
       (h) Effective Date.--Except as otherwise provided, the 
     amendments made by this section shall take effect on January 
     1, 2009.

     SEC. 214. ELIMINATING APPLICATION OF ESTATE RECOVERY.

       (a) In General.--Section 1917(b)(1)(B)(ii) of the Social 
     Security Act (42 U.S.C. 1396p(b)(1)(B)(ii)) is amended by 
     inserting ``(but not including medical assistance for 
     medicare cost-sharing or for benefits described in section 
     1902(a)(10)(E))'' before the period at the end.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as of January 1, 2008.

     SEC. 215. ELIMINATION OF PART D COST-SHARING FOR CERTAIN NON-
                   INSTITUTIONALIZED FULL-BENEFIT DUAL ELIGIBLE 
                   INDIVIDUALS.

       (a) In General.--Section 1860D-14(a)(1)(D)(i) of the Social 
     Security Act (42 U.S.C. 1395w-114(a)(1)(D)(i)) is amended--
       (1) by striking ``Institutionalized individuals.--In'' and 
     inserting ``Elimination of cost-sharing for certain full-
     benefit dual eligible individuals.--

       ``(I) Institutionalized individuals.--In''; and

       (2) by adding at the end the following new subclause:

       ``(II) Certain other individuals.--In the case of an 
     individual who is a full-benefit dual eligible individual and 
     with respect to whom there has been a determination that but 
     for the provision of home and community based care (whether 
     under section 1915 or under a waiver under section 1115) the 
     individual would require the level of care provided in a 
     hospital or a nursing facility or intermediate care facility 
     for the mentally retarded the cost of which could be 
     reimbursed under the State plan under title XIX, the 
     elimination of any beneficiary coinsurance described in 
     section 1860D-2(b)(2) (for all amounts through the total 
     amount of expenditures at which benefits are available under 
     section 1860D-2(b)(4)).''.

       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to drugs dispensed on or after January 1, 2009.

     SEC. 216. EXEMPTIONS FROM INCOME AND RESOURCES FOR 
                   DETERMINATION OF ELIGIBILITY FOR LOW-INCOME 
                   SUBSIDY.

       (a) In General.--Section 1860D-14(a)(3) of the Social 
     Security Act (42 U.S.C. 1395w-114(a)(3)), as amended by 
     subsections (a) and (b) of section 213, is further amended--
       (1) in subparagraph (C)(i), by inserting ``and except that 
     support and maintenance furnished in kind shall not be 
     counted as income'' after ``section 1902(r)(2)'';
       (2) in subparagraph (D), in the matter before clause (i), 
     by inserting ``subject to the additional exclusions provided 
     under subparagraph (G)'' before ``)'';
       (3) in subparagraph (E)(i), in the matter before subclause 
     (I), by inserting ``subject to the additional exclusions 
     provided under subparagraph (G)'' before ``)''; and
       (4) by adding at the end the following new subparagraph:
       ``(I) Additional exclusions.--In determining the resources 
     of an individual (and the eligible spouse of the individual, 
     if any) under section 1613 for purposes of subparagraphs (D) 
     and (E) the following additional exclusions shall apply:
       ``(i) Life insurance policy.--No part of the value of any 
     life insurance policy shall be taken into account.
       ``(ii) Pension or retirement plan.--No balance in any 
     pension or retirement plan shall be taken into account.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2009, and shall apply to 
     determinations of eligibility for months beginning with 
     January 2009.

     SEC. 217. COST-SHARING PROTECTIONS FOR LOW-INCOME SUBSIDY-
                   ELIGIBLE INDIVIDUALS.

       (a) In General.--Section 1860D-14(a) of the Social Security 
     Act (42 U.S.C. 1395w-114(a)) is amended--
       (1) in paragraph (1)(D), by adding at the end the following 
     new clause:
       ``(iv) Overall limitation on cost-sharing.--In the case of 
     all such individuals, a limitation on aggregate cost-sharing 
     under this part for a year not to exceed 5 percent of 
     income.''; and
       (2) in paragraph (2), by adding at the end the following 
     new subparagraph:
       ``(F) Overall limitation on cost-sharing.--A limitation on 
     aggregate cost-sharing under this part for a year not to 
     exceed 5 percent of income.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply as of January 1, 2009.

     SEC. 218. INTELLIGENT ASSIGNMENT IN ENROLLMENT.

       (a) In General.--Section 1860D-1(b)(1) of the Social 
     Security Act (42 U.S.C. 1395w-101(b)(1)) is amended--
       (1) in the second sentence of subparagraph (C), by 
     inserting ``, subject to subparagraph (D),'' before ``on a 
     random basis''; and
       (2) by adding at the end the following new subparagraph:
       ``(D) Intelligent assignment.--In the case of any auto-
     enrollment under subparagraph (C), no part D eligible 
     individual described in such subparagraph shall be enrolled 
     in a prescription drug plan which does not meet the following 
     requirements:
       ``(i) Formulary.--The plan has a formulary that covers at 
     least--

       ``(I) 95 percent of the 100 most commonly prescribed non-
     duplicative generic covered part D drugs for the population 
     of individuals entitled to benefits under part A or enrolled 
     under part B; and
       ``(II) 95 percent of the 100 most commonly prescribed non-
     duplicative brand name covered part D drugs for such 
     population.

       ``(ii) Pharmacy network.--The plan has a network of 
     pharmacies that substantially exceeds the minimum 
     requirements for prescription drug plans in the State and 
     that provides access in areas where lower income individuals 
     reside.
       ``(iii) Quality.--

       ``(I) In general.--Subject to subclause (I), the plan has 
     an above average score on quality ratings of the Secretary of 
     prescription drug plans under this part.
       ``(II) Exception.--Subclause (I) shall not apply to a plan 
     that is a new plan (as defined by the Secretary), with 
     respect to the plan year involved.

       ``(iv) Low cost.--The total cost under this title of 
     providing prescription drug coverage under the plan 
     consistent with the previous clauses of this subparagraph is 
     among the lowest 25th percentile of prescription drug plans 
     under this part in the State.

     In the case that no plan meets the requirements under clauses 
     (i) through (iv), the Secretary shall implement this 
     subparagraph to the greatest extent possible with the goal of 
     protecting beneficiary access to drugs without increasing the 
     cost relative to the enrollment process under subparagraph 
     (C) as in existence before the date of the enactment of this 
     subparagraph.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect for enrollments effected on or after 
     November 15, 2009.

              Subtitle C--Part D Beneficiary Improvements

     SEC. 221. INCLUDING COSTS INCURRED BY AIDS DRUG ASSISTANCE 
                   PROGRAMS AND INDIAN HEALTH SERVICE IN PROVIDING 
                   PRESCRIPTION DRUGS TOWARD THE ANNUAL OUT OF 
                   POCKET THRESHOLD UNDER PART D.

       (a) In General.--Section 1860D-2(b)(4)(C) of the Social 
     Security Act (42 U.S.C. 1395w-102(b)(4)(C)) is amended--
       (1) in clause (i), by striking ``and'' at the end;
       (2) in clause (ii)--
       (A) by striking ``such costs shall be treated as incurred 
     only if'' and inserting ``subject to clause (iii), such costs 
     shall be treated as incurred only if'';
       (B) by striking ``, under section 1860D-14, or under a 
     State Pharmaceutical Assistance Program''; and
       (C) by striking the period at the end and inserting ``; 
     and''; and
       (3) by inserting after clause (ii) the following new 
     clause:
       ``(iii) such costs shall be treated as incurred and shall 
     not be considered to be reimbursed under clause (ii) if such 
     costs are borne or paid--

       ``(I) under section 1860D-14;
       ``(II) under a State Pharmaceutical Assistance Program;
       ``(III) by the Indian Health Service, an Indian tribe or 
     tribal organization, or an urban Indian

[[Page 22238]]

     organization (as defined in section 4 of the Indian Health 
     Care Improvement Act); or
       ``(IV) under an AIDS Drug Assistance Program under part B 
     of title XXVI of the Public Health Service Act.''.

       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to costs incurred on or after January 1, 2009.

     SEC. 222. PERMITTING MID-YEAR CHANGES IN ENROLLMENT FOR 
                   FORMULARY CHANGES ADVERSELY IMPACT AN ENROLLEE.

       (a) In General.--Section 1860D-1(b)(3) of the Social 
     Security Act (42 U.S.C. 1395w-101(b)(3)) is amended by adding 
     at the end the following new subparagraph:
       ``(F) Change in formulary resulting in increase in cost-
     sharing.--
       ``(i) In general.--Except as provided in clause (ii), in 
     the case of an individual enrolled in a prescription drug 
     plan (or MA-PD plan) who has been prescribed a covered part D 
     drug while so enrolled, if the formulary of the plan is 
     materially changed (other than at the end of a contract year) 
     so to reduce the coverage (or increase the cost-sharing) of 
     the drug under the plan.
       ``(ii) Exception.--Clause (i) shall not apply in the case 
     that a drug is removed from the formulary of a plan because 
     of a recall or withdrawal of the drug issued by the Food and 
     Drug Administration.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to contract years beginning on or after January 
     1, 2009.

     SEC. 223. REMOVAL OF EXCLUSION OF BENZODIAZEPINES FROM 
                   REQUIRED COVERAGE UNDER THE MEDICARE 
                   PRESCRIPTION DRUG PROGRAM.

       (a) In General.--Section 1860D-2(e)(2)(A) of the Social 
     Security Act (42 U.S.C. 1395w-102(e)(2)(A)) is amended--
       (1) by striking ``subparagraph (E)'' and inserting 
     ``subparagraphs (E) and (J)''; and
       (2) by inserting ``and benzodiazepines, respectively'' 
     after ``smoking cessation agents''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to prescriptions dispensed on or after January 1, 
     2013.

     SEC. 224. PERMITTING UPDATING DRUG COMPENDIA UNDER PART D 
                   USING PART B UPDATE PROCESS.

       Section 1860D-4(b)(3)(C) of the Social Security Act (42 
     U.S.C. 1395w-104(b)(3)(C)) is amended by adding at the end 
     the following new clause:
       ``(iv) Updating drug compendia using part b process.--The 
     Secretary may apply under this subparagraph the same process 
     for updating drug compendia that is used for purposes of 
     section 1861(t)(2)(B)(ii).''.

     SEC. 225. CODIFICATION OF SPECIAL PROTECTIONS FOR SIX 
                   PROTECTED DRUG CLASSIFICATIONS.

       (a) In General.--Section 1860D-4(b)(3) of the Social 
     Security Act (42 U.S.C. 1395w-104(b)(3)) is amended--
       (1) in subparagraph (C)(i), by inserting ``, except as 
     provided in subparagraph (G),'' after ``although''; and
       (2) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G) Required inclusion of drugs in certain therapeutic 
     classes.--
       ``(i) In general.--The formulary must include all or 
     substantially all covered part D drugs in each of the 
     following therapeutic classes of covered part D drugs:

       ``(I) Anticonvulsants.
       ``(II) Antineoplastics.
       ``(III) Antiretrovirals.
       ``(IV) Antidepressants.
       ``(V) Antipsychotics.
       ``(VI) Immunosuppresessants.

       ``(ii) Use of utilization management tools.--A PDP sponsor 
     of a prescription drug plan may use prior authorization or 
     step therapy for the initiation of medications within one of 
     the classifications specified in clause (i) but only when 
     approved by the Secretary, except that such prior 
     authorization or step therapy may not be used in the case of 
     antiretrovirals and in the case of individuals who already 
     are stabilized on a drug treatment regimen.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply for plan years beginning on or after January 1, 
     2009.

     SEC. 226. ELIMINATION OF MEDICARE PART D LATE ENROLLMENT 
                   PENALTIES PAID BY LOW-INCOME SUBSIDY-ELIGIBLE 
                   INDIVIDUALS.

       (a) Individuals With Income Below 135 Percent of Poverty 
     Line.--Paragraph (1)(A)(ii) of section 1860D-14(a) of the 
     Social Security Act (42 U.S.C. 1395w-114(a)) is amended to 
     read as follows:
       ``(ii) 100 percent of any late enrollment penalties imposed 
     under section 1860D-13(b) for such individual.''.
       (b) Individuals With Income Between 135 and 150 Percent of 
     Poverty Line.--Paragraph (2)(A) of such section is amended--
       (1) by inserting ``equal to (i) an amount'' after ``premium 
     subsidy'';
       (2) by striking ``paragraph (1)(A)'' and inserting ``clause 
     (i) of paragraph (1)(A)''; and
       (3) by adding at the end before the period the following: 
     ``, plus (ii) 100 percent of the amount described in clause 
     (ii) of such paragraph for such individual''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to subsidies for months beginning with January 
     2008.

     SEC. 227. SPECIAL ENROLLMENT PERIOD FOR SUBSIDY ELIGIBLE 
                   INDIVIDUALS.

       (a) In General.--Section 1860D-1(b)(3) of the Social 
     Security Act (42 U.S.C. 1395w-101(b)(3)), as amended by 
     section 222(a), is further amended by adding at the end the 
     following new subparagraph:
       ``(G) Eligibility for low-income subsidy.--
       ``(i) In general.--In the case of an applicable subsidy 
     eligible individual (as defined in clause (ii)), the special 
     enrollment period described in clause (iii).
       ``(ii) Applicable subsidy eligible individual defined.--For 
     purposes of this subparagraph, the term `applicable subsidy 
     eligible individual' means a part D eligible individual who 
     is determined under subparagraph (B) of section 1860D-
     14(a)(3) to be a subsidy eligible individual (as defined in 
     subparagraph (A) of such section), and includes such an 
     individual who was enrolled in a prescription drug plan or an 
     MA-PD plan on the date of such determination.
       ``(iii) Special enrollment period described.--The special 
     enrollment period described in this clause, with respect to 
     an applicable subsidy eligible individual, is the 90-day 
     period beginning on the date the individual receives 
     notification that such individual has been determined under 
     section 1860D-14(a)(3)(B) to be a subsidy eligible individual 
     (as so defined).''.
       (b) Automatic Enrollment Process for Certain Subsidy 
     Eligible Individuals.--Section 1860D-1(b)(1) of the Social 
     Security Act (42 U.S.C. 1395w-101(b)(1)), as amended by 
     section 218(a)(2), is further amended by adding at the end 
     the following new subparagraph:
       ``(E) Special rule for subsidy eligible individuals.--The 
     process established under subparagraph (A) shall include, in 
     the case of an applicable subsidy eligible individual (as 
     defined in clause (ii) of paragraph (3)(F)) who fails to 
     enroll in a prescription drug plan or an MA-PD plan during 
     the special enrollment period described in clause (iii) of 
     such paragraph applicable to such individual, a process for 
     the facilitated enrollment of the individual in the 
     prescription drug plan or MA-PD plan that is most appropriate 
     for such individual (as determined by the Secretary). Nothing 
     in the previous sentence shall prevent an individual 
     described in such sentence from declining enrollment in a 
     plan determined appropriate by the Secretary (or in the 
     program under this part) or from changing such enrollment.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to subsidy determinations made for months 
     beginning with January 2008.

                Subtitle D--Reducing Health Disparities

     SEC. 231. MEDICARE DATA ON RACE, ETHNICITY, AND PRIMARY 
                   LANGUAGE.

       (a) Requirements.--
       (1) In general.--The Secretary of Health and Human Services 
     (in this subtitle referred to as the ``Secretary'') shall--
       (A) collect data on the race, ethnicity, and primary 
     language of each applicant for and recipient of benefits 
     under title XVIII of the Social Security Act--
       (i) using, at a minimum, the categories for race and 
     ethnicity described in the 1997 Office of Management and 
     Budget Standards for Maintaining, Collecting, and Presenting 
     Federal Data on Race and Ethnicity;
       (ii) using the standards developed under subsection (e) for 
     the collection of language data;
       (iii) where practicable, collecting data for additional 
     population groups if such groups can be aggregated into the 
     minimum race and ethnicity categories; and
       (iv) where practicable, through self-reporting;
       (B) with respect to the collection of the data described in 
     subparagraph (A) for applicants and recipients who are minors 
     or otherwise legally incapacitated, require that--
       (i) such data be collected from the parent or legal 
     guardian of such an applicant or recipient; and
       (ii) the preferred language of the parent or legal guardian 
     of such an applicant or recipient be collected;
       (C) systematically analyze at least annually such data 
     using the smallest appropriate units of analysis feasible to 
     detect racial and ethnic disparities in health and health 
     care and when appropriate, for men and women separately;
       (D) report the results of analysis annually to the Director 
     of the Office for Civil Rights, 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; and
       (E) ensure that the provision of assistance to an applicant 
     or recipient of assistance is not denied or otherwise 
     adversely affected because of the failure of the applicant or 
     recipient to provide race, ethnicity, and primary language 
     data.
       (2) Rules of construction.--Nothing in this subsection 
     shall be construed--
       (A) to permit the use of information collected under this 
     subsection in a manner that would adversely affect any 
     individual providing any such information; and
       (B) to require health care providers to collect data.
       (b) Protection of Data.--The Secretary shall ensure 
     (through the promulgation of regulations or otherwise) that 
     all data collected pursuant to subsection (a) is protected--
       (1) under the same privacy protections as the Secretary 
     applies to other health data under the regulations 
     promulgated under section 264(c) of the Health Insurance 
     Portability and Accountability Act of 1996 (Public Law 104-
     191; 110 Stat. 2033) relating to the privacy of individually 
     identifiable health information and other protections; and
       (2) from all inappropriate internal use by any entity that 
     collects, stores, or receives the data,

[[Page 22239]]

     including use of such data in determinations of eligibility 
     (or continued eligibility) in health plans, and from other 
     inappropriate uses, as defined by the Secretary.
       (c) Collection Plan.--In carrying out the duties specified 
     in subsection (a), the Secretary shall develop and implement 
     a plan to improve the collection, analysis, and reporting of 
     racial, ethnic, and primary language data within the programs 
     administered under title XVIII of the Social Security Act, 
     and, in consultation with the National Committee on Vital 
     Health Statistics, the Office of Minority Health, and other 
     appropriate public and private entities, shall make 
     recommendations on how to--
       (1) implement subsection (a) while minimizing the cost and 
     administrative burdens of data collection and reporting;
       (2) expand awareness that data collection, analysis, and 
     reporting by race, ethnicity, and primary language is legal 
     and necessary to assure equity and non-discrimination in the 
     quality of health care services;
       (3) ensure that future patient record systems including 
     electronic health records, electronic medical records and 
     patient health records, have data code sets for racial, 
     ethnic, and primary language identifiers and that such 
     identifiers can be retrieved from clinical records, including 
     records transmitted electronically;
       (4) improve health and health care data collection and 
     analysis for more population groups if such groups can be 
     aggregated into the minimum race and ethnicity categories;
       (5) provide researchers with greater access to racial, 
     ethnic, and primary language data, subject to privacy and 
     confidentiality regulations; and
       (6) safeguard and prevent the misuse of data collected 
     under subsection (a).
       (d) Compliance With Standards.--Data collected under 
     subsection (a) shall be obtained, maintained, and presented 
     (including for reporting purposes and at a minimum) in 
     accordance with the 1997 Office of Management and Budget 
     Standards for Maintaining, Collecting, and Presenting Federal 
     Data on Race and Ethnicity.
       (e) Language Collection Standards.--Not later than 1 year 
     after the date of enactment of this Act, the Director of the 
     Office of Minority Health, in consultation with the Office 
     for Civil Rights of the Department of Health and Human 
     Services, shall develop and disseminate Standards for the 
     Classification of Federal Data on Preferred Written and 
     Spoken Language.
       (f) Technical Assistance for the Collection and Reporting 
     of Data.--
       (1) In general.--The Secretary may, either directly or 
     through grant or contract, provide technical assistance to 
     enable a health care provider or plan operating under the 
     Medicare program to comply with the requirements of this 
     section.
       (2) Types of assistance.--Assistance provided under this 
     subsection may include assistance to--
       (A) enhance or upgrade computer technology that will 
     facilitate racial, ethnic, and primary language data 
     collection and analysis;
       (B) improve methods for health data collection and analysis 
     including additional population groups beyond the Office of 
     Management and Budget categories if such groups can be 
     aggregated into the minimum race and ethnicity categories;
       (C) develop mechanisms for submitting collected data 
     subject to existing privacy and confidentiality regulations; 
     and
       (D) develop educational programs to raise awareness that 
     data collection and reporting by race, ethnicity, and 
     preferred language are legal and essential for eliminating 
     health and health care disparities; and,
       (E) provide for the revision of existing HIPAA claims-
     related code sets to mandate the collection of racial and 
     ethnicity data, and to provide a code set for primary 
     language.
       (g) Analysis of Racial and Ethnic Data.--The Secretary, 
     acting through the Director of the Agency for Health Care 
     Research and Quality and in coordination with the 
     Administrator of the Centers for Medicare & Medicaid 
     Services, shall--
       (1) identify appropriate quality assurance mechanisms to 
     monitor for health disparities under the Medicare program;
       (2) specify the clinical, diagnostic, or therapeutic 
     measures which should be monitored;
       (3) develop new quality measures relating to racial and 
     ethnic disparities in health and health care;
       (4) identify the level at which data analysis should be 
     conducted; and
       (5) share data with external organizations for research and 
     quality improvement purposes, in compliance with applicable 
     Federal privacy laws.
       (h) Report.--Not later than 2 years after the date of 
     enactment of this Act, and biennially thereafter, the 
     Secretary shall submit to the appropriate committees of 
     Congress a report on the effectiveness of data collection, 
     analysis, and reporting on race, ethnicity, and primary 
     language under the programs administered through title XVIII 
     of the Social Security Act. The report shall evaluate the 
     progress made with respect to the plan under subsection (c) 
     or subsequent revisions thereto.
       (i) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section, such sums as 
     may be necessary for each of fiscal years 2008 through 2012.

     SEC. 232. ENSURING EFFECTIVE COMMUNICATION IN MEDICARE.

       (a) Ensuring Effective Communication by the Centers for 
     Medicare & Medicaid Services.--
       (1) Study on medicare payments for language services.--The 
     Secretary of Health and Human Services shall conduct a study 
     that examines ways that Medicare should develop payment 
     systems for language services using the results of the 
     demonstration program conducted under section 233.
       (2) Analyses.-- The study shall include an analysis of each 
     of the following:
       (A) How to develop and structure appropriate payment 
     systems for language services for all Medicare service 
     providers.
       (B) The feasibility of adopting a payment methodology for 
     on-site interpreters, including interpreters who work as 
     independent contractors and interpreters who work for 
     agencies that provide on-site interpretation, pursuant to 
     which such interpreters could directly bill Medicare for 
     services provided in support of physician office services for 
     an LEP Medicare patient.
       (C) The feasibility of Medicare contracting directly with 
     agencies that provide off-site interpretation including 
     telephonic and video interpretation pursuant to which such 
     contractors could directly bill Medicare for the services 
     provided in support of physician office services for an LEP 
     Medicare patient.
       (D) The feasibility of modifying the existing Medicare 
     resource-based relative value scale (RBRVS) by using 
     adjustments (such as multipliers or add-ons) when a patient 
     is LEP.
       (E) How each of options described in a previous paragraph 
     would be funded and how such funding would affect physician 
     payments, a physician's practice, and beneficiary cost-
     sharing.
       (3) Variation in payment system described.--The payment 
     systems described in subsection (b) may allow variations 
     based upon types of service providers, available delivery 
     methods, and costs for providing language services including 
     such factors as--
       (A) the type of language services provided (such as 
     provision of health care or health care related services 
     directly in a non-English language by a bilingual provider or 
     use of an interpreter);
       (B) type of interpretation services provided (such as in-
     person, telephonic, video interpretation);
       (C) the methods and costs of providing language services 
     (including the costs of providing language services with 
     internal staff or through contract with external independent 
     contractors and/or agencies);
       (D) providing services for languages not frequently 
     encountered in the United States; and
       (E) providing services in rural areas.
       (4) Report.--The Secretary shall submit a report on the 
     study conducted under subsection (a) to appropriate 
     committees of Congress not later than 1 year after the 
     expiration of the demonstration program conducted under 
     section 3.
       (b) Health Plans.--Section 1857(g)(1) of the Social 
     Security Act (42 U.S.C. 1395w-27(g)(1)) is amended--
       (1) by striking ``or'' at the end of subparagraph (F);
       (2) by adding ``or'' at the end of subparagraph (G); and
       (3) by inserting after subparagraph (G) the following new 
     subparagraph:
       ``(H) fails substantially to provide language services to 
     limited English proficient beneficiaries enrolled in the plan 
     that are required under law;''.

     SEC. 233. DEMONSTRATION TO PROMOTE ACCESS FOR MEDICARE 
                   BENEFICIARIES WITH LIMITED ENGLISH PROFICIENCY 
                   BY PROVIDING REIMBURSEMENT FOR CULTURALLY AND 
                   LINGUISTICALLY APPROPRIATE SERVICES.

       (a) In General.--Within one year after the date of the 
     enactment of this Act the Secretary, acting through the 
     Centers for Medicare & Medicaid Services, shall award 24 3-
     year demonstration grants to eligible Medicare service 
     providers to improve effective communication between such 
     providers and Medicare beneficiaries who are ``living in 
     communities where racial and ethnic minorities, including 
     populations that face language barriers, are underserved with 
     respect to such services''. The Secretary shall not authorize 
     a grant larger than $500,000 over three years for any 
     grantee.
       (b) Eligibility; Priority.--
       (1) Eligibility.--To be eligible to receive a grant under 
     subsection (1) an entity shall--
       (A) be--
       (i) a provider of services under part A of title XVIII of 
     the Social Security Act;
       (ii) a service provider under part B of such title;
       (iii) a part C organization offering a Medicare part C plan 
     under part C of such title; or
       (iv) a PDP sponsor of a prescription drug plan under part D 
     of such title; and
       (B) prepare and submit to the Secretary an application, at 
     such time, in such manner, and accompanied by such additional 
     information as the Secretary may require.
       (2) Priority.--
       (A) Distribution.--To the extent feasible, in awarding 
     grants under this section, the Secretary shall award--
       (i) 6 grants to providers of services described in 
     paragraph (1)(A)(i);
       (ii) 6 grants to service providers described in paragraph 
     (1)(A)(ii);
       (iii) 6 grants to organizations described in paragraph 
     (1)(A)(iii); and
       (iv) 6 grants to sponsors described in paragraph 
     (1)(A)(iv).
       (B) For community organizations.--The Secretary shall give 
     priority to applicants that

[[Page 22240]]

     have developed partnerships with community organizations or 
     with agencies with experience in language access.
       (C) Variation in grantees.--The Secretary shall also ensure 
     that the grantees under this section represent, among other 
     factors, variations in--
       (i) different types of service providers and organizations 
     under parts A through D of title XVIII of the Social Security 
     Act;
       (ii) languages needed and their frequency of use;
       (iii) urban and rural settings;
       (iv) at least two geographic regions; and
       (v) at least two large metropolitan statistical areas with 
     diverse populations.
       (c) Use of Funds.--
       (1) In general.--A grantee shall use grant funds received 
     under this section to pay for the provision of competent 
     language services to Medicare beneficiaries who are limited 
     English proficient. Competent interpreter services may be 
     provided through on-site interpretation, telephonic 
     interpretation, or video interpretation or direct provision 
     of health care or health care related services by a bilingual 
     health care provider. A grantee may use bilingual providers, 
     staff, or contract interpreters. A grantee may use grant 
     funds to pay for competent translation services. A grantee 
     may use up to 10 percent of the grant funds to pay for 
     administrative costs associated with the provision of 
     competent language services and for reporting required under 
     subsection (E).
       (2) Organizations.--Grantees that are part C organizations 
     or PDP sponsors must ensure that their network providers 
     receive at least 50 percent of the grant funds to pay for the 
     provision of competent language services to Medicare 
     beneficiaries who are limited English proficient, including 
     physicians and pharmacies.
       (3) Determination of payments for language services.--
     Payments to grantees shall be calculated based on the 
     estimated numbers of LEP Medicare beneficiaries in a 
     grantee's service area utilizing--
       (A) data on the numbers of limited English proficient 
     individuals who speak English less than ``very well'' from 
     the most recently available data from the Bureau of the 
     Census or other State-based study the Secretary determines 
     likely to yield accurate data regarding the number of LEP 
     individuals served by the grantee; or
       (B) the grantee's own data if the grantee routinely 
     collects data on Medicare beneficiaries' primary language in 
     a manner determined by the Secretary to yield accurate data 
     and such data shows greater numbers of LEP individuals than 
     the data listed in subparagraph (A).
       (4) Limitations.--
       (A) Reporting.--Payments shall only be provided under this 
     section to grantees that report their costs of providing 
     language services as required under subsection (e). If a 
     grantee fails to provide the reports under such section for 
     the first year of a grant, the Secretary may terminate the 
     grant and solicit applications from new grantees to 
     participate in the subsequent two years of the demonstration 
     program.
       (B) Type of services.--
       (i) In general.--Subject to clause (ii), payments shall be 
     provided under this section only to grantees that utilize 
     competent bilingual staff or competent interpreter or 
     translation services which--

       (I) if the grantee operates in a State that has statewide 
     health care interpreter standards, meet the State standards 
     currently in effect; or
       (II) if the grantee operates in a State that does not have 
     statewide health care interpreter standards, utilizes 
     competent interpreters who follow the National Council on 
     Interpreting in Health Care's Code of Ethics and Standards of 
     Practice.

       (ii) Exemptions.--The requirements of clause (i) shall not 
     apply--

       (I) in the case of a Medicare beneficiary who is limited 
     English proficient (who has been informed in the 
     beneficiary's primary language of the availability of free 
     interpreter and translation services) and who requests the 
     use of family, friends, or other persons untrained in 
     interpretation or translation and the grantee documents the 
     request in the beneficiary's record; and
       (II) in the case of a medical emergency where the delay 
     directly associated with obtaining a competent interpreter or 
     translation services would jeopardize the health of the 
     patient.

     Nothing in clause (ii)(II) shall be construed to exempt an 
     emergency rooms or similar entities that regularly provide 
     health care services in medical emergencies from having in 
     place systems to provide competent interpreter and 
     translation services without undue delay.
       (d) Assurances.--Grantees under this section shall--
       (1) ensure that appropriate clinical and support staff 
     receive ongoing education and training in linguistically 
     appropriate service delivery; ensure the linguistic 
     competence of bilingual providers;
       (2) offer and provide appropriate language services at no 
     additional charge to each patient with limited English 
     proficiency at all points of contact, in a timely manner 
     during all hours of operation;
       (3) notify Medicare beneficiaries of their right to receive 
     language services in their primary language;
       (4) post signage in the languages of the commonly 
     encountered group or groups present in the service area of 
     the organization; and
       (5) ensure that--
       (A) primary language data are collected for recipients of 
     language services; and
       (B) consistent with the privacy protections provided under 
     the regulations promulgated pursuant to section 264(c) of the 
     Health Insurance Portability and Accountability Act of 1996 
     (42 U.S.C. 1320d-2 note), if the recipient of language 
     services is a minor or is incapacitated, the primary language 
     of the parent or legal guardian is collected and utilized.
       (e) Reporting Requirements.--Grantees under this section 
     shall provide the Secretary with reports at the conclusion of 
     the each year of a grant under this section. each report 
     shall include at least the following information:
       (1) The number of Medicare beneficiaries to whom language 
     services are provided.
       (2) The languages of those Medicare beneficiaries.
       (3) The types of language services provided (such as 
     provision of services directly in non-English language by a 
     bilingual health care provider or use of an interpreter).
       (4) Type of interpretation (such as in-person, telephonic, 
     or video interpretation).
       (5) The methods of providing language services (such as 
     staff or contract with external independent contractors or 
     agencies).
       (6) The length of time for each interpretation encounter.
       (7) The costs of providing language services (which may be 
     actual or estimated, as determined by the Secretary).
       (f) No Cost Sharing.--LEP Beneficiaries shall not have to 
     pay cost-sharing or co-pays for language services provided 
     through this demonstration program.
       (g) Evaluation and Report.--The Secretary shall conduct an 
     evaluation of the demonstration program under this section 
     and shall submit to the appropriate committees of Congress a 
     report not later than 1 year after the completion of the 
     program. The report shall include the following:
       (1) An analysis of the patient outcomes and costs of 
     furnishing care to the LEP Medicare beneficiaries 
     participating in the project as compared to such outcomes and 
     costs for limited English proficient Medicare beneficiaries 
     not participating.
       (2) The effect of delivering culturally and linguistically 
     appropriate services on beneficiary access to care, 
     utilization of services, efficiency and cost-effectiveness of 
     health care delivery, patient satisfaction, and select health 
     outcomes.
       (3) Recommendations regarding the extension of such project 
     to the entire Medicare program.
       (h) General Provisions.--Nothing in this section shall be 
     construed to limit otherwise existing obligations of 
     recipients of Federal financial assistance under title VI of 
     the Civil Rights Act of 1964 (42 U.S.C. 2000(d) et. seq.) or 
     any other statute.
       (i) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $10,000,000 for 
     each fiscal year of the demonstration.

     SEC. 234. DEMONSTRATION TO IMPROVE CARE TO PREVIOUSLY 
                   UNINSURED.

       (a) Establishment.--Within one year after the date of 
     enactment of this Act, the Secretary shall establish a 
     demonstration project to determine the greatest needs and 
     most effective methods of outreach to medicare beneficiaries 
     who were previously uninsured.
       (b) Scope.--The demonstration shall be in no fewer than 10 
     sites, and shall include state health insurance assistance 
     programs, community health centers, community-based 
     organizations, community health workers, and other service 
     providers under parts A, B, and C of title XVIII of the 
     Social Security Act. Grantees that are plans operating under 
     part C shall document that enrollees who were previously 
     uninsured receive the ``Welcome to Medicare'' physical exam.
       (c) Duration.--The Secretary shall conduct the 
     demonstration project for a period of 2 years.
       (d) Report and Evaluation.--The Secretary shall conduct an 
     evaluation of the demonstration and not later than 1 year 
     after the completion of the project shall submit to Congress 
     a report including the following:
       (1) An analysis of the effectiveness of outreach activities 
     targeting beneficiaries who were previously uninsured, such 
     as revising outreach and enrollment materials (including the 
     potential for use of video information), providing one-on-one 
     counseling, working with community health workers, and 
     amending the Medicare and You handbook.
       (2) The effect of such outreach on beneficiary access to 
     care, utilization of services, efficiency and cost-
     effectiveness of health care delivery, patient satisfaction, 
     and select health outcomes.

     SEC. 235. OFFICE OF THE INSPECTOR GENERAL REPORT ON 
                   COMPLIANCE WITH AND ENFORCEMENT OF NATIONAL 
                   STANDARDS ON CULTURALLY AND LINGUISTICALLY 
                   APPROPRIATE SERVICES (CLAS) IN MEDICARE.

       (a) Report.--Not later than two years after the date of the 
     enactment of this Act, the Inspector General of the 
     Department of Health and Human Services shall prepare and 
     publish a report on--
       (1) the extent to which Medicare providers and plans are 
     complying with the Office for Civil Rights' Guidance to 
     Federal Financial Assistance Recipients Regarding Title VI 
     Prohibition Against National Origin Discrimination Affecting 
     Limited English Proficient Persons and the Office of Minority 
     Health's Culturally and Linguistically Appropriate Services 
     Standards in health care; and
       (2) a description of the costs associated with or savings 
     related to the provision of language services.


[[Page 22241]]


     Such report shall include recommendations on improving 
     compliance with CLAS Standards and recommendations on 
     improving enforcement of CLAS Standards.
       (b) Implementation.--Not later than one year after the date 
     of publication of the report under subsection (a), the 
     Department of Health and Human Services shall implement 
     changes responsive to any deficiencies identified in the 
     report.

     SEC. 236. IOM REPORT ON IMPACT OF LANGUAGE ACCESS SERVICES.

       (a) In General.--The Secretary of Health and Human Services 
     shall seek to enter into an arrangement with the Institute of 
     Medicine under which the Institute will prepare and publish, 
     not later than 3 years after the date of the enactment of 
     this Act, a report on the impact of language access services 
     on the health and health care of limited English proficient 
     populations.
       (b) Contents.--Such report shall include--
       (1) recommendations on the development and implementation 
     of policies and practices by health care organizations and 
     providers for limited English proficient patient populations;
       (2) a description of the effect of providing language 
     access services on quality of health care and access to care 
     and reduced medical error; and
       (3) a description of the costs associated with or savings 
     related to provision of language access services.

     SEC. 237. DEFINITIONS.

       In this subtitle:
       (1) Bilingual.--The term ``bilingual'' with respect to an 
     individual means a person who has sufficient degree of 
     proficiency in two languages and can ensure effective 
     communication can occur in both languages.
       (2) Competent interpreter services.--The term ``competent 
     interpreter services'' means a trans-language rendition of a 
     spoken message in which the interpreter comprehends the 
     source language and can speak comprehensively in the target 
     language to convey the meaning intended in the source 
     language. The interpreter knows health and health-related 
     terminology and provides accurate interpretations by choosing 
     equivalent expressions that convey the best matching and 
     meaning to the source language and captures, to the greatest 
     possible extent, all nuances intended in the source message.
       (3) Competent translation services.--The term ``competent 
     translation services'' means a trans-language rendition of a 
     written document in which the translator comprehends the 
     source language and can write comprehensively in the target 
     language to convey the meaning intended in the source 
     language. The translator knows health and health-related 
     terminology and provides accurate translations by choosing 
     equivalent expressions that convey the best matching and 
     meaning to the source language and captures, to the greatest 
     possible extent, all nuances intended in the source document.
       (4) Effective communication.--The term ``effective 
     communication'' means an exchange of information between the 
     provider of health care or health care-related services and 
     the limited English proficient recipient of such services 
     that enables limited English proficient individuals to 
     access, understand, and benefit from health care or health 
     care-related services.
       (5) Interpreting/interpretation.--The terms 
     ``interpreting'' and ``interpretation'' mean the transmission 
     of a spoken message from one language into another, 
     faithfully, accurately, and objectively.
       (6) Health care services.--The term ``health care 
     services'' means services that address physical as well as 
     mental health conditions in all care settings.
       (7) Health care-related services.--The term ``health care-
     related services'' means human or social services programs or 
     activities that provide access, referrals or links to health 
     care.
       (8) Language access.--The term ``language access'' means 
     the provision of language services to an LEP individual 
     designed to enhance that individual's access to, 
     understanding of or benefit from health care or health care-
     related services.
       (9) Language services.--The term ``language services'' 
     means provision of health care services directly in a non-
     English language, interpretation, translation, and non-
     English signage.
       (10) Limited english proficient.--The term ``limited 
     English proficient'' or ``LEP'' with respect to an individual 
     means an individual who speaks a primary language other than 
     English and who cannot speak, read, write or understand the 
     English language at a level that permits the individual to 
     effectively communicate with clinical or nonclinical staff at 
     an entity providing health care or health care related 
     services.
       (11) Medicare program.--The term ``Medicare program'' means 
     the programs under parts A through D of title XVIII of the 
     Social Security Act.
       (12) Service provider.--The term ``service provider'' 
     includes all suppliers, providers of services, or entities 
     under contract to provide coverage, items or services under 
     any part of title XVIII of the Social Security Act.

             TITLE III--PHYSICIANS' SERVICE PAYMENT REFORM

     SEC. 301. ESTABLISHMENT OF SEPARATE TARGET GROWTH RATES FOR 
                   SERVICE CATEGORIES.

       (a) Establishment of Service Categories.--Subsection (j) of 
     section 1848 of the Social Security Act (42 U.S.C. 1395w-4) 
     is amended by adding at the end the following new paragraph:
       ``(5) Service categories.--For services furnished on or 
     after January 1, 2008, each of the following categories of 
     physicians' services shall be treated as a separate `service 
     category':
       ``(A) Evaluation and management services for primary care 
     (including new and established patient office visits 
     delivered by physicians who the Secretary determines provide 
     accessible, continuous, coordinated, and comprehensive care 
     for Medicare beneficiaries, emergency department visits, and 
     home visits), and for preventive services (including 
     screening mammography, colorectal cancer screening, and other 
     services as defined by the Secretary, limited to the 
     recommendations of the United States Preventive Services Task 
     Force).
       ``(B) Evaluation and management services not described in 
     subparagraph (A).
       ``(C) Imaging services (as defined in subsection (b)(4)(B)) 
     and diagnostic tests (other than clinical diagnostic 
     laboratory tests) not described in subparagraph (A).
       ``(D) Procedures that are subject (under regulations 
     promulgated to carry out this section) to a 10-day or 90-day 
     global period (in this paragraph referred to as `major 
     procedures'), except that the Secretary may reclassify as 
     minor procedures under subparagraph (F) any procedures that 
     would otherwise be included in this category if the Secretary 
     determines that such procedures are not major procedures.
       ``(E) Anesthesia services that are paid on the basis of the 
     separate conversion factor for anesthesia services determined 
     under subsection (d)(1)(D).
       ``(F) Minor procedures and any other physicians' services 
     that are not described in a preceding subparagraph.''.
       (b) Establishment of Separate Conversion Factors for Each 
     Service Category.--Subsection (d)(1) of section 1848 of the 
     Social Security Act (42 U.S.C. 1395w-4) is amended--
       (1) in subparagraph (A)--
       (A) by designating the sentence beginning ``The conversion 
     factor'' as clause (i) with the heading ``Application of 
     single conversion factor.--'' and with appropriate 
     indentation;
       (B) by striking ``The conversion factor'' and inserting 
     ``Subject to clause (ii), the conversion factor''; and
       (C) by adding at the end the following new clause:
       ``(ii) Application of multiple conversion factors beginning 
     with 2008.--

       ``(I) In general.--In applying clause (i) for years 
     beginning with 2008, separate conversion factors shall be 
     established for each service category of physicians' services 
     (as defined in subsection (j)(5)) and any reference in this 
     section to a conversion factor for such years shall be deemed 
     to be a reference to the conversion factor for each of such 
     categories.
       ``(II) Initial conversion factors; special rule for 
     anesthesia services.-- Such factors for 2008 shall be based 
     upon the single conversion factor for 2007 multiplied by the 
     update established under paragraph (8) for such category for 
     2008. In the case of the service category described in 
     subsection (j)(5)(F) (relating to anesthesia services), the 
     conversion factor for 2008 shall be based on the separate 
     conversion factor specified in subparagraph (D) for 2007 
     multiplied by the update established under paragraph (8) for 
     such category for 2008.
       ``(III) Updating of conversion factors.-- Such factor for a 
     service category for a subsequent year shall be based upon 
     the conversion factor for such category for the previous year 
     and adjusted by the update established for such category 
     under paragraph (8) for the year involved.''; and

       (2) in subparagraph (D), by inserting ``(before 2008)'' 
     after ``for a year''.
       (c) Establishing Updates for Conversion Factors for Service 
     Categories.--Section 1848(d) of the Social Security Act (42 
     U.S.C. 1395w-4(d)) is amended--
       (1) in paragraph (4)(B), by striking ``and (6)'' and 
     inserting ``, (6), (8), and (9).
       (2) in paragraph (4)(C)(iii), by striking ``The allowed'' 
     and inserting ``Subject to paragraph (8)(B), the allowed'';
       (3) in paragraph (4)(D), by striking ``The update'' and 
     inserting ``Subject to paragraph (8)(E), the update''; and
       (4) by adding at the end the following new paragraph:
       ``(8) Updates for service categories beginning with 2008 
     and ending with 2012.
       ``(9) No update for service categories beginning with 
     2013.--The update to the conversion factor for each of the 
     service categories established under paragraph (8) for 2013 
     and each succeeding year shall be 0 percent.''.
       ``(A) In general.--In applying paragraph (4) for a year 
     beginning with 2008 and ending with 2012, the following rules 
     apply:
       ``(i) Application of separate update adjustments for each 
     service category.--Pursuant to paragraph (1)(A)(ii)(I), the 
     update shall be made to the conversion factor for each 
     service category (as defined in subsection (j)(5)) based upon 
     an update adjustment factor for the respective category and 
     year and the update adjustment factor shall be computed, for 
     a year, separately for each service category.
       ``(ii) Computation of allowed and actual expenditures based 
     on service categories.--In computing the prior year 
     adjustment component and the cumulative adjustment component 
     under clauses (i) and (ii) of paragraph (4)(B), the following 
     rules apply:

       ``(I) Application based on service categories.--The allowed 
     expenditures and actual expenditures shall be the allowed and 
     actual expenditures for the service category, as determined 
     under subparagraph (B).

[[Page 22242]]

       ``(II) Limitation to physician fee-schedule services.--
     Actual expenditures shall only take into account expenditures 
     for services furnished under the physician fee schedule.
       ``(III) Application of category specific target growth 
     rate.--The growth rate applied under clause (ii)(II) of such 
     paragraph shall be the target growth rate for the service 
     category involved under subsection (f)(5).
       ``(IV) Allocation of cumulative overhang.--There shall be 
     substituted for the difference described in subparagraph 
     (B)(ii)(I) of such paragraph the amount described in 
     subparagraph (C)(i) for the service category involved.

       ``(B) Determination of allowed expenditures.--In applying 
     paragraph (4) for a year beginning with 2008, notwithstanding 
     subparagraph (C)(iii) of such paragraph, the allowed 
     expenditures for a service category for a year is an amount 
     computed by the Secretary as follows:
       ``(i) For 2008.--For 2008:

       ``(I) Total 2007 allowed expenditures for all services 
     included in sgr computation.--Compute total allowed 
     expenditures for physicians' services (as defined in 
     subsection (f)(4)(A)) for 2007 that would otherwise be 
     calculated under subsection (d) but for this paragraph.
       ``(II) Total 2007 allowed expenditures for physician fee 
     schedule services.--Compute total allowed expenditures for 
     services furnished under the physician fee schedule for 2007 
     by subtracting, from the total allowed expenditures computed 
     under subclause (I), the Secretary's estimate of the amount 
     of the actual expenditures for 2007 for services included in 
     such subclause for which payment is not made under the fee 
     schedule established pursuant to this section.
       ``(III) Allocation of 2007 allowed expenditures to service 
     category.--Compute allowed expenditures for the service 
     category involved for 2007 by multiplying the total allowed 
     expenditures computed under subclause (II) by the overhang 
     allocation factor for the service category (as defined in 
     subparagraph (C)(iii)).
       ``(IV) Increase by growth rate to obtain 2008 allowed 
     expenditures for service category.--Compute allowed 
     expenditures for the service category for 2008 by increasing 
     the allowed expenditures for the service category for 2007 
     computed under subclause (III) by the target growth rate for 
     such service category under subsection (f) for 2008.

       ``(ii) For subsequent years.--For a subsequent year, take 
     the amount of allowed expenditures for such category for the 
     preceding year (under clause (i) or this clause) and increase 
     it by the target growth rate determined under subsection (f) 
     for such category and year.
       ``(C) Computation and application of cumulative overhang 
     among categories.--
       ``(i) In general.--For purposes of applying paragraph 
     (4)(B)(ii)(II) under clause (ii)(IV), the amount described in 
     this clause for a year (beginning with 2008) is the sum of 
     the following:

       ``(I) Pre-2008 cumulative overhang.--The amount of the pre-
     2008 cumulative excess spending (as defined in clause (ii)) 
     multiplied by the overhang allocation factor for the service 
     category (under clause (iii)).
       ``(II) Post-2007 cumulative amounts.--For a year beginning 
     with 2009, the difference (which may be positive or negative) 
     between the amount of the allowed expenditures for 
     physicians' services (as determined under paragraph (4)(C)) 
     in the service category from January 1, 2008, through the end 
     of the prior year and the amount of the actual expenditures 
     for such services in such category during that period.

       ``(ii) Pre-2008 cumulative excess spending defined.--For 
     purposes of clause (i)(I), the term `pre-2008 cumulative 
     excess spending' means the difference described in paragraph 
     (4)(B)(ii)(I) as determined for the year 2008, taking into 
     account expenditures through December 31, 2007. Such 
     difference takes into account expenditures included in 
     subsection (f)(4)(A).
       ``(iii) Overhang allocation factor.--For purposes of this 
     paragraph, the term `overhang allocation factor' means, for a 
     service category, the proportion, as determined by the 
     Secretary of total actual expenditures under this part for 
     items and services in such category during 2007 to the total 
     of such actual expenditures for all the service categories. 
     In calculating such proportion, the Secretary shall only take 
     into account services furnished under the physician fee 
     schedule.
       ``(D) Updates for 2008 and 2009.--The update to the 
     conversion factors for each service category for each of 2008 
     and 2009 shall be equal to 0.5 percent.
       ``(E) Change in restriction on update adjustment factor for 
     2010 and 2011.--The update adjustment factor determined under 
     subparagraph (4)(B), as modified by this paragraph, for a 
     service category for a year (beginning with 2010 and ending 
     with 2011) may be less than -0.07, but may not be less than -
     0.14.''.
       (d) Application of Separate Target Growth Rates for Each 
     Category.--
       (1) In general.--Section 1848(f) of the Social Security Act 
     (42 U.S.C. 1395w-4(f)) is amended by adding at the end the 
     following new paragraph:
       ``(5) Application of separate target growth rates for each 
     service category beginning with 2008.--The target growth rate 
     for a year beginning with 2008 shall be computed and applied 
     separately under this subsection for each service category 
     (as defined in subsection (j)(5)) and shall be computed using 
     the same method for computing the sustainable growth rate 
     except for the following:
       ``(A) The reference in paragraphs (2)(A) and (2)(D) to `all 
     physicians' services' is deemed a reference to the 
     physicians' services included in such category but shall not 
     take into account items and services included in physicians' 
     services through the operation of paragraph (4)(A).
       ``(B) The factor described in paragraph (2)(C) for the 
     service category described in subsection (j)(5)(A) shall be 
     increased by 0.025.
       ``(C) A national coverage determination (as defined in 
     section 1869(f)(1)(B)) shall be treated as a change in 
     regulation described in paragraph (2)(D).''.
       (2) Use of target growth rates.--Section 1848 of such Act 
     is further amended--
       (A) in subsection (d)--
       (i) in paragraph (1)(E)(ii), by inserting ``or target'' 
     after ``sustainable''; and
       (ii) in paragraph (4)(B)(ii)(II), by inserting ``or 
     target'' after ``sustainable''; and
       (B) in subsection (f)--
       (i) in the heading by inserting ``; Target Growth Rate'' 
     after ``Sustainable Growth Rate''
       (ii) in paragraph (1)--

       (I) by striking ``and'' at the end of subparagraph (A);
       (II) in subparagraph (B), by inserting ``before 2008'' 
     after ``each succeeding year'' and by striking the period at 
     the end and inserting ``; and''; and
       (III) by adding at the end the following new subparagraph:

       ``(C) November 1 of each succeeding year the target growth 
     rate for such succeeding year and each of the 2 preceding 
     years.''; and
       (iii) in paragraph (2), in the matter before subparagraph 
     (A), by inserting after ``beginning with 2000'' the 
     following: ``and ending with 2007'' .
       (e) Reports on Expenditures for Part B Drugs and Clinical 
     Diagnostic Laboratory Tests.--
       (1) Reporting requirement.--The Secretary of Health and 
     Human Services shall include information in the annual 
     physician fee schedule proposed rule on the change in the 
     annual rate of growth of actual expenditures for clinical 
     diagnostic laboratory tests or drugs, biologicals, and 
     radiopharmaceuticals for which payment is made under part B 
     of title XVIII of the Social Security Act.
       (2) Recommendations.--The report submitted under paragraph 
     (1) shall include an analysis of the reasons for such excess 
     expenditures and recommendations for addressing them in the 
     future.

     SEC. 302. IMPROVING ACCURACY OF RELATIVE VALUES UNDER THE 
                   MEDICARE PHYSICIAN FEE SCHEDULE.

       (a) Use of Expert Panel to Identify Misvalued Physicians' 
     Services.--Section 1848(c) of the Social Security Act (42 
     U.S.C. 1395w(c)) is amended by adding at the end the 
     following new paragraph:
       ``(7) Use of expert panel to identify misvalued physicians' 
     services.--
       ``(A) In general.--The Secretary shall establish an expert 
     panel (in this paragraph referred to as the `expert panel')--
       ``(i) to identify, through data analysis, physicians' 
     services for which the relative value under this subsection 
     is potentially misvalued, particularly those services for 
     which such relative value may be overvalued;
       ``(ii) to assess whether those misvalued services warrant 
     review using existing processes (referred to in paragraph 
     (2)(J)(ii)) for the consideration of coding changes; and
       ``(iii) to advise the Secretary concerning the exercise of 
     authority under clauses (ii)(III) and (vi) of paragraph 
     (2)(B).
       ``(B) Composition of panel.--The expert panel shall be 
     appointed by the Secretary and composed of--
       ``(i) members with expertise in medical economics and 
     technology diffusion;
       ``(ii) members with clinical expertise;
       ``(iii) physicians, particularly physicians (such as a 
     physician employed by the Veterans Administration or a 
     physician who has a full time faculty appointment at a 
     medical school) who are not directly affected by changes in 
     the physician fee schedule under this section;
       ``(iv) carrier medical directors; and
       ``(v) representatives of private payor health plans.
       ``(C) Appointment considerations.--In appointing members to 
     the expert panel, the Secretary shall assure racial and 
     ethnic diversity on the panel and may consider appointing a 
     liaison from organizations with experience in the 
     consideration of coding changes to the panel.''.
       (b) Examination of Services With Substantial Changes.--Such 
     section is further amended by adding at the end the following 
     new paragraph:
       ``(8) Examination of services with substantial changes.--
     The Secretary, in consultation with the expert panel under 
     paragraph (7), shall--
       ``(A) conduct a five-year review of physicians' services in 
     conjunction with the RUC 5-year review, particularly for 
     services that have experienced substantial changes in length 
     of stay, site of service, volume, practice expense, or other 
     factors that may indicate changes in physician work;
       ``(B) identify new services to determine if they are likely 
     to experience a reduction in relative value over time and 
     forward a list of the services so identified for such five-
     year review; and
       ``(C) for physicians' services that are otherwise 
     unreviewed under the process the Secretary has established, 
     periodically review a sample of relative value units within 
     different types of services to assess the accuracy of the 
     relative

[[Page 22243]]

     values contained in the Medicare physician fee schedule.''.
       (c) Authority to Reduce Work Component for Services With 
     Accelerated Volume Growth.--
       (1) In general.--Paragraph (2)(B) of such section is 
     amended--
       (A) in clause (v), by adding at the end the following new 
     subclause:

       ``(III) Reductions in work value units for services with 
     accelerated volume growth.--Effective January 1, 2009, 
     reduced expenditures attributable to clause (vi).''; and

       (B) by adding at the end the following new clauses:
       ``(vi) Authorizing reduction in work value units for 
     services with accelerated volume growth.--The Secretary may 
     provide (without using existing processes the Secretary has 
     established for review of relative value) for a reduction in 
     the work value units for a particular physician's service if 
     the annual rate of growth in the expenditures for such 
     service for which payment is made under this part for 
     individuals for 2006 or a subsequent year exceeds the average 
     annual rate of growth in expenditures of all physicians' 
     services for which payment is made under this part by more 
     than 10 percentage points for such year.
       ``(vii) Consultation with expert panel and based on 
     clinical evidence.--The Secretary shall exercise authority 
     under clauses (ii)(III) and (vi) in consultation with the 
     expert panel established under paragraph (7) and shall take 
     into account clinical evidence supporting or refuting the 
     merits of such accelerated growth.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply with respect to payment for services furnished on 
     or after January 1, 2009.
       (d) Adjustment Authority for Efficiency Gains for New 
     Procedures.--Paragraph (2)(B)(ii) of such section is amended 
     by adding at the end the following new subclause:

       ``(III) Adjustment authority for efficiency gains for new 
     procedures.--In carrying out subclauses (I) and (II), the 
     Secretary may apply a methodology, based on supporting 
     evidence, under which there is imposed a reduction over a 
     period of years in specified relative value units in the case 
     of a new (or newer) procedure to take into account inherent 
     efficiencies that are typically or likely to be gained during 
     the period of initial increased application of the 
     procedure.''.

     SEC. 303. FEEDBACK MECHANISM ON PRACTICE PATTERNS.

       By not later than July 1, 2008, the Secretary of Health and 
     Human Services shall develop and implement a mechanism to 
     measure resource use on a per capita and an episode basis in 
     order to provide confidential feedback to physicians in the 
     Medicare program on how their practice patterns compare to 
     physicians generally, both in the same locality as well as 
     nationally. Such feedback shall not be subject to disclosure 
     under section 552 of title 5, United States Code). The 
     Secretary shall consider extending such mechanism to other 
     suppliers as necessary.

     SEC. 304. PAYMENTS FOR EFFICIENT AREAS.

       Section 1833 of the Social Security Act (42 U.S.C. 1395l) 
     is amended by adding at the end the following new subsection:
       ``(v) Incentive Payments for Efficient Areas.--
       ``(1) In general.--In the case of services furnished under 
     the physician fee schedule under section 1848 on or after 
     January 1, 2009, and before January 1, 2011, by a supplier 
     that is paid under such fee schedule in an efficient area (as 
     identified under paragraph (2)), in addition to the amount of 
     payment that would otherwise be made for such services under 
     this part, there also shall be paid an amount equal to 5 
     percent of the payment amount for the services under this 
     part.
       ``(2) Identification of efficient areas.--
       ``(A) In general.--Based upon available data, the Secretary 
     shall identify those counties or equivalent areas in the 
     United States in the lowest fifth percentile of utilization 
     based on per capita spending for services provided in 2007 
     under this part and part A, ``as standardized to eliminate 
     the effect of geographic adjustments in payment rates''.
       ``(B) Identification of counties where service is 
     furnished..--For purposes of paying the additional amount 
     specified in paragraph (1), if the Secretary uses the 5-digit 
     postal ZIP Code where the service is furnished, the dominant 
     county of the postal ZIP Code (as determined by the United 
     States Postal Service, or otherwise) shall be used to 
     determine whether the postal ZIP Code is in a county 
     described in subparagraph (A).
       ``(C) Judicial review.-- There shall be no administrative 
     or judicial review under section 1869, 1878, or otherwise, 
     respecting--
       ``(i) the identification of a county or other area under 
     subparagraph (A); or
       ``(ii) the assignment of a postal ZIP Code to a county or 
     other area under subparagraph (B).
       ``(D) Publication of list of counties; posting on 
     website.--With respect to a year for which a county or area 
     is identified under this paragraph, the Secretary shall 
     identify such counties or areas as part of the proposed and 
     final rule to implement the physician fee schedule under 
     section 1848 for the applicable year. The Secretary shall 
     post the list of counties identified under this paragraph on 
     the Internet website of the Centers for Medicare & Medicaid 
     Services.''.

     SEC. 305. RECOMMENDATIONS ON REFINING THE PHYSICIAN FEE 
                   SCHEDULE.

       (a) Recommendations on Consolidated Coding for Services 
     Commonly Performed Together.--Not later than December 31, 
     2008, the Comptroller General of the United States shall--
       (1) complete an analysis of codes paid under the Medicare 
     physician fee schedule to determine whether the codes for 
     procedures that are commonly furnished together should be 
     combined; and
       (2) submit to Congress a report on such analysis and 
     include in the report recommendations on whether an 
     adjustment should be made to the relative value units for 
     such combined code.
       (b) Recommendations on Increased Use of Bundled Payments.--
     Not later than December 31, 2008, the Comptroller General of 
     the United States shall--
       (1) complete an analysis of those procedures under the 
     Medicare physician fee schedule for which no global payment 
     methodology is applied but for which a ``bundled'' payment 
     methodology would be appropriate; and
       (2) submit to Congress a report on such analysis and 
     include in the report recommendations on increasing the use 
     of ``bundled'' payment methodology under such schedule.
       (c) Medicare Physician Fee Schedule.--In this section, the 
     term ``Medicare physician fee schedule'' means the fee 
     schedule established under section 1848 of the Social 
     Security Act (42 U.S.C. 1395w-4).

     SEC. 306. IMPROVED AND EXPANDED MEDICAL HOME DEMONSTRATION 
                   PROJECT.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     establish under title XVIII of the Social Security Act an 
     expanded medical home demonstration project (in this section 
     referred to as the ``expanded project'') under this section. 
     The expanded project supersedes the project that was 
     initiated under section 204 of the Medicare Improvement and 
     Extension Act of 2006 (division B of Public Law 109-432). The 
     purpose of the expanded project is--
       (1) to guide the redesign of the health care delivery 
     system to provide accessible, continuous, comprehensive, and 
     coordinated, care to Medicare beneficiaries; and
       (2) to provide care management fees to personal physicians 
     delivering continuous and comprehensive care in qualified 
     medical homes.
       (b) Nature and Scope of Project.--
       (1) Duration; scope.--The expanded project shall operate 
     during a period of three years, beginning not later than 
     October 1, 2009, and shall include a nationally 
     representative sample of physicians serving urban, rural, and 
     underserved areas throughout the United States.
       (2) Encouraging participation of small physician 
     practices.--
       (A) In general.--The expanded project shall be designed to 
     include the participation of physicians in practices with 
     fewer than four full-time equivalent physicians, as well as 
     physicians in larger practices particularly in rural and 
     underserved areas.
       (B) Technical assistance.-- In order to facilitate the 
     participation under the expanded project of physicians in 
     such practices, the Secretary shall make available additional 
     technical assistance to such practices during the first year 
     of the expanded project.
       (3) Selection of homes to participate.--The Secretary shall 
     select up to 500 medical homes to participate in the expanded 
     project and shall give priority to--
       (A) the selection of up to 100 HIT-enhanced medical homes; 
     and
       (B) the selection of other medical homes that serve 
     communities whose populations are at higher risk for health 
     disparities,
       (4) Beneficiary participation.--The Secretary shall 
     establish a process for any Medicare beneficiary who is 
     served by a medical home participating in the expanded 
     project to elect to participate in the project. Each 
     beneficiary who elects to so participate shall be eligible--
       (A) for enhanced medical home services under the project 
     with no cost sharing for the additional services; and
       (B) for a reduction of up to 50 percent in the coinsurance 
     for services furnished under the physician fee schedule under 
     section 1848 of the Social Security Act by the medical home.
     The Secretary shall develop standard recruitment materials 
     and election processes for Medicare beneficiaries who are 
     electing to participate in the expanded project.
       (c) Standards for Medical Homes, HIT-Enhanced Medical 
     Homes.--
       (1) Standard setting and certification process.--The 
     Secretary shall establish a process for selection of a 
     qualified standard setting and certification organization--
       (A) to establish standards, consistent with this section, 
     for medical practices to qualify as medical homes or as HIT-
     enhanced medical homes; and
       (B) to provide for the review and certification of medical 
     practices as meeting such standards.
       (2) Basic standards for medical homes.--For purposes of 
     this subsection, the term ``medical home'' means a physician-
     directed practice that has been certified, under paragraph 
     (1), as meeting the following standards:
       (A) Access and communication with patients.--The practice 
     applies standards for access to care and communication with 
     participating beneficiaries.
       (B) Managing patient information and using information in 
     management to support patient care.--The practice has readily 
     accessible, clinically useful information on participating 
     beneficiaries that enables the practice to treat such 
     beneficiaries comprehensively and systematically.

[[Page 22244]]

       (C) Managing and coordinating care according to individual 
     needs.--The practice maintains continuous relationships with 
     participating beneficiaries by implementing evidence-based 
     guidelines and applying them to the identified needs of 
     individual beneficiaries over time and with the intensity 
     needed by such beneficiaries.
       (D) Providing ongoing assistance and encouragement in 
     patient self-management.--The practice--
       (i) collaborates with participating beneficiaries to pursue 
     their goals for optimal achievable health; and
       (ii) assesses patient-specific barriers to communication 
     and conducts activities to support patient self-management.
       (E) Resources to manage care.--The practice has in place 
     the resources and processes necessary to achieve improvements 
     in the management and coordination of care for participating 
     beneficiaries.
       (F) Monitoring performance.--The practice monitors its 
     clinical process and performance (including outcome measures) 
     in meeting the applicable standards under this subsection and 
     provides information in a form and manner specified by the 
     Secretary with respect to such process and performance.
       (3) Additional standards for hit-enhanced medical home.--
     For purposes of this subsection, the term ``HIT-enhanced 
     medical home'' means a medical home that has been certified, 
     under paragraph (1), as using a health information technology 
     system that includes at least the following elements:
       (A) Electronic health record (ehr).--The system uses, for 
     participating beneficiaries, an electronic health record that 
     meets the following standards:
       (i) In general.--The record--

       (I) has the capability of interoperability with secure data 
     acquisition from health information technology systems of 
     other health care providers in the area served by the home; 
     or
       (II) the capability to securely acquire clinical data 
     delivered by such other health care providers to a secure 
     common data source.

       (ii) The record protects the privacy and security of health 
     information.
       (iii) The record has the capability to acquire, manage, and 
     display all the types of clinical information commonly 
     relevant to services furnished by the medical home, such as 
     complete medical records, radiographic image retrieval, and 
     clinical laboratory information.
       (iv) The record is integrated with decision support 
     capacities that facilitate the use of evidence-based medicine 
     and clinical decision support tools to guide decision-making 
     at the point-of-care based on patient-specific factors.
       (B) E-prescribing.--The system supports e-prescribing and 
     computerized physician order entry.
       (C) Outcome measurement.--The system supports the secure, 
     confidential provision of clinical process and outcome 
     measures approved by the National Quality Forum to the 
     Secretary for use in confidential manner for provider 
     feedback and peer review and for outcomes and clinical 
     effectiveness research.
       (D) Patient education capability.--The system actively 
     facilitates participating beneficiaries engaging in the 
     management of their own health through education and support 
     systems and tools for shared decision-making.
       (E) Support of basic standards.-- The elements of such 
     system, such as the electronic health record, email 
     communications, patient registries, and clinical-decision 
     support tools, are integrated in a manner to better achieve 
     the basic standards specified in paragraph (2) for a medical 
     home.
       (4) Use of data.--The Secretary shall use the data 
     submitted under paragraph (1)(F) in a confidential manner for 
     feedback and peer review for medical homes and for outcomes 
     and clinical effectiveness research. After the first two 
     years of the expanded project, these data may be used for 
     adjustment in the monthly medical home care management fee 
     under subsection (d)(2)(E).
       (d) Monthly Medical Home Care Management Fee.--
       (1) In general.--Under the expanded project, the Secretary 
     shall provide for payment to the personal physician of each 
     participating beneficiary of a monthly medical home care 
     management fee.
       (2) Amount of payment.-- In determining the amount of such 
     fee, the Secretary shall consider the following:
       (A) Operating expenses.--The additional practice expenses 
     for the delivery of services through a medical home, taking 
     into account the additional expenses for an HIT-enhanced 
     medical home. Such expenses include costs associated with--
       (i) structural expenses, such as equipment, maintenance, 
     and training costs;
       (ii) enhanced access and communication functions;
       (iii) population management and registry functions;
       (iv) patient medical data and referral tracking functions;
       (v) provision of evidence-based care;
       (vi) implementation and maintenance of health information 
     technology;
       (vii) reporting on performance and improvement conditions; 
     and
       (viii) patient education and patient decision support, 
     including print and electronic patient education materials.
       (B) Added value services.--The value of additional 
     physician work, such as augmented care plan oversight, 
     expanded e-mail and telephonic consultations, extended 
     patient medical data review (including data stored and 
     transmitted electronically), and physician supervision of 
     enhanced self management education, and expanded follow-up 
     accomplished by non-physician personnel, in a medical home 
     that is not adequately taken into account in the 
     establishment of the physician fee schedule under section 
     1848 of the Social Security Act.
       (C) Risk adjustment.--The development of an appropriate 
     risk adjustment mechanism to account for the varying costs of 
     medical homes based upon characteristics of participating 
     beneficiaries.
       (D) HIT adjustment.--Variation of the fee based on the 
     extensiveness of use of the health information technology in 
     the medical home.
       (E) Performance-based.--After the first two years of the 
     expanded project, an adjustment of the fee based on 
     performance of the medical home in achieving quality or 
     outcomes standards.
       (3) Personal physician defined.--For purposes of this 
     subsection, the term ``personal physician'' means, with 
     respect to a participating Medicare beneficiary, a physician 
     (as defined in section 1861(r)(1) of the Social Security Act 
     (42 U.S.C. 1395x(r)(1)) who provides accessible, continuous, 
     coordinated, and comprehensive care for the beneficiary as 
     part of a medical practice that is a qualified medical home. 
     Such a physician may be a specialist for a beneficiary 
     requiring ongoing care for a chronic condition or multiple 
     chronic conditions (such as severe asthma, complex diabetes, 
     cardiovascular disease, rheumatologic disorder) or for a 
     beneficiary with a prolonged illness.
       (e) Funding.--
       (1) Use of current project funding.--Funds otherwise 
     applied to the demonstration under section 204 of the 
     Medicare Improvement and Extension Act of 2006 (division B of 
     Public Law 109-432) shall be available to carry out the 
     expanded project
       (2) Additional funding from smi trust fund.--
       (A) In general.--In addition to the funds provided under 
     paragraph (1), there shall be available, from the Federal 
     Supplementary Medical Insurance Trust Fund (under section 
     1841 of the Social Security Act), the amount of $500,000,000 
     to carry out the expanded project, including payments to of 
     monthly medical home care management fees under subsection 
     (d), reductions in coinsurance for participating 
     beneficiaries under subsection (b)(4)(B), and funds for the 
     design, implementation, and evaluation of the expanded 
     project.
       (B) Monitoring expenditures; early termination.--The 
     Secretary shall monitor the expenditures under the expanded 
     project and may terminate the project early in order that 
     expenditures not exceed the amount of funding provided for 
     the project under subparagraph (A).
       (f) Evaluations and Reports.--.
       (1) Annual interim evaluations and reports.--For each year 
     of the expanded project, the Secretary shall provide for an 
     evaluation of the project and shall submit to Congress, by a 
     date specified by the Secretary, a report on the project and 
     on the evaluation of the project for each such year.
       (2) Final evaluation and report.--The Secretary shall 
     provide for an evaluation of the expanded project and shall 
     submit to Congress, not later than 18 months after the date 
     of completion of the project, a report on the project and on 
     the evaluation of the project.

     SEC. 307. REPEAL OF PHYSICIAN ASSISTANCE AND QUALITY 
                   INITIATIVE FUND.

       Subsection (l) of section 1848 of the Social Security Act 
     (42 U.S.C. 1395w-4) is repealed.

     SEC. 308. ADJUSTMENT TO MEDICARE PAYMENT LOCALITIES.

       Section 1848(e) of the Social Security Act (42 U.S.C.1395w-
     4(e)) is amended by adding at the end the following new 
     paragraph:
       ``(6) Fee schedule geographic areas.--
       ``(A) In general.--
       ``(i) Revision.--Subject to clause (ii), for services 
     furnished on or after January 1, 2008, the Secretary shall 
     revise the fee schedule areas used for payment under this 
     section applicable to the State of California using the 
     county-based geographic adjustment factor as specified in 
     option 3 (table 9) in the proposed rule for the 2008 
     physician fee schedule published at 72 Fed. Reg. 38,122 (July 
     12, 2007).
       ``(ii) Transition.--For services furnished during the 
     period beginning January 1, 2008, and ending December 31, 
     2010, after calculating the work, practice expense, and 
     malpractice geographic indices described in clauses (i), 
     (ii), and (iii) of paragraph (1)(A) that would otherwise 
     apply, the Secretary shall increase any such geographic index 
     for any county in California that is lower than the 
     geographic index used for payment for services under this 
     section as of December 31, 2007, in such county to such 
     geographic index level.
       ``(B) Subsequent revisions.--
       ``(i) Timing.--Not later than January 1, 2011, the 
     Secretary shall review and make revisions to fee schedule 
     areas in all States for which more than one fee schedule area 
     is used for payment of services under this section. The 
     Secretary may revise fee schedule areas in States in which a 
     single fee schedule area is used for payment for services 
     under this section using the same methodology applied in the 
     previous sentence.
       ``(ii) Link with geographic index data revision.--The 
     revision described in clause (i) shall be made effective 
     concurrently with the application of the periodic review of 
     geographic adjustment factors required under paragraph (1)(C) 
     for 2011 and subsequent periods.''.

[[Page 22245]]



     SEC. 309. PAYMENT FOR IMAGING SERVICES.

       (a) Payment Under Part B of the Medicare Program for 
     Diagnostic Imaging Services Furnished in Facilities 
     Conditioned on Accreditation of Facilities.--
       (1) Special payment rule.--
       (A) In general.--Section 1848(b)(4) of the Social Security 
     Act (42 U.S.C. 1395w-4(b)(4)) is amended--
       (i) in the heading, by striking ``rule'' and inserting 
     ``rules'';
       (ii) in subparagraph (A), by striking ``In general'' and 
     inserting ``Limitation''; and
       (iii) by adding at the end the following new subparagraph:
       ``(C) Payment only for services provided in accredited 
     facilities.--
       ``(i) In general.--In the case of imaging services that are 
     diagnostic imaging services described in clause (ii), the 
     payment amount for the technical component and the 
     professional component of the services established for a year 
     under the fee schedule described in paragraph (1) shall each 
     be zero, unless the services are furnished at a diagnostic 
     imaging services facility that meets the certificate 
     requirement described in section 354(b)(1) of the Public 
     Health Service Act, as applied under subsection (m). The 
     previous sentence shall not apply with respect to the 
     technical component if the imaging equipment meets 
     certification standards and the professional component of a 
     diagnostic imaging service that is furnished by a physician.
       ``(ii) Diagnostic imaging services.--For purposes of clause 
     (i) and subsection (m), the term `diagnostic imaging 
     services' means all imaging modalities, including diagnostic 
     magnetic resonance imaging (`MRI'), computed tomography 
     (`CT'), positron emission tomography (`PET'), nuclear 
     medicine procedures, x-rays, sonograms, ultrasounds, 
     echocardiograms, and such emerging diagnostic imaging 
     technologies as specified by the Secretary.''.
       (B) Effective date.--
       (i) In general.--Subject to clause (ii), the amendments 
     made by subparagraph (A) shall apply to diagnostic imaging 
     services furnished on or after January 1, 2010.
       (ii) Extension for ultrasound services.--The amendments 
     made by subparagraph (A) shall apply to diagnostic imaging 
     services that are ultrasound services on or after January 1, 
     2012.
       (2) Certification of facilities that furnish diagnostic 
     imaging services.--Section 1848 of the Social Security Act 
     (42 U.S.C. 1395w-4) is amended by adding at the end the 
     following new subsection:
       ``(m) Certification of Facilities That Furnish Diagnostic 
     Imaging Services.--
       ``(1) In general.--For purposes of subsection (b)(4)(C)(i), 
     except as provided under paragraphs (2) through (8), the 
     provisions of section 354 of the Public Health Service Act 
     (as in effect as of June 1, 2007), relating to the 
     certification of mammography facilities, shall apply, with 
     respect to the provision of diagnostic imaging services (as 
     defined in subsection (b)(4)(C)(ii)) and to a diagnostic 
     imaging services facility defined in paragraph (8) (and to 
     the process of accrediting such facilities) in the same 
     manner that such provisions apply, with respect to the 
     provision of mammograms and to a facility defined in 
     subsection (a)(3) of such section (and to the process of 
     accrediting such mammography facilities).
       ``(2) Terminology and references.--For purposes of applying 
     section 354 of the Public Health Service Act under paragraph 
     (1)--
       ``(A) any reference to `mammography', or `breast imaging' 
     is deemed a reference to `diagnostic imaging services (as 
     defined in section 1848(b)(4)(C)(ii) of the Social Security 
     Act)';
       ``(B) any reference to a mammogram or film is deemed a 
     reference to an image, as defined in paragraph (8);
       ``(C) any reference to `mammography facility' or to a 
     `facility' under such section 354 is deemed a reference to a 
     diagnostic imaging services facility, as defined in paragraph 
     (8);
       ``(D) any reference to radiological equipment used to image 
     the breast is deemed a reference to medical imaging equipment 
     used to provide diagnostic imaging services;
       ``(E) any reference to radiological procedures or 
     radiological is deemed a reference to medical imaging 
     services, as defined in paragraph (8) or medical imaging, 
     respectively;
       ``(F) any reference to an inspection (as defined in 
     subsection (a)(4) of such section) or inspector is deemed a 
     reference to an audit (as defined in paragraph (8)) or 
     auditor, respectively;
       ``(G) any reference to a medical physicist (as described in 
     subsection (f)(1)(E) of such section) is deemed to include a 
     reference to a magnetic resonance scientist or the 
     appropriate qualified expert as determined by the accrediting 
     body;
       ``(H) in applying subsection (d)(1)(A)(i) of such section, 
     the reference to `type of each x-ray machine, image receptor, 
     and processor' is deemed a reference to `type of imaging 
     equipment';
       ``(I) in applying subsection (d)(1)(B) of such section, the 
     reference that `the person or agent submits to the Secretary' 
     is deemed a reference that `the person or agent submits to 
     the Secretary, through the appropriate accreditation body';
       ``(J) in applying subsection (d)(1)(B)(i) of such section, 
     the reference to standards established by the Secretary is 
     deemed a reference to standards established by an 
     accreditation body and approved by the Secretary;
       ``(K) in applying subsection (e) of such section, relating 
     to an accreditation body--
       ``(i) in paragraph (1)(A), the reference to `may' is deemed 
     a reference to `shall';
       ``(ii) in paragraph (1)(B)(i)(II), the reference to `a 
     random sample of clinical images from such facilities' is 
     deemed a reference to `a statistically significant random 
     sample of clinical images from a statistically significant 
     random sample of facilities';
       ``(iii) in paragraph (3)(A) of such section--

       ``(I) the reference to `paragraph (1)(B)' in such 
     subsection is deemed to be a reference to `paragraph (1)(B) 
     and subsection (f)'; and
       ``(II) the reference to the `Secretary' is deemed a 
     reference to `an accreditation body, with the approval of the 
     Secretary'; and

       ``(iv) in paragraph (6)(B), the reference to the Committee 
     on Labor and Human Resources of the Senate is deemed to be 
     the Committee on Finance of the Senate and the reference to 
     the Committee on Energy and Commerce of the House of 
     Representatives is deemed to include a reference to the 
     Committee on Ways and Means of the House of Representatives;
       ``(L) in applying subsection (f), relating to quality 
     standards--
       ``(i) each reference to standards established by the 
     Secretary is deemed a reference to standards established by 
     an accreditation body involved and approved by the Secretary 
     under subsection (d)(1)(B)(i) of such section
       ``(ii) in paragraph (1)(A), the reference to `radiation 
     dose' is deemed a reference to `radiation dose, as 
     appropriate';
       ``(iii) in paragraph (1)(B), the reference to `radiological 
     standards' is deemed a reference to `medical imaging 
     standards, as appropriate';
       ``(iv) in paragraphs (1)(D)(ii) and (1)(E)(iii), the 
     reference to `the Secretary' is deemed a reference to `an 
     accreditation body with the approval of the Secretary';
       ``(v) in each of subclauses (III) and (IV) of paragraph 
     (1)(G)(ii), each reference to `patient' is deemed a reference 
     to `patient, if requested by the patient'; and
       ``(M) in applying subsection (g), relating to inspections--
       ``(i) each reference to the `Secretary or State or local 
     agency acting on behalf of the Secretary' is deemed to 
     include a reference to an accreditation body involved;
       ``(ii) in the first sentence of paragraph (1)(F), the 
     reference to `annual inspections required under this 
     paragraph' is deemed a reference to `the audits carried out 
     in facilities at least every three years from the date of 
     initial accreditation under this paragraph'; and
       ``(iii) in the second sentence of paragraph (1)(F), the 
     reference to `inspections carried out under this paragraph' 
     is deemed a reference to `audits conducted under this 
     paragraph during the previous year'.
       ``(3) Dates and periods.--For purposes of paragraph (1), in 
     applying section 354 of the Public Health Service Act, the 
     following applies:
       ``(A) In general.--Except as provided in subparagraph (B)--
       ``(i) any reference to `October 1, 1994' shall be deemed a 
     reference to `January 1, 2010';
       ``(ii) the reference to `the date of the enactment of this 
     section' in each of subsections (e)(1)(D) and (f)(1)(E)(iii) 
     is deemed to be a reference to `the date of the enactment of 
     the Children's Health and Medicare Protection Act of 2007';
       ``(iii) the reference to `annually' in subsection (g)(1)(E) 
     is deemed a reference to `every three years';
       ``(iv) the reference to `October 1, 1996' in subsection (l) 
     is deemed to be a reference to `January 1, 2011';
       ``(v) the reference to `October 1, 1999' in subsection 
     (n)(3)(H) is deemed to be a reference to `January 1, 2012'; 
     and
       ``(vi) the reference to `October 1, 1993' in the matter 
     following paragraph (3)(J) of subsection (n) is deemed to be 
     a reference `January 1, 2010'.
       ``(B) Ultrasound services.--With respect to diagnostic 
     imaging services that are ultrasounds--
       ``(i) any reference to `October 1, 1994' shall be deemed a 
     reference to `January 1, 2012';
       ``(ii) the reference to `the date of the enactment of this 
     section' in subsection (f)(1)(E)(iii) is deemed to be a 
     reference to `7 years after the date of the enactment of the 
     Children's Health and Medicare Protection Act of 2007';
       ``(iii) the reference to `October 1, 1996' in subsection 
     (l) is deemed to be a reference to `January 1, 2013';
       ``(4) Provisions not applicable.--For purposes of paragraph 
     (1), in applying section 354 of the Public Health Service 
     Act, the following provision shall not apply:
       ``(A) Subsections (e) and (f) of such section, in so far as 
     the respective subsection imposes any requirement for a 
     physician to be certified, accredited, or otherwise meet 
     requirements, with respect to the provision of any diagnostic 
     imaging services, as a condition of payment under subsection 
     (b)(4)(C)(i), with respect to the professional or technical 
     component, for such service.
       ``(B) Subsection (e)(1)(B)(v).
       ``(C) Subsection (f)(1)(H) of such section, relating to 
     standards for special techniques for mammograms of patients 
     with breast implants.
       ``(D) Subsection (g)(6) of such section, relating to an 
     inspection demonstration program.
       ``(E) Subsection (n) of such section, relating to the 
     national advisory committee.
       ``(F) Subsection (p) of such section, relating to breast 
     cancer screening surveillance research grants.
       ``(g) Paragraphs (1)(B) and (2) of subsection (r) of such 
     section, related to funding.
       ``(5) Accreditation bodies.--For purposes of paragraph (1), 
     in applying section 354(e)(1) of the Public Health Service, 
     the following shall apply:

[[Page 22246]]

       ``(A) Approval of two accreditation bodies for each 
     treatment modality.--In the case that there is more than one 
     accreditation body for a treatment modality that qualifies 
     for approval under this subsection, the Secretary shall 
     approve at least two accreditation bodies for such treatment 
     modality.
       ``(B) Additional accreditation body standards.--In addition 
     to the standards described in subparagraph (B) of such 
     section for accreditation bodies, the Secretary shall 
     establish standards that require--
       ``(i) the timely integration of new technology by 
     accreditation bodies for purposes of accrediting facilities 
     under this subsection; and
       ``(ii) the accreditation body involved to evaluate the 
     annual medical physicist survey (or annual medical survey of 
     another appropriate qualified expert chosen by the 
     accreditation body) of a facility upon onsite review of such 
     facility.
       ``(6) Additional quality standards.--For purposes of 
     paragraph (1), in applying subsection (f)(1) of section 354 
     of the Public Health Service--
       ``(A) the quality standards under such subsection shall, 
     with respect to a facility include--
       ``(i) standards for qualifications of medical personnel who 
     are not physicians and who perform diagnostic imaging 
     services at the facility that require such personnel to 
     ensure that individuals, prior to performing medical imaging, 
     demonstrate compliance with the standards established under 
     subsection (a) through successful completion of certification 
     by a nationally recognized professional organization, 
     licensure, completion of an examination, pertinent coursework 
     or degree program, verified pertinent experience, or through 
     other ways determined appropriate by an accreditation body 
     (with the approval of the Secretary, or through some 
     combination thereof);
       ``(ii) standards requiring the facility to maintain records 
     of the credentials of physicians and other medical personnel 
     described in clause (i);
       ``(iii) standards for qualifications and responsibilities 
     of medical directors and other personnel with supervising 
     roles at the facility;
       ``(iv) standards that require the facility has procedures 
     to ensure the safety of patients of the facility; and
       ``(v) standards for the establishment of a quality control 
     program at the facility to be implemented as described in 
     subparagraph (E) of such subsection;
       ``(B) the quality standards described in subparagraph (B) 
     of such subsection shall be deemed to include standards that 
     require the establishment and maintenance of a quality 
     assurance and quality control program at each facility that 
     is adequate and appropriate to ensure the reliability, 
     clarity, and accuracy of the technical quality of diagnostic 
     images produced at such facilities; and
       ``(C) the quality standard described in subparagraph (C) of 
     such subsection, relating to a requirement for personnel who 
     perform specified services, shall include in such requirement 
     that such personnel must meet continuing medical education 
     standards as specified by an accreditation body (with the 
     approval of the Secretary) and update such standards at least 
     once every three years.
       ``(7) Additional requirements.--Notwithstanding any 
     provision of section 354 of the Public Health Service Act, 
     the following shall apply to the accreditation process under 
     this subsection for purposes of subsection (b)(4)(C)(i):
       ``(A) Any diagnostic imaging services facility accredited 
     before January 1, 2010 (or January 1, 2012 in the case of 
     ultrasounds), by an accrediting body approved by the 
     Secretary shall be deemed a facility accredited by an 
     approved accreditation body for purposes of such subsection 
     as of such date if the facility submits to the Secretary 
     proof of such accreditation by transmittal of the certificate 
     of accreditation, including by electronic means.
       ``(B) The Secretary may require the accreditation under 
     this subsection of an emerging technology used in the 
     provision of a diagnostic imaging service as a condition of 
     payment under subsection (b)(4)(C)(i) for such service at 
     such time as the Secretary determines there is sufficient 
     empirical and scientific information to properly carry out 
     the accreditation process for such technology.
       ``(8) Definitions.--For purposes of this subsection:
       ``(A)  Audit.--The term `audit' means an onsite evaluation, 
     with respect to a diagnostic imaging services facility, by 
     the Secretary, State or local agency on behalf of the 
     Secretary, or accreditation body approved under this 
     subsection that includes the following:
       ``(i) Equipment verification.
       ``(ii) Evaluation of policies and procedures for compliance 
     with accreditation requirements.
       ``(iii) Evaluation of personnel qualifications and 
     credentialing.
       ``(iv) Evaluation of the technical quality of images.
       ``(v) Evaluation of patient reports.
       ``(vi) Evaluation of peer-review mechanisms and other 
     quality assurance activities.
       ``(vii) Evaluation of quality control procedures, results, 
     and follow-up actions.
       ``(viii) Evaluation of medical physicists (or other 
     appropriate professionals chosen by the accreditation body) 
     and magnetic resonance scientist surveys.
       ``(ix) Evaluation of consumer complaint mechanisms.
       ``(x) Provision of recommendations for improvement based on 
     findings with respect to clauses (i) through (ix).
       ``(B) Diagnostic imaging services facility.--The term 
     `diagnostic imaging services facility' has the meaning given 
     the term `facility' in section 354(a)(3) of the Public Health 
     Service Act (42 U.S.C. 263b(a)(3)) subject to the reference 
     changes specified in paragraph (2), but does not include any 
     facility that does not furnish diagnostic imaging services 
     for which payment may be made under this section.
       ``(C) Image.--The term `image' means the portrayal of 
     internal structures of the human body for the purpose of 
     detecting and determining the presence or extent of disease 
     or injury and may be produced through various techniques or 
     modalities, including radiant energy or ionizing radiation 
     and ultrasound and magnetic resonance. Such term does not 
     include image guided procedures.
       ``(D) Medical imaging service.--The term `medical imaging 
     service' means a service that involves the science of an 
     image.''.
       (b) Adjustment in Practice Expense to Reflect Higher 
     Presumed Utilization.--Section 1848 of the Social Security 
     Act (42 U.S.C. 1395w) is amended--
       (1) in subsection (b)(4)--
       (A) in subparagraph (B), by striking ``subparagraph (A)'' 
     and inserting ``this paragraph''; and
       (B) by adding at the end the following new subparagraph:
       ``(D) Adjustment in practice expense to reflect higher 
     presumed utilization.--In computing the number of practice 
     expense relative value units under subsection (c)(2)(C)(ii) 
     with respect to imaging services described in subparagraph 
     (B), the Secretary shall adjust such number of units so it 
     reflects a 75 percent (rather than 50 percent) presumed rate 
     of utilization of imaging equipment.''; and
       (2) in subsection (c)(2)(B)(v)(II), by inserting ``and 
     other provisions'' after ``OPD payment cap''
       (c) Adjustment in Technical Component ``discount'' on 
     Single-Session Imaging to Consecutive Body Parts.--Section 
     1848(b)(4) of such Act is further amended by adding at the 
     end the following new subparagraph:
       ``(E) Adjustment in technical component discount on single-
     session imaging involving consecutive body parts.--The 
     Secretary shall increase the reduction in expenditures 
     attributable to the multiple procedure payment reduction 
     applicable to the technical component for imaging under the 
     final rule published by the Secretary in the Federal Register 
     on November 21, 2005 (42 CFR 405, et al.) from 25 percent to 
     50 percent.''.
       (d) Adjustment in Assumed Interest Rate for Capital 
     Purchases.--Section 1848(b)(4) of such Act is further amended 
     by adding at the end the following new subparagraph:
       ``(F) Adjustment in assumed interest rate for capital 
     purchases.--In computing the practice expense component for 
     imaging services under this section, the Secretary shall 
     change the interest rate assumption for capital purchases of 
     imaging devices to reflect the prevailing rate in the market, 
     but in no case higher than 11 percent.''.
       (e) Disallowance of Global Billing.--Effective for claims 
     filed for imaging services (as defined in subsection 
     (b)(4)(B) of section 1848 of the Social Security Act) 
     furnished on or after the first day of the first month that 
     begins more than 1 year after the date of the enactment of 
     this Act, the Secretary of Health and Human Services shall 
     not accept (or pay) a claim under such section unless the 
     claim is made separately for each component of such services.
       (f) Effective Date.--Except as otherwise provided, this 
     section, and the amendments made by this section, shall apply 
     to services furnished on or after January 1, 2008.

     SEC. 310. REDUCING FREQUENCY OF MEETINGS OF THE PRACTICING 
                   PHYSICIANS ADVISORY COUNCIL.

       Section 1868(a)(2) of the Social Security Act (42 U.S.C. 
     1395ee(a)(2)) is amended by striking ``once during each 
     calendar quarter'' and inserting ``once each year (and at 
     such other times as the Secretary may specify)''.

                  TITLE IV--MEDICARE ADVANTAGE REFORMS

                       Subtitle A--Payment Reform

     SEC. 401. EQUALIZING PAYMENTS BETWEEN MEDICARE ADVANTAGE 
                   PLANS AND FEE-FOR-SERVICE MEDICARE.

       (a) Phase in of Payment Based on Fee-for-Service Costs.--
     Section 1853 of the Social Security Act (42 U.S.C. 1395w-23) 
     is amended--
       (1) in subsection (j)(1)(A)--
       (A) by striking ``beginning with 2007'' and inserting ``for 
     2007 and 2008''; and
       (B) by inserting after ``(k)(1)'' the following: ``, or, 
     beginning with 2009, \1/12\ of the blended benchmark amount 
     determined under subsection (l)(1)''; and
       (2) by adding at the end the following new subsection:
       ``(l) Determination of Blended Benchmark Amount.--
       ``(1) In general.--For purposes of subsection (j), subject 
     to paragraphs (2) and (3), the term

[[Page 22247]]

     `blended benchmark amount' means for an area--
       ``(A) for 2009 the sum of--
       ``(i) \2/3\ of the applicable amount (as defined in 
     subsection (k)(1)) for the area and year; and
       ``(ii) \1/3\ of the amount specified in subsection 
     (c)(1)(D)(i) for the area and year;
       ``(B) for 2010 the sum of--
       ``(i) \1/3\ of the applicable amount for the area and year; 
     and
       ``(ii) \2/3\ of the amount specified in subsection 
     (c)(1)(D)(i) for the area and year; and
       ``(C) for a subsequent year the amount specified in 
     subsection (c)(1)(D)(i) for the area and year.
       ``(2) Fee-for-service payment floor.--In no case shall the 
     blended benchmark amount for an area and year be less than 
     the amount specified in subsection (c)(1)(D)(i) for the area 
     and year.
       ``(3) Exception for pace plans.--This subsection shall not 
     apply to payments to a PACE program under section 1894.''.
       (b) Phase in of Payment Based on IME Costs.--
       (1) In general.--Section 1853(c)(1)(D)(i) of such Act (42 
     U.S.C. 1395w-23(c)(1)(D)(i)) is amended by inserting ``and 
     costs attributable to payments under section 1886(d)(5)(B)'' 
     after ``1886(h)''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to the capitation rate for years beginning with 
     2009.
       (c) Limitation on Plan Enrollment in Cases of Excess Bids 
     for 2009 and 2010.--
       (1) In general.--In the case of a Medicare Part C 
     organization that offers a Medicare Part C plan in the 50 
     States or the District of Columbia for which--
       (A) bid amount described in paragraph (2) for a Medicare 
     Part C plan for 2009 or 2010, exceeds
       (B) the percent specified in paragraph (4) of the fee-for-
     service amount described in paragraph (3),
     the Medicare Part C plan may not enroll any new enrollees in 
     the plan during the annual, coordinated election period 
     (under section 1851(e)(3)(B) of such Act (42 U.S.C. 1395w-
     21(e)(3)(B)) for the year or during the year (if the 
     enrollment becomes effective during the year).
       (2) Bid amount for part a and b services.--
       (A) In general.--Except as provided in subparagraph (B), 
     the bid amount described in this paragraph is the unadjusted 
     Medicare Part C statutory non-drug monthly bid amount (as 
     defined in section 1854(b)(2)(E) of the Social Security Act 
     (42 U.S.C. 1395w-24(b)(2)(E)).
       (B) Treatment of msa plans.--In the case of an MSA plan (as 
     defined in section 1859(b)(3) of the Social Security Act, 42 
     U.S.C. 1935w-28(b)(3)), the bid amount described in this 
     paragraph is the amount described in section 1854(a)(3)(A) of 
     such Act (42 U.S.C. 1395w-24(a)(3)(A)).
       (3) Fee-for-service amount described.--
       (A) In general.--Subject to subparagraph (B), the fee-for-
     service amount described in this paragraph for an Medicare 
     Part C local area is the amount described in section 
     1853(c)(1)(D)(i) of the Social Security Act (42 U.S.C. 1395w-
     23) for such area.
       (B) Treatment of multi-county plans.--In the case of an MA 
     plan the service area for which covers more than one Medicare 
     Part C local area, the fee-for-service amount described in 
     this paragraph is the amount described in section 
     1853(c)(1)(D)(i) of the Social Security Act for each such 
     area served, weighted for each such area by the proportion of 
     the enrollment of the plan that resides in the county (as 
     determined based on amounts posted by the Administrator of 
     the Centers for Medicare & Medicaid Services in the April bid 
     notice for the year involved).
       (4) Percentage phase down.--For purposes of paragraph (1), 
     the percentage specified in this paragraph--
       (A) for 2009 is 106 percent; and
       (B) for 2010 is 103 percent.
       (5) Exemption of age-ins.--For purposes of paragraph (1), 
     the term ``new enrollee'' with respect to a Medicare Part C 
     plan offered by a Medicare Part C organization, does not 
     include an individual who was enrolled in a plan offered by 
     the organization in the month immediately before the month in 
     which the individual was eligible to enroll in such a 
     Medicare Part C plan offered by the organization.
       (d) Annual Rebasing of Fee-for-Service Rates.--Section 
     1853(c)(1)(D)(ii) of the Social Security Act (42 U.S.C. 
     1395w-23(c)(1)(D)(ii)) is amended--
       (1) by inserting ``(before 2009)'' after ``for subsequent 
     years''; and
       (2) by inserting before the period at the end the 
     following: ``and for each year beginning with 2009''.
       (e) Repeal of PPO Stabilization Fund.--Section 1858 of the 
     Social Security Act (42 U.S.C. 1395) is amended--
       (1) by striking subsection (e); and
       (2) in subsection (f)(1), by striking ``subject to 
     subsection (e),''.

                  Subtitle B--Beneficiary Protections

     SEC. 411. NAIC DEVELOPMENT OF MARKETING, ADVERTISING, AND 
                   RELATED PROTECTIONS.

       (a) In General.--Section 1852 of the Social Security Act 
     (42 U.S.C. 1395w-22) is amended by adding at the end the 
     following new subsection:
       ``(m) Application of Model Marketing and Enrollment 
     Standards.--
       ``(1) In general.--The National Association of Insurance 
     Commissioners (in this subsection referred to as the `NAIC') 
     is requested to develop, and to submit to the Secretary of 
     Health and Human Services not later than 12 months after the 
     date of the enactment of this Act, model regulations (in this 
     section referred to as `model regulations') regarding 
     Medicare plan marketing, enrollment, broker and agent 
     training and certification, agent and broker commissions, and 
     market conduct by plans, agents and brokers for 
     implementation (under paragraph (7)) under this part and part 
     D, including for enforcement by States under section 
     1856(b)(3).
       ``(2) Marketing guidelines.--
       ``(A) In general.--The model regulations shall address the 
     sales and advertising techniques used by Medicare private 
     plans, agents and brokers in selling plans, including 
     defining and prohibiting cold calls, unsolicited door-to-door 
     sales, cross-selling, and co-branding.
       ``(B) Special considerations.--The model regulations shall 
     specifically address the marketing--
       ``(i) of plans to full benefit dual-eligible individuals 
     and qualified medicare beneficiaries;
       ``(ii) of plans to populations with limited English 
     proficiency;
       ``(iii) of plans to beneficiaries in senior living 
     facilities; and
       ``(iv) of plans at educational events.
       ``(3) Enrollment guidelines.--
       ``(A) In general.--The model regulations shall address the 
     disclosures Medicare private plans, agents, and brokers must 
     make when enrolling beneficiaries, and a process--
       ``(i) for affirmative beneficiary sign off before 
     enrollment in a plan; and
       ``(ii) in the case of Medicare Part C plans, for plans to 
     conduct a beneficiary call-back to confirm beneficiary sign 
     off and enrollment.
       ``(B) Specific considerations.--The model regulations shall 
     specially address beneficiary understanding of the Medicare 
     plan through required disclosure (or beneficiary 
     verification) of each of the following:
       ``(i) The type of Medicare private plan involved.
       ``(ii) Attributes of the plan, including premiums, cost 
     sharing, formularies (if applicable), benefits, and provider 
     access limitations in the plan.
       ``(iii) Comparative quality of the plan.
       ``(iv) The fact that plan attributes may change annually.
       ``(4) Appointment, certification and training of agents and 
     brokers.--The model regulations shall establish procedures 
     and requirements for appointment, certification (and periodic 
     recertification), and training of agents and brokers that 
     market or sell Medicare private plans consistent with 
     existing State appointment and certification procedures and 
     with this paragraph.
       ``(5) Agent and broker commissions.--
       ``(A) In general.--The model regulations shall establish 
     standards for fair and appropriate commissions for agents and 
     brokers consistent with this paragraph.
       ``(B) Limitation on types of commission.--The model 
     regulations shall specifically prohibit the following:
       ``(i) Differential commissions--

       ``(I) for Medicare Part C plans based on the type of 
     Medicare private plan; or
       ``(II) prescription drug plans under part D based on the 
     type of prescription drug plan.

       ``(ii) Commissions in the first year that are more than 200 
     percent of subsequent year commissions.
       ``(iii) The payment of extra bonuses or incentives (such as 
     trips, gifts, and other non-commission cash payments).
       ``(C) Agent disclosure.--In developing the model 
     regulations, the NAIC shall consider requiring agents and 
     brokers to disclose commissions to a beneficiary upon request 
     of the beneficiary before enrollment.
       ``(D) Prevention of fraud.--The model regulations shall 
     consider the opportunity for fraud and abuse and beneficiary 
     steering in setting standards under this paragraph and shall 
     provide for the ability of State commissioners to investigate 
     commission structures.
       ``(6) Market conduct.--
       ``(A) In general.--The model regulations shall establish 
     standards for the market conduct of organizations offering 
     Medicare private plans, and of agents and brokers selling 
     such plans, and for State review of plan market conduct.
       ``(B) Matters to be included.--Such standards shall include 
     standards for--
       ``(i) timely payment of claims;
       ``(ii) beneficiary complaint reporting and disclosure; and
       ``(iii) State reporting of market conduct violations and 
     sanctions.
       ``(7) Implementation.--
       ``(A) Publication of naic model regulations.--If the model 
     regulations are submitted on a timely basis under paragraph 
     (1)--
       ``(i) the Secretary shall publish them in the Federal 
     Register upon receipt and request public comment on the issue 
     of whether such regulations are consistent with the 
     requirements established in this subsection for such 
     regulations;
       ``(ii) not later than 6 months after the date of such 
     publication, the Secretary shall determine whether such 
     regulations are so consistent with such requirements and 
     shall publish notice of such determination in the Federal 
     Register; and
       ``(iii) if the Secretary makes the determination under 
     clause (ii) that such regulations are consistent with such 
     requirements, in the notice published under clause (ii) the 
     Secretary shall publish notice of adoption of such model 
     regulations as constituting the marketing and enrollment 
     standards adopted under this subsection to be applied under 
     this title; and

[[Page 22248]]

       ``(iv) if the Secretary makes the determination under such 
     clause that such regulations are not consistent with such 
     requirements, the procedures of clauses (ii) and (iii) of 
     subparagraph (B) shall apply (in relation to the notice 
     published under clause (ii)), in the same manner as such 
     clauses would apply in the case of publication of a notice 
     under subparagraph (B)(i).
       ``(B) No model regulations.--If the model regulations are 
     not submitted on a timely basis under paragraph (1)--
       ``(i) the Secretary shall publish notice of such fact in 
     the Federal Register;
       ``(ii) not later than 6 months after the date of 
     publication of such notice, the Secretary shall propose 
     regulations that provide for marketing and enrollment 
     standards that incorporate the requirements of this 
     subsection for the model regulations and request public 
     comments on such proposed regulations; and
       ``(iii) not later than 6 months after the date of 
     publication of such proposed regulations, the Secretary shall 
     publish final regulations that shall constitute the marketing 
     and enrollment standards adopted under this subsection to be 
     applied under this title.
       ``(C) References to marketing and enrollment standards.--In 
     this title, a reference to marketing and enrollment standards 
     adopted under this subsection is deemed a reference to the 
     regulations constituting such standards adopted under 
     subparagraph (A) or (B), as the case may be.
       ``(D) Effective date of standards.--In order to provide for 
     the orderly and timely implementation of marketing and 
     enrollment standards adopted under this subsection, the 
     Secretary, in consultation with the NAIC, shall specify (by 
     program instruction or otherwise) effective dates with 
     respect to all components of such standards consistent with 
     the following:
       ``(i) In the case of components that relate predominantly 
     to operations in relation to Medicare private plans, the 
     effective date shall be for plan years beginning on or after 
     such date (not later than 1 year after the date of 
     promulgation of the standards) as the Secretary specifies.
       ``(ii) In the case of other components, the effective date 
     shall be such date, not later than 1 year after the date of 
     promulgation of the standards, as the Secretary specifies.
       ``(E) Consultation.-- In promulgating marketing and 
     enrollment standards under this paragraph, the NAIC or 
     Secretary shall consult with a working group composed of 
     representatives of issuers of Medicare private plans, 
     consumer groups, medicare beneficiaries, State Health 
     Insurance Assistance Programs, and other qualified 
     individuals. Such representatives shall be selected in a 
     manner so as to assure balanced representation among the 
     interested groups.
       ``(8) Enforcement.--
       ``(A) In general.--Any Medicare private plan that violates 
     marketing and enrollment standards is subject to sanctions 
     under section 1857(g).
       ``(B) State responsibilities.--Nothing in this subsection 
     or section 1857(g) shall prohibit States from imposing 
     sanctions against Medicare private plans, agents, or brokers 
     for violations of the marketing and enrollment standards 
     adopted under section 1852(m). States shall have the sole 
     authority to regulate agents and brokers.
       ``(9) Medicare private plan defined.--In this subsection, 
     the term `Medicare private plan' means a Medicare Part C plan 
     and a prescription drug plan under part D.''.
       (b) Expansion of Exception to Preemption of State Role.--
       (1) In general.--Section 1856(b)(3) of the Social Security 
     Act (42 U.S.C. 1395w-26(b)(3)) is amended by striking 
     ``(other than State licensing laws or State laws relating to 
     plan solvency)'' and inserting ``(other than State laws 
     relating to licensing or plan solvency and State laws or 
     regulations adopting the marketing and enrollment standards 
     adopted under section 1852(m))''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to plans offered on or after July 1, 2008.
       (c) Application to Prescription Drug Plans.--
       (1) In general.--Section 1860D-1 of such Act is amended by 
     adding at the end the following new subsection:
       ``(d) Application of Marketing and Enrollment Standards.--
     The marketing and enrollment standards adopted under section 
     1852(m) shall apply to prescription drug plans (and sponsors 
     of such plans) in the same manner as they apply to Medicare 
     Part C plans and organizations offering such plans.''.
       (2) Reference to current law provisions.--The amendment 
     made by subsection (a) and (b) apply, pursuant to section 
     1860D-1(b)(1)(B)(ii) of the Social Security Act (42 U.S.C. 
     1395w-101(b)(1)(B)(ii)), to prescription drug plans under 
     part D of title XVIII of such Act.
       (d) Contract Requirement to Meet Marketing and Advertising 
     Standards.--
       (1) In general.--Section 1857(d) of the Social Security Act 
     (42 U.S.C. 1395w-27(d)), as amended by subsection (b)(1), is 
     further amended by adding at the end the following new 
     paragraph:
       ``(7) Marketing and advertising standards.--The contract 
     shall require the organization to meet all standards adopted 
     under section 1852(m) (including those enforced by the State 
     involved pursuant to section 1856(b)(3)) relating to 
     marketing and advertising conduct.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to contracts for plan years beginning on or after 
     January 1, 2011.
       (e) Application of Sanctions.--
       (1) Application to violation of marketing and enrollment 
     standards.--Section 1857(g)(1) of such Act (42 U.S.C. 1395w-
     27(g)(1)), as amended by the preceding provisions of this 
     Act, is further amended--
       (A) by striking ``and'' at the end of subparagraph (G);
       (B) by adding ``and'' at the end of subparagraph (H); and
       (C) by inserting after subparagraph (H) the following new 
     subparagraph:
       ``(I) violates marketing and enrollment standards adopted 
     under section 1852(m);''.
       (2) Enhanced civil money sanctions.--Such section is 
     further amended--
       (A) in paragraph (2)(A), by striking ``$25,000'', 
     ``$100,000'', and ``$15,000'' and inserting ``$50,000'', 
     ``$200,000'', and ``$30,000'', respectively; and
       (B) in subparagraphs (A), (B), and (D) of paragraph (3), by 
     striking ``$25,000'', ``$10,000'', and ``$100,000'', 
     respectively, and inserting ``$50,000'', ``$20,000'', and 
     ``$200,000'', respectively.
       (3) Effective date.--The amendments made by paragraph (2) 
     shall apply to violations occurring on or after the date of 
     the enactment of this Act.
       (f) Disclosure of Market and Advertising Contract 
     Violations and Imposed Sanctions.--Section 1857 of such Act 
     is amended by adding at the end the following new subsection
       ``(j) Disclosure of Market and Advertising Contract 
     Violations and Imposed Sanctions.--For years beginning with 
     2009, the Secretary shall post on its public website for the 
     Medicare program an annual report that--
       ``(1) lists each MA organization for which the Secretary 
     made during the year a determination under subsection (c)(2) 
     the basis of which is described in paragraph (1)(E); and
       ``(2) that describes any applicable sanctions under 
     subsection (g) applied to such organization pursuant to such 
     determination.''.
       (g) Standard Definitions of Benefits and Formats for Use in 
     Marketing Materials.--Section 1851(h) of such Act (42 U.S.C. 
     1395w-21(h)) is amended by adding at the end the following 
     new paragraph:
       ``(6) Standard definitions of benefits and formats for use 
     in marketing materials.--
       ``(A) In general.--Not later than January 1, 2010, the 
     Secretary, in consultation with the National Association of 
     Insurance Commissioners and a working group of the type 
     described in section 1852(m)(7)(E), shall develop standard 
     descriptions and definitions for benefits under this title 
     for use in marketing material distributed by Medicare Part C 
     organizations and formats for including such descriptions in 
     such marketing material.
       ``(B) Required use of standard definitions.-- For plan 
     years beginning on or after January 1, 2011, the Secretary 
     shall disapprove the distribution of marketing material under 
     paragraph (1)(B) if such marketing material does not use, 
     without modification, the applicable descriptions and formats 
     specified under subparagraph (A).''.
       (h) Support for State Health Insurance Assistance Programs 
     (SHIPs).--Section 1857(e)(2) of the Social Security Act (42 
     U.S.C. 1395w-27(e)(2)) is amended--
       (1) in subparagraph (B), by adding at the end the 
     following: ``Of the amounts so collected, no less than 
     $55,000,000 for fiscal year 2009, $65,000,000 for fiscal year 
     2010, $75,000,000 for fiscal year 2011, and $85,000,000 for 
     fiscal year 2012 and each succeeding fiscal year shall be 
     used to support Medicare Part C and Part D counseling and 
     assistance provided by State Health Insurance Assistance 
     Programs.'';
       (2) in subparagraph (C)--
       (A) by striking ``and'' after ``$100,000,000,'' and
       (B) by striking ``an amount equal to $200,000,000'' and 
     inserting ``and ending with fiscal year 2008 an amount equal 
     to $200,000,000, for fiscal year 2009 an amount equal to 
     $255,000,000, for fiscal year 2010 an amount equal to 
     $265,000,000, for fiscal year 2011 an amount equal to 
     $275,000,000, and for fiscal year 2012 and each succeeding 
     fiscal year an amount equal to $285,000,000.''
       (3) in subparagraph (D)(ii)--
       (A) by striking ``and'' at the end of subclause (IV);
       (B) in subclause (V), by striking the period at the end and 
     inserting ``before fiscal year 2009; and''; and
       (C) by adding at the end the following new subclause:
       ``(VI) for fiscal year 2009 and each succeeding fiscal year 
     the applicable portion (as so defined) of the amount 
     specified in subparagraph (C) for that fiscal year.''.

     SEC. 412. LIMITATION ON OUT-OF-POCKET COSTS FOR INDIVIDUAL 
                   HEALTH SERVICES.

       (a) In General.--Section 1852(a)(1) of the Social Security 
     Act (42 U.S.C. 1395w-22(a)(1)) is amended--
       (1) in subparagraph (A), by inserting before the period at 
     the end the following: ``with cost-sharing that is no greater 
     (and may be less) than the cost-sharing that would otherwise 
     be imposed under such program option'';
       (2) in subparagraph (B)(i), by striking ``or an actuarially 
     equivalent level of cost-sharing as determined in this 
     part''; and
       (3) by amending clause (ii) of subparagraph (B) to read as 
     follows:
       ``(ii) Permitting use of flat copayment or per diem rate.--
     Nothing in clause (i) shall be construed as prohibiting a 
     Medicare part C plan from using a flat copayment or per diem 
     rate, in

[[Page 22249]]

     lieu of the cost-sharing that would be imposed under part A 
     or B, so long as the amount of the cost-sharing imposed does 
     not exceed the amount of the cost-sharing that would be 
     imposed under the respective part if the individual were not 
     enrolled in a plan under this part.''.
       (b) Limitation for Dual Eligibles and Qualified Medicare 
     Beneficiaries.--Section 1852(a) of such Act is amended by 
     adding at the end the following new paragraph:
       ``(7) Limitation on cost-sharing for dual eligibles and 
     qualified medicare beneficiaries.--In the case of a 
     individual who is a full-benefit dual eligible individual (as 
     defined in section 1935(c)(6)) or a qualified medicare 
     beneficiary (as defined in section 1905(p)(1)) who is 
     enrolled in a Medicare Part C plan, the plan may not impose 
     cost-sharing that exceeds the amount of cost-sharing that 
     would be permitted with respect to the individual under this 
     title and title XIX if the individual were not enrolled with 
     such plan.''.
       (c) Effective Dates.--
       (1) The amendments made by subsection (a) shall apply to 
     plan years beginning on or after January 1, 2009.
       (2) The amendments made by subsection (b) shall apply to 
     plan years beginning on or after January 1, 2008.

     SEC. 413. MA PLAN ENROLLMENT MODIFICATIONS.

       (a) Improved Plan Enrollment, Disenrollment, and Change of 
     Enrollment.--
       (1) Continuous open enrollment for full-benefit dual 
     eligible individuals and qualified medicare beneficiaries 
     (qmb).--Section 1851(e)(2)(D) of the Social Security Act (42 
     U.S.C. 1395w-21(e)(2)(D)) is amended--
       (A) in the heading, by inserting``, full-benefit dual 
     eligible individuals, and qualified medicare beneficiaries'' 
     after ``institutionalized individuals''; and
       (B) in the matter before clause (i), by inserting ``, a 
     full-benefit dual eligible individual (as defined in section 
     1935(c)(6)), or a qualified medicare beneficiary (as defined 
     in section 1905(p)(1))'' after ``institutionalized (as 
     defined by the Secretary)''; and
       (C) in clause (i), by inserting ``or disenroll'' after 
     ``enroll''.
       (2) Special election periods for additional categories of 
     individuals.--Section 1851(e)(4) of such Act (42 U.S.C. 
     1395w(e)(4)) is amended--
       (A) in subparagraph (C), by striking at the end ``or'';
       (B) in subparagraph (D), by inserting ``, taking into 
     account the health or well-being of the individual'' before 
     the period and redesignating such subparagraph as 
     subparagraph (F); and
       (C) by inserting after subparagraph (C) the following new 
     subparagraphs:
       ``(D) the individual is described in section 
     1902(a)(10)(E)(iii) (relating to specified low-income 
     medicare beneficiaries);
       ``(E) the individual is enrolled in an MA plan and 
     enrollment in the plan is suspended under paragraph (2)(B) or 
     (3)(C) of section 1857(g) because of a failure of the plan to 
     meet applicable requirements; or''.
       (3) Effective date.--The amendments made by this subsection 
     shall take effect on the date of the enactment of this Act.
       (b) Access to Medigap Coverage for Individuals Who Leave MA 
     Plans.--
       (1) In general.--Section 1882(s)(3) of the Social Security 
     Act (42 U.S.C. 1395ss(s)(3)) is amended--
       (A) in each of clauses (v)(III) and (vi) of subparagraph 
     (B), by striking ``12 months'' and inserting ``24 months''; 
     and
       (B) in each of subclauses (I) and (II) of subparagraph 
     (F)(i), by striking ``12 months'' and inserting ``24 
     months''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply to terminations of enrollments in MA plans 
     occurring on or after the date of the enactment of this Act.
       (c) Improved Enrollment Policies.--
       (1) No auto-enrollment of medicaid beneficiaries.--
       (A) In general.--Section 1851(e) of such Act (42 U.S.C. 
     1395w-21(e)) is amended by adding at the end the following 
     new paragraph:
       ``(7) No auto-enrollment of medicaid beneficiaries.--In no 
     case may the Secretary provide for the enrollment in a MA 
     plan of a Medicare Advantage eligible individual who is 
     eligible to receive medical assistance under title XIX as a 
     full-benefit dual eligible individual or a qualified medicare 
     beneficiary, without the affirmative application of such 
     individual (or authorized representative of the individual) 
     to be enrolled in such plan.''.
       (B) No application to prescription drug plans.--Section 
     1860D-1(b)(1)(B)(iii) of such Act (42 U.S.C. 1395w-
     101(b)(1)(B)(iii)) is amended--
       (i) by striking ``paragraph (2) and'' and by inserting 
     ``paragraph (2),''; and
       (ii) by inserting ``, and paragraph (7),'' after 
     ``paragraph (4)''.
       (C) Effective date.--The amendments made by this paragraph 
     shall apply to enrollments that are effective on or after the 
     date of the enactment of this Act.

     SEC. 414. INFORMATION FOR BENEFICIARIES ON MA PLAN 
                   ADMINISTRATIVE COSTS.

       (a) Disclosure of Medical Loss Ratios and Other Expense 
     Data.--Section 1851 of the Social Security Act (42 U.S.C. 
     1395w21) is amended by adding at the end the following new 
     subsection:
       ``(j) Publication of Medical Loss Ratios and Other Cost-
     Related Information.--
       ``(1) In general.--The Secretary shall publish, not later 
     than October 1 of each year (beginning with 2009), for each 
     Medicare Part C plan contract, the following:
       ``(A) The medical loss ratio of the plan in the previous 
     year.
       ``(B) The per enrollee payment under this part to the plan, 
     as adjusted to reflect a risk score (based on factors 
     described in section 1853(a)(1)(C)(i)) of 1.0.
       ``(C) The average risk score (as so based).
       ``(2) Submission of data.--
       ``(A) In general.--Each Medicare Part C organization shall 
     submit to the Secretary, in a form and manner specified by 
     the Secretary, data necessary for the Secretary to publish 
     the information described in paragraph (1) on a timely basis, 
     including the information described in paragraph (3).
       ``(B) Data for 2008 and 2009.--The data submitted under 
     subparagraph (A) for 2008 and for 2009 shall be consistent in 
     content with the data reported as part of the Medicare Part C 
     plan bid in June 2007 for 2008.
       ``(C) Medical loss ratio data.--The data to be submitted 
     under subparagraph (A) relating to medical loss ratio for a 
     year--
       ``(i) shall be submitted not later than June 1 of the 
     following year; and
       ``(ii) beginning with 2010, shall be submitted based on the 
     standardized elements and definitions developed under 
     paragraph (4).
       ``(D) Audited data.--Data submitted under this paragraph 
     shall be data that has been audited by an independent third 
     party auditor.
       ``(3) MLR information.--The information described in this 
     paragraph with respect to a Medicare Part C plan for a year 
     is as follows:
       ``(A) The costs for the plan in the previous year for each 
     of the following:
       ``(i) Total medical expenses, separately indicated for 
     benefits for the original medicare fee-for-service program 
     option and for supplemental benefits.
       ``(ii) Non-medical expenses, shown separately for each of 
     the following categories of expenses:

       ``(I) Marketing and sales.
       ``(II) Direct administration.
       ``(III) Indirect administration.
       ``(IV) Net cost of private reinsurance.

       ``(B) Gain or loss margin.
       ``(C) Total revenue requirement, computed as the total of 
     medical and nonmedical expenses and gain or loss margin, 
     multiplied by the gain or loss margin.
       ``(D) Percent of revenue ratio, computed as the total 
     revenue requirement expressed as a percentage of revenue.
       ``(4) Development of data reporting standards.--
       ``(A) In general.--The Secretary shall develop and 
     implement standardized data elements and definitions for 
     reporting under this subsection, for contract years beginning 
     with 2010, of data necessary for the calculation of the 
     medical loss ratio for Medicare Part C plans. Not later than 
     December 31, 2008, the Secretary shall publish a report 
     describing the elements and definitions so developed.
       ``(B) Consultation.--The Secretary shall consult with 
     representatives of Medicare Part C organizations, experts on 
     health plan accounting systems, and representatives of the 
     National Association of Insurance Commissioners, in the 
     development of such data elements and definitions
       ``(5) Medical loss ratio defined.--For purposes of this 
     part, the term `medical loss ratio' means, with respect to an 
     MA plan for a year, the ratio of--
       ``(A) the aggregate benefits (excluding nonmedical expenses 
     described in paragraph (3)(A)(ii)) paid under the plan for 
     the year, to
       ``(B) the aggregate amount of premiums (including basic and 
     supplemental beneficiary premiums) and payments made under 
     sections 1853 and 1860D-15) collected for the plan and year.
     Such ratio shall be computed without regard to whether the 
     benefits or premiums are for required or supplemental 
     benefits under the plan.''.
       (b) Audit of Administrative Costs and Compliance With the 
     Federal Acquisition Regulation.--
       (1) In general.--Section 1857(d)(2)(B) of such Act (42 
     U.S.C. 1395w-27(d)(2)(B)) is amended--
       (A) by striking ``or (ii)'' and inserting ``(ii)''; and
       (B) by inserting before the period at the end the 
     following: ``, or (iii) to compliance with the requirements 
     of subsection (e)(4) and the extent to which administrative 
     costs comply with the applicable requirements for such costs 
     under the Federal Acquisition Regulation''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply for contract years beginning after the date of 
     the enactment of this Act.
       (c) Minimum Medical Loss Ratio.--Section 1857(e) of the 
     Social Security Act (42 U.S.C. 1395w-27(e)) is amended by 
     adding at the end the following new paragraph:
       ``(4) Requirement for minimum medical loss ratio.--If the 
     Secretary determines for a contract year (beginning with 
     2010) that an MA plan has failed to have a medical loss ratio 
     (as defined in section 1851(j)(4)) of at least .85--
       ``(A) for that contract year, the Secretary shall reduce 
     the blended benchmark amount under subsection (l) for the 
     second succeeding contract year by the numer of percentage 
     points by which such loss ratio was less than 85 percent;
       ``(B) for 3 consecutive contract years, the Secretary shall 
     not permit the enrollment of new enrollees under the plan for 
     coverage during the second succeeding contract year; and
       ``(C) the Secretary shall terminate the plan contract if 
     the plan fails to have such a medical loss ratio for 5 
     consecutive contract years.''.

[[Page 22250]]

       (d) Information on Medicare Part C Plan Enrollment and 
     Services.--Section 1851 of such Act, as amended by subsection 
     (a), is further amended by adding at the end the following 
     new subsection:
       ``(k) Publication of Enrollment and Other Information.--
       ``(1) Monthly publication of plan-specific enrollment 
     data.--The Secretary shall publish (on the public website of 
     the Centers for Medicare & Medicaid Services or otherwise) 
     not later than 30 days after the end of each month (beginning 
     with January 2008) on the actual enrollment in each Medicare 
     Part C plan by contract and by county.
       ``(2) Availability of other information.--The Secretary 
     shall make publicly available data and other information in a 
     format that may be readily used for analysis of the Medicare 
     Part C program under this part and will contribute to the 
     understanding of the organization and operation of such 
     program.''.
       (e) MedPAC Report on Varying Minimum Medical Loss Ratios.--
       (1) Study.--The Medicare Payment Advisory Commission shall 
     conduct a study of the need and feasibility of providing for 
     different minimum medical loss ratios for different types of 
     Medicare Part C plans, including coordinated care plans, 
     group model plans, coordinated care independent practice 
     association plans, preferred provider organization plans, and 
     private fee-for-services plans.
       (2) Report.--Not later than 1 year after the date of the 
     enactment of this Act, submit to Congress a report on the 
     study conducted under paragraph (1).

                Subtitle C--Quality and Other Provisions

     SEC. 421. REQUIRING ALL MA PLANS TO MEET EQUAL STANDARDS.

       (a) Collection and Reporting of Information.--
       (1) In general.--Section 1852(e)(1) of the Social Security 
     Act (42 U.S.C. 1395w-112(e)(1)) is amended by striking 
     ``(other than an MA private fee-for-service plan or an MSA 
     plan)''.
       (2) Reporting for private fee-for-services and msa plans.--
     Section 1852(e)(3) of such Act is amended by adding at the 
     end the following new subparagraph:
       ``(C) Data collection requirements by private fee-for-
     service plans and msa plans.--
       ``(i) Using measures for ppos for contract year 2009.--For 
     contract year 2009, the Medicare Part C organization offering 
     a private fee-for-service plan or an MSA plan shall submit to 
     the Secretary for such plan the same information on the same 
     performance measures for which such information is required 
     to be submitted for Medicare Part C plans that are preferred 
     provider organization plans for that year.
       ``(ii) Application of same measures as coordinated care 
     plans beginning in contract year 2010.--For a contract year 
     beginning with 2010, a Medicare Part C organization offering 
     a private fee-for-service plan or an MSA plan shall submit to 
     the Secretary for such plan the same information on the same 
     performance measures for which such information is required 
     to be submitted for such contract year Medicare Part C plans 
     described in section 1851(a)(2)(A)(i) for contract year such 
     contract year.''.
       (3) Effective date.--The amendment made by paragraph (1) 
     shall apply to contract years beginning on or after January 
     1, 2009.
       (b) Employer Plans.--
       (1) In general.--The first sentence of paragraph (2) of 
     section 1857(i) of such Act (42 U.S.C. 1395w-27(i)) is 
     amended by inserting before the period at the end the 
     following: ``, but only if 90 percent of the Medicare part C 
     eligible individuals enrolled under such plan reside in a 
     county in which the Medicare Part C organization offers a 
     Medicare Part C local plan''.
       (2) Limitation on application of waiver authority.--
     Paragraphs (1) and (2) of such section are each amended by 
     inserting ``that were in effect before the date of the 
     enactment of the Children's Health and Medicare Protection 
     Act of 2007'' after ``waive or modify requirements''.
       (3) Effective dates.--The amendment made by paragraph (1) 
     shall apply for plan years beginning on or after January 1, 
     2009, and the amendments made by paragraph (2) shall take 
     effect on the date of the enactment of this Act.

     SEC. 422. DEVELOPMENT OF NEW QUALITY REPORTING MEASURES ON 
                   RACIAL DISPARITIES.

       (a) New Quality Reporting Measures.--
       (1) In general.--Section 1852(e)(3) of the Social Security 
     Act (42 U.S.C. 1395w-22(e)(3)), as amended by section 
     421(a)(2), is amended--
       (A) in subparagraph (B)--
       (i) in clause (i), by striking ``The Secretary'' and 
     inserting ``Subject to subparagraph (D), the Secretary''; and
       (ii) in clause (ii), by striking ``subclause (iii)'' and 
     inserting ``clause (iii) and subparagraph (C)'' ; and
       (B) by adding at the end the following new subparagraph:
       ``(D) Additional quality reporting measures.--
       ``(i) In general.--The Secretary shall develop by October 
     1, 2009, quality measures for Medicare Part C plans that 
     measure disparities in the amount and quality of health 
     services provided to racial and ethnic minorities.
       ``(ii) Data to measure racial and ethnic disparities in the 
     amount and quality of care provided to enrollees.--The 
     Secretary shall provide for Medicare Part C organizations to 
     submit data under this paragraph, including data similar to 
     those submitted for other quality measures, that permits 
     analysis of disparities among racial and ethnic minorities in 
     health services, quality of care, and health status among 
     Medicare Part C plan enrollees for use in submitting the 
     reports under paragraph (5).''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to reporting of quality measures for plan years 
     beginning on or after January 1, 2010.
       (b) Biennial Report on Racial and Ethnic Minorities.--
     Section 1852(e) of such Act (42 U.S.C. 1395w-22(e)) is 
     amended by adding at the end the following new paragraph:
       ``(5) Report to congress.--
       ``(A) In general.--Not later than 2 years after the date of 
     the enactment of this paragraph, and biennially thereafter, 
     the Secretary shall submit to Congress a report regarding how 
     quality assurance programs conducted under this subsection 
     measure and report on disparities in the amount and quality 
     of health care services furnished to racial and ethnic 
     minorities.
       ``(B) Contents of report.--Each such report shall include 
     the following:
       ``(i) A description of the means by which such programs 
     focus on such racial and ethnic minorities.
       ``(ii) An evaluation of the impact of such programs on 
     eliminating health disparities and on improving health 
     outcomes, continuity and coordination of care, management of 
     chronic conditions, and consumer satisfaction.
       ``(iii) Recommendations on ways to reduce clinical outcome 
     disparities among racial and ethnic minorities.
       ``(iv) Data for each MA plan from HEDIS and other source 
     reporting the disparities in the amount and quality of health 
     services furnished to racial and ethnic minorities.''.

     SEC. 423. STRENGTHENING AUDIT AUTHORITY.

       (a) For Part C Payments Risk Adjustment.--Section 
     1857(d)(1) of the Social Security Act (42 U.S.C. 1395w-
     27(d)(1)) is amended by inserting after ``section 1858(c))'' 
     the following: ``, and data submitted with respect to risk 
     adjustment under section 1853(a)(3)''.
       (b) Enforcement of Audits and Deficiencies.--
       (1) In general.--Section 1857(e) of such Act is amended by 
     adding at the end the following new paragraph:
       ``(5) Enforcement of audits and deficiencies.--
       ``(A) Information in contract.--The Secretary shall require 
     that each contract with a Medicare Part C organization under 
     this section shall include terms that inform the organization 
     of the provisions in subsection (d).
       ``(B) Enforcement authority.--The Secretary is authorized, 
     in connection with conducting audits and other activities 
     under subsection (d), to take such actions, including pursuit 
     of financial recoveries, necessary to address deficiencies 
     identified in such audits or other activities.''.
       (2) Application under part d.--For provision applying the 
     amendment made by paragraph (1) to prescription drug plans 
     under part D, see section 1860D-12(b)(3)(D) of the Social 
     Security Act.
       (c) Effective Date.--The amendments made by this section 
     shall take effect the date of the enactment of this Act and 
     shall apply to audits and activities conducted for contract 
     years beginning on or after January 1, 2009.

     SEC. 424. IMPROVING RISK ADJUSTMENT FOR MA PAYMENTS.

       (a) In General.--Not later than 1 year after the date of 
     the enactment of this Act, the Secretary of Health and Human 
     Services shall submit to Congress a report that evaluates the 
     adequacy of the Medicare Advantage risk adjustment system 
     under section 1853(a)(1)(C) of the Social Security Act (42 
     U.S.C. 1395-23(a)(1)(C)).
       (b) Particulars.--The report under subsection (a) shall 
     include an evaluation of at least the following:
       (1) The need and feasibility of improving the adequacy of 
     the risk adjustment system in predicting costs for 
     beneficiaries with co-morbid conditions and associated 
     cognitive impairments.
       (2) The need and feasibility of including further 
     gradations of diseases and conditions (such as the degree of 
     severity of congestive heart failure).
       (3) The feasibility of measuring difference in coding over 
     time between Medicare part C plans and the medicare 
     traditional fee-for-service program and, to the extent this 
     difference exists, the options for addressing it.
       (4) The feasibility and value of including part D and other 
     drug utilization data in the risk adjustment model.

     SEC. 425. ELIMINATING SPECIAL TREATMENT OF PRIVATE FEE-FOR-
                   SERVICE PLANS.

       (a) Elimination of Extra Billing Provision.--Section 
     1852(k)(2) of the Social Security Act (42 U.S.C. 1395w-
     22(k)(2)) is amended--
       (1) in subparagraph (A)(i), by striking ``115 percent'' and 
     inserting ``100 percent''; and
       (2) in subparagraph (C)(i), by striking ``including any 
     liability for balance billing consistent with this 
     subsection)''.
       (b) Review of Bid Information.--Section 1854(a)(6)(B) of 
     such Act (42 U.S.C. 1395w-24(a)(6)(B)) is amended--
       (1) in clause (i), by striking ``clauses (iii) and (iv)'' 
     and inserting ``clause (iii)''; and
       (2) by striking clause (iv).
       (c) Effective Date.--The amendments made by this section 
     shall apply to contract years beginning with 2009.

     SEC. 426. RENAMING OF MEDICARE ADVANTAGE PROGRAM.

       (a) In General.--The program under part C of title XVIII of 
     the Social Security Act is

[[Page 22251]]

     henceforth to be known as the ``Medicare Part C program''.
       (b) Change in References.--
       (1) Amending social security act.--The Social Security Act 
     is amended by striking ``Medicare Advantage'', ``MA'', and 
     ``Medicare+Choice'' and inserting ``Medicare Part C'' each 
     place it appears, with the appropriate, respective 
     typographic formatting, including typeface and 
     capitalization.
       (2) Additional references.--Notwithstanding section 201(b) 
     of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003 (Public Law 108-173), any reference 
     to the program under part C of title XVIII of the Social 
     Security Act shall be deemed a reference to the ``Medicare 
     Part C'' program and, with respect to such part, any 
     reference to ``Medicare+Choice''. ``Medicare Advantage'', or 
     ``MA'' is deemed a reference to the program under such part.

                  Subtitle D--Extension of Authorities

     SEC. 431. EXTENSION AND REVISION OF AUTHORITY FOR SPECIAL 
                   NEEDS PLANS (SNPS).

       (a) Extending Restriction on Enrollment Authority for SNPs 
     for 3 Years.--Subsection (f) of section 1859 of the Social 
     Security Act (42 U.S.C. 1395w-28) is amended by striking 
     ``2009'' and inserting ``2012''.
       (b) Structure of Authority for SNPs.--
       (1) In general.--Such section is further amended--
       (A) in subsection (b)(6)(A), by striking all that follows 
     ``means'' and inserting the following: ``an MA plan and
       ``(i) that serves special needs individuals (as defined in 
     subparagraph (B));
       ``(ii) as of January 1, 2009--

       ``(I) at least 90 percent of the enrollees in which are 
     described in subparagraph (B)(i), as determined under 
     regulations in effect as of July 1, 2007;
       ``(II) at least 90 percent of the enrollees in which are 
     described in subparagraph (B)(ii) and are full-benefit dual 
     eligible individuals (as defined in section 1935(c)(6)) or 
     qualified medicare beneficiaries (as defined in section 
     1905(p)(1)); or
       ``(III) at least 90 percent of the enrollees in which have 
     a severe or disabling chronic condition of the type that the 
     plan is committed to serve as indicated by the data submitted 
     for the risk-adjustment of plan payments; and''.

       ``(iii) as of January 1, 2009, meets the applicable 
     requirements of paragraph (2) or (3) of subsection (f), as 
     the case may be.'';
       (B) in subsection (f)--
       (i) by amending the heading to read as follows: 
     ``Requirements for Enrollment in Part C Plans for Special 
     Needs Beneficiaries'';
       (ii) by designating the sentence beginning ``In the case 
     of'' as paragraph (1) with the heading ``Requirements for 
     enrollment.--'' and with appropriate indentation; and
       (iii) by adding at the end the following new paragraphs:
       ``(2) Additional requirements for institutional snps.--In 
     the case of a specialized MA plan for special needs 
     individuals described in subsection (b)(6)(A)(ii)(I), the 
     applicable requirements of this subsection are as follows:
       ``(A) The plan has an agreement with the State that 
     includes provisions regarding cooperation on the coordination 
     of care for such individuals. Such agreement shall include a 
     description of the manner that the State Medicaid program 
     under title XIX will pay for the costs of services for 
     individuals eligible under such title for medical assistance 
     for acute care and long-term care services.
       ``(B) The plan has a contract with long-term care 
     facilities and other providers in the area sufficient to 
     provide care for enrollees described in subsection 
     (b)(6)(B)(i).
       ``(C) The plan reports to the Secretary information on 
     additional quality measures specified by the Secretary under 
     section 1852(e)(3)(D)(iv)(I) for such plans.
       ``(3) Additional requirements for dual snps.--In the case 
     of a specialized MA plan for special needs individuals 
     described in subsection (b)(6)(A)(ii)(II), the applicable 
     requirements of this subsection are as follows:
       ``(A) The plan has an agreement with the State Medicaid 
     agency that--
       ``(i) includes provisions regarding cooperation on the 
     coordination of the financing of care for such individuals;
       ``(ii) includes a description of the manner that the State 
     Medicaid program under title XIX will pay for the costs of 
     cost-sharing and supplemental services for individuals 
     enrolled in the plan eligible under such title for medical 
     assistance for acute and long-term care services; and
       ``(iii) effective January 1, 2011, provides for capitation 
     payments to cover costs of supplemental benefits for 
     individuals described in subsection (b)(6)(A)(ii)(II).
       ``(B) The out-of-pocket costs for services under parts A 
     and B that are charged to enrollees may not exceed the out-
     of-pocket costs for same services permitted for such 
     individuals under title XIX.
       ``(C) The plan reports to the Secretary information on 
     additional quality measures specified by the Secretary under 
     section 1852(e)(3)(D)(iv)(II) for such plans.''.
       ``(4) Additional requirements for severe or disabling 
     chronic condition snps.--In the case of a specialized MA plan 
     for special needs individuals described in subsection 
     (b)(6)(A)(ii)(III), the applicable requirements of this 
     subsection are as follows:
       ``(A) The plan is designated to serve, and serves, Medicare 
     beneficiaries with one or more of the following specific 
     severe or disabling chronic conditions:
       ``(i) Cardiovascular.
       ``(ii) Cerebrovascular.
       ``(iii) Congestive health failure.
       ``(iv) Diabetes.
       ``(v) Chronic obstructive pulmonary disease.
       ``(vi) HIV/AIDS.
       ``(B) The plan has an average risk score under section 
     1853(a)(1)(C) of 1.35 or greater.
       ``(C) The plan has established and actively manages a 
     chronic care improvement program under section 1852(e)(2) for 
     each of the conditions that it serves under subparagraph (A) 
     that significantly exceeds the features and results of such 
     programs established and managed by Medicare Part C plans 
     that are not specialized Medicare Part C plans for special 
     needs individuals of the type described in this paragraph.
       ``(D) The plan has a network of a sufficient number of 
     primary care and specialty physicians, hospitals, and other 
     health care providers under contract to the plan so that the 
     plan can clearly meet the routine and specialty needs of the 
     severely ill and disabled enrollees of the plan throughout 
     the service area of the plan.
       ``(E) The plan reports to the Secretary information on 
     additional quality measures specified by the Secretary under 
     section 1852(e)(3)(D)(iv)(III) for such plans.''.
       (2) Quality standards and quality reporting.--Section 
     1852(e)(3) of such Act (42 U.S.C. 1395w-22(e)(3) is amended--
       (A) in subparagraph (A)(i), by adding at the end the 
     following: ``In the case of a specialized Medicare Part C 
     plan for special needs individuals described in paragraph 
     (2), (3), or (4) of section 1859(f), the organization shall 
     provide for the reporting on quality measures developed for 
     the plan under subparagraph (D)(iii).''; and
       (B) in subparagraph (D), as added by section 422(a)(1), by 
     adding at the end the following new clause:
       ``(iii) Specification of additional quality measurements 
     for specialized part c plans.--For implementation for plan 
     years beginning not later than January 1, 2010, the Secretary 
     shall develop new quality measures appropriate to meeting the 
     needs of--

       ``(I) beneficiaries enrolled in specialized Medicare Part C 
     plans for special needs individuals (described in section 
     1859(b)(6)(A)(ii)(I)) that serve predominantly individuals 
     who are dual-eligible individuals eligible for medical 
     assistance under title XIX by measuring the special needs for 
     care of individuals who are both Medicare and Medicaid 
     beneficiaries; and
       ``(II) beneficiaries enrolled in specialized Medicare Part 
     C plans for special needs individuals (described in section 
     1859(b)(6)(A)(ii)(II)) that serve predominantly 
     institutionalized individuals by measuring the special needs 
     for care of individuals who are a resident in long-term care 
     institution.''; and
       ``(III) beneficiaries enrolled in specialized Medicare Part 
     C plans for special needs individuals (described in section 
     1859(b)(6)(A)(ii)(III)) that serve predominantly individuals 
     with severe or disabling chronic conditions by measuring the 
     special needs for care of such individuals.''.

       (3) Effective date; grandfather.--The amendments made by 
     paragraph (1) shall take effect for enrollments occurring on 
     or after January 1, 2009, and shall not apply--
       (A) to a Medicare Advantage plan with a contract with a 
     State Medicaid integrated Medicare-Medicaid plan program that 
     had been approved by the Centers for Medicare & Medicaid 
     Services as of January 1, 2004; and
       (B) to plans that are operational as of the date of the 
     enactment of this Act as approved Medicare demonstration 
     projects and that provide services predominantly to 
     individuals with end-stage renal disease.
       (4) Transition for non-qualifying snps.--
       (A) Restrictions in 2008 for chronic care snps.--In the 
     case of a specialized MA plan for special needs individuals 
     (as defined in section 1859(b)(6)(A) of the Social Security 
     Act (42 U.S.C. 1395w-28(b)(6)(A)) that, as of December 31, 
     2007, is not described in either subclause (I) or subclause 
     (II) of clause (ii) of such section, as amended by paragraph 
     (1), then as of January 1, 2008--
       (i) the plan may not be offered unless it was offered 
     before such date;
       (ii) no new members may be enrolled with the plan; and
       (iii) there may be no expansion of the service area of such 
     plan.
       (B) Transition of enrollees.--The Secretary of Health and 
     Human Services shall provide for an orderly transition of 
     those specialized MA plans for special needs individuals (as 
     defined in section 1859(b)(6)(A) of the Social Security Act 
     (42 U.S.C. 1395w-28(b)(6)(A)), as of the date of the 
     enactment of this Act), and their enrollees, that no longer 
     qualify as such plans under such section, as amended by this 
     subsection.
       (c) Sunset of Additional Designation Authority.--
       (1) In general.--Subsection (d) of section 231 of the 
     Medicare Prescription Drug, Improvement, and Modernization 
     Act of 2003 (Public Law 108-173) is repealed.
       (2) Effective date.--The repeal made by paragraph (1) shall 
     take effect on January 1, 2009, and shall apply to plans 
     offered on or after such date.

     SEC. 432. EXTENSION AND REVISION OF AUTHORITY FOR MEDICARE 
                   REASONABLE COST CONTRACTS.

       (a) Extension for 3 Years of Period Reasonable Cost Plans 
     Can Remain in the Market.--Section 1876(h)(5)(C)(ii) of the 
     Social Security Act (42 U.S.C. 1395mm(h)(5)(C)(ii)) is

[[Page 22252]]

     amended, in the matter preceding subclause (I), by striking 
     ``January 1, 2008'' and inserting ``January 1, 2011''.
       (b) Application of Certain Medicare Advantage Requirements 
     to Cost Contracts Extended or Renewed After Enactment.--
     Section 1876(h) of such Act (42 U.S.C. 1395mm(h)), as amended 
     by subsection (a), is amended--
       (1) by redesignating paragraph (5) as paragraph (6); and
       (2) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5)(A) Any reasonable cost reimbursement contract with an 
     eligible organization under this subsection that is extended 
     or renewed on or after the date of enactment of the 
     Children's Health and Medicare Protection Act of 2007 shall 
     provide that the provisions of the Medicare Part C program 
     described in subparagraph (B) shall apply to such 
     organization and such contract in a substantially similar 
     manner as such provisions apply to Medicare Part C 
     organizations and Medicare Part C plans under part C.
       ``(B) The provisions described in this subparagraph are as 
     follows:
       ``(i) Section 1851(h) (relating to the approval of 
     marketing material and application forms).
       ``(ii) Section 1852(e) (relating to the requirement of 
     having an ongoing quality improvement program and treatment 
     of accreditation in the same manner as such provisions apply 
     to Medicare Part C local plans that are preferred provider 
     organization plans).
       ``(iii) Section 1852(f) (relating to grievance mechanisms).
       ``(iv) Section 1852(g) (relating to coverage 
     determinations, reconsiderations, and appeals).
       ``(v) Section 1852(j)(4) (relating to limitations on 
     physician incentive plans).
       ``(vi) Section 1854(c) (relating to the requirement of 
     uniform premiums among individuals enrolled in the plan).
       ``(vii) Section 1854(g) (relating to restrictions on 
     imposition of premium taxes with respect to payments to 
     organizations).
       ``(viii) Section 1856(b)(3) (relating to relation to State 
     laws).
       ``(ix) The provisions of part C relating to timelines for 
     contract renewal and beneficiary notification.''.

            TITLE V--PROVISIONS RELATING TO MEDICARE PART A

     SEC. 501. INPATIENT HOSPITAL PAYMENT UPDATES.

       (a) For Acute Hospitals.--Clause (i) of section 
     1886(b)(3)(B) of the Social Security Act (42 U.S.C. 
     1395ww(b)(3)(B)) is amended--
       (1) in subclause (XIX), by striking ``and'';
       (2) by redesignating subclause (XX) as subclause (XXII); 
     and
       (3) by inserting after subclause (XIX) the following new 
     subclauses:
       ``(XX) for fiscal year 2007, subject to clause (viii), the 
     market basket percentage increase for hospitals in all areas,
       ``(XXI) for fiscal year 2008, subject to clause (viii), the 
     market basket percentage increase minus 0.25 percentage point 
     for hospitals in all areas, and''.
       (b) For Other Hospitals.--Clause (ii) of such section is 
     amended--
       (1) in subclause (VII) by striking ``and'';
       (2) by redesignating subclause (VIII) as subclause (X); and
       (3) by inserting after subclause (VII) the following new 
     subclauses:
       ``(VIII) fiscal years 2003 through 2007, is the market 
     basket percentage increase,
       ``(IX) fiscal year 2008, is the market basket percentage 
     increase minus 0.25 percentage point, and''.
       (c) Delayed Effective Date.--
       (1) Acute care hospitals.--The amendments made by 
     subsection (a) shall not apply to discharges occurring before 
     January 1, 2008.
       (2) Other hospitals.--The amendments made by subsection (b) 
     shall be applied, only with respect to cost reporting periods 
     beginning during fiscal year 2008 and not with respect to the 
     computation for any succeeding cost reporting period, by 
     substituting ``0.1875 percentage point'' for ``0.25 
     percentage point''.

     SEC. 502. PAYMENT FOR INPATIENT REHABILITATION FACILITY (IRF) 
                   SERVICES.

       (a) Payment Update.--
       (1) In general.--Section 1886(j)(3)(C) of the Social 
     Security Act (42 U.S.C. 1395ww(j)(3)(C)) is amended by adding 
     at the end the following: ``The increase factor to be applied 
     under this subparagraph for fiscal year 2008 shall be 1 
     percent.''
       (2) Delayed effective date.--The amendment made by 
     paragraph (1) shall not apply to payment units occurring 
     before January 1, 2008.
       (b) Inpatient Rehabilitation Facility Classification 
     Criteria.--
       (1) In general.--Section 5005 of the Deficit Reduction Act 
     of 2005 (Public Law 109-171) is amended--
       (A) in subsection (a), by striking ``apply the applicable 
     percent specified in subsection (b)'' and inserting ``require 
     a compliance rate that is no greater than the 60 percent 
     compliance rate that became effective for cost reporting 
     periods beginning on or after July 1, 2006,''; and
       (B) by amending subsection (b) to read as follows:
       ``(b) Continued Use of Comorbidities.--For portions of cost 
     reporting periods occurring on or after the date of the 
     enactment of the Children's Health and Medicare Protection 
     Act of 2007, the Secretary shall include patients with 
     comorbidities as described in section 412.23(b)(2)(i) of 
     title 42, Code of Federal Regulations (as in effect as of 
     January 1, 2007), in the inpatient population that counts 
     towards the percent specified in subsection (a).''.
       (2) Effective date.--The amendment made by paragraph (1)(A) 
     shall apply to portions of cost reporting periods beginning 
     on or after the date of the enactment of this Act.
       (c) Payment for Certain Medical Conditions Treated in 
     Inpatient Rehabilitation Facilities.--
       (1) In general.--Section 1886(j) of the Social Security Act 
     (42 U.S.C. 1395ww(j)) is amended--
       (A) by redesignating paragraph (7) as paragraph (8);
       (B) by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) Special payment rule for certain medical 
     conditions.--
       ``(A) In general.--Subject to subparagraph (H), in the case 
     of discharges occurring on or after October 1, 2008, in lieu 
     of the standardized payment amount (as determined pursuant to 
     the preceding provisions of this subsection) that would 
     otherwise be applicable under this subsection, the Secretary 
     shall substitute, for payment units with respect to an 
     applicable medical condition (as defined in subparagraph 
     (G)(i)) that is treated in an inpatient rehabilitation 
     facility, the modified standardized payment amount determined 
     under subparagraph (B).
       ``(B) Modified standardized payment amount.--The modified 
     standardized payment amount for an applicable medical 
     condition shall be based on the amount determined under 
     subparagraph (C) for such condition, as adjusted under 
     subparagraphs (D), (E), and (F).
       ``(C) Amount determined.--
       ``(i) In general.--The amount determined under this 
     subparagraph for an applicable medical condition shall be 
     based on the sum of the following:

       ``(I) An amount equal to the average per stay skilled 
     nursing facility payment rate for the applicable medical 
     condition (as determined under clause (ii)).
       ``(II) An amount equal to 25 percent of the difference 
     between the overhead costs (as defined in subparagraph 
     (G)(ii)) component of the average inpatient rehabilitation 
     facility per stay payment amount for the applicable medical 
     condition (as determined under the preceding paragraphs of 
     this subsection) and the overhead costs component of the 
     average per stay skilled nursing facility payment rate for 
     such condition (as determined under clause (ii)).
       ``(III) An amount equal to 33 percent of the difference 
     between the patient care costs (as defined in subparagraph 
     (G)(iii)) component of the average inpatient rehabilitation 
     facility per stay payment amount for the applicable medical 
     condition (as determined under the preceding paragraphs of 
     this subsection) and the patient care costs component of the 
     average per stay skilled nursing facility payment rate for 
     such condition (as determined under clause (ii)).

       ``(ii) Determination of average per stay skilled nursing 
     facility payment rate.--For purposes of clause (i), the 
     Secretary shall convert skilled nursing facility payment 
     rates for applicable medical conditions, as determined under 
     section 1888(e), to average per stay skilled nursing facility 
     payment rates for each such condition.
       ``(D) Adjustments.--The Secretary shall adjust the amount 
     determined under subparagraph (C) for an applicable medical 
     condition using the adjustments to the prospective payment 
     rates for inpatient rehabilitation facilities described in 
     paragraphs (2), (3), (4), and (6).
       ``(E) Update for inflation.--Except in the case of a fiscal 
     year for which the Secretary rebases the amounts determined 
     under subparagraph (C) for applicable medical conditions 
     pursuant to subparagraph (F), the Secretary shall annually 
     update the amounts determined under subparagraph (C) for each 
     applicable medical condition by the increase factor for 
     inpatient rehabilitation facilities (as described in 
     paragraph (3)(C)).
       ``(F) Rebasing.--The Secretary shall periodically (but in 
     no case less than once every 5 years) rebase the amounts 
     determined under subparagraph (C) for applicable medical 
     conditions using the methodology described in such 
     subparagraph and the most recent and complete cost report and 
     claims data available.
       ``(G) Definitions.--In this paragraph:
       ``(i) Applicable medical condition.--The term `applicable 
     medical condition' means--

       ``(I) unilateral knee replacement;
       ``(II) unilateral hip replacement; and
       ``(III) unilateral hip fracture.

       ``(ii) Overhead costs.--The term `overhead costs' means 
     those Medicare-allowable costs that are contained in the 
     General Service cost centers of the Medicare cost reports for 
     inpatient rehabilitation facilities and for skilled nursing 
     facilities, respectively, as determined by the Secretary.
       ``(iii) Patient care costs.--The term `patient care costs' 
     means total Medicare-allowable costs minus overhead costs.
       ``(H) Sunset.--The provisions of this paragraph shall cease 
     to apply as of the date the Secretary implements an 
     integrated, site-neutral payment methodology under this title 
     for post-acute care.''; and
       (C) in paragraph (8), as redesignated by paragraph (1)--
       (i) in subparagraph (C), by striking ``and'' at the end;
       (ii) in subparagraph (D), by striking the period at the end 
     and inserting ``, and''; and
       (iii) by adding at the end the following new subparagraph:
       ``(E) modified standardized payment amounts under paragraph 
     (7).''.
       (2) Special rule for discharges occurring in the second 
     half of fiscal year 2008.--

[[Page 22253]]

       (A) In general.--In the case of discharges from an 
     inpatient rehabilitation facility occurring during the period 
     beginning on April 1, 2008, and ending on September 30, 2008, 
     for applicable medical conditions (as defined in paragraph 
     (7)(G)(i) of section 1886(j) of the Social Security Act (42 
     U.S.C. 1395ww(j)), as inserted by paragraph (1)(B), in lieu 
     of the standardized payment amount determined pursuant to 
     such section, the standardized payment amount shall be $9,507 
     for unilateral knee replacement, $10,398 for unilateral hip 
     replacement, and $10,958 for unilateral hip fracture. Such 
     amounts are the amounts that are estimated would be 
     determined under paragraph (7)(C) of such section 1886(j) for 
     such conditions if such paragraph applied for such period. 
     Such standardized payment amounts shall be multiplied by the 
     relative weights for each case-mix group and tier, as 
     published in the final rule of the Secretary of Health and 
     Human Services for inpatient rehabilitation facility services 
     prospective payment for fiscal year 2008, to obtain the 
     applicable payment amounts for each such condition for each 
     case-mix group and tier.
       (B) Implementation.--Notwithstanding any other provision of 
     law, the Secretary of Health and Human Services may implement 
     this subsection by program instruction or otherwise. 
     Paragraph (8)(E) of such section 1886(j) of the Social 
     Security Act, as added by paragraph (1)(C), shall apply for 
     purposes of this subsection in the same manner as such 
     paragraph applies for purposes of paragraph (7) of such 
     section 1886(j).
       (d) Recommendations for Classifying Inpatient 
     Rehabilitation Hospitals and Units.--
       (1) Report to congress.--Not later than 12 months after the 
     date of the enactment of this Act, the Secretary of Health 
     and Human Services, in consultation with physicians 
     (including geriatricians and physiatrists), administrators of 
     inpatient rehabilitation, acute care hospitals, skilled 
     nursing facilities, and other settings providing 
     rehabilitation services, Medicare beneficiaries, trade 
     organizations representing inpatient rehabilitation hospitals 
     and units and skilled nursing facilities, and the Medicare 
     Payment Advisory Commission, shall submit to the Committee on 
     Ways and Means of the House of Representatives and the 
     Committee on Finance of the Senate a report that includes--
       (A) an examination of Medicare beneficiaries' access to 
     medically necessary rehabilitation services;
       (B) alternatives or refinements to the 75 percent rule 
     policy for determining exclusion criteria for inpatient 
     rehabilitation hospital and unit designation under the 
     Medicare program, including determining clinical 
     appropriateness of inpatient rehabilitation hospital and unit 
     admissions and alternative criteria which would consider a 
     patient's functional status, diagnosis, co-morbidities, and 
     other relevant factors; and
       (C) an examination that identifies any condition for which 
     individuals are commonly admitted to inpatient rehabilitation 
     hospitals that is not included as a condition described in 
     section 412.23(b)(2)(iii) of title 42, Code of Federal 
     Regulations, to determine the appropriate setting of care, 
     and any variation in patient outcomes and costs, across 
     settings of care, for treatment of such conditions.

     For the purposes of this subsection, the term ``75 percent 
     rule'' means the requirement of section 412.23(b)(2) of title 
     42, Code of Federal Regulations, that 75 percent of the 
     patients of a rehabilitation hospital or converted 
     rehabilitation unit are in 1 or more of 13 listed treatment 
     categories.
       (2) Considerations.--In developing the report described in 
     paragraph (1), the Secretary shall include the following:
       (A) The potential effect of the 75 percent rule on access 
     to rehabilitation care by Medicare beneficiaries for the 
     treatment of a condition, whether or not such condition is 
     described in section 412.23(b)(2)(iii) of title 42, Code of 
     Federal Regulations.
       (B) An analysis of the effectiveness of rehabilitation care 
     for the treatment of conditions, whether or not such 
     conditions are described in section 412.23(b)(2)(iii) of 
     title 42, Code of Federal Regulations, available to Medicare 
     beneficiaries in various health care settings, taking into 
     account variation in patient outcomes and costs across 
     different settings of care, and which may include whether the 
     Medicare program and Medicare beneficiaries may incur higher 
     costs of care for the entire episode of illness due to 
     readmissions, extended lengths of stay, and other factors.

     SEC. 503. LONG-TERM CARE HOSPITALS.

       (a) Long-Term Care Hospital Payment Update.--
       (1) In general.--Section 1886 of the Social Security Act 
     (42 U.S.C. 1395ww) is amended by adding at the end the 
     following new subsection:
       ``(m) Prospective Payment for Long-Term Care Hospitals.--
       ``(1) Reference to establishment and implementation of 
     system.--For provisions related to the establishment and 
     implementation of a prospective payment system for payments 
     under this title for inpatient hospital services furnished by 
     a long-term care hospital described in subsection 
     (d)(1)(B)(iv), see section 123 of the Medicare, Medicaid, and 
     SCHIP Balanced Budget Refinement Act of 1999 and section 
     307(b) of Medicare, Medicaid, and SCHIP Benefits Improvement 
     and Protection Act of 2000.
       ``(2) Update for rate year 2008.--In implementing the 
     system described in paragraph (1) for discharges occurring 
     during the rate year ending in 2008 for a hospital, the base 
     rate for such discharges for the hospital shall be the same 
     as the base rate for discharges for the hospital occurring 
     during the previous rate year.''.
       (2) Delayed effective date.--Subsection (m)(2) of section 
     1886 of the Social Security Act, as added by paragraph (1), 
     shall not apply to discharges occurring on or after July 1, 
     2007, and before January 1, 2008.
       (b) Payment for Long-Term Care Hospital Services; Patient 
     and Facility Criteria.--
       (1) Definition of long-term care hospital.--
       (A) Definition.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x), as amended by section 201(a)(2), is 
     amended by adding at the end the following new subsection:

                       ``Long-Term Care Hospital

       ``(ddd) The term `long-term care hospital' means an 
     institution which--
       ``(1) is primarily engaged in providing inpatient services, 
     by or under the supervision of a physician, to Medicare 
     beneficiaries whose medically complex conditions require a 
     long hospital stay and programs of care provided by a long-
     term care hospital;
       ``(2) has an average inpatient length of stay (as 
     determined by the Secretary) for Medicare beneficiaries of 
     greater than 25 days, or as otherwise defined in section 
     1886(d)(1)(B)(iv);
       ``(3) satisfies the requirements of subsection (e);
       ``(4) meets the following facility criteria:
       ``(A) the institution has a patient review process, 
     documented in the patient medical record, that screens 
     patients prior to admission for appropriateness of admission 
     to a long-term care hospital, validates within 48 hours of 
     admission that patients meet admission criteria for long-term 
     care hospitals, regularly evaluates patients throughout their 
     stay for continuation of care in a long-term care hospital, 
     and assesses the available discharge options when patients no 
     longer meet such continued stay criteria;
       ``(B) the institution has active physician involvement with 
     patients during their treatment through an organized medical 
     staff, physician-directed treatment with physician on-site 
     availability on a daily basis to review patient progress, and 
     consulting physicians on call and capable of being at the 
     patient's side within a moderate period of time, as 
     determined by the Secretary;
       ``(C) the institution has interdisciplinary team treatment 
     for patients, requiring interdisciplinary teams of health 
     care professionals, including physicians, to prepare and 
     carry out an individualized treatment plan for each patient; 
     and
       ``(5) meets patient criteria relating to patient mix and 
     severity appropriate to the medically complex cases that 
     long-term care hospitals are designed to treat, as measured 
     under section 1886(n).''.
       (B) New patient criteria for long-term care hospital 
     prospective payment.--Section 1886 of such Act (42 U.S.C. 
     1395ww), as amended by subsection (a), is further amended by 
     adding at the end the following new subsection:
       ``(n) Patient Criteria for Prospective Payment to Long-Term 
     Care Hospitals.--
       ``(1) In general.--To be eligible for prospective payment 
     under this section as a long-term care hospital, a long-term 
     care hospital must admit not less than a majority of patients 
     who have a high level of severity, as defined by the 
     Secretary, and who are assigned to one or more of the 
     following major diagnostic categories:
       ``(A) Circulatory diagnoses.
       ``(B) Digestive, endocrine, and metabolic diagnoses.
       ``(C) Infection disease diagnoses.
       ``(D) Neurological diagnoses.
       ``(E) Renal diagnoses.
       ``(F) Respiratory diagnoses.
       ``(G) Skin diagnoses.
       ``(H) Other major diagnostic categories as selected by the 
     Secretary.
       ``(2) Major diagnostic category defined.--In paragraph (1), 
     the term `major diagnostic category' means the medical 
     categories formed by dividing all possible principle 
     diagnosis into mutually exclusive diagnosis areas which are 
     referred to in 67 Federal Register 49985 (August 1, 2002).''.
       (C) Establishment of rehabilitation units within certain 
     long-term care hospitals.--If the Secretary of Health and 
     Human Services does not include rehabilitation services 
     within a major diagnostic category under section 1886(n)(2) 
     of the Social Security Act, as added by subparagraph (B), the 
     Secretary shall approve for purposes of title XVIII of such 
     Act distinct part inpatient rehabilitation hospital units in 
     long-term care hospitals consistent with the following:
       (i) A hospital that, on or before October 1, 2004, was 
     classified by the Secretary as a long-term care hospital, as 
     described in section 1886(d)(1)(B)(iv)(I) of such Act (42 
     U.S.C. 1395ww(d)(1)(V)(iv)(I)), and was accredited by the 
     Commission on Accreditation of Rehabilitation Facilities, may 
     establish a hospital rehabilitation unit that is a distinct 
     part of the long-term care hospital, if the distinct part 
     meets the requirements (including conditions of 
     participation) that would otherwise apply to a distinct-part 
     rehabilitation unit if the distinct part were established by 
     a subsection (d) hospital in accordance with the matter 
     following clause (v) of section 1886(d)(1)(B) of such Act, 
     including any regulations adopted by the Secretary in 
     accordance with this section, except that the one-year 
     waiting period described in section 412.30(c) of title 42, 
     Code of Federal Regulations, applicable to the conversion of 
     hospital beds into a distinct-part rehabilitation unit shall 
     not apply to such units.
       (ii) Services provided in inpatient rehabilitation units 
     established under clause (i) shall not

[[Page 22254]]

     be reimbursed as long-term care hospital services under 
     section 1886 of such Act and shall be subject to payment 
     policies established by the Secretary to reimburse services 
     provided by inpatient hospital rehabilitation units.
       (D) Effective date.--The amendments made by subparagraphs 
     (A) and (B), and the provisions of subparagraph (C), shall 
     apply to discharges occurring on or after January 1, 2008.
       (2) Implementation of facility and patient criteria.--
       (A) Report.--No later than 1 year after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall submit to the appropriate committees of Congress a 
     report containing recommendations regarding the promulgation 
     of the national long-term care hospital facility and patient 
     criteria for application under paragraphs (4) and (5) of 
     section 1861(ccc) and section 1886(n) of the Social Security 
     Act, as added by subparagraphs (A) and (B), respectively, of 
     paragraph (1). In the report, the Secretary shall consider 
     recommendations contained in a report to Congress by the 
     Medicare Payment Advisory Commission in June 2004 for long-
     term care hospital-specific facility and patient criteria to 
     ensure that patients admitted to long-term care hospitals are 
     medically complex and appropriate to receive long-term care 
     hospital services.
       (B) Implementation.--No later than 1 year after the date of 
     submittal of the report under subparagraph (A), the Secretary 
     shall, after rulemaking, implement the national long-term 
     care hospital facility and patient criteria referred to in 
     such subparagraph. Such long-term care hospital facility and 
     patient criteria shall be used to screen patients in 
     determining the medical necessity and appropriateness of a 
     Medicare beneficiary's admission to, continued stay at, and 
     discharge from, long-term care hospitals under the Medicare 
     program and shall take into account the medical judgment of 
     the patient's physician, as provided for under sections 
     1814(a)(3) and 1835(a)(2)(B) of the Social Security Act (42 
     U.S.C. 1395f(a)(3), 1395n(a)(2)(B)).
       (3) Expanded review of medical necessity.--
       (A) In general.--The Secretary of Health and Human Services 
     shall provide, under contracts with one or more appropriate 
     fiscal intermediaries or medicare administrative contractors 
     under section 1874A(a)(4)(G) of the Social Security Act (42 
     U.S.C. 1395kk(a)(4)(G)), for reviews of the medical necessity 
     of admissions to long-term care hospitals (described in 
     section 1886(d)(1)(B)(iv) of such Act) and continued stay at 
     such hospitals, of individuals entitled to, or enrolled for, 
     benefits under part A of title XVIII of such Act on a 
     hospital-specific basis consistent with this paragraph. Such 
     reviews shall be made for discharges occurring on or after 
     October 1, 2007.
       (B) Review methodology.--The medical necessity reviews 
     under paragraph (A) shall be conducted for each such long-
     term care hospital on an annual basis in accordance with 
     rules (including a sample methodology) specified by the 
     Secretary. Such sample methodology shall--
       (i) provide for a statistically valid and representative 
     sample of admissions of such individuals sufficient to 
     provide results at a 95 percent confidence interval; and
       (ii) guarantee that at least 75 percent of overpayments 
     received by long-term care hospitals for medically 
     unnecessary admissions and continued stays of individuals in 
     long-term care hospitals will be identified and recovered and 
     that related days of care will not be counted toward the 
     length of stay requirement contained in section 
     1886(d)(1)(B)(iv) of the Social Security Act (42 U.S.C. 
     1395ww(d)(1)(B)(iv)).
       (C) Continuation of reviews.--Under contracts under this 
     paragraph, the Secretary shall establish a denial rate with 
     respect to such reviews that, if exceeded, could require 
     further review of the medical necessity of admissions and 
     continued stay in the hospital involved.
       (D) Termination of required reviews.--
       (i) In general.--Subject to clause (iii), the previous 
     provisions of this subsection shall cease to apply as of the 
     date specified in clause (ii).
       (ii) Date specified.--The date specified in this clause is 
     the later of January 1, 2013, or the date of implementation 
     of national long-term care hospital facility and patient 
     criteria under section paragraph (2)(B).
       (iii) Continuation.--As of the date specified in clause 
     (ii), the Secretary shall determine whether to continue to 
     guarantee, through continued medical review and sampling 
     under this paragraph, recovery of at least 75 percent of 
     overpayments received by long-term care hospitals due to 
     medically unnecessary admissions and continued stays.
       (E) Funding.--The costs to fiscal intermediaries or 
     medicare administrative contractors conducting the medical 
     necessity reviews under subparagraph (A) shall be funded from 
     the aggregate overpayments recouped by the Secretary of 
     Health and Human Services from long-term care hospitals due 
     to medically unnecessary admissions and continued stays. The 
     Secretary may use an amount not in excess of 40 percent of 
     the overpayments recouped under this paragraph to compensate 
     the fiscal intermediaries or Medicare administrative 
     contractors for the costs of services performed.
       (4) Limited, qualified moratorium of long-term care 
     hospitals.--
       (A) In general.--Subject to subparagraph (B), the Secretary 
     shall impose a temporary moratorium on the certification of 
     new long-term care hospitals (and satellite facilities), and 
     new long-term care hospital and satellite facility beds, for 
     purposes of the Medicare program under title XVIII of the 
     Social Security Act. The moratorium shall terminate at the 
     end of the 4-year period beginning on the date of the 
     enactment of this Act.
       (B) Exceptions.--
       (i) In general.--The moratorium under subparagraph (A) 
     shall not apply as follows:

       (I) To a long-term care hospital, satellite facility, or 
     additional beds under development as of the date of the 
     enactment of this Act.
       (II) To an existing long-term care hospital that requests 
     to increase its number of long-term care hospital beds, if 
     the Secretary determines there is a need at the long-term 
     care hospital for additional beds to accommodate--

       (aa) infectious disease issues for isolation of patients;
       (bb) bedside dialysis services;
       (cc) single-sex accommodation issues;
       (dd) behavioral issues; or
       (ee) any requirements of State or local law.

       (III) To an existing long-term care hospital that requests 
     an increase in beds because of the closure of a long-term 
     care hospital or significant decrease in the number of long-
     term care hospital beds, in a State where there is only one 
     other long-term care hospital.

     There shall be no administrative or judicial review from a 
     decision of the Secretary under this subparagraph.
       (ii) ``Under development'' defined.--For purposes of clause 
     (i)(I), a long-term care hospital or satellite facility is 
     considered to be ``under development'' as of a date if any of 
     the following have occurred on or before such date:

       (I) The hospital or a related party has a binding written 
     agreement with an outside, unrelated party for the 
     construction, reconstruction, lease, rental, or financing of 
     the long-term care hospital and the hospital has expended, 
     before the date of the enactment of this Act, at least 10 
     percent of the estimated cost of the project (or, if less, 
     $2,500,000).
       (II) Actual construction, renovation or demolition for the 
     long-term care hospital has begun and the hospital has 
     expended, before the date of the enactment of this Act, at 
     least 10 percent of the estimated cost of the project (or, if 
     less, $2,500,000).
       (III) A certificate of need has been approved in a State 
     where one is required or other necessary approvals from 
     appropriate State agencies have been received for the 
     operation of the hospital.
       (IV) The hospital documents that, within 3 months after the 
     date of the enactment of this Act, it is within a 6-month 
     long-term care hospital demonstration period required by 
     section 412.23(e)(1)-(3) of title 42, Code of Federal 
     Regulations, to demonstrate that it has a greater than 25 day 
     average length of stay.

       (5) No application of 25 percent patient threshold payment 
     adjustment to freestanding and grandfathered ltchs.--The 
     Secretary shall not apply, during the 5-year period beginning 
     on the date of the enactment of this Act, section 412.536 of 
     title 42, Code of Federal Regulations, or any similar 
     provision, to freestanding long-term care hospitals and the 
     Secretary shall not apply such section or section 412.534 of 
     title 42, Code of Federal Regulations, or any similar 
     provisions, to a long-term care hospital identified by 
     section 4417(a) of the Balanced Budget Act of 1997 (Public 
     Law 105-33). A long-term care hospital identified by such 
     section 4417(a) shall be deemed to be a freestanding long-
     term care hospital for the purpose of this section. Section 
     412.536 of title 42, Code of Federal Regulations, shall be 
     void and of no effect.
       (6) Payment for hospitals-within-hospitals.--
       (A) In general.--Payments to an applicable long-term care 
     hospital or satellite facility which is located in a rural 
     area or which is co-located with an urban single or MSA 
     dominant hospital under paragraphs (d)(1), (e)(1), and (e)(4) 
     of section 412.534 of title 42, Code of Federal Regulations, 
     shall not be subject to any payment adjustment under such 
     section if no more than 75 percent of the hospital's Medicare 
     discharges (other than discharges described in paragraphs 
     (d)(2) or (e)(3) of such section) are admitted from a co-
     located hospital.
       (B) Co-located long-term care hospitals and satellite 
     facilities.--
       (i) In general.--Payment to an applicable long-term care 
     hospital or satellite facility which is co-located with 
     another hospital shall not be subject to any payment 
     adjustment under section 412.534 of title 42, Code of Federal 
     Regulations, if no more than 50 percent of the hospital's 
     Medicare discharges (other than discharges described in 
     section 412.534(c)(3) of such title) are admitted from a co-
     located hospital.
       (ii) Applicable long-term care hospital or satellite 
     facility defined.--In this paragraph, the term ``applicable 
     long-term care hospital or satellite facility'' means a 
     hospital or satellite facility that is subject to the 
     transition rules under section 412.534(g) of title 42, Code 
     of Federal Regulations.
       (C) Effective date.--Subparagraphs (A) and (B) shall apply 
     to discharges occurring on or after October 1, 2007, and 
     before October 1, 2012.
       (7) No application of very short-stay outlier policy.--The 
     Secretary shall not apply, during the 5-year period beginning 
     on the date of the enactment of this Act, the amendments 
     finalized on May 11, 2007 (72 Federal Register 26904) made to 
     the short-stay outlier payment provision for long-term care 
     hospitals contained in section 412.529(c)(3)(i) of title 42, 
     Code of Federal Regulations, or any similar provision.

[[Page 22255]]

       (8) No application of one time adjustment to standard 
     amount.--The Secretary shall not, during the 5-year period 
     beginning on the date of the enactment of this Act, make the 
     one-time prospective adjustment to long-term care hospital 
     prospective payment rates provided for in section 
     412.523(d)(3) of title 42, Code of Federal Regulations, or 
     any similar provision.
       (c) Separate Classification for Certain Long-Stay Cancer 
     Hospitals.--
       (1) In general.--Subsection (d)(1)(B) of section 1886 of 
     the Social Security Act (42 U.S.C. 1395ww) is amended--
       (A) in clause (iv)--
       (i) in subclause (I), by striking ``(iv)(I)'' and inserting 
     ``(iv)'' and by striking ``or'' at the end; and
       (ii) in subclause (II)--

       (I) by striking ``, or'' at the end and inserting a 
     semicolon; and
       (II) by redesignating such subclause as clause (vi) and by 
     moving it to immediately follow clause (v); and

       (B) in clause (v), by striking the semicolon at the end and 
     inserting ``, or''.
       (2) Conforming payment references.--Subsection (b) of such 
     section is amended--
       (A) in paragraph (2)(E)(ii), by adding at the end the 
     following new subclause:
       ``(III) Hospitals described in clause (vi) of such 
     subsection.'';
       (B) in paragraph (3)(F)(iii), by adding at the end the 
     following new subclause:
       ``(VI) Hospitals described in clause (vi) of such 
     subsection.'';
       (C) in paragraphs (3)(G)(ii), (3)(H)(i), and (3)(H)(ii)(I), 
     by inserting ``or (vi)'' after ``clause (iv)'' each place it 
     appears;
       (D) in paragraph (3)(H)(iv), by adding at the end the 
     following new subclause:
       ``(IV) Hospitals described in clause (vi) of such 
     subsection.'';
       (E) in paragraph (3)(J), by striking ``subsection 
     (d)(1)(B)(iv)'' and inserting ``clause (iv) or (vi) of 
     subsection (d)(1)(B)''; and
       (F) in paragraph (7)(B), by adding at the end the following 
     new clause:
       ``(iv) Hospitals described in clause (vi) of such 
     subsection.''.
       (3) Additional conforming amendments.--The second sentence 
     of subsection (d)(1)(B) of such section is amended--
       (A) by inserting ``(as in effect as of such date)'' after 
     ``clause (iv)''; and
       (B) by inserting ``(or, in the case of a hospital 
     classified under clause (iv)(II), as so in effect, shall be 
     classified under clause (vi) on and after the effective date 
     of such clause)'' after ``so classified''.
       (4) In General.--In the case of a hospital that is 
     classified under clause (iv)(II) of section 1886(d)(1)(B) of 
     the Social Security Act immediately before the date of the 
     enactment of this Act and which is classified under clause 
     (vi) of such section after such date of enactment, payments 
     under section 1886 of such Act for cost reporting periods 
     beginning after the date of the enactment of this Act shall 
     be based upon payment rates in effect for the cost reporting 
     period for such hospital beginning during fiscal year 2001, 
     increased for each succeeding cost reporting period 
     (beginning before the date of the enactment of this Act) by 
     the applicable percentage increase under section 
     1886(b)(3)(B)(ii) of such Act.
       (5) Clarification of treatment of satellite facilities and 
     remote locations.--A long-stay cancer hospital described in 
     section 1886(d)(1)(B)(vi) of the Social Security Act, as 
     designated under paragraph (1), shall include satellites or 
     remote site locations for such hospital established before or 
     after the date of the enactment ``without regard to section 
     412.22(h)(2)(i) of title 42, Code of Federal Regulations,'' 
     if the provider-based requirements under section 413.65 of 
     such title, applicable certification requirements under title 
     XVIII of the Social Security, and such other applicable State 
     licensure and certificate of need requirements are met with 
     respect to such satellites or remote site locations.

     SEC. 504. INCREASING THE DSH ADJUSTMENT CAP.

       (a) In General.--Section 1886(d)(5)(F)(xiv) of the Social 
     Security Act (42 U.S.C. 1395ww(d)(5)(F)(xiv)) is amended--
       (b) Special Rule in Computing Disproportionate Patient 
     Percentage.--
       (1) In general.--Section 1886(d)(5)(F)(vi) of such Act (42 
     U.S.C. 1395ww(d)(5)(F)(vi)) is amended by adding at the end 
     the following: ``In applying this clause in the case of 
     hospitals located in Puerto Rico, the Secretary shall 
     substitute for the fraction described in subclause (I) one-
     half of the national average of such fraction for all 
     subsection (d) hospitals, as estimated by the Secretary.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to discharges in cost reporting periods of 
     hospitals beginning on or after January 1, 2008.
       (1) in subclause (II), by striking ``12 percent'' and 
     inserting ``the percent specified in subclause (III)''; and
       (2) by adding at the end the following new subclause:
       ``(III) The percent specified in this subclause is, in the 
     case of discharges occurring--
       ``(a) before October 1, 2007, 12 percent;
       ``(b) during fiscal year 2008, 16 percent;
       ``(c) during fiscal year 2009, 18 percent; and
       ``(d) on or after October 1, 2009, 12 percent.''.

     SEC. 505. PPS-EXEMPT CANCER HOSPITALS.

       (a) Authorizing Rebasing for PPS-Exempt Cancer Hospitals.--
     Section 1886(b)(3)(F) of the Social Security Act (42 U.S.C. 
     1395ww(b)(3)(F)) is amended by adding at the end the 
     following new clause:
       ``(iv) In the case of a hospital (or unit described in the 
     matter following clause (v) of subsection (d)(1)(B)) that 
     received payment under this subsection for inpatient hospital 
     services furnished during cost reporting periods beginning 
     before October 1, 1999, that is within a class of hospital 
     described in clause (iii) (other than subclause (IV), 
     relating to long-term care hospitals, and that requests the 
     Secretary (in a form and manner specified by the Secretary) 
     to effect a rebasing under this clause for the hospital, the 
     Secretary may compute the target amount for the hospital's 
     12-month cost reporting period beginning during fiscal year 
     2008 as an amount equal to the average described in clause 
     (ii) but determined as if any reference in such clause to 
     `the date of the enactment of this subparagraph' were a 
     reference to `the date of the enactment of this clause'.''.
       (b) Additional Cancer Hospital Provisions.--
       (1) In general.--Section 1886(d)(1) of the Social Security 
     Act (42 U.S.C. 1395ww(d)(1)) is amended--
       (A) in subparagraph (B)(v)--
       (i) by striking ``or'' at the end of subclause (II); and
       (ii) by adding at the end the following:
       ``(IV) a hospital that is a nonprofit corporation, the sole 
     member of which is affiliated with a university that has been 
     the recipient of a cancer center support grant from the 
     National Cancer Institute of the National Institutes of 
     Health, and which sole member (or its predecessors or such 
     university) was recognized as a comprehensive cancer center 
     by the National Cancer Institute of the National Institutes 
     of Health as of April 20, 1983, if the hospital's articles of 
     incorporation specify that at least 50 percent of its total 
     discharges have a principal finding of neoplastic disease (as 
     defined in subparagraph (E)) and if, of December 31, 2005, 
     the hospital was licensed for less than 150 acute care beds, 
     or
       ``(V) a hospital (aa) that the Secretary has determined to 
     be, at any time on or before December 31, 2011, a hospital 
     involved extensively in treatment for, or research on, 
     cancer, (bb) that is (as of the date of such determination) a 
     free-standing facility, (cc) for which the hospital's 
     predecessor provider entity was University Hospitals of 
     Cleveland with medicare provider number 36-0137;''; and
       (B) in subparagraph (B), by inserting after clause (vi), as 
     redesignated by section 503(c)(1)(A)(ii)(II), the following 
     new clause:
       ``(vii) a hospital that--
       ``(I) is located in a State that as of December 31, 2006, 
     had only one center under section 414 of the Public Health 
     Service Act that has been designated by the National Cancer 
     Institute as a comprehensive center currently serving all 21 
     counties in the most densely populated State in the nation 
     (U.S. Census estimate for 2005: 8,717,925 persons; 1,134.5 
     persons per square mile), serving more than 70,000 patient 
     visits annually;
       ``(II) as of December 31, 2006, served as the teaching and 
     clinical care, research and training hospital for the Center 
     described in subclause (II), providing significant financial 
     and operational support to such Center;
       ``(III) as of December 31, 2006, served as a core and 
     essential element in such Center which conducts more than 130 
     clinical trial activities, national cooperative group 
     studies, investigator-initiated and peer review studies and 
     has received as of 2005 at least $93,000,000 in research 
     grant awards;
       ``(IV) as of December 31, 2006, includes dedicated patient 
     care units organized primarily for the treatment of and 
     research on cancer with approximately 125 beds, 75 percent of 
     which are dedicated to cancer patients, and contains a 
     radiation oncology department as well as specialized 
     emergency services for oncology patients; and
       ``(V) as of December 31, 2004, is identified as the focus 
     of the Center's inpatient activities in the Center's 
     application as a NCI-designated comprehensive cancer center 
     and shares the NCI comprehensive cancer designation with the 
     Center; and
       (D) in subparagraph (E)--
       (i) by striking ``subclauses (II) and (III)'' and inserting 
     ``subclauses (II), (III), and (IV)''; and
       (ii) by inserting ``and subparagraph (B)(vi)'' after 
     ``subparagraph (B)(v)''.
       (2) Effective dates; payments.--
       (A) Application to cost reporting periods.--
       (i) Any classification by reason of section 
     1886(d)(1)(B)(vi) of the Social Security Act (42 U.S.C. 
     1395ww(d)(1)(B)(vi)), as inserted by paragraph (1), shall 
     apply to cost reporting periods beginning on or after January 
     1, 2006.
       (ii) The provisions of section 1886(d)(1)(B)(v)(IV) of the 
     Social Security Act, as added by paragraph (1), shall take 
     effect on January 1, 2008.
       (B) Base target amount.--Notwithstanding subsection 
     (b)(3)(E) of section 1886 of the Social Security Act (42 
     U.S.C. 1395ww), in the case of a hospital described in 
     subsection (d)(1)(B)(vi) of such section, as inserted by 
     paragraph (1)--
       (i) the hospital shall be permitted to resubmit the 2006 
     Medicare 2552 cost report incorporating a cancer hospital 
     sub-provider number and to apply the Medicare ratio-of-cost-
     to-charge settlement methodology for outpatient cancer 
     services; and
       (ii) the hospital's target amount under subsection 
     (b)(3)(E)(i) of such section for the first cost reporting 
     period beginning on or after January 1, 2006, shall be the 
     allowable operating

[[Page 22256]]

     costs of inpatient hospital services (referred to in 
     subclause (I) of such subsection) for such first cost 
     reporting period.
       (C) Deadline for payments.--Any payments owed to a hospital 
     as a result of this subsection for periods occurring before 
     the date of the enactment of this Act shall be made 
     expeditiously, but in no event later than 1 year after such 
     date of enactment.
       (3) Application to certain hospitals.--
       (A) Inapplicability of certain requirements.--The 
     provisions of section 412.22(e) of title 42, Code of Federal 
     Regulations, shall not apply to a hospital described in 
     section 1886(d)(1)(B)(v)(V) of the Social Security Act, as 
     added by paragraph (1).
       (B) Application to cost reporting periods.--If the 
     Secretary makes a determination that a hospital is described 
     in section 1886(d)(1)(B)(v)(V) of the Social Security Act, as 
     added by paragraph (1), such determination shall apply as of 
     the first cost reporting period beginning on or after the 
     date of such determination.
       (C) Base period.--Notwithstanding the provisions of section 
     1886(b)(3)(E) of the Social Security Act (42 U.S.C. 
     1395ww(b)(3)(E)) or any other provision of law, the base cost 
     reporting period for purposes of determining the target 
     amount for any hospital for which a determination described 
     in subparagraph (B) has been made shall be the first full 12-
     month cost reporting period beginning on or after the date of 
     such determination.
       (D) Rule.--A hospital described in subclause (V) of section 
     1886(b)(1)(B)(v) of the Social Security Act, as added by 
     paragraph (1), shall not qualify as a hospital described in 
     such subclause for any cost reporting period in which less 
     than 50 percent of its total discharges have a principal 
     finding of neoplastic disease. With respect to the first cost 
     reporting period for which a determination described in 
     subparagraph (B) has been made, the Secretary shall accept a 
     self-certification by the hospital, which shall be applicable 
     to such first cost reporting period, that the hospital 
     intends to have total discharges during such first cost 
     reporting period of which 50 percent or more have a principal 
     finding of neoplastic disease.
       (c) MedPAC Report on PPS-Exempt Cancer Hospitals.--Not 
     later than March 1, 2009, the Medicare Payment Advisory 
     Commission (established under section 1805 of the Social 
     Security Act (42 U.S.C. 1395b-6)) shall submit to the 
     Secretary and Congress a report evaluating the following:
       (1) Measures of payment adequacy and Medicare margins for 
     PPS-exempt cancer hospitals, as established under section 
     1886(d)(1)(B)(v) of the Social Security Act (42 U.S.C. 
     1395ww(d)(1)(B)(v)).
       (2) To the extent a PPS-exempt cancer hospital was 
     previously affiliated with another hospital, the margins of 
     the PPS-exempt hospital and the other hospital as separate 
     entities and the margins of such hospitals that existed when 
     the hospitals were previously affiliated.
       (3) Payment adequacy for cancer discharges under the 
     Medicare inpatient hospital prospective payment system.

     SEC. 506. SKILLED NURSING FACILITY PAYMENT UPDATE.

       (a) In General.--Section 1888(e)(4)(E)(ii) of the Social 
     Security Act (42 U.S.C. 1395yy(e)(4)(E)(ii)) is amended--
       (1) in subclause (III), by striking ``and'' at the end;
       (2) by redesignating subclause (IV) as subclause (VI); and
       (3) by inserting after subclause (III) the following new 
     subclauses:

       ``(IV) for each of fiscal years 2004, 2005, 2006, and 2007, 
     the rate computed for the previous fiscal year increased by 
     the skilled nursing facility market basket percentage change 
     for the fiscal year involved;
       ``(V) for fiscal year 2008, the rate computed for the 
     previous fiscal year; and''.

       (b) Delayed Effective Date.--Section 1888(e)(4)(E)(ii)(V) 
     of the Social Security Act, as inserted by subsection (a)(3), 
     shall not apply to payment for days before January 1, 2008.

     SEC. 507. REVOCATION OF UNIQUE DEEMING AUTHORITY OF THE JOINT 
                   COMMISSION FOR THE ACCREDITATION OF HEALTHCARE 
                   ORGANIZATIONS.

       (a) Revocation.--Section 1865 of the Social Security Act 
     (42 U.S.C. 1395bb) is amended--
       (1) by striking subsection (a); and
       (2) by redesignating subsections (b), (c), (d), and (e) as 
     subsections (a), (b), (c), and (d), respectively.
       (b) Conforming Amendments.--(1) Such section is further 
     amended--
       (A) in subsection (a)(1), as so redesignated, by striking 
     ``In addition, if'' and inserting ``If'';
       (B) in subsection (b), as so redesignated--
       (i) by striking ``released to him by the Joint Commission 
     on Accreditation of Hospitals,'' and inserting ``released to 
     the Secretary by''; and
       (ii) by striking the comma after ``Association'';
       (C) in subsection (c), as so redesignated, by striking 
     ``pursuant to subsection (a) or (b)(1)'' and inserting 
     ``pursuant to subsection (a)(1)''; and
       (D) in subsection (d), as so redesignated, by striking 
     ``pursuant to subsection (a) or (b)(1)'' and inserting 
     ``pursuant to subsection (a)(1)''.
       (2) Section 1861(e) of such Act (42 U.S.C. 1395x(e)) is 
     amended in the fourth sentence by striking ``and (ii) is 
     accredited by the Joint Commission on Accreditation of 
     Hospitals, or is accredited by or approved by a program of 
     the country in which such institution is located if the 
     Secretary finds the accreditation or comparable approval 
     standards of such program to be essentially equivalent to 
     those of the Joint Commission on Accreditation of 
     Hospitals.'' and inserting ``and (ii) is accredited by a 
     national accreditation body recognized by the Secretary under 
     section 1865(a), or is accredited by or approved by a program 
     of the country in which such institution is located if the 
     Secretary finds the accreditation or comparable approval 
     standards of such program to be essentially equivalent to 
     those of such a national accreditation body.''.
       (3) Section 1864(c) of such Act (42 U.S.C. 1395aa(c)) is 
     amended by striking ``pursuant to subsection (a) or (b)(1) of 
     section 1865'' and inserting ``pursuant to section 
     1865(a)(1)''.
       (4) Section 1875(b) of such Act (42 U.S.C. 1395ll(b)) is 
     amended by striking ``the Joint Commission on Accreditation 
     of Hospitals,'' and inserting ``national accreditation bodies 
     under section 1865(a)''.
       (5) Section 1834(a)(20)(B) of such Act (42 U.S.C. 
     1395m(a)(20)(B)) is amended by striking ``section 1865(b)'' 
     and inserting ``section 1865(a)''.
       (6) Section 1852(e)(4)(C) of such Act (42 U.S.C. 1395w-
     22(e)(4)(C)) is amended by striking ``section 1865(b)(2)'' 
     and inserting ``section 1865(a)(2)''.
       (c) Authority to Recognize JCAHO as a National 
     Accreditation Body.--The Secretary of Health and Human 
     Services may recognize the Joint Commission on Accreditation 
     of Healthcare Organizations as a national accreditation body 
     under section 1865 of the Social Security Act (42 U.S.C. 
     1395bb), as amended by this section, upon such terms and 
     conditions, and upon submission of such information, as the 
     Secretary may require.
       (d) Effective Date; Transition Rule.--(1) Subject to 
     paragraph (2), the amendments made by this section shall 
     apply with respect to accreditations of hospitals granted on 
     or after the date that is 18 months after the date of the 
     enactment of this Act.
       (2) For purposes of title XVIII of the Social Security Act 
     (42 U.S.C. 1395 et seq.), the amendments made by this section 
     shall not effect the accreditation of a hospital by the Joint 
     Commission on Accreditation of Healthcare Organizations, or 
     under accreditation or comparable approval standards found to 
     be essentially equivalent to accreditation or approval 
     standards of the Joint Commission on Accreditation of 
     Healthcare Organizations, for the period of time applicable 
     under such accreditation.

     SEC. 508. TREATMENT OF MEDICARE HOSPITAL RECLASSIFICATIONS.

       (a) Extending Certain Medicare Hospital Wage Index 
     Reclassifications Through Fiscal Year 2009.--
       (1) In general.--Section 106(a) of the Medicare 
     Improvements and Extension Act of 2006 (division B of Public 
     Law 109-432) is amended by striking ``September 30, 2007'' 
     and inserting ``September 30, 2009''.
       (2) Special exception reclassifications.--The Secretary of 
     Health and Human Services shall extend for discharges 
     occurring through September 30, 2009, the special exception 
     reclassification made under the authority of section 
     1886(d)(5)(I)(i) of the Social Security Act (42 U.S.C. 
     1395ww(d)(5)(I)(i)) and contained in the final rule 
     promulgated by the Secretary in the Federal Register on 
     August 11, 2004 (69 Fed. Reg. 49105, 49107).
       (b) Disregarding Section 508 Hospital Reclassifications for 
     Purposes of Group Reclassifications.--Section 508 of the 
     Medicare Prescription Drug, Improvement, and Modernization 
     Act of 2003 (Public Law 108-173, 42 U.S.C. 1395ww note) is 
     amended by adding at the end the following new subsection:
       ``(g) Disregarding Hospital Reclassifications for Purposes 
     of Group Reclassifications.--For purposes of the 
     reclassification of a group of hospitals in a geographic area 
     under section 1886(d), a hospital reclassified under this 
     section (including any such reclassification which is 
     extended under section 106(a) of the Medicare Improvements 
     and Extension Act of 2006) shall not be taken into account 
     and shall not prevent the other hospitals in such area from 
     establishing such a group for such purpose.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to payments for discharges occurring on or after 
     October 1, 2008.
       (c) Other Hospital Reclassification Provisions.--
     Notwithstanding any other provision of law--
       (1) In the case of a subsection (d) hospital (as defined 
     for purposes of section 1886 of the Social Security Act (42 
     U.S.C. 1395ww)) located in Putnam County, Tennessee with 
     respect to which a reclassification of its wage index for 
     purposes of such section would (but for this subsection) 
     expire on September 30, 2007, such reclassification of such 
     hospital shall be extended through September 30, 2008.
       (2) For purposes of making payments under section 1886(d) 
     of the Social Security Act (42 U.S.C. 1395ww(d)), the 
     Secretary of Health and Human Services shall classify any 
     hospital located in Orange County, New York that was 
     reclassified under the authority of section 508 of the the 
     Medicare Prescription Drug, Improvement and Modernization Act 
     of 2003 (Public Law 108-173) as being located in the New 
     York-White Plains-Wayne, NY-NJ Core Based Statistical Area. 
     Any reclassification under this subsection shall be treated 
     as a reclassification under section 1886(d)(8) of such Act.
       (3) For purposes of making payments under section 1886(d) 
     of the Social Security Act (42 U.S.C. 1395ww(d)), the large 
     urban area of New York, New York is deemed to include 
     hospitals,

[[Page 22257]]

     required by State law enacted prior to June 30, 2007, to join 
     under a single unified governance structure if--
       (A) such hospitals are located in a city with a population 
     of no less than 20,000 and no greater than 30,000; and
       (B) such hospitals are less than 3/4 miles apart.
       (4) For purposes of making payments under section 1886(d) 
     of the Social Security Act (42 U.S.C. 1395ww(d)) the large 
     urban area of Buffalo-Niagara Falls, New York is deemed to 
     include Chautauqua County, New York. In no case shall there 
     be a reduction in the hospital wage index for Erie County, 
     New York, or any adjoining county, as a result of the 
     application of this paragraph, (other than as a result of a 
     general reduction required to carry out paragraph (8)(D) of 
     that section).
       (5) For purposes of making payments under section 1886(d) 
     of the Social Security Act (42 U.S.C. 1395ww(d)) a hospital 
     shall be reclassified into the New York-White Plains-Wayne, 
     New York-New Jersey core based statistical area (CBSA code 
     35644) if the hospital is a subsection (d) hospital (as 
     defined in section 1886(d)(1)(B) of the Social Security Act 
     (42 U.S.C. 1395ww(d)(1)(B)) that--
       (A) is licensed by the State in which it is located as a 
     specialty hospital;
       (B) specializes in the treatment of cardiac, vascular, and 
     pulmonary diseases;
       (C) provides at least 100 beds; and
       (D) is located in Burlington County, New Jersey.
       (6)(A) Any hospital described in subparagraph (B) shall be 
     treated as located in the core based statistical area 
     described in subparagraph (C) for purposes of making payments 
     under section 1886(d) of the Social Security Act (42 U.S.C. 
     1395ww(d)).
       (B) A hospital described in this subparagraph is any 
     hospital that--
       (i) is located in a core based statistical area (CBSA) 
     that--
       (I) had a population (as reported in the decennial census 
     for the year 2000) of at least 500,000, but not more than 
     750,000;
       (II) had a population (as reported in such census) that was 
     at least 10,000 below the population for the area as reported 
     in the previous decennial census; and
       (III) has as of January 1, 2006, at least 5, and no more 
     than 7, subsection (d) hospitals; and
       (ii) demonstrates that its average hourly wage amount (as 
     determined consistent with section 1886(d)(10)(D)(vi) of the 
     Social Security Act is not less than 96 percent of such 
     average hourly wage amount rate for all subsection (d) 
     hospitals located in same core base statistical area of the 
     hospital.
       (C) The area described in this subparagraph, with respect 
     to a hospital described in subparagraph (B), is the core 
     based statistical area that--
       (i) is within the same State as, and is adjacent to, the 
     core based statistical area in which the hospital is located; 
     and
       (ii) has an average hourly wage amount (described in 
     subparagraph (B)(ii)) that is closest to (but does not 
     exceed) such average hourly wage amount of the hospital.
       (7) For purposes of making payments under section 1886(d) 
     of the Social Security Act (42 U.S.C. 1395ww(d)), the large 
     urban area of Hartford, Connecticut is deemed to include 
     Albany, Schenectady, and Rensselaer Counties, New York.
       (8) For purposes of making payment under section 1886(d) of 
     the Social Security Act (42 U.S.C. 1395ww(d)), the Nashville-
     Davidson-Murfreesboro core based statistical area is deemed 
     to include Cumberland County, Tennessee.
       (9) For purposes of making payment under section 1886(d) of 
     the Social Security Act (42 U.S.C. 1395ww(d)), any hospital 
     that is co-located in Marinette, Wisconsin and the Menominee, 
     Michigan is deemed to be located in Chicago, Illinois.
       (10) In the case of a hospital located in Massachusetts or 
     Clinton County, New York, that is reclassified based on wages 
     under paragraph (8) or (10) of section 1886(d) of the Social 
     Security Act into an area the area wage index for which is 
     increased under section 4410(a) of the Balanced Budget Act of 
     1997 (Public Law 105-33), such increased area wage index 
     shall also apply to such hospital under such section 1886(d).
       (11) For purposes of applying the area wage index under 
     section 1886(d) of the Social Security Act (42 U.S.C. 
     1395ww(d)), hospital provider numbers 360112 and 23005 shall 
     be treated as located in the same urban area as Ann Arbor, 
     Michigan.
       (12) For purposes of making payment under section 1886(d) 
     of the Social Security Act (42 U.S.C. 1395ww(d)), any 
     hospital that is located in Columbia County, New York, with 
     less 250 beds is deemed to be located in the New York-White 
     Plains-Wayne, NY-NJ core based statistical area.
       (13) For purposes of the previous provisions of this 
     subsection (other than paragraph (1))--
       (A) any reclassification effected under such provisions 
     shall be treated as a decision of the Medicare Geographic 
     Classification Review Board under section 1886(d) of the 
     Social Security Act and subject to budget neutrality under 
     paragraph (8)(D) of such section.; and
       (B) such provisions shall only apply to discharges 
     occurring on or after October 1, 2008, during the 3-year 
     reclassification period beginning on such date.

     SEC. 509. MEDICARE CRITICAL ACCESS HOSPITAL DESIGNATIONS.

       (a) In General.--
       (1) Section 405(h) of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (Public Law 108-
     173; 117 Stat. 2269) is amended by adding at the end the 
     following new paragraph:
       ``(3) Exception.--
       ``(A) In general.--The amendment made by paragraph (1) 
     shall not apply to the certification by the State of 
     Minnesota on or after January 1, 2006, under section 
     1820(c)(2)(B)(i)(II) of the Social Security Act (42 U.S.C. 
     1395i-4(c)(2)(B)(i)(II)) of one hospital that meets the 
     criteria described in subparagraph (B) and is located in Cass 
     County, Minnesota, as a necessary provider of health care 
     services to residents in the area of the hospital.
       ``(B) Criteria described.--A hospital meets the criteria 
     described in this subparagraph if the hospital
       ``(i) has been granted an exception by the State to an 
     otherwise applicable statutory restriction on hospital 
     construction or licensing prior to the date of enactment of 
     this subparagraph; and
       ``(ii) is located on property which the State has approved 
     for conveyance to a county within the State prior to such 
     date of enactment.''.
       (2) Section 1820(c)(2)(B)(i)(I) of the Social Security Act 
     (42 U.S.C. 1395i-4(c)(2)(B)(i)(I)) is amended by striking 
     ``or,'' and inserting ``or, in the case of a hospital that is 
     located in the county seat of Butler, Alabama, a 32-mile 
     drive, or,''.
       (b) Effective Date.--The amendment made by subsection 
     (a)(2) shall apply to cost reporting periods beginning on or 
     after the date of the enactment of this Act.

         TITLE VI--OTHER PROVISIONS RELATING TO MEDICARE PART B

             Subtitle A--Payment and Coverage Improvements

     SEC. 601. PAYMENT FOR THERAPY SERVICES.

       (a) Extension of Exceptions Process for Medicare Therapy 
     Caps.--Section 1833(g)(5) of the Social Security Act (42 
     U.S.C. 1395l(g)(5)), as amended by section 201 of the 
     Medicare Improvements and Extension Act of 2006 (division B 
     of Public Law 109-432), is amended by striking ``2007'' and 
     inserting ``2009''.
       (b) Study and Report.--
       (1) Study.--The Secretary of Health and Human Services, in 
     consultation with appropriate stakeholders, shall conduct a 
     study on refined and alternative payment systems to the 
     Medicare payment cap under section 1833(g) of the Social 
     Security Act (42 U.S.C. 1395l(g)) for physical therapy 
     services and speech-language pathology services, described in 
     paragraph (1) of such section and occupational therapy 
     services described in paragraph (3) of such section. Such 
     study shall consider, with respect to payment amounts under 
     Medicare, the following:
       (A) The creation of multiple payment caps for such services 
     to better reflect costs associated with specific health 
     conditions.
       (B) The development of a prospective payment system, 
     including an episode-based system of payments, for such 
     services.
       (C) The data needed for the development of a system of 
     multiple payment caps (or an alternative payment methodology) 
     for such services and the availability of such data.
       (2) Report.--Not later than January 1, 2009, the Secretary 
     shall submit to Congress a report on the study conducted 
     under paragraph (1).

     SEC. 602. MEDICARE SEPARATE DEFINITION OF OUTPATIENT SPEECH-
                   LANGUAGE PATHOLOGY SERVICES.

       (a) In General.--Section 1861(ll) of the Social Security 
     Act (42 U.S.C. 1395x(ll)) is amended--
       (1) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively; and
       (2) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) The term `outpatient speech-language pathology 
     services' has the meaning given the term `outpatient physical 
     therapy services' in subsection (p), except that in applying 
     such subsection--
       ``(A) `speech-language pathology' shall be substituted for 
     `physical therapy' each place it appears; and
       ``(B) `speech-language pathologist' shall be substituted 
     for `physical therapist' each place it appears.''.
       (b) Conforming Amendments.--
       (1) Section 1832(a)(2)(C) of the Social Security Act (42 
     U.S.C. 1395k(a)(2)(C)) is amended--
       (A) by striking ``and outpatient'' and inserting ``, 
     outpatient''; and
       (B) by inserting before the semicolon at the end the 
     following: ``, and outpatient speech-language pathology 
     services (other than services to which the second sentence of 
     section 1861(p) applies through the application of section 
     1861(ll)(2))''.
       (2) Subparagraphs (A) and (B) of section 1833(a)(8) of such 
     Act (42 U.S.C. 1395l(a)(8)) are each amended by striking 
     ``(which includes outpatient speech-language pathology 
     services)'' and inserting ``, outpatient speech-language 
     pathology services,''.
       (3) Section 1833(g)(1) of such Act (42 U.S.C. 1395l(g)(1)) 
     is amended--
       (A) by inserting ``and speech-language pathology services 
     of the type described in such section through the application 
     of section 1861(ll)(2)'' after ``1861(p)''; and
       (B) by inserting ``and speech-language pathology services'' 
     after ``and physical therapy services''.

[[Page 22258]]

       (4) The second sentence of section 1835(a) of such Act (42 
     U.S.C. 1395n(a)) is amended--
       (A) by striking ``section 1861(g)'' and inserting 
     ``subsection (g) or (ll)(2) of section 1861'' each place it 
     appears; and
       (B) by inserting ``or outpatient speech-language pathology 
     services, respectively'' after ``occupational therapy 
     services''.
       (5) Section 1861(p) of such Act (42 U.S.C. 1395x(p)) is 
     amended by striking the fourth sentence.
       (6) Section 1861(s)(2)(D) of such Act (42 U.S.C. 
     1395x(s)(2)(D)) is amended by inserting ``, outpatient 
     speech-language pathology services,'' after ``physical 
     therapy services''.
       (7) Section 1862(a)(20) of such Act (42 U.S.C. 
     1395y(a)(20)) is amended--
       (A) by striking ``outpatient occupational therapy services 
     or outpatient physical therapy services'' and inserting 
     ``outpatient physical therapy services, outpatient speech-
     language pathology services, or outpatient occupational 
     therapy services''; and
       (B) by striking ``section 1861(g)'' and inserting 
     ``subsection (g) or (ll)(2) of section 1861''.
       (8) Section 1866(e)(1) of such Act (42 U.S.C. 1395cc(e)(1)) 
     is amended--
       (A) by striking ``section 1861(g)'' and inserting 
     ``subsection (g) or (ll)(2) of section 1861'' the first two 
     places it appears;
       (B) by striking ``defined) or'' and inserting 
     ``defined),''; and
       (C) by inserting before the semicolon at the end the 
     following: ``, or (through the operation of section 
     1861(ll)(2)) with respect to the furnishing of outpatient 
     speech-language pathology''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after January 1, 
     2008.
       (d) Construction.--Nothing in this section shall be 
     construed to affect existing regulations and policies of the 
     Centers for Medicare & Medicaid Services that require 
     physician oversight of care as a condition of payment for 
     speech-language pathology services under part B of the 
     medicare program.

     SEC. 603. INCREASED REIMBURSEMENT RATE FOR CERTIFIED NURSE-
                   MIDWIVES.

       (a) In General.--Section 1833(a)(1)(K) of the Social 
     Security Act (42 U.S.C.1395l(a)(1)(K)) is amended by striking 
     ``(but in no event'' and all that follows through ``performed 
     by a physician)''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services furnished on or after April 1, 2008.

     SEC. 604. ADJUSTMENT IN OUTPATIENT HOSPITAL FEE SCHEDULE 
                   INCREASE FACTOR.

       The first sentence of section 1833(t)(3)(C)(iv) of the 
     Social Security Act (42 U.S.C. 1395l(t)(3)(C)(iv)) is amended 
     by inserting before the period at the end the following: 
     ``and reduced by 0.25 percentage point for such factor for 
     such services furnished in 2008''.

     SEC. 605. EXCEPTION TO 60-DAY LIMIT ON MEDICARE SUBSTITUTE 
                   BILLING ARRANGEMENTS IN CASE OF PHYSICIANS 
                   ORDERED TO ACTIVE DUTY IN THE ARMED FORCES.

       (a) In General.--Section 1842(b)(6)(D)(iii) of the Social 
     Security Act (42 U.S.C. 1395u(b)(6)(D)(iii)) is amended by 
     inserting after ``of more than 60 days'' the following: ``or 
     are provided over a longer continuous period during all of 
     which the first physician has been called or ordered to 
     active duty as a member of a reserve component of the Armed 
     Forces''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services furnished on or after the date of the 
     enactment of this section.

     SEC. 606. EXCLUDING CLINICAL SOCIAL WORKER SERVICES FROM 
                   COVERAGE UNDER THE MEDICARE SKILLED NURSING 
                   FACILITY PROSPECTIVE PAYMENT SYSTEM AND 
                   CONSOLIDATED PAYMENT.

       (a) In General.--Section 1888(e)(2)(A)(ii) of the Social 
     Security Act (42 U.S.C. 1395yy(e)(2)(A)(ii)) is amended by 
     inserting ``clinical social worker services,'' after 
     ``qualified psychologist services,''.
       (b) Conforming Amendment.--Section 1861(hh)(2) of the 
     Social Security Act (42 U.S.C. 1395x(hh)(2)) is amended by 
     striking ``and other than services furnished to an inpatient 
     of a skilled nursing facility which the facility is required 
     to provide as a requirement for participation''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     January 1, 2008.

     SEC. 607. COVERAGE OF MARRIAGE AND FAMILY THERAPIST SERVICES 
                   AND MENTAL HEALTH COUNSELOR SERVICES.

       (a) Coverage of Marriage and Family Therapist Services.--
       (1) Coverage of services.--Section 1861(s)(2) of the Social 
     Security Act (42 U.S.C. 1395x(s)(2)), as amended by section 
     201(a)(1), is amended--
       (A) in subparagraph (AA), by striking ``and'' at the end;
       (B) in subparagraph (BB), by adding ``and'' at the end; and
       (C) by adding at the end the following new subparagraph:
       ``(CC) marriage and family therapist services (as defined 
     in subsection (eee));''.
       (2) Definition.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x), as amended by sections 201(a)(2) and 
     503(b)(1), is amended by adding at the end the following new 
     subsection:

                ``Marriage and Family Therapist Services

       ``(eee)(1) The term `marriage and family therapist 
     services' means services performed by a marriage and family 
     therapist (as defined in paragraph (2)) for the diagnosis and 
     treatment of mental illnesses, which the marriage and family 
     therapist is legally authorized to perform under State law 
     (or the State regulatory mechanism provided by State law) of 
     the State in which such services are performed, provided such 
     services are covered under this title, as would otherwise be 
     covered if furnished by a physician or as incident to a 
     physician's professional service, but only if no facility or 
     other provider charges or is paid any amounts with respect to 
     the furnishing of such services.
       ``(2) The term `marriage and family therapist' means an 
     individual who--
       ``(A) possesses a master's or doctoral degree which 
     qualifies for licensure or certification as a marriage and 
     family therapist pursuant to State law;
       ``(B) after obtaining such degree has performed at least 2 
     years of clinical supervised experience in marriage and 
     family therapy; and
       ``(C) is licensed or certified as a marriage and family 
     therapist in the State in which marriage and family therapist 
     services are performed.''.
       (3) Provision for payment under part b.--Section 
     1832(a)(2)(B) of the Social Security Act (42 U.S.C. 
     1395k(a)(2)(B)) is amended by adding at the end the following 
     new clause:
       ``(v) marriage and family therapist services;''.
       (4) Amount of payment.--
       (A) In general.--Section 1833(a)(1) of the Social Security 
     Act (42 U.S.C. 1395l(a)(1)), as amended by section 201(b)(1), 
     is amended--
       (i) by striking ``and'' before ``(W)''; and
       (ii) by inserting before the semicolon at the end the 
     following: ``, and (X) with respect to marriage and family 
     therapist services under section 1861(s)(2)(CC), the amounts 
     paid shall be 80 percent of the lesser of (i) the actual 
     charge for the services or (ii) 75 percent of the amount 
     determined for payment of a psychologist under subparagraph 
     (L)''.
       (B) Development of criteria with respect to consultation 
     with a physician.--The Secretary of Health and Human Services 
     shall, taking into consideration concerns for patient 
     confidentiality, develop criteria with respect to payment for 
     marriage and family therapist services for which payment may 
     be made directly to the marriage and family therapist under 
     part B of title XVIII of the Social Security Act (42 U.S.C. 
     1395j et seq.) under which such a therapist must agree to 
     consult with a patient's attending or primary care physician 
     in accordance with such criteria.
       (5) Exclusion of marriage and family therapist services 
     from skilled nursing facility prospective payment system.--
     Section 1888(e)(2)(A)(ii) of the Social Security Act (42 
     U.S.C. 1395yy(e)(2)(A)(ii)), is amended by inserting 
     ``marriage and family therapist services (as defined in 
     subsection (eee)(1)),'' after ``qualified psychologist 
     services,''.
       (6) Coverage of marriage and family therapist services 
     provided in rural health clinics and federally qualified 
     health centers.--Section 1861(aa)(1)(B) of the Social 
     Security Act (42 U.S.C. 1395x(aa)(1)(B)) is amended by 
     striking ``or by a clinical social worker (as defined in 
     subsection (hh)(1)),'' and inserting ``, by a clinical social 
     worker (as defined in subsection (hh)(1)), or by a marriage 
     and family therapist (as defined in subsection (eee)(2)),''.
       (7) Inclusion of marriage and family therapists as 
     practitioners for assignment of claims.--Section 
     1842(b)(18)(C) of the Social Security Act (42 U.S.C. 
     1395u(b)(18)(C)) is amended by adding at the end the 
     following new clause:
       ``(vii) A marriage and family therapist (as defined in 
     section 1861(eee)(2)).''.
       (b) Coverage of Mental Health Counselor Services.--
       (1) Coverage of services.--Section 1861(s)(2) of the Social 
     Security Act (42 U.S.C. 1395x(s)(2)), as amended by 
     subsection (a)(1), is further amended--
       (A) in subparagraph (BB), by striking ``and'' at the end;
       (B) in subparagraph (CC), by inserting ``and'' at the end; 
     and
       (C) by adding at the end the following new subparagraph:
       ``(DD) mental health counselor services (as defined in 
     subsection (fff)(2));''.
       (2) Definition.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x), as amended by sections 201(a)(2) and 
     503(b)(1) and subsection (a)(2), is amended by adding at the 
     end the following new subsection:

      ``Mental Health Counselor; Mental Health Counselor Services

       ``(fff)(1) The term `mental health counselor' means an 
     individual who--
       ``(A) possesses a master's or doctor's degree which 
     qualifies the individual for licensure or certification for 
     the practice of mental health counseling in the State in 
     which the services are performed;
       ``(B) after obtaining such a degree has performed at least 
     2 years of supervised mental health counselor practice; and
       ``(C) is licensed or certified as a mental health counselor 
     or professional counselor by the State in which the services 
     are performed.
       ``(2) The term `mental health counselor services' means 
     services performed by a mental health counselor (as defined 
     in paragraph (1)) for the diagnosis and treatment of mental 
     illnesses which the mental health counselor is legally 
     authorized to perform under State law (or the State 
     regulatory mechanism provided by the State law) of the State 
     in which such services are performed, provided such services 
     are covered under this title, as would otherwise be covered 
     if furnished by a physician or as incident

[[Page 22259]]

     to a physician's professional service, but only if no 
     facility or other provider charges or is paid any amounts 
     with respect to the furnishing of such services.''.
       (3) Provision for payment under part b.--Section 
     1832(a)(2)(B) of the Social Security Act (42 U.S.C. 
     1395k(a)(2)(B)), as amended by subsection (a)(3), is further 
     amended by adding at the end the following new clause:
       ``(vi) mental health counselor services;''.
       (4) Amount of payment.--
       (A) In general.--Section 1833(a)(1) of the Social Security 
     Act (42 U.S.C. 1395l(a)(1)), as amended by subsection (a)(4), 
     is further amended--
       (i) by striking ``and'' before ``(X)''; and
       (ii) by inserting before the semicolon at the end the 
     following: ``, and (Y) with respect to mental health 
     counselor services under section 1861(s)(2)(DD), the amounts 
     paid shall be 80 percent of the lesser of (i) the actual 
     charge for the services or (ii) 75 percent of the amount 
     determined for payment of a psychologist under subparagraph 
     (L)''.
       (B) Development of criteria with respect to consultation 
     with a physician.--The Secretary of Health and Human Services 
     shall, taking into consideration concerns for patient 
     confidentiality, develop criteria with respect to payment for 
     mental health counselor services for which payment may be 
     made directly to the mental health counselor under part B of 
     title XVIII of the Social Security Act (42 U.S.C. 1395j et 
     seq.) under which such a counselor must agree to consult with 
     a patient's attending or primary care physician in accordance 
     with such criteria.
       (5) Exclusion of mental health counselor services from 
     skilled nursing facility prospective payment system.--Section 
     1888(e)(2)(A)(ii) of the Social Security Act (42 U.S.C. 
     1395yy(e)(2)(A)(ii)), as amended by subsection (a)(5), is 
     amended by inserting ``mental health counselor services (as 
     defined in section 1861(ddd)(2)),'' after ``marriage and 
     family therapist services (as defined in subsection 
     (eee)(1)),''.
       (6) Coverage of mental health counselor services provided 
     in rural health clinics and federally qualified health 
     centers.--Section 1861(aa)(1)(B) of the Social Security Act 
     (42 U.S.C. 1395x(aa)(1)(B)), as amended by subsection (a)(6), 
     is amended by striking ``or by a marriage and family 
     therapist (as defined in subsection (eee)(2)),'' and 
     inserting ``by a marriage and family therapist (as defined in 
     subsection (eee)(2)), or a mental health counselor (as 
     defined in subsection (fff)(1)),''.
       (7) Inclusion of mental health counselors as practitioners 
     for assignment of claims.--Section 1842(b)(18)(C) of the 
     Social Security Act (42 U.S.C. 1395u(b)(18)(C)), as amended 
     by subsection (a)(7), is amended by adding at the end the 
     following new clause:
       ``(viii) A mental health counselor (as defined in section 
     1861(fff)(1)).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     January 1, 2008.

     SEC. 608. RENTAL AND PURCHASE OF POWER-DRIVEN WHEELCHAIRS.

       (a) In General.--Section 1834(a)(7) of the Social Security 
     Act (42 U.S.C. 1395m(a)(7)) is amended--
       (1) in subparagraph (A)--
       (A) in clause (i)(I), by striking ``Except as provided in 
     clause (iii), payment'' and inserting ``Payment'';
       (B) by striking clause (iii); and
       (C) in clause (iv)--
       (i) by redesignating such clause as clause (iii); and
       (ii) by striking ``or in the case of a power-driven 
     wheelchair for which a purchase agreement has been entered 
     into under clause (iii)''; and
       (2) in subparagraph (C)(ii)(II), by striking ``or 
     (A)(iii)''.
       (b) Effective Date.--
       (1) In general.--Subject to paragraph (1), the amendments 
     made by subsection (a) shall take effect on January 1, 2008, 
     and shall apply to power-driven wheelchairs furnished on or 
     after such date.
       (2) Application to competitive acquisition.--The amendments 
     made by subsection (a) shall not apply to contracts entered 
     into under section 1847 of the Social Security Act (42 U.S.C. 
     1395w-3) pursuant to a bid submitted under such section 
     before October 1, 2007.

     SEC. 609. RENTAL AND PURCHASE OF OXYGEN EQUIPMENT.

       (a) In General.--Section 1834(a)(5)(F) of the Social 
     Security Act (42 U.S.C. 1395m(a)(5)(F)) is amended--
       (1) in clause (i)--
       (A) by striking ``Payment'' and inserting ``Subject to 
     clause (iii), payment''; and
       (B) by striking ``36 months'' and inserting ``18 months'';
       (2) in clause (ii)(I), by striking ``36th continuous 
     month'' and inserting ``18th continuous month''; and
       (3) by adding at the end the following new clause:
       ``(iii) Special rule for oxygen generating portable 
     equipment.--In the case of oxygen generating portable 
     equipment referred to in the final rule published in the 
     Federal Register on November 9, 2006 (71 Fed. Reg. 65897-
     65899), in applying clauses (i) and (ii)(I) each reference to 
     `18 months' is deemed a reference to `36 months'.''.
       (b) Effective Date.--
       (1) In general.--Subject to paragraph (3), the amendments 
     made by subsection (a) shall apply to oxygen equipment 
     furnished on or after January 1, 2008.
       (2) Transition.--In the case of an individual receiving 
     oxygen equipment on December 31, 2007, for which payment is 
     made under section 1834(a) of the Social Security Act (42 
     U.S.C. 1395m(a)), the 18-month period described in paragraph 
     (5)(F)(i) of such section, as amended by subsection (a), 
     shall begin on January 1, 2008, but in no case shall the 
     rental period for such equipment exceed 36 months.
       (3) Application to competitive acquisition.--The amendments 
     made by subsection (a) shall not apply to contracts entered 
     into under section 1847 of the Social Security Act (42 U.S.C. 
     1395w-3) pursuant to a bid submitted under such section 
     before October 1, 2007.
       (c) Study and Report.--
       (1) Study.--The Secretary of Health and Human Services 
     shall conduct a study to examine the service component and 
     the equipment component of the provision of oxygen to 
     Medicare beneficiaries. The study shall assess--
       (A) the type of services provided and variation across 
     suppliers in providing such services;
       (B) whether the services are medically necessary or affect 
     patient outcomes;
       (C) whether the Medicare program pays appropriately for 
     equipment in connection with the provision of oxygen;
       (D) whether such program pays appropriately for necessary 
     services;
       (E) whether such payment in connection with the provision 
     of oxygen should be divided between equipment and services, 
     and if so, how; and
       (F) how such payment rate compares to a competitively bid 
     rate.
       (2) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall submit to Congress a report on the study 
     conducted under paragraph (1).

     SEC. 610. ADJUSTMENT FOR MEDICARE MENTAL HEALTH SERVICES.

       (a) In General.--For purposes of payment for services 
     furnished under the physician fee schedule under section 1848 
     of the Social Security Act (42 U.S.C. 1395w-4) during the 
     applicable period, the Secretary of Health and Human Services 
     shall increase the amount otherwise payable for applicable 
     services by 5 percent.
       (b) Definitions.--For purposes of subsection (a):
       (1) Applicable period.--The term ``applicable period'' 
     means the period beginning on January 1, 2008, and ending on 
     December 31 of the year before the effective date of the 
     first review after January 1, 2008, of work relative value 
     units conducted under section 1848(c)(2)(B)(i) of the Social 
     Security Act.
       (2) Applicable services.--The term ``applicable services'' 
     means procedure codes for services--
       (A) in the categories of psychiatric therapeutic procedures 
     furnished in office or other outpatient facility settings, or 
     inpatient hospital, partial hospital or residential care 
     facility settings; and
       (B) which cover insight oriented, behavior modifying, or 
     supportive psychotherapy and interactive psychotherapy 
     services in the Healthcare Common Procedure Coding System 
     established by the Secretary of Health and Human Services 
     under section 1848(c)(5) of such Act.
       (c) Implementation.--Notwithstanding any other provision of 
     law, the Secretary of Health and Human Services may implement 
     this section by program instruction or otherwise.

     SEC. 611. EXTENSION OF BRACHYTHERAPY SPECIAL RULE.

       Section 1833(t)(16)(C) of the Social Security Act (42 
     U.S.C. 1395l(t)(16)(C)) is amended by striking ``2008'' and 
     inserting ``2009''.

     SEC. 612. PAYMENT FOR PART B DRUGS.

       (a) Application of Consistent Volume Weighting in 
     Computation of ASP.--In order to assure that payments for 
     drugs and biologicals under section 1847A of the Social 
     Security Act (42 U.S.C. 1395w-3a) are correct and consistent 
     with law, the Secretary of Health and Human Services shall, 
     for payment for drugs and biologicals furnished on or after 
     July 1, 2008, compute the volume-weighted average sales price 
     using equation #2 (specified in appendix A of the report of 
     the Inspector General of the Department of Health and Human 
     Services on ``Calculation of Volume-Weighted Average Sales 
     Price for Medicare Part B Prescription Drugs'' (February 
     2006; OEI-03-05-00310)) used by the Office of Inspector 
     General to calculate a volume-weighted ASP.
       (b) Improvements in the Competitive Acquisition Program 
     (CAP).--
       (1) Continuous open enrollment; automatic reenrollment 
     without need for reapplication.--Subsection (a)(1)(A) of 
     section 1847B of the Social Security Act (42 U.S.C. 1395w-3b) 
     is amended--
       (A) in clause (ii), by striking ``annually'' and inserting 
     ``on an ongoing basis'';
       (B) in clause (iii), by striking ``an annual selection'' 
     and inserting ``a selection (which may be changed on an 
     annual basis)'' ; and
       (C) by adding at the end the following: ``An election and 
     selection described in clauses (ii) and (iii) shall continue 
     to be effective without the need for any periodic reelection 
     or reapplication or selection.''.
       (2) Permitting appropriate delivery and transport of 
     drugs.--Subsection (b)(4)(E) of such section is amended--
       (A) by striking ``or'' at the end of clause (i);
       (B) by striking the period at the end of clause (ii) and 
     inserting a semicolon; and
       (C) by adding at the end the following new clauses:
       ``(iii) prevent a contractor from delivering drugs to a 
     satellite office designated by the prescribing physician; or

[[Page 22260]]

       ``(iv) prevent a contractor from allowing a selecting 
     physician to transport drugs or biologicals to the site of 
     administration consistent with State law and other applicable 
     laws and regulations.''.
       (3) Physician outreach and education.--Subsection (a)(1) of 
     such section is amended by adding at the end the following 
     new subparagraph:
       ``(E) Physician outreach and education.--The Secretary 
     shall conduct a program of outreach to education physicians 
     concerning the program and the ongoing opportunity of 
     physicians to elect to obtain drugs and biologicals under the 
     program.''.
       (4) Rebidding of contracts.--The Secretary of Health and 
     Human Services shall provide for the rebidding of contracts 
     under section 1847B(c) of the Social Security Act (42 U.S.C. 
     1395w-3b(c)) only for periods on or after the expiration of 
     the contract in effect under such section as of the date of 
     the enactment of this Act, except in the case of a contractor 
     terminated as a result of the application of section 
     1847B(b)(2)(B) of such Act.''
       (c) Treatment of Certain Drugs.--Section 1847A(b) of the 
     Social Security Act (42 U.S.C. 1395w-3a(b)) is amended--
       (1) in paragraph (1), by inserting ``paragraph (6) and'' 
     after ``Subject to''; and
       (2) by adding at the end the following new paragraph:
       ``(6) Special rule.--Beginning with January 1, 2008, the 
     payment amount for--
       ``(A) each single source drug or biological described in 
     section 1842(o)(1)(G) (including a single source drug or 
     biological that is treated as a multiple source drug because 
     of the application of subsection (c)(6)(C)(ii)) is the lower 
     of--
       ``(i) the payment amount that would be determined for such 
     drug or biological applying such subsection; or
       ``(ii) the payment amount that would have been determined 
     for such drug or biological if such subsection were not 
     applied; and
       ``(B) a multiple source drug (excluding a drug or 
     biological that is treated as a multiple source drug because 
     of the application of such subsection) is the lower of--
       ``(i) the payment amount that would be determined for such 
     drug or biological taking into account the application of 
     such subsection; or
       ``(ii) the payment amount that would have been determined 
     for such drug or biological if such subsection were not 
     applied.''.
       (d) Effective Date.--Except as otherwise provided, the 
     amendments made by this section shall apply to drugs 
     furnished on or after January 1, 2008.

       Subtitle B--Extension of Medicare Rural Access Protections

     SEC. 621. 2-YEAR EXTENSION OF FLOOR ON MEDICARE WORK 
                   GEOGRAPHIC ADJUSTMENT.

       Section 1848(e)(1)(E) of such Act (42 U.S.C. 1395w-
     4(e)(1)(E)) is amended by striking ``2008'' and inserting 
     ``2010''.

     SEC. 622. 2-YEAR EXTENSION OF SPECIAL TREATMENT OF CERTAIN 
                   PHYSICIAN PATHOLOGY SERVICES UNDER MEDICARE.

       Section 542(c) of the Medicare, Medicaid, and SCHIP 
     Benefits Improvement and Protection Act of 2000, as amended 
     by section 732 of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003, and section 104 
     of the Medicare Improvements and Extension Act of 2006 
     (division B of Public Law 109-432), is amended by striking 
     ``and 2007'' and inserting ``2007, 2008, and 2009''.

     SEC. 623. 2-YEAR EXTENSION OF MEDICARE REASONABLE COSTS 
                   PAYMENTS FOR CERTAIN CLINICAL DIAGNOSTIC 
                   LABORATORY TESTS FURNISHED TO HOSPITAL PATIENTS 
                   IN CERTAIN RURAL AREAS.

       Section 416(b) of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (Public Law 108-
     173; 117 Stat. 2282; 42 U.S.C. 1395l-4(b)), as amended by 
     section 105 of the Medicare Improvement and Extension Act of 
     2006 (division B of Public Law 109-432), is amended by 
     striking ``3-year'' and inserting ``5-year''.

     SEC. 624. 2-YEAR EXTENSION OF MEDICARE INCENTIVE PAYMENT 
                   PROGRAM FOR PHYSICIAN SCARCITY AREAS .

       (a) In General.--Section 1833(u)(1) of the Social Security 
     Act (42 U.S.C. 1395l(u)(1)) is amended by striking ``2008'' 
     and inserting ``2010''.
       (b) Transition.--With respect to physicians' services 
     furnished during 2008 and 2009, for purposes of subsection 
     (a), the Secretary of Health and Human Services shall use the 
     primary care scarcity areas and the specialty care scarcity 
     areas (as identified in section 1833(u)(4)) that the 
     Secretary was using under such subsection with respect to 
     physicians' services furnished on December 31, 2007.

     SEC. 625. 2-YEAR EXTENSION OF MEDICARE INCREASE PAYMENTS FOR 
                   GROUND AMBULANCE SERVICES IN RURAL AREAS.

       Section 1834(l)(13) of the Social Security Act (42 U.S.C. 
     1395m(l)(13)) is amended--
       (1) in subparagraph (A)--
       (A) in the matter before clause (i), by striking 
     ``furnished on or after July 1, 2004, and before January 1, 
     2007,'';
       (B) in clause (i), by inserting ``for services furnished on 
     or after July 1, 2004, and before January 1, 2007, and on or 
     after January 1, 2008, and before January 1, 2010,'' after 
     ``in such paragraph,''; and
       (C) in clause (ii), by inserting ``for services furnished 
     on or after July 1, 2004, and before January 1, 2007,'' after 
     ``in clause (i),''; and
       (2) in subparagraph (B)--
       (A) in the heading, by striking ``after 2006'' and 
     inserting ``for subsequent periods'';
       (B) by inserting ``clauses (i) and (ii) of'' before 
     ``subparagraph (A)''; and
       (C) by striking ``in such subparagraph'' and inserting ``in 
     the respective clause''.

     SEC. 626. EXTENDING HOLD HARMLESS FOR SMALL RURAL HOSPITALS 
                   UNDER THE HOPD PROSPECTIVE PAYMENT SYSTEM.

       Section 1833(t)(7)(D)(i)(II) of the Social Security Act (42 
     U.S.C. 1395l(t)(7)(D)(I)(II)) is amended--
       (1) by striking ``January 1, 2009'' and inserting ``January 
     1, 2010'';
       (2) by striking ``2007, or 2008,''; and
       (3) by striking ``90 percent, and 85 percent, 
     respectively.'' and inserting ``and with respect to such 
     services furnished after 2006 the applicable percentage shall 
     be 90 percent.''.

              Subtitle C--End Stage Renal Disease Program

     SEC. 631. CHRONIC KIDNEY DISEASE DEMONSTRATION PROJECTS.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary''), acting 
     through the Director of the National Institutes of Health, 
     shall establish demonstration projects to--
       (1) increase public and medical community awareness 
     (particularly of those who treat patients with diabetes and 
     hypertension) about the factors that lead to chronic kidney 
     disease, how to prevent it, how to diagnose it, and how to 
     treat it;
       (2) increase screening and use of prevention techniques for 
     chronic kidney disease for Medicare beneficiaries and the 
     general public (particularly among patients with diabetes and 
     hypertension, where prevention techniques are well 
     established and early detection makes prevention possible); 
     and
       (3) enhance surveillance systems and expand research to 
     better assess the prevalence and incidence of chronic kidney 
     disease, (building on work done by Centers for Disease 
     Control and Prevention).
       (b) Scope and Duration.--
       (1) Scope.--The Secretary shall select at least 3 States in 
     which to conduct demonstration projects under this section. 
     In selecting the States under this paragraph, the Secretary 
     shall take into account the size of the population of 
     individuals with end-stage renal disease who are enrolled in 
     part B of title XVIII of the Social Security Act and ensure 
     the participation of individuals who reside in rural and 
     urban areas.
       (2) Duration.--The demonstration projects under this 
     section shall be conducted for a period that is not longer 
     than 5 years and shall begin on January 1, 2009.
       (c) Evaluation and Report.--
       (1) Evaluation.--The Secretary shall conduct an evaluation 
     of the demonstration projects conducted under this section.
       (2) Report.--Not later than 12 months after the date on 
     which the demonstration projects under this section are 
     completed, the Secretary shall submit to Congress a report on 
     the evaluation conducted under paragraph (1) together with 
     recommendations for such legislation and administrative 
     action as the Secretary determines appropriate.

     SEC. 632. MEDICARE COVERAGE OF KIDNEY DISEASE PATIENT 
                   EDUCATION SERVICES.

       (a) Coverage of Kidney Disease Education Services.--
       (1) Coverage.--Section 1861(s)(2) of the Social Security 
     Act (42 U.S.C. 1395x(s)(2)), as amended by sections 
     201(a)(1), 607(a)(1), and 607(b)(1), is amended--
       (A) in subparagraph (CC), by striking ``and'' after the 
     semicolon at the end;
       (B) in subparagraph (DD), by adding ``and'' after the 
     semicolon at the end; and
       (C) by adding at the end the following new subparagraph:
       ``(EE) kidney disease education services (as defined in 
     subsection (ggg));''.
       (2) Services described.--Section 1861 of the Social 
     Security Act (42 U.S.C. 1395x), as amended by sections 
     201(a)(2), 503(b)(1), 607(a)(2), and 607(b)(2), is amended by 
     adding at the end the following new subsection:

                  ``Kidney Disease Education Services

       ``(ggg)(1) The term `kidney disease education services' 
     means educational services that are--
       ``(A) furnished to an individual with stage IV chronic 
     kidney disease who, according to accepted clinical guidelines 
     identified by the Secretary, will require dialysis or a 
     kidney transplant;
       ``(B) furnished, upon the referral of the physician 
     managing the individual's kidney condition, by a qualified 
     person (as defined in paragraph (2)); and
       ``(C) designed--
       ``(i) to provide comprehensive information (consistent with 
     the standards developed under paragraph (3)) regarding--
       ``(I) the management of comorbidities, including for 
     purposes of delaying the need for dialysis;
       ``(II) the prevention of uremic complications; and
       ``(III) each option for renal replacement therapy 
     (including hemodialysis and peritoneal dialysis at home and 
     in-center as well as vascular access options and 
     transplantation);

[[Page 22261]]

       ``(ii) to ensure that the individual has the opportunity to 
     actively participate in the choice of therapy; and
       ``(iii) to be tailored to meet the needs of the individual 
     involved.
       ``(2) The term `qualified person' means a physician, 
     physician assistant, nurse practitioner, or clinical nurse 
     specialist who furnishes services for which payment may be 
     made under the fee schedule established under section 1848. 
     Such term does not include a renal dialysis facility.
       ``(3) The Secretary shall set standards for the content of 
     such information to be provided under paragraph (1)(C)(i) 
     after consulting with physicians, other health professionals, 
     health educators, professional organizations, accrediting 
     organizations, kidney patient organizations, dialysis 
     facilities, transplant centers, network organizations 
     described in section 1881(c)(2), and other knowledgeable 
     persons. To the extent possible the Secretary shall consult 
     with a person or entity described in the previous sentence, 
     other than a dialysis facility, that has not received 
     industry funding from a drug or biological manufacturer or 
     dialysis facility.
       ``(4) In promulgating regulations to carry out this 
     subsection, the Secretary shall ensure that each individual 
     who is eligible for benefits for kidney disease education 
     services under this title receives such services in a timely 
     manner to maximize the benefit of those services.
       ``(5) The Secretary shall monitor the implementation of 
     this subsection to ensure that individuals who are eligible 
     for benefits for kidney disease education services receive 
     such services in the manner described in paragraph (4).
       ``(6) No individual shall be eligible to be provided more 
     than 6 sessions of kidney disease education services under 
     this title.''.
       (3) Payment under the physician fee schedule.--Section 
     1848(j)(3) of the Social Security Act (42 U.S.C. 1395w-
     4(j)(3)) is amended by inserting ``(2)(DD),'' after 
     ``(2)(AA),''.
       (4) Limitation on number of sessions.--Section 1862(a)(1) 
     of the Social Security Act (42 U.S.C. 1395y(a)(1)) is 
     amended--
       (A) in subparagraph (M), by striking ``and'' at the end;
       (B) in subparagraph (N), by striking the semicolon at the 
     end and inserting ``, and''; and
       (C) by adding at the end the following new subparagraph:
       ``(O) in the case of kidney disease education services (as 
     defined in section 1861(ggg)), which are furnished in excess 
     of the number of sessions covered under such section;''.
       (5) GAO report.--Not later than September 1, 2010, the 
     Comptroller General of the United States shall submit to 
     Congress a report on the following:
       (A) The number of Medicare beneficiaries who are eligible 
     to receive benefits for kidney disease education services (as 
     defined in section 1861(ggg) of the Social Security Act, as 
     added by paragraph (2)) under title XVIII of such Act and who 
     receive such services.
       (B) The extent to which there is a sufficient amount of 
     physicians, physician assistants, nurse practitioners, and 
     clinical nurse specialists to furnish kidney disease 
     education services (as so defined) under such title and 
     whether or not renal dialysis facilities (and appropriate 
     employees of such facilities) should be included as an entity 
     eligible under such section to furnish such services.
       (C) Recommendations, if appropriate, for renal dialysis 
     facilities (and appropriate employees of such facilities) to 
     structure kidney disease education services (as so defined) 
     in a manner that is objective and unbiased and that provides 
     a range of options and alternative locations for renal 
     replacement therapy and management of co-morbidities that may 
     delay the need for dialysis.
       (b) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after January 1, 
     2009.

     SEC. 633. REQUIRED TRAINING FOR PATIENT CARE DIALYSIS 
                   TECHNICIANS.

       Section 1881 of the Social Security Act (42 U.S.C. 1395rr) 
     is amended by adding the following new subsection:
       ``(h)(1) Except as provided in paragraph (2), a provider of 
     services or a renal dialysis facility may not use, for more 
     than 12 months during 2009, or for any period beginning on 
     January 1, 2010, any individual as a patient care dialysis 
     technician unless the individual--
       ``(A) has completed a training program in the care and 
     treatment of an individual with chronic kidney failure who is 
     undergoing dialysis treatment; and
       ``(B) has been certified by a nationally recognized 
     certification entity for dialysis technicians.
       ``(2)(A) A provider of services or a renal dialysis 
     facility may permit an individual enrolled in a training 
     program described in paragraph (1)(A) to serve as a patient 
     care dialysis technician while they are so enrolled.
       ``(B) The requirements described in subparagraphs (A), (B), 
     and (C) of paragraph (1) do not apply to an individual who 
     has performed dialysis-related services for at least 5 years.
       ``(3) For purposes of paragraph (1), if, since the most 
     recent completion by an individual of a training program 
     described in paragraph (1)(A), there has been a period of 24 
     consecutive months during which the individual has not 
     furnished dialysis-related services for monetary 
     compensation, such individual shall be required to complete a 
     new training program or become recertified as described in 
     paragraph (1)(B).
       ``(4) A provider of services or a renal dialysis facility 
     shall provide such regular performance review and regular in-
     service education as assures that individuals serving as 
     patient care dialysis technicians for the provider or 
     facility are competent to perform dialysis-related 
     services.''.

     SEC. 634. MEDPAC REPORT ON TREATMENT MODALITIES FOR PATIENTS 
                   WITH KIDNEY FAILURE.

       (a) Evaluation.--
       (1) In general.--Not later than March 1, 2009, the Medicare 
     Payment Advisory Commission (established under section 1805 
     of the Social Security Act) shall submit to the Secretary and 
     Congress a report evaluating the barriers that exist to 
     increasing the number of individuals with end-stage renal 
     disease who elect to receive home dialysis services under the 
     Medicare program under title XVIII of the Social Security Act 
     (42 U.S.C. 1395 et seq.).
       (2) Report details.--The report shall include the 
     following:
       (A) A review of Medicare home dialysis demonstration 
     projects initiated before the date of the enactment of this 
     Act, and the results of such demonstration projects and 
     recommendations for future Medicare home dialysis 
     demonstration projects or Medicare program changes that will 
     test models that can improve Medicare beneficiary access to 
     home dialysis.
       (B) A comparison of current Medicare home dialysis costs 
     and payments with current in-center and hospital dialysis 
     costs and payments.
       (C) An analysis of the adequacy of Medicare reimbursement 
     for patient training for home dialysis (including 
     hemodialysis and peritoneal dialysis) and recommendations for 
     ensuring appropriate payment for such home dialysis training.
       (D) A catalogue and evaluation of the incentives and 
     disincentives in the current reimbursement system that 
     influence whether patients receive home dialysis services or 
     other treatment modalities.
       (E) An evaluation of patient education services and how 
     such services impact the treatment choices made by patients.
       (F) Recommendations for implementing incentives to 
     encourage patients to elect to receive home dialysis services 
     or other treatment modalities under the Medicare program
       (3) Scope of review.--In preparing the report under 
     paragraph (1), the Medicare Payment Advisory Commission shall 
     consider a variety of perspectives, including the 
     perspectives of physicians, other health care professionals, 
     hospitals, dialysis facilities, health plans, purchasers, and 
     patients.

     SEC. 635. ADJUSTMENT FOR ERYTHROPOIETIN STIMULATING AGENTS 
                   (ESAS).

       (a) In General.--Subsection (b)(13) of section 1881 of the 
     Social Security Act (42 U.S.C. 1395rr) is amended--
       (1) in subparagraph (A)(iii), by striking ``For such 
     drugs'' and inserting ``Subject to subparagraph (C), for such 
     drugs''; and
       (2) by adding at the end the following new subparagraph:
       ``(C)(i) The payment amounts under this title for 
     erythropoietin furnished during 2008 or 2009 to an individual 
     with end stage renal disease by a large dialysis facility (as 
     defined in subparagraph (D)) (whether to individuals in the 
     facility or at home), in an amount equal to $8.75 per 
     thousand units (rounded to the nearest 100 units) or, if 
     less, 102 percent of the average sales price (as determined 
     under section 1847A) for such drug or biological.
       ``(ii) The payment amounts under this title for darbepoetin 
     alfa furnished during 2008 or 2009 to an individual with end 
     stage renal disease by a large dialysis facility (as defined 
     in clause (iii)) (whether to individuals in the facility or 
     at home), in an amount equal to $2.92 per microgram or, if 
     less, 102 percent of the average sales price (as determined 
     under section 1847A) for such drug or biological.
       ``(iii) For purposes of this subparagraph, the term `large 
     dialysis facility' means a provider of services or renal 
     dialysis facility that is owned or managed by a corporate 
     entity that, as of July 24, 2007, owns or manages 300 or more 
     such providers or facilities, and includes a successor to 
     such a corporate entity.''.
       (b) No Impact on Drug Add-on Payment.--Nothing in the 
     amendments made by subsection (a) shall be construed to 
     affect the amount of any payment adjustment made under 
     section 1881(b)(12)(B)(ii) of the Social Security Act (42 
     U.S.C. 1395rr(b)(12)(B)(ii)).

     SEC. 636. SITE NEUTRAL COMPOSITE RATE.

       Subsection (b)(12)(A) of section 1881 of the Social 
     Security Act (42 U.S.C. 1395rr) is amended by adding at the 
     end the following new sentence: ``Under such system the 
     payment rate for dialysis services furnished on or after 
     January 1, 2008, by providers of such services for hospital-
     based facilities shall be the same as the payment rate 
     (computed without regard to this sentence) for such services 
     furnished by renal dialysis facilities that are not hospital-
     based, except that in applying the geographic index under 
     subparagraph (D) to hospital-based facilities, the labor 
     share shall be based on the labor share otherwise applied for 
     such facilities.''.

     SEC. 637. DEVELOPMENT OF ESRD BUNDLING SYSTEM AND QUALITY 
                   INCENTIVE PAYMENTS.

       (a) Development of ESRD Bundling System.--Subsection (b) of 
     section 1881 of the Social Security Act (42 U.S.C. 1395rr) is 
     further amended--
       (1) in paragraph (12)(A), by striking ``In lieu of 
     payment'' and inserting ``Subject to paragraph (14), in lieu 
     of payment'';
       (2) in the second sentence of paragraph (12)(F)--

[[Page 22262]]

       (A) by inserting ``or paragraph (14)'' after ``this 
     paragraph''; and
       (B) by inserting ``or under the system under paragraph 
     (14)'' after ``subparagraph (B)'';
       (3) in paragraph (12)(H)--
       (A) by inserting ``or paragraph (14)'' after ``under this 
     paragraph'' the first place it appears; and
       (B) by inserting before the period at the end the 
     following: ``or, under paragraph (14), the identification of 
     renal dialysis services included in the bundled payment, the 
     adjustment for outliers, the identification of facilities to 
     which the phase-in may apply, and the determination of 
     payment amounts under subparagraph (A) under such paragraph, 
     and the application of paragraph (13)(C)(iii)'';
       (4) in paragraph (13)--
       (A) in subparagraph (A), by striking ``The payment 
     amounts'' and inserting ``subject to paragraph (14), the 
     payment amounts''; and
       (B) in subparagraph (B)--
       (i) in clause (i), by striking ``(i)'' after ``(B)'' and by 
     inserting ``, subject to paragraph (14)'' before the period 
     at the end; and
       (ii) by striking clause (ii); and
       (5) by adding at the end the following new paragraph:
       ``(14)(A) Subject to subparagraph (E), for services 
     furnished on or after January 1, 2010, the Secretary shall 
     implement a payment system under which a single payment is 
     made under this title for renal dialysis services (as defined 
     in subparagraph (B)) in lieu of any other payment (including 
     a payment adjustment under paragraph (12)(B)(ii)) for such 
     services and items furnished pursuant to paragraph (4). In 
     implementing the system the Secretary shall ensure that the 
     estimated total amount of payments under this title for 2010 
     for renal dialysis services shall equal 96 percent of the 
     estimated amount of payments for such services, including 
     payments under paragraph (12)(B)(ii), that would have been 
     made if such system had not been implemented.
       ``(B) For purposes of this paragraph, the term `renal 
     dialysis services' includes--
       ``(i) items and services included in the composite rate for 
     renal dialysis services as of December 31, 2009;
       ``(ii) erythropoietin stimulating agents furnished to 
     individuals with end stage renal disease;
       ``(iii) other drugs and biologicals and diagnostic 
     laboratory tests, that the Secretary identifies as commonly 
     used in the treatment of such patients and for which payment 
     was (before the application of this paragraph) made 
     separately under this title, and any oral equivalent form of 
     such drugs and biologicals or of drugs and biologicals 
     described in clause (ii); and
       ``(iv) home dialysis training for which payment was (before 
     the application of this paragraph) made separately under this 
     section.
     Such term does not include vaccines.
       ``(C) The system under this paragraph may provide for 
     payment on the basis of services furnished during a week or 
     month or such other appropriate unit of payment as the 
     Secretary specifies.
       ``(D) Such system--
       ``(i) shall include a payment adjustment based on case mix 
     that may take into account patient weight, body mass index, 
     comorbidities, length of time on dialysis, age, race, 
     ethnicity, and other appropriate factors;
       ``(ii) shall include a payment adjustment for high cost 
     outliers due to unusual variations in the type or amount of 
     medically necessary care, including variations in the amount 
     of erythropoietin stimulating agents necessary for anemia 
     management; and
       ``(iii) may include such other payment adjustments as the 
     Secretary determines appropriate, such as a payment 
     adjustment--
       ``(I) by a geographic index, such as the index referred to 
     in paragraph (12)(D), as the Secretary determines to be 
     appropriate;
       ``(II) for pediatric providers of services and renal 
     dialysis facilities;
       ``(III) for low volume providers of services and renal 
     dialysis facilities;
       ``(IV) for providers of services or renal dialysis 
     facilities located in rural areas; and
       ``(V) for providers of services or renal dialysis 
     facilities that are not large dialysis facilities.
       ``(E) The Secretary may provide for a phase-in of the 
     payment system described in subparagraph (A) for services 
     furnished by a provider of services or renal dialysis 
     facility described in any of subclauses (II) through (V) of 
     subparagraph (D)(iii), but such payment system shall be fully 
     implemented for services furnished in the case of any such 
     provider or facility on or after January 1, 2013.
       ``(F) The Secretary shall apply the annual increase that 
     would otherwise apply under subparagraph (F) of paragraph 
     (12) to payment amounts established under such paragraph (if 
     this paragraph did not apply) in an appropriate manner under 
     this paragraph.''.
       (b) Prohibition of Unbundling.--Section 1862(a) of such Act 
     (42 U.S.C. 1395y(a)) is amended--
       (1) by striking ``or'' at the end of paragraph (21);
       (2) by striking the period at the end of paragraph (22) and 
     inserting ``; or''; and
       (3) by inserting after paragraph (22) the following new 
     paragraph:
       ``(23) where such expenses are for renal dialysis services 
     (as defined in subparagraph (B) of section 1881(b)(14)) for 
     which payment is made under such section (other than under 
     subparagraph (E) of such section) unless such payment is made 
     under such section to a provider of services or a renal 
     dialysis facility for such services.''.
       (c) Quality Incentive Payments.--Section 1881 of such Act 
     is amended by adding at the end the following new subsection:
       ``(i) Quality Incentive Payments in the End-Stage Renal 
     Disease Program.--
       ``(1) Quality incentive payments for services furnished in 
     2008, 2009, and 2010.--
       ``(A) In general.--With respect to renal dialysis services 
     furnished during a performance period (as defined in 
     subparagraph (B)) by a provider of services or renal dialysis 
     facility that the Secretary determines meets the applicable 
     performance standard for the period under subparagraph (C) 
     and reports on measures for 2009 and 2010 under subparagraph 
     (D) for such services, in addition to the amount otherwise 
     paid under this section, subject to subparagraph (G), there 
     also shall be paid to the provider or facility an amount 
     equal to the applicable percentage (specified in subparagraph 
     (E) for the period) of the Secretary's estimate (based on 
     claims submitted not later than two months after the end of 
     the performance period) of the amount specified in 
     subparagraph (F) for such period.
       ``(B) Performance period.--In this paragraph, the term 
     `performance period' means each of the following:
       ``(i) The period beginning on July 1, 2008, and ending on 
     December 31, 2008.
       ``(ii) 2009.
       ``(iii) 2010.
       ``(C) Performance standard.--
       ``(i) 2008.--For the performance period occurring in 2008, 
     the applicable performance standards for a provider or 
     facility under this subparagraph are--

       ``(I) 92 percent or more of individuals with end stage 
     renal disease receiving erythopoetin stimulating agents who 
     have an average hematocrit of 33.0 percent or more; and
       ``(II) less than a percentage, specified by the Secretary, 
     of individuals with end stage renal disease receiving 
     erythopoetin stimulating agents who have an average 
     hematocrit of 39.0 percent or more.

       ``(ii) 2009 and 2010.--For the 2009 and 2010 performance 
     periods, the applicable performance standard for a provider 
     or facility under this subparagraph is successful performance 
     (relative to national average) on--

       ``(I) such measures of anemia management as the Secretary 
     shall specify, including measures of hemoglobin levels or 
     hematocrit levels for erythropoietin stimulating agents that 
     are consistent with the labeling for dosage of erythropoietin 
     stimulating agents approved by the Food and Drug 
     Administration for treatment of anemia in patients with end 
     stage renal disease, taking into account variations in 
     hemoglobin ranges or hematocrit levels of patients; and
       ``(II) such other measures, relating to subjects described 
     in subparagraph (D)(i), as the Secretary may specify.

       ``(D) Reporting performance measures.--The performance 
     measures under this subparagraph to be reported shall 
     include--
       ``(i) such measures as the Secretary specifies, before the 
     beginning of the performance period involved and taking into 
     account measures endorsed by the National Quality Forum, 
     including, to the extent feasible measures on--

       ``(I) iron management;
       ``(II) dialysis adequacy; and
       ``(III) vascular access, including for maximizing the 
     placement of arterial venous fistula; and

       ``(ii) to the extent feasible, such measure (or measures) 
     of patient satisfaction as the Secretary shall specify.

     The provider or facility submitting information on such 
     measures shall attest to the completeness and accuracy of 
     such information.
       ``(E) Applicable percentage.--The applicable percentage 
     specified in this subparagraph for--
       ``(i) the performance period occurring in 2008, is 1.0 
     percent;
       ``(ii) the 2009 performance period, is 2.0 percent; and
       ``(iii) the 2010 performance period, is 3.0 percent.

     In the case of any performance period which is less than an 
     entire year, the applicable percentage specified in this 
     subparagraph shall be multiplied by the ratio of the number 
     of months in the year to the number of months in such 
     performance period. In the case of 2010, the applicable 
     percentage specified in this subparagraph shall be multiplied 
     by the Secretary's estimate of the ratio of the aggregate 
     payment amount described in subparagraph (F)(i) that would 
     apply in 2010 if paragraph (14) did not apply, to the 
     aggregate payment base under subparagraph (F)(ii) for 2010.
       ``(F) Payment base.--The payment base described in this 
     subparagraph for a provider or facility is--
       ``(i) for performance periods before 2010, the payment 
     amount determined under paragraph (12) for services furnished 
     by the provider or facility during the performance period, 
     including the drug payment adjustment described in 
     subparagraph (B)(ii) of such paragraph; and
       ``(ii) for the 2010 performance period is the amount 
     determined under paragraph (14) for services furnished by the 
     provider or facility during the period.
       ``(G) Limitation on funding.--
       ``(i) In general.--If the Secretary determines that the 
     total payments under this paragraph for a performance period 
     is projected to exceed the dollar amount specified in clause 
     (ii) for such period, the Secretary shall reduce, in a pro 
     rata manner, the amount of such payments for

[[Page 22263]]

     each provider or facility for such period to eliminate any 
     such projected excess for the period.
       ``(ii) Dollar amount.--The dollar amount specified in this 
     clause--

       ``(I) for the performance period occurring in 2008, is 
     $50,000,000;
       ``(II) for the 2009 performance period is $100,000,000; and
       ``(III) for the 2010 performance period is $150,000,000.

       ``(H) Form of payment.--The payment under this paragraph 
     shall be in the form of a single consolidated payment.
       ``(2) Quality incentive payments for facilities and 
     providers for 2011.--
       ``(A) Increased payment.--For 2011, in the case of a 
     provider or facility that, for the performance period (as 
     defined in subparagraph (B))--
       ``(i) meets (or exceeds) the performance standard for 
     anemia management specified in paragraph (1)(C)(ii)(I);
       ``(ii) has substantially improved performance or exceeds a 
     performance standard (as determined under subparagraph (E)); 
     and
       ``(iii) reports measures specified in paragraph (1)(D),
     with respect to renal dialysis services furnished by the 
     provider or facility during the quality bonus payment period 
     (as specified in subparagraph (C)) the payment amount 
     otherwise made to such provider or facility under subsection 
     (b)(14) shall be increased, subject to subparagraph (F), by 
     the applicable percentage specified in subparagraph (D). 
     Payment amounts under paragraph (1) shall not be counted for 
     purposes of applying the previous sentence.
       ``(B) Performance period.--In this paragraph, the term 
     `performance period' means a multi-month period specified by 
     the Secretary .
       ``(C) Quality bonus payment period.--In this paragraph, the 
     term `quality bonus payment period' means, with respect to a 
     performance period, a multi-month period beginning on January 
     1, 2011, specified by the Secretary that begins at least 3 
     months (but not more than 9 months) after the end of the 
     performance period.
       ``(D) Applicable percentage.--The applicable percentage 
     specified in this subparagraph is a percentage, not to exceed 
     the 4.0 percent, specified by the Secretary consistent with 
     subparagraph (F). Such percentage may vary based on the level 
     of performance and improvement. The applicable percentage 
     specified in this subparagraph shall be multiplied by the 
     ratio applied under the third sentence of paragraph (1)(E) 
     for 2010.
       ``(E) Performance standard.--Based on performance of a 
     provider of services or a renal dialysis facility on 
     performance measures described in paragraph (1)(D) for a 
     performance period, the Secretary shall determine a composite 
     score for such period.
       ``(F) Limitation on funding.--If the Secretary determines 
     that the total amount to be paid under this paragraph for a 
     quality bonus payment period is projected to exceed 
     $200,000,000, the Secretary shall reduce, in a uniform 
     manner, the applicable percentage otherwise applied under 
     subparagraph (D) for services furnished during the period to 
     eliminate any such projected excess.
       ``(3) Application.--
       ``(A) Implementation.--Notwithstanding any other provision 
     of law, the Secretary may implement by program instruction or 
     otherwise this subsection.
       ``(B) Limitations on review.--
       ``(i) In general.--There shall be no administrative or 
     judicial review under section 1869 or 1878 or otherwise of--

       ``(I) the determination of performance measures and 
     standards under this subsection;
       ``(II) the determination of successful reporting, including 
     a determination of composite scores; and
       ``(III) the determination of the quality incentive payments 
     made under this subsection.

       ``(ii) Treatment of determinations.--A determination under 
     this subparagraph shall not be treated as a determination for 
     purposes of section 1869.
       ``(4) Technical assistance.--The Secretary shall identify 
     or establish an appropriately skilled group or organization, 
     such as the ESRD Networks, to provide technical assistance to 
     consistently low-performing facilities or providers that are 
     in the bottom quintile.
       ``(5) Public reporting.--
       ``(A) Annual notice.--The Secretary shall provide an annual 
     written notification to each individual who is receiving 
     renal dialysis services from a provider of services or renal 
     dialysis facility that--
       ``(i) informs such individual of the composite scores 
     described in subparagraph (A) and other relevant quality 
     measures with respect to providers of services or renal 
     dialysis facilities in the local area;
       ``(ii) compares such scores and measures to the average 
     local and national scores and measures; and
       ``(iii) provides information on how to access additional 
     information on quality of such services furnished and options 
     for alternative providers and facilities.
       ``(B) Certificates.--The Secretary shall provide 
     certificates to facilities and providers who provide services 
     to individuals with end-stage renal disease under this title 
     to display in patient areas. The certificate shall indicate 
     the composite score obtained by the facility or provider 
     under the quality initiative.
       ``(C) Web-based quality list.--The Secretary shall 
     establish a web-based list of facilities and providers who 
     furnish renal dialysis services under this section that 
     indicates their composite score of each provider and 
     facility.
       ``(6) Recommendations for reporting and quality incentive 
     intitiative for physicians.--The Secretary shall develop 
     recommendations for applying quality incentive payments under 
     this subsection to physicians who receive the monthly 
     capitated payment under this title. Such recommendations 
     shall include the following:
       ``(A) Recommendations to include pediatric specific 
     measures for physicians with at least 50 percent of their 
     patients with end stage renal disease being individuals under 
     18 years of age.
       ``(B) Recommendations on how to structure quality incentive 
     payments for physicians who demonstrate improvements in 
     quality or who attain quality standards, as specified by the 
     Secretary.
       ``(7) Reports.--
       ``(A) Initial report.--Not later than January 1, 2013, the 
     Secretary shall submit to Congress a report on the 
     implementation of the bundled payment system under subsection 
     (b)(14) and the quality initiative under this subsection. 
     Such report shall include the following information:
       ``(i) A comparison of the aggregate payments under 
     subsection (b)(14) for items and services to the cost of such 
     items and services.
       ``(ii) The changes in utilization rates for erythropoietin 
     stimulating agents.
       ``(iii) The mode of administering such agents, including 
     information on the proportion of such individuals receiving 
     such agents intravenously as compared to subcutaneously.
       ``(iv) The frequency of dialysis.
       ``(v) Other differences in practice patterns, such as the 
     adoption of new technology, different modes of practice, and 
     variations in use of drugs other than drugs described in 
     clause (iii).
       ``(vi) The performance of facilities and providers under 
     paragraph (2).
       ``(vii) Other recommendations for legislative and 
     administrative actions determined appropriate by the 
     Secretary.
       ``(B) Subsequent report.--Not later than January 1, 2015, 
     the Secretary shall submit to Congress a report that contains 
     the information described in each of clauses (ii) through 
     (vii) of subparagraph (A) and a comparison of the results of 
     the payment system under subsection (b)(14) for renal 
     dialysis services furnished during the 2-year period 
     beginning on January 1, 2013, and the results of such payment 
     system for such services furnished during the previous two-
     year period.''.

     SEC. 638. MEDPAC REPORT ON ESRD BUNDLING SYSTEM.

       Not later than March 1, 2012, the Medicare Payment Advisory 
     Commission (established under section 1805 of the Social 
     Security Act) shall submit to Congress a report on the 
     implementation of the payment system under section 
     1881(b)(14) of the Social Security Act (as added by section 
     7) for renal dialysis services and related services (defined 
     in subparagraph (B) of such section). Such report shall 
     include, with respect to such payment system for such 
     services, an analysis of each of the following:
       (1) An analysis of the overall adequacy of payment under 
     such system for all such services.
       (2) An analysis that compares the adequacy of payment under 
     such system for services furnished by--
       (A) a provider of services or renal dialysis facility that 
     is described in section 1881(b)(13)(C)(iv) of the Social 
     Security Act;
       (B) a provider of services or renal dialysis facility not 
     described in such section;
       (C) a hospital-based facility;
       (D) a freestanding renal dialysis facility;
       (E) a renal dialysis facility located in an urban area; and
       (F) a renal dialysis facility located in a rural area.
       (3) An analysis of the financial status of providers of 
     such services and renal dialysis facilities, including access 
     to capital, return on equity, and return on capital.
       (4) An analysis of the adequacy of payment under such 
     method and the adequacy of the quality improvement payments 
     under section 1881(i) of the Social Security Act in ensuring 
     that payments for such services under the Medicare program 
     are consistent with costs for such services.
       (5) Recommendations, if appropriate, for modifications to 
     such payment system.

     SEC. 639. OIG STUDY AND REPORT ON ERYTHROPOIETIN.

       (a) Study.--The Inspector General of the Department of 
     Health and Human Services shall conduct a study on the 
     following:
       (1) The dosing guidelines, standards, protocols, and 
     alogorithms for erythropoietin stimulating agents recommended 
     or used by providers of services and renal dialysis 
     facilities that are described in section 1881(b)(13)(C)(iv) 
     of the Social Security Act and providers and facilities that 
     are not described in such section.
       (2) The extent to which such guidelines, standards, 
     protocols, and algorithms are consistent with the labeling of 
     the Food and Drug Administration for such agents.
       (3) The extent to which physicians sign standing orders for 
     such agents that are consistent with such guidelines, 
     standards, protocols, and algorithms recommended or used by 
     the provider or facility involved.
       (4) The extent to which the prescribing decisions of 
     physicians, with respect to such agents, are independent of--
       (A) such relevant guidelines, standards, protocols, and 
     algorithms; or
       (B) recommendations of an anemia management nurse or other 
     appropriate employee of the provider or facility involved.

[[Page 22264]]

       (5) The role of medical directors of providers of services 
     and renal dialysis facilities and the financial relationships 
     between such providers and facilities and the physicians 
     hired as medical directors of such providers and facilities, 
     respectively.
       (b) Report.--Not later than January 1, 2009, the Inspector 
     General of the Department of Health and Human Services shall 
     submit to Congress a report on the study conducted under 
     subsection (a), together with such recommendations as the 
     Inspector General determines appropriate.

                       Subtitle D--Miscellaneous

     SEC. 651. LIMITATION ON EXCEPTION TO THE PROHIBITION ON 
                   CERTAIN PHYSICIAN REFERRALS FOR HOSPITALS.

       (a) In General.--Section 1877 of the Social Security Act 
     (42 U.S.C. 1395) is amended--
       (1) in subsection (d)(2)--
       (A) in subparagraph (A), by striking ``and'' at the end;
       (B) in subparagraph (B), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(C) if the entity is a hospital, the hospital meets the 
     requirements of paragraph (3)(D).'';
       (2) in subsection (d)(3)--
       (A) in subparagraph (B), by striking ``and'' at the end;
       (B) in subparagraph (C), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(D) the hospital meets the requirements described in 
     subsection (i)(1) not later than 18 months after the date of 
     the enactment of this subparagraph.''; and
       (3) by adding at the end the following new subsection:
       ``(i) Requirements for Hospitals to Qualify for Hospital 
     Exception to Ownership or Investment Prohibition.--
       ``(1) Requirements described.--For purposes of paragraphs 
     subsection (d)(3)(D), the requirements described in this 
     paragraph for a hospital are as follows:
       ``(A) Provider agreement.--The hospital had a provider 
     agreement under section 1866 in effect on July 24, 2007.
       ``(B) Prohibition of expansion of facility capacity.--The 
     number of operating rooms and beds of the hospital at any 
     time on or after the date of the enactment of this subsection 
     are no greater than the number of operating rooms and beds as 
     of such date.
       ``(C) Preventing conflicts of interest.--
       ``(i) The hospital submits to the Secretary an annual 
     report containing a detailed description of--

       ``(I) the identity of each physician owner and any other 
     owners of the hospital; and
       ``(II) the nature and extent of all ownership interests in 
     the hospital.

       ``(ii) The hospital has procedures in place to require that 
     any referring physician owner discloses to the patient being 
     referred, by a time that permits the patient to make a 
     meaningful decision regarding the receipt of care, as 
     determined by the Secretary--

       ``(I) the ownership interest of such referring physician in 
     the hospital; and
       ``(II) if applicable, any such ownership interest of the 
     treating physician.

       ``(iii) The hospital does not condition any physician 
     ownership interests either directly or indirectly on the 
     physician owner making or influencing referrals to the 
     hospital or otherwise generating business for the hospital.
       ``(D) Ensuring bona fide investment.--
       ``(i) Physician owners in the aggregate do not own more 
     than 40 percent of the total value of the investment 
     interests held in the hospital or in an entity whose assets 
     include the hospital.
       ``(ii) The investment interest of any individual physician 
     owner does not exceed 2 percent of the total value of the 
     investment interests held in the hospital or in an entity 
     whose assets include the hospital.
       ``(iii) Any ownership or investment interests that the 
     hospital offers to a physician owner are not offered on more 
     favorable terms than the terms offered to a person who is not 
     a physician owner.
       ``(iv) The hospital does not directly or indirectly provide 
     loans or financing for any physician owner investments in the 
     hospital.
       ``(v) The hospital does not directly or indirectly 
     guarantee a loan, make a payment toward a loan, or otherwise 
     subsidize a loan, for any individual physician owner or group 
     of physician owners that is related to acquiring any 
     ownership interest in the hospital.
       ``(vi) Investment returns are distributed to investors in 
     the hospital in an amount that is directly proportional to 
     the investment of capital by the physician owner in the 
     hospital.
       ``(vii) Physician owners do not receive, directly or 
     indirectly, any guaranteed receipt of or right to purchase 
     other business interests related to the hospital, including 
     the purchase or lease of any property under the control of 
     other investors in the hospital or located near the premises 
     of the hospital.
       ``(viii) The hospital does not offer a physician owner the 
     opportunity to purchase or lease any property under the 
     control of the hospital or any other investor in the hospital 
     on more favorable terms than the terms offered to an 
     individual who is not a physician owner.
       ``(E) Patient safety.--
       ``(i) Insofar as the hospital admits a patient and does not 
     have any physician available on the premises to provide 
     services during all hours in which the hospital is providing 
     services to such patient, before admitting the patient--

       ``(I) the hospital discloses such fact to a patient; and
       ``(II) following such disclosure, the hospital receives 
     from the patient a signed acknowledgment that the patient 
     understands such fact.

       ``(ii) The hospital has the capacity to--

       ``(I) provide assessment and initial treatment for 
     patients; and
       ``(II) refer and transfer patients to hospitals with the 
     capability to treat the needs of the patient involved.

       ``(2) Publication of information reported.--The Secretary 
     shall publish, and update on an annual basis, the information 
     submitted by hospitals under paragraph (1)(C)(i) on the 
     public Internet website of the Centers for Medicare & 
     Medicaid Services.
       ``(3) Collection of ownership and investment information.--
     For purposes of clauses (i) and (ii) of paragraph (1)(D), the 
     Secretary shall collect physician ownership and investment 
     information for each hospital as it existed on the date of 
     the enactment of this subsection.
       ``(4) Physician owner defined.--For purposes of this 
     subsection, the term `physician owner' means a physician (or 
     an immediate family member of such physician) with a direct 
     or an indirect ownership interest in the hospital.''.
       (b) Enforcement.--
       (1) Ensuring compliance.--The Secretary of Health and Human 
     Services shall establish policies and procedures to ensure 
     compliance with the requirements described in such section 
     1877(i)(1) of the Social Security Act, as added by subsection 
     (a)(3), beginning on the date such requirements first apply. 
     Such policies and procedures may include unannounced site 
     reviews of hospitals.
       (2) Audits.--Beginning not later than 18 months after the 
     date of the enactment of this Act, the Secretary of Health 
     and Human Services shall conduct audits to determine if 
     hospitals violate the requirements referred to in paragraph 
     (1).

        TITLE VII--PROVISIONS RELATING TO MEDICARE PARTS A AND B

     SEC. 701. HOME HEALTH PAYMENT UPDATE FOR 2008.

       Section 1895(b)(3)(B)(ii) of the Social Security Act (42 
     U.S.C. 1395fff(b)(3)(B)(ii)) is amended--
       (1) in subclause (IV) at the end, by striking ``and'';
       (2) by redesignating subclause (V) as subclause (VII); and
       (3) by inserting after subclause (IV) the following new 
     subclauses:

       ``(V) 2007, subject to clause (v), the home health market 
     basket percentage increase;
       ``(VI) 2008, subject to clause (v), 0 percent; and''.

     SEC. 702. 2-YEAR EXTENSION OF TEMPORARY MEDICARE PAYMENT 
                   INCREASE FOR HOME HEALTH SERVICES FURNISHED IN 
                   A RURAL AREA.

       Section 421 of the Medicare Prescription Drug, Improvement, 
     and Modernization Act of 2003 (Public Law 108-173; 117 Stat. 
     2283; 42 U.S.C. 1395fff note), as amended by section 5201(b) 
     of the Deficit Reduction Act of 2005, is amended--
       (1) in the heading, by striking ``ONE-YEAR'' and inserting 
     ``TEMPORARY''; and
       (2) in subsection (a), by striking ``and episodes and 
     visits beginning on or after January 1, 2006, and before 
     January 1, 2007'' and inserting ``episodes and visits 
     beginning on or after January 1, 2006, and before January 1, 
     2007, and episodes and visits beginning on or after January 
     1, 2008, and before January 1, 2010''.

     SEC. 703. EXTENSION OF MEDICARE SECONDARY PAYER FOR 
                   BENEFICIARIES WITH END STAGE RENAL DISEASE FOR 
                   LARGE GROUP PLANS.

       (a) In General.--Section 1862(b)(1)(C) of the Social 
     Security Act (42 U.S.C. 1395y(b)(1)(C)) is amended--
       (1) by redesignating clauses (i) and (ii) as subclauses (I) 
     and (II), respectively, and indenting accordingly;
       (2) by amending the text preceding subclause (I), as so 
     redesignated, to read as follows:
       ``(C) Individuals with end stage renal disease.--
       ``(i) In general.--A group health plan (as defined in 
     subparagraph (A)(v))--'';
       (3) in the matter following subclause (II), as so 
     redesignated--
       (A) by striking ``clause (i)'' and inserting ``subclause 
     (I)'';
       (B) by striking ``clause (ii)'' and inserting ``subclause 
     (II)''; and
       (C) by striking ``clauses (i) and (ii)'' and inserting 
     ``subclauses (I) and (II)''; and
       (D) in the last sentence, by striking ``Effective for 
     items'' and inserting ``Subject to clause (ii), effective for 
     items''; and
       (4) by adding at the end the following new clause:
       ``(ii) Special Rule for Large Group Plans.--In applying 
     clause (i) to a large group health plan (as defined in 
     subparagraph (B)(iii)). effective for items and services 
     furnished on or after January 1, 2008, (with respect to 
     periods beginning on or after the date that is 30 months 
     prior to January 1, 2008), subclauses (I) and (II) of such 
     clause shall be applied by substituting `42-month' for `12-
     month' each place it appears.''.

     SEC. 704. PLAN FOR MEDICARE PAYMENT ADJUSTMENTS FOR NEVER 
                   EVENTS.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     develop a plan (in this section referred to as the ``never 
     events plan'') to implement, beginning in fiscal year 2010, a 
     policy to reduce or eliminate payments under title XVIII of 
     the Social Security Act for never events.

[[Page 22265]]

       (b) Never Event Defined.--For purposes of this section, the 
     term ``never event'' means an event involving the delivery of 
     (or failure to deliver) physicians' services, inpatient or 
     outpatient hospital services, or facility services furnished 
     in an ambulatory surgical facility in which there is an error 
     in medical care that is clearly identifiable, usually 
     preventable, and serious in consequences to patients, and 
     that indicates a deficiency in the safety and process 
     controls of the services furnished with respect to the 
     physician, hospital, or ambulatory surgical center involved.
       (c) Plan Details.--
       (1) Defining never events.--With respect to criteria for 
     identifying never events under the never events plan, the 
     Secretary should consider whether the event meets the 
     following characteristics:
       (A) Clearly identifiable.--The event is clearly 
     identifiable and measurable and feasible to include in a 
     reporting system for never events.
       (B) Usually preventable.--The event is usually preventable 
     taking into consideration that, because of the complexity of 
     medical care, certain medical events are not always 
     avoidable.
       (C) Serious.--The event is serious and could result in 
     death or loss of a body part, disability, or more than 
     transient loss of a body function.
       (D) Deficiency in safety and process controls.--The event 
     is indicative of a problem in safety systems and process 
     controls used by the physician, hospital, or ambulatory 
     surgical center involved and is indicative of the reliability 
     of the quality of services provided by the physician, 
     hospital, or ambulatory surgical center, respectively.
       (2) Identification and payment issues.--With respect to 
     policies under the never events plan for identifying and 
     reducing (or eliminating) payment for never events, the 
     Secretary shall consider--
       (A) mechanisms used by hospitals and physicians in 
     reporting and coding of services that would reliably identify 
     never events; and
       (B) modifications in billing and payment mechanisms that 
     would enable the Secretary to efficiently and accurately 
     reduce or eliminate payments for never events.
       (3) Priorities.--Under the never events plan the Secretary 
     shall identify priorities regarding the services to focus on 
     and, among those, the never events for which payments should 
     be reduced or eliminated.
       (4) Consultation.--In developing the never events plan, the 
     Secretary shall consult with affected parties that are 
     relevant to payment reductions in response to never events.
       (d) Congressional Report.--By not later than June 1, 2008, 
     the Secretary shall submit a report to Congress on the never 
     events plan developed under this subsection and shall include 
     in the report recommendations on specific methods for 
     implementation of the plan on a timely basis.

     SEC. 705. REINSTATEMENT OF RESIDENCY SLOTS.

       (a) In General.--Section 1886(h) of the Social Security Act 
     (42 U.S.C. 1395ww(h)) is amended--
       (1) in paragraph (4)(H), by adding at the end the following 
     new clauses:
       ``(v) Increase in resident limit due to closure of other 
     hospitals.--If one or more hospitals with approved medical 
     residency training programs, which are located within the 
     same metropolitan statistical area as of January 1, 2001, 
     closed, the Secretary shall increase by not more than 10   
     (subject to the limitation set forth in the last sentence of 
     this clause) the otherwise applicable resident limit under 
     subparagraph (F) for each hospital within the same 
     metropolitan statistical area that meets all the following 
     criteria:

       ``(I) The hospital is described in subsection (d)(5)(F)(i).
       ``(II) The hospital instituted a medical residency training 
     program in internal medicine that was accredited by the 
     American Osteopathic Association on or after January 1, 2004.
       ``(III) The hospital had a provider number and a resident 
     limit as of January 1, 2000, and remained open as of October 
     1, 2007.
       ``(IV) The hospital did not receive an increase in its 
     resident limit under paragraph (7)(B).
       ``(V) The hospital maintains no more than 400 beds.

     In no event may the resident limit for any hospital be 
     increased above 50 through application of this clause and in 
     no event may the total of the residency positions added by 
     this clause for all hospitals exceed 10.
       ``(vi) Increase in residency slots.--In the case of a 
     hospital located in Peoria County, Illinois, that has more 
     than 500 beds, the Secretary shall increase by two the 
     otherwise applicable resident limit under subparagraph (F) 
     for such hospital.''.
       (2) in paragraph (7)--
       (A) by redesignating subparagraph (D) as subparagraph (E); 
     and
       (B) by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) Adjustment based on settled cost report.--In the case 
     of a hospital with a dual accredited osteopathic and 
     allopathic family practice program for which--
       ``(i) the otherwise applicable resident limit was reduced 
     under subparagraph (A)(i)(I); and
       ``(ii) such reduction was based on a reference resident 
     level that was determined using a cost report and where a 
     revised or corrected notice of program reimbursement was 
     issued between September 1, 2006 and September 15, 2006, 
     whether as a result of an appeal or otherwise, and the 
     reference resident level under such settled cost report is 
     higher than the level used for the reduction under 
     subparagraph (A)(i)(I);

     the Secretary shall apply subparagraph (A)(i)(I) using the 
     higher resident reference level and make any necessary 
     adjustments to such reduction. Any such necessary adjustments 
     shall be effective for portions of cost reporting periods 
     occurring on or after July 1, 2005.''.
       (b) Effective Dates.--The amendment made by paragraph (1) 
     shall be effective for cost reporting periods beginning on or 
     after October 1, 2007, and the amendments made by paragraph 
     (2) shall take effect as if included in the enactment of 
     section 422 of the Medicare Prescription Drug, Improvement, 
     and Modernization Act of 2003 (Public Law 108-173).

     SEC. 706. STUDIES RELATING TO HOME HEALTH.

       (a) In General.--The Medicare Payment Advisory Commission 
     shall conduct a study of Medicare beneficiaries utilizing 
     home health care services to determine--
       (1) the impact that remote monitoring equipment and related 
     services have on improving health care outcomes in the home 
     health care setting for beneficiaries with chronic 
     conditions;
       (2) the differences in the percentage of inpatient hospital 
     admissions and emergency room visits for beneficiaries with a 
     similar health care risk profile who utilize remote 
     monitoring equipment and services compared to those who do 
     not use such equipment and services;
       (3) the percentage of Medicare beneficiaries currently 
     utilizing remote monitoring equipment and related services;
       (4) the estimated reduction in aggregate expenditures under 
     parts A and B of title XVIII of the Social Security Act 
     expenditures if home health agencies increased their 
     utilization of remote monitoring equipment and related 
     services for patients with chronic disease conditions; and
       (5) the variation of utilization of remote monitoring 
     equipment and related services within geographic regions and 
     by size of home health agency.
       (b) Data Collection.--As a condition of a home health 
     agency's participation in the program under title XVIII of 
     the Social Security Act, beginning no later than January 1, 
     2008, the Secretary of Health and Human Services shall 
     require such agencies to collect, in a form and manner 
     determined by the Secretary, the following data:
       (1) The extent of home health agency's usage of remote 
     monitoring equipment and related services for beneficiaries 
     with chronic conditions.
       (2) Whether such equipment and services are used to monitor 
     patients' with chronic conditions vital signs on a daily 
     basis.
       (3) Whether standing physician orders accompany the use of 
     remote monitoring equipment and services.
       (4) The costs of remote monitoring equipment and related 
     services.
       (c) Report to Congress.--Not later than June 1, 2010, the 
     Commission shall report to Congress on its findings on the 
     study conducted under subsection (a). Such report shall 
     include recommendations regarding how Congress may enact 
     reimbursement policies that increase the appropriate 
     utilization of remote monitoring equipment and services under 
     the home health program for Medicare beneficiaries with 
     chronic conditions in a manner that facilitates health care 
     outcomes and leads to the long-term reduction of aggregate 
     expenditures under the Medicare program.

     SEC. 707. RURAL HOME HEALTH QUALITY DEMONSTRATION PROJECTS.

       (a) In General.--Not later than 180 days after the date of 
     the enactment of this Act, the Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall make grants to eligible entities for demonstration 
     projects to assist home health agencies to better serve their 
     Medicare populations while aiming to reduce costs to the 
     Medicare program through utilization of technologies, 
     including telemonitoring and other telehealth technologies, 
     health information technologies, and telecommunications 
     technologies that--
       (1) implement procedures and standards that reduce the need 
     for inpatient hospital services and health center visits; and
       (2) address the aims of safety, effectiveness, patient- or 
     community-centeredness, timeliness, efficiency, and equity 
     identified by the Institute of Medicine of the National 
     Academies in its report entitled ``Crossing the Quality 
     Chasm: A New Health System for the 21st Century'' released on 
     March 1, 2001, when determining when and what care is needed.
       (b) Eligible Entities.--In this section, the term 
     ``eligible entity'' means a State that includes--
       (1) a rural academic medical center;
       (2) no urban regional medical center; and
       (3) a Medicare population whose enrollees in the Medicare 
     Part C program is less than 3 percent.
       (c) Consultation.--In developing the program for awarding 
     grants under this section, the Secretary shall consult with 
     the Administrator of the Centers for Medicare & Medicaid 
     Services, home health agencies, rural health care 
     researchers, and private and non-profit groups (including 
     national associations) which are undertaking similar efforts.
       (d) Duration.--Each demonstration project under this 
     section shall be for a period of 2 years.
       (e) Report.--Not later than one year after the conclusion 
     of all of the demonstration projects funded under this 
     section, the Secretary shall submit a report to the Congress 
     on the results of such projects. The report shall include--
       (1) an evaluation of technologies utilized and effects on 
     patient access to home health care,

[[Page 22266]]

     patient outcomes, and an analysis of the cost effectiveness 
     of each such project; and
       (2) recommendations on Federal legislation, regulations, or 
     administrative policies to enhance rural home health quality 
     and outcomes.
       (f) Funding.-- Out of any funds in the Treasury not 
     otherwise appropriated, there are appropriated to the 
     Secretary for fiscal year 2008, $3,000,000 to carry out this 
     section. Funds appropriated under this subsection shall 
     remain available until expended.

                          TITLE VIII--MEDICAID

                Subtitle A--Protecting Existing Coverage

     SEC. 801. MODERNIZING TRANSITIONAL MEDICAID.

       (a) Four-Year Extension.--
       (1) In general.--Sections 1902(e)(1)(B) and 1925(f) of the 
     Social Security Act (42 U.S.C. 1396a(e)(1)(B), 1396r-6(f)) 
     are each amended by striking ``September 30, 2003'' and 
     inserting ``September 30, 2011''.
       (2) Effective date.--The amendments made by this subsection 
     shall take effect on October 1, 2007.
       (b) State Option of Initial 12-Month Eligibility.--Section 
     1925 of the Social Security Act (42 U.S.C. 1396r-6) is 
     amended--
       (1) in subsection (a)(1), by inserting ``but subject to 
     paragraph (5)'' after ``Notwithstanding any other provision 
     of this title'';
       (2) by adding at the end of subsection (a) the following:
       ``(5) Option of 12-month initial eligibility period.--A 
     State may elect to treat any reference in this subsection to 
     a 6-month period (or 6 months) as a reference to a 12-month 
     period (or 12 months). In the case of such an election, 
     subsection (b) shall not apply.''; and
       (3) in subsection (b)(1), by inserting ``but subject to 
     subsection (a)(5)'' after ``Notwithstanding any other 
     provision of this title''.
       (c) Removal of Requirement for Previous Receipt of Medical 
     Assistance.--Section 1925(a)(1) of such Act (42 U.S.C. 1396r-
     6(a)(1)), as amended by subsection (b)(1), is further 
     amended--
       (1) by inserting ``subparagraph (B) and'' before 
     ``paragraph (5)'';
       (2) by redesignating the matter after ``Requirement.--'' as 
     a subparagraph (A) with the heading ``In general.--'' and 
     with the same indentation as subparagraph (B) (as added by 
     paragraph (3)); and
       (3) by adding at the end the following:
       ``(B) State option to waive requirement for 3 months before 
     receipt of medical assistance.--A State may, at its option, 
     elect also to apply subparagraph (A) in the case of a family 
     that was receiving such aid for fewer than three months or 
     that had applied for and was eligible for such aid for fewer 
     than 3 months during the 6 immediately preceding months 
     described in such subparagraph.''.
       (d) CMS Report on Enrollment and Participation Rates Under 
     TMA.--Section 1925 of such Act (42 U.S.C. 1396r-6), as 
     amended by this section, is further amended by adding at the 
     end the following new subsection:
       ``(g) Collection and Reporting of Participation 
     Information.--
       ``(1) Collection of information from states.--Each State 
     shall collect and submit to the Secretary (and make publicly 
     available), in a format specified by the Secretary, 
     information on average monthly enrollment and average monthly 
     participation rates for adults and children under this 
     section and of the number and percentage of children who 
     become ineligible for medical assistance under this section 
     whose medical assistance is continued under another 
     eligibility category or who are enrolled under the State's 
     child health plan under title XXI. Such information shall be 
     submitted at the same time and frequency in which other 
     enrollment information under this title is submitted to the 
     Secretary.
       ``(2) Annual reports to congress.--Using the information 
     submitted under paragraph (1), the Secretary shall submit to 
     Congress annual reports concerning enrollment and 
     participation rates described in such paragraph.''.
       (e) Effective Date.--The amendments made by subsections (b) 
     through (d) shall take effect on the date of the enactment of 
     this Act.

     SEC. 802. FAMILY PLANNING SERVICES.

       (a) Coverage as Optional Categorically Needy Group.--
       (1) In general.--Section 1902(a)(10)(A)(ii) of the Social 
     Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is amended--
       (A) in subclause (XVIII), by striking ``or'' at the end;
       (B) in subclause (XIX), by adding ``or'' at the end; and
       (C) by adding at the end the following new subclause:
       ``(XX) who are described in subsection (ee) (relating to 
     individuals who meet certain income standards);''.
       (2) Group described.--Section 1902 of the Social Security 
     Act (42 U.S.C. 1396a), as amended by section 112(c), is 
     amended by adding at the end the following new subsection:
       ``(ee)(1) Individuals described in this subsection are 
     individuals--
       ``(A) whose income does not exceed an income eligibility 
     level established by the State that does not exceed the 
     highest income eligibility level established under the State 
     plan under this title (or under its State child health plan 
     under title XXI) for pregnant women; and
       ``(B) who are not pregnant.
       ``(2) At the option of a State, individuals described in 
     this subsection may include individuals who are determined to 
     meet the eligibility requirements referred to in paragraph 
     (1) under the terms, conditions, and procedures applicable to 
     making eligibility determinations for medical assistance 
     under this title under a waiver to provide the benefits 
     described in clause (XV) of the matter following subparagraph 
     (G) of section 1902(a)(10) granted to the State under section 
     1115 as of January 1, 2007.''.
       (3) Limitation on benefits.--Section 1902(a)(10) of the 
     Social Security Act (42 U.S.C. 1396a(a)(10)) is amended in 
     the matter following subparagraph (G)--
       (A) by striking ``and (XIV)'' and inserting ``(XIV)''; and
       (B) by inserting ``, and (XV) the medical assistance made 
     available to an individual described in subsection (ee) shall 
     be limited to family planning services and supplies described 
     in section 1905(a)(4)(C) including medical diagnosis or 
     treatment services that are provided pursuant to a family 
     planning service in a family planning setting provided during 
     the period in which such an individual is eligible'' after 
     ``cervical cancer''.
       (4) Conforming amendments.--Section 1905(a) of the Social 
     Security Act (42 U.S.C. 1396d(a)) is amended in the matter 
     preceding paragraph (1)--
       (A) in clause (xii), by striking ``or'' at the end;
       (B) in clause (xiii), by adding ``or'' at the end; and
       (C) by inserting after clause (xiii) the following:
       ``(xiv) individuals described in section 1902(ee),''.
       (b) Presumptive Eligibility.--
       (1) In general.--Title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.) is amended by inserting after section 
     1920B the following:


         ``PRESUMPTIVE ELIGIBILITY FOR FAMILY PLANNING SERVICES

       ``Sec. 1920C.  (a) State Option.--State plan approved under 
     section 1902 may provide for making medical assistance 
     available to an individual described in section 1902(ee) 
     (relating to individuals who meet certain income eligibility 
     standard) during a presumptive eligibility period. In the 
     case of an individual described in section 1902(ee), such 
     medical assistance shall be limited to family planning 
     services and supplies described in 1905(a)(4)(C) and, at the 
     State's option, medical diagnosis or treatment services that 
     are provided in conjunction with a family planning service in 
     a family planning setting provided during the period in which 
     such an individual is eligible.
       ``(b) Definitions.--For purposes of this section:
       ``(1) Presumptive eligibility period.--The term 
     `presumptive eligibility period' means, with respect to an 
     individual described in subsection (a), the period that--
       ``(A) begins with the date on which a qualified entity 
     determines, on the basis of preliminary information, that the 
     individual is described in section 1902(ee); and
       ``(B) ends with (and includes) the earlier of--
       ``(i) the day on which a determination is made with respect 
     to the eligibility of such individual for services under the 
     State plan; or
       ``(ii) in the case of such an individual who does not file 
     an application by the last day of the month following the 
     month during which the entity makes the determination 
     referred to in subparagraph (A), such last day.
       ``(2) Qualified entity.--
       ``(A) In general.--Subject to subparagraph (B), the term 
     `qualified entity' means any entity that--
       ``(i) is eligible for payments under a State plan approved 
     under this title; and
       ``(ii) is determined by the State agency to be capable of 
     making determinations of the type described in paragraph 
     (1)(A).
       ``(B) Rule of construction.--Nothing in this paragraph 
     shall be construed as preventing a State from limiting the 
     classes of entities that may become qualified entities in 
     order to prevent fraud and abuse.
       ``(c) Administration.--
       ``(1) In general.--The State agency shall provide qualified 
     entities with--
       ``(A) such forms as are necessary for an application to be 
     made by an individual described in subsection (a) for medical 
     assistance under the State plan; and
       ``(B) information on how to assist such individuals in 
     completing and filing such forms.
       ``(2) Notification requirements.--A qualified entity that 
     determines under subsection (b)(1)(A) that an individual 
     described in subsection (a) is presumptively eligible for 
     medical assistance under a State plan shall--
       ``(A) notify the State agency of the determination within 5 
     working days after the date on which determination is made; 
     and
       ``(B) inform such individual at the time the determination 
     is made that an application for medical assistance is 
     required to be made by not later than the last day of the 
     month following the month during which the determination is 
     made.
       ``(3) Application for medical assistance.--In the case of 
     an individual described in subsection (a) who is determined 
     by a qualified entity to be presumptively eligible for 
     medical assistance under a State plan, the individual shall 
     apply for medical assistance by not later than the last day 
     of the month following the month during which the 
     determination is made.
       ``(d) Payment.--Notwithstanding any other provision of this 
     title, medical assistance that--
       ``(1) is furnished to an individual described in subsection 
     (a)--
       ``(A) during a presumptive eligibility period;
       ``(B) by a entity that is eligible for payments under the 
     State plan; and

[[Page 22267]]

       ``(2) is included in the care and services covered by the 
     State plan, shall be treated as medical assistance provided 
     by such plan for purposes of clause (4) of the first sentence 
     of section 1905(b).''.
       (2) Conforming amendments.--
       (A) Section 1902(a)(47) of the Social Security Act (42 
     U.S.C. 1396a(a)(47)) is amended by inserting before the 
     semicolon at the end the following: ``and provide for making 
     medical assistance available to individuals described in 
     subsection (a) of section 1920C during a presumptive 
     eligibility period in accordance with such section''.
       (B) Section 1903(u)(1)(D)(v) of such Act (42 U.S.C. 
     1396b(u)(1)(D)(v)) is amended--
       (i) by striking ``or for'' and inserting ``for''; and
       (ii) by inserting before the period the following: ``, or 
     for medical assistance provided to an individual described in 
     subsection (a) of section 1920C during a presumptive 
     eligibility period under such section''.
       (e) Clarification of Coverage of Family Planning Services 
     and Supplies.--Section 1937(b) of the Social Security Act (42 
     U.S.C. 1396u-7(b)) is amended by adding at the end the 
     following:
       ``(5) Coverage of family planning services and supplies.--
     Notwithstanding the previous provisions of this section, a 
     State may not provide for medical assistance through 
     enrollment of an individual with benchmark coverage or 
     benchmark-equivalent coverage under this section unless such 
     coverage includes for any individual described in section 
     1905(a)(4)(C), medical assistance for family planning 
     services and supplies in accordance with such section.''.
       (f) Effective Date.--The amendments made by this section 
     take effect on October 1, 2007.

     SEC. 803. AUTHORITY TO CONTINUE PROVIDING ADULT DAY HEALTH 
                   SERVICES APPROVED UNDER A STATE MEDICAID PLAN.

       (a) In General.--During the period described in subsection 
     (b), the Secretary of Health and Human Services shall not--
       (1) withhold, suspend, disallow, or otherwise deny Federal 
     financial participation under section 1903(a) of the Social 
     Security Act (42 U.S.C. 1396b(a)) for the provision of adult 
     day health care services, day activity and health services, 
     or adult medical day care services, as defined under a State 
     Medicaid plan approved during or before 1994, during such 
     period if such services are provided consistent with such 
     definition and the requirements of such plan; or
       (2) withdraw Federal approval of any such State plan or 
     part thereof regarding the provision of such services (by 
     regulation or otherwise).
       (b) Period Described.--The period described in this 
     subsection is the period that begins on November 3, 2005, and 
     ends on March 1, 2009.

     SEC. 804. STATE OPTION TO PROTECT COMMUNITY SPOUSES OF 
                   INDIVIDUALS WITH DISABILITIES.

        Section 1924(h)(1)(A) of the Social Security Act (42 
     U.S.C. 1396r-5(h)(1)(A)) is amended by striking ``is 
     described in section 1902(a)(10)(A)(ii)(VI)'' and inserting 
     ``is being provided medical assistance for home and 
     community-based services under subsection (c), (d), (e), (i), 
     or (j) of section 1915 or pursuant to section 1115''.

     SEC. 805. COUNTY MEDICAID HEALTH INSURING ORGANIZATIONS .

       (a) In General.--Section 9517(c)(3) of the Consolidated 
     Omnibus Budget Reconciliation Act of 1985 (42 U.S.C. 1396b 
     note), as added by section 4734 of the Omnibus Budget 
     Reconciliation Act of 1990 and as amended by section 704 of 
     the Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000, is amended--
       (1) in subparagraph (A), by inserting ``, in the case of 
     any health insuring organization described in such 
     subparagraph that is operated by a public entity established 
     by Ventura County, and in the case of any health insuring 
     organization described in such subparagraph that is operated 
     by a public entity established by Merced County'' after 
     ``described in subparagraph (B)''; and
       (2) in subparagraph (C), by striking ``14 percent'' and 
     inserting ``16 percent''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

                          Subtitle B--Payments

     SEC. 811. PAYMENTS FOR PUERTO RICO AND TERRITORIES.

       (a) Payment Ceiling.--Section 1108(g) of the Social 
     Security Act (42 U.S.C. 1308(g)) is amended--
       (1) in paragraph (2), by striking ``paragraph (3)'' and 
     inserting ``paragraphs (3) and (4)''; and
       (2) by adding at the end the following new paragraph:
       ``(4) Fiscal years 2009 through 2012 for certain insular 
     areas.--The amounts otherwise determined under this 
     subsection for Puerto Rico, the Virgin Islands, Guam, the 
     Northern Mariana Islands, and American Samoa for fiscal years 
     2009 through 2012 shall be increased by the following 
     amounts:
       ``(A) Puerto rico.--For Puerto Rico, $250,000,000 for 
     fiscal year 2009, $350,000,000 for fiscal year 2010, 
     $500,000,000 for fiscal year 2011, and $600,000,000 for 
     fiscal year 2012.
       ``(B) Virgin islands.--For the Virgin Islands, $5,000,000 
     for each of fiscal years 2009 through 2012.
       ``(C) Guam.--For Guam, $5,000,000 for each of fiscal years 
     2009 through 2012.
       ``(D) Northern mariana islands.--For the Northern Mariana 
     Islands, $4,000,000 for each of fiscal years 2009 through 
     2012.
       ``(E) American samoa.--For American Samoa, $4,000,000 for 
     each of fiscal years 2009 through 2012.

     Such amounts shall not be taken into account in applying 
     paragraph (2) for fiscal years 2009 through 2012 but shall be 
     taken into account in applying such paragraph for fiscal year 
     2013 and subsequent fiscal years.''.
       (b) Removal of Federal Matching Payments for Improving Data 
     Reporting Systems From the Overall Limit on Payments to 
     Territories Under Title XIX.--Such section is further amended 
     by adding at the end the following new paragraph:
       ``(5) Exclusion of certain expenditures from payment 
     limits.--With respect to fiscal year 2008 and each fiscal 
     year thereafter, if Puerto Rico, the Virgin Islands, Guam, 
     the Northern Mariana Islands, or American Samoa qualify for a 
     payment under subparagraph (A)(i) or (B) of section 
     1903(a)(3) for a calendar quarter of such fiscal year with 
     respect to expenditures for improvements in data reporting 
     systems described in such subparagraph, the limitation on 
     expenditures under title XIX for such commonwealth or 
     territory otherwise determined under subsection (f) and this 
     subsection for such fiscal year shall be determined without 
     regard to payment for such expenditures.''.

     SEC. 812. MEDICAID DRUG REBATE.

       Paragraph (1)(B)(i) of section 1927(c) of the Social 
     Security Act (42 U.S.C. 1396r-8(c)) is amended--
       (1) by striking ``and'' at the end of subclause (IV);
       (2) in subclause (V)--
       (A) by inserting ``and before January 1, 2008,'' after 
     ``December 31, 1995,''; and
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (3) by adding at the end the following new subclause:

       ``(VI) after December 31, 2007, is 22.1 percent.''.

       (1) In general.--Section 1927(c)(1)(C)(ii)(I) of the Social 
     Security Act (42 U.S.C. 1396r-8(c)(1)(C)(ii)(I)) is amended--
       (A) by striking ``and'' before ``rebates''; and
       (B) by inserting before the semicolon at the end the 
     following: ``, and rebates, discounts, and other price 
     concessions to pharmaceutical benefit managers (PBMs)''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply to calendar quarters beginning on or after 
     January 1, 2008.

     SEC. 813. ADJUSTMENT IN COMPUTATION OF MEDICAID FMAP TO 
                   DISREGARD AN EXTRAORDINARY EMPLOYER PENSION 
                   CONTRIBUTION.

       (a) In General.--Only for purposes of computing the Federal 
     medical assistance percentage under section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b)) for a State for a 
     fiscal year (beginning with fiscal year 2006), any 
     significantly disproportionate employer pension contribution 
     described in subsection (b) shall be disregarded in computing 
     the per capita income of such State, but shall not be 
     disregarded in computing the per capita income for the 
     continental United States (and Alaska) and Hawaii.
       (b) Significantly Disproportionate Employer Pension 
     Contribution.--For purposes of subsection (a), a 
     significantly disproportionate employer pension contribution 
     described in this subsection with respect to a State for a 
     fiscal year is an employer contribution towards pensions that 
     is allocated to such State for a period if the aggregate 
     amount so allocated exceeds 25 percent of the total increase 
     in personal income in that State for the period involved.

     SEC. 814. MORATORIUM ON CERTAIN PAYMENT RESTRICTIONS.

       Notwithstanding any other provision of law, the Secretary 
     of Health and Human Services shall not, prior to the date 
     that is 1 year after the date of enactment of this Act, take 
     any action (through promulgation of regulation, issuance of 
     regulatory guidance, use of federal payment audit procedures, 
     or other administrative action, policy, or practice, 
     including a Medical Assistance Manual transmittal or letter 
     to State Medicaid directors) to restrict coverage or payment 
     under title XIX of the Social Security Act for rehabilitation 
     services, or school-based administration, transportation, or 
     medical services if such restrictions are more restrictive in 
     any aspect than those applied to such coverage or payment as 
     of July 1, 2007.

     SEC. 815. TENNESSEE DSH.

       The DSH allotments for Tennessee for each fiscal year 
     beginning with fiscal year 2008 under subsection (f)(3) of 
     section 1923 of the Social Security Act (42 U.S.C. 13961396r-
     4) are deemed to be $30,000,000. The Secretary of Health and 
     Human Services may impose a limitation on the total amount of 
     payments made to hospitals under the TennCare Section 1115 
     waiver only to the extent that such limitation is necessary 
     to ensure that a hospital does not receive payment in excess 
     of the amounts described in subsection (f) of such section or 
     as necessary to ensure that the waiver remains budget 
     neutral.

     SEC. 816. CLARIFICATION TREATMENT OF REGIONAL MEDICAL CENTER.

       (a) In General.--Nothing in section 1903(w) of the Social 
     Security Act (42 U.S.C. 1396b(w)) shall be construed by the 
     Secretary of Health and Human Services as prohibiting a 
     State's use of funds as the non-Federal share of expenditures 
     under title XIX of such Act where such funds are transferred 
     from or certified by a publicly-owned regional medical center 
     located in another State and described in subsection (b), so 
     long as the Secretary determines that such use

[[Page 22268]]

     of funds is proper and in the interest of the program under 
     title XIX.
       (b) Center Described.--A center described in this 
     subsection is a publicly-owned regional medical center that--
       (1) provides level 1 trauma and burn care services;
       (2) provides level 3 neonatal care services;
       (3) is obligated to serve all patients, regardless of 
     ability to pay;
       (4) is located within a Standard Metropolitan Statistical 
     Area (SMSA) that includes at least 3 States;
       (5) provides services as a tertiary care provider for 
     patients residing within a 125-mile radius; and
       (6) meets the criteria for a disproportionate share 
     hospital under section 1923 of such Act (42 U.S.C. 1396r-4) 
     in at least one State other than the State in which 
     the center is located.

     SEC. 817. EXTENSION OF SSI WEB-BASED ASSET DEMONSTRATION 
                   PROJECT TO THE MEDICAID PROGRAM.

       (a) In General.--The Secretary of Health and Human Services 
     shall provide for the application to asset eligibility 
     determinations under the Medicaid program under title XIX of 
     the Social Security Act of the automated, secure, web-based 
     asset verification request and response process being applied 
     for determining eligibility for benefits under the 
     Supplemental Security Income (SSI) program under title XVI of 
     such Act under a demonstration project conducted under the 
     authority of section 1631(e)(1)(B)(ii) of such Act (42 U.S.C. 
     1383(e)(1)(B)(ii)).
       (b) Limitation.--Such application shall only extend to 
     those States in which such demonstration project is operating 
     and only for the period in which such project is otherwise 
     provided.
       (c) Rules of Application.--For purposes of carrying out 
     subsection (a), notwithstanding any other provision of law, 
     information obtained from a financial institution that is 
     used for purposes of eligibility determinations under such 
     demonstration project with respect to the Secretary of Health 
     and Human Services under the SSI program may also be shared 
     and used by States for purposes of eligibility determinations 
     under the Medicaid program. In applying section 
     1631(e)(1)(B)(ii) of the Social Security Act under this 
     subsection, references to the Commissioner of Social Security 
     and benefits under title XVI of such Act shall be treated as 
     including a reference to a State described in subsection (b) 
     and medical assistance under title XIX of such Act provided 
     by such a State.

                       Subtitle C--Miscellaneous

     SEC. 821. DEMONSTRATION PROJECT FOR EMPLOYER BUY-IN.

       Title XXI of the Social Security Act, as amended by section 
     133(a)(1), is further amended by adding at the end the 
     following new section:

     ``SEC. 2112. DEMONSTRATION PROJECT FOR EMPLOYER BUY-IN.

       ``(a) Authority.--
       ``(1) In general.--The Secretary shall establish a 
     demonstration project under which up to 10 States (each 
     referred to in this section as a `participating State') that 
     meets the conditions of paragraph (2) may provide, under its 
     State child health plan (notwithstanding section 
     2102(b)(3)(C)) for a period of 5 years, for child health 
     assistance in relation to family coverage described in 
     subsection (d) for children who would be targeted low-income 
     children but for coverage as beneficiaries under a group 
     health plan as the children of participants by virtue of a 
     qualifying employer's contribution under subsection (b)(2). :
       ``(2) Conditions.--The conditions described in this 
     paragraph for a State are as follows:
       ``(A) No waiting lists.--The State does not impose any 
     waiting list, enrollment cap, or similar limitation on 
     enrollment of targeted low-income children under the State 
     child health plan.
       ``(B) Eligibility of all children under 200 percent of 
     poverty line.--The State is applying an income eligibility 
     level under section 2110(b)(1)(B)(ii)(I) that is at least 200 
     percent of the poverty line.
       ``(3) Qualifying employer defined.--In this section, the 
     term `qualifying employer' means an employer that has a 
     majority of its workforce composed of full-time workers with 
     family incomes reasonably estimated by the employer (based on 
     wage information available to the employer) at or below 200 
     percent of the poverty line. In applying the previous 
     sentence, two part-time workers shall be treated as a single 
     full-time worker.
       ``(b) Funding.--A demonstration project under this section 
     in a participating State shall be funded, with respect to 
     assistance provided to children described in subsection 
     (a)(1), consistent with the following:
       ``(1) Limited family contribution.--The family involved 
     shall be responsible for providing payment towards the 
     premium for such assistance of such amount as the State may 
     specify, except that the limitations on cost-sharing 
     (including premiums) under paragraphs (2) and (3) of section 
     2103(e) shall apply to all cost-sharing of such family under 
     this section.
       ``(2) Minimum employer contribution.--The qualifying 
     employer involved shall be responsible for providing payment 
     to the State child health plan in the State of at least 50 
     percent of the portion of the cost (as determined by the 
     State) of the family coverage in which the employer is 
     enrolling the family that exceeds the amount of the family 
     contribution under paragraph (1) applied towards such 
     coverage.
       ``(3) Limitation on federal financial participation.--In no 
     case shall the Federal financial participation under section 
     2105 with respect to a demonstration project under this 
     section be made for any portion of the costs of family 
     coverage described in subsection (d) (including the costs of 
     administration of such coverage) that are not attributable to 
     children described in subsection (a)(1).
       ``(c) Uniform Eligibility Rules.--In providing assistance 
     under a demonstration project under this section--
       ``(1) a State shall establish uniform rules of eligibility 
     for families to participate; and
       ``(2) a State shall not permit a qualifying employer to 
     select, within those families that meet such eligibility 
     rules, which families may participate.
       ``(d) Terms and Conditions.--The family coverage offered to 
     families of qualifying employers under a demonstration 
     project under this section in a State shall be the same as 
     the coverage and benefits provided under the State child 
     health plan in the State for targeted low-income children 
     with the highest family income level permitted.''.

     SEC. 822. DIABETES GRANTS.

       Section 2104 of the Social Security Act (42 U.C.C 1397dd), 
     as amended by section 101, is further amended--
       (1) in subsection (a)(11), by inserting before the period 
     at the end the following: ``plus for fiscal year 2009 the 
     total of the amount specified in subsection (j)''; and
       (2) by adding at the end the following new subsection:
       ``(j) Funding for Diabetes Grants.--From the amounts 
     appropriated under subsection (a)(11), for fiscal year 2009 
     from the amounts--
       ``(1) $150,000,000 is hereby transferred and made available 
     in such fiscal year for grants under section 330B of the 
     Public Health Service Act; and
       ``(2) $150,000,000 is hereby transferred and made available 
     in such fiscal year for grants under section 330C of such 
     Act.''.

     SEC. 823. TECHNICAL CORRECTION.

       (a) Correction of Reference to Children in Foster Care 
     Receiving Child Welfare Services.--Section 
     1937(a)(2)(B)(viii) of the Social Security Act (42 U.S.C. 
     1396u-7(a)(2)(B) is amended by striking ``aid or assistance 
     is made available under part B of title IV to children in 
     foster care'' and inserting ``child welfare services are made 
     available under part B of title IV on the basis of being a 
     child in foster care''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the amendment made by 
     section 6044(a) of the Deficit Reduction Act of 2005.

                        TITLE IX--MISCELLANEOUS

     SEC. 901. MEDICARE PAYMENT ADVISORY COMMISSION STATUS.

       Section 1805(a) of the Social Security Act (42 U.S.C. 
     1395b-6(a)) is amended by inserting ``as an agency of 
     Congress'' after ``established''.

     SEC. 902. REPEAL OF TRIGGER PROVISION.

       Subtitle A of title VIII of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (Public Law 108-
     173) is repealed and the provisions of law amended by such 
     subtitle are restored as if such subtitle had never been 
     enacted.

     SEC. 903. REPEAL OF COMPARATIVE COST ADJUSTMENT (CCA) 
                   PROGRAM.

        Section 1860C-1 of the Social Security Act (42 U.S.C. 
     1395w-29), as added by section 241(a) of the Medicare 
     Prescription Drug, Improvement, and Modernization Act of 2003 
     (Public Law 108-173), is repealed.

     SEC. 904. COMPARATIVE EFFECTIVENESS RESEARCH.

       (a) In General.--Part A of title XVIII of the Social 
     Security Act is amended by adding at the end the following 
     new section:


                  ``COMPARATIVE EFFECTIVENESS RESEARCH

       ``Sec. 1822.  (a) Center for Comparative Effectiveness 
     Research Established.--
       ``(1) In general.--The Secretary shall establish within the 
     Agency of Healthcare Research and Quality a Center for 
     Comparative Effectiveness Research (in this section referred 
     to as the `Center') to conduct, support, and synthesize 
     research (including research conducted or supported under 
     section 1013 of the Medicare Prescription Drug, Improvement, 
     and Modernization Act of 2003) with respect to the outcomes, 
     effectiveness, and appropriateness of health care services 
     and procedures in order to identify the manner in which 
     diseases, disorders, and other health conditions can most 
     effectively and appropriately be prevented, diagnosed, 
     treated, and managed clinically.
       ``(2) Duties.--The Center shall--
       ``(A) conduct, support, and synthesize research relevant to 
     the comparative clinical effectiveness of the full spectrum 
     of health care treatments, including pharmaceuticals, medical 
     devices, medical and surgical procedures, and other medical 
     interventions;
       ``(B) conduct and support systematic reviews of clinical 
     research, including original research conducted subsequent to 
     the date of the enactment of this section;
       ``(C) use methodologies such as randomized controlled 
     clinical trials as well as other various types of clinical 
     research, such as observational studies;
       ``(D) submit to the Comparative Effectiveness Research 
     Commission, the Secretary, and Congress appropriate relevant 
     reports described in subsection (d)(2);
       ``(E) encourage, as appropriate, the development and use of 
     clinical registries and the development of clinical 
     effectiveness research data networks from electronic health 
     records, post marketing drug and medical device surveillance 
     efforts, and other forms of electronic health data; and

[[Page 22269]]

       ``(F) not later than 180 days after the date of the 
     enactment of this section, develop methodological standards 
     to be used when conducting studies of comparative clinical 
     effectiveness and value (and procedures for use of such 
     standards) in order to help ensure accurate and effective 
     comparisons and update such standards at least biennially.
       ``(b) Oversight by Comparative Effectiveness Research 
     Commission.--
       ``(1) In general.--The Secretary shall establish an 
     independent Comparative Effectiveness Research Commission (in 
     this section referred to as the `Commission') to oversee and 
     evaluate the activities carried out by the Center under 
     subsection (a) to ensure such activities result in highly 
     credible research and information resulting from such 
     research.
       ``(2) Duties.--The Commission shall--
       ``(A) determine national priorities for research described 
     in subsection (a) and in making such determinations consult 
     with patients and health care providers and payers;
       ``(B) monitor the appropriateness of use of the CERTF 
     described in subsection (f) with respect to the timely 
     production of comparative effectiveness research determined 
     to be a national priority under subparagraph (A);
       ``(C) identify highly credible research methods and 
     standards of evidence for such research to be considered by 
     the Center;
       ``(D) review and approve the methodological standards (and 
     updates to such standards) developed by the Center under 
     subsection (a)(2)(F);
       ``(E) enter into an arrangement under which the Institute 
     of Medicine of the National Academy of Sciences shall conduct 
     an evaluation and report on standards of evidence for such 
     research;
       ``(F) support forums to increase stakeholder awareness and 
     permit stakeholder feedback on the efforts of the Agency of 
     Healthcare Research and Quality to advance methods and 
     standards that promote highly credible research;
       ``(G) make recommendations for public data access policies 
     of the Center that would allow for access of such data by the 
     public while ensuring the information produced from research 
     involved is timely and credible;
       ``(H) appoint a clinical perspective advisory panel for 
     each research priority determined under subparagraph (A), 
     which shall frame the specific research inquiry to be 
     examined with respect to such priority to ensure that the 
     information produced from such research is clinically 
     relevant to decisions made by clinicians and patients at the 
     point of care;
       ``(I) make recommendations for the priority for periodic 
     reviews of previous comparative effectiveness research and 
     studies conducted by the Center under subsection (a);
       ``(J) routinely review processes of the Center with respect 
     to such research to confirm that the information produced by 
     such research is objective, credible, consistent with 
     standards of evidence established under this section, and 
     developed through a transparent process that includes 
     consultations with appropriate stakeholders;
       ``(K) at least annually, provide guidance or 
     recommendations to health care providers and consumers for 
     the use of information on the comparative effectiveness of 
     health care services by consumers, providers (as defined for 
     purposes of regulations promulgated under section 264(c) of 
     the Health Insurance Portability and Accountability Act of 
     1996) and public and private purchasers;
       ``(L) make recommendations for a strategy to disseminate 
     the findings of research conducted and supported under this 
     section that enables clinicians to improve performance, 
     consumers to make more informed health care decisions, and 
     payers to set medical policies that improve quality and 
     value;
       ``(M) provide for the public disclosure of relevant reports 
     described in subsection (d)(2); and
       ``(N) submit to Congress an annual report on the progress 
     of the Center in achieving national priorities determined 
     under subparagraph (A) for the provision of credible 
     comparative effectiveness information produced from such 
     research to all interested parties.
       ``(3) Composition of commission.--
       ``(A) In general.--The members of the Commission shall 
     consist of--
       ``(i) the Director of the Agency for Healthcare Research 
     and Quality;
       ``(ii) the Chief Medical Officer of the Centers for 
     Medicare & Medicaid Services; and
       ``(iii) 15 additional members who shall represent broad 
     constituencies of stakeholders including clinicians, 
     patients, researchers, third-party payers, consumers of 
     Federal and State beneficiary programs.
       ``(B) Qualifications.--
       ``(i) Diverse representation of perspectives.--The members 
     of the Commission shall represent a broad range of 
     perspectives and shall collectively have experience in the 
     following areas:

       ``(I) Epidemiology.
       ``(II) Health services research.
       ``(III) Bioethics.
       ``(IV) Decision sciences.
       ``(V) Economics.

       ``(ii) Diverse representation of health care community.--At 
     least one member shall represent each of the following health 
     care communities:

       ``(I) Consumers.
       ``(II) Practicing physicians, including surgeons.
       ``(III) Employers.
       ``(IV) Public payers.
       ``(V) Insurance plans.
       ``(VI) Clinical researchers who conduct research on behalf 
     of pharmaceutical or device manufacturers.

       ``(4) Appointment.--The Comptroller General of the United 
     States, in consultation with the chairs of the committees of 
     jurisdiction of the House of Representatives and the Senate, 
     shall appoint the members of the Commission.
       ``(5) Chairman; vice chairman.--The Comptroller General of 
     the United States shall designate a member of the Commission, 
     at the time of appointment of the member, as Chairman and a 
     member as Vice Chairman for that term of appointment, except 
     that in the case of vacancy of the Chairmanship or Vice 
     Chairmanship, the Comptroller General may designate another 
     member for the remainder of that member's term.
       ``(6) Terms.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     each member of the Commission shall be appointed for a term 
     of 4 years.
       ``(B) Terms of initial appointees.--Of the members first 
     appointed--
       ``(i) 8 shall be appointed for a term of 4 years; and
       ``(ii) 7 shall be appointed for a term of 3 years.
       ``(7) Coordination.--To enhance effectiveness and 
     coordination, the Comptroller General is encouraged, to the 
     greatest extent possible, to seek coordination between the 
     Commission and the National Advisory Council of the Agency 
     for Healthcare Research and Quality.
       ``(8) Conflicts of interest.--In appointing the members of 
     the Commission or a clinical perspective advisory panel 
     described in paragraph (2)(H), the Comptroller General of the 
     United States or the Commission, respectively, shall take 
     into consideration any financial conflicts of interest.
       ``(9) Compensation.--While serving on the business of the 
     Commission (including traveltime), a member of the Commission 
     shall be entitled to compensation at the per diem equivalent 
     of the rate provided for level IV of the Executive Schedule 
     under section 5315 of title 5, United States Code; and while 
     so serving away from home and the member's regular place of 
     business, a member may be allowed travel expenses, as 
     authorized by the Director of the Commission.
       ``(10) Availability of reports.--The Commission shall 
     transmit to the Secretary a copy of each report submitted 
     under this subsection and shall make such reports available 
     to the public.
       ``(11) Director and staff; experts and consultants.--
     Subject to such review as the Secretary, in consultation with 
     the Comptroller General deems necessary to assure the 
     efficient administration of the Commission, the Commission 
     may--
       ``(A) employ and fix the compensation of an Executive 
     Director (subject to the approval of the Secretary, in 
     consultation with the Comptroller General) and such other 
     personnel as may be necessary to carry out its duties 
     (without regard to the provisions of title 5, United States 
     Code, governing appointments in the competitive service);
       ``(B) seek such assistance and support as may be required 
     in the performance of its duties from appropriate Federal 
     departments and agencies;
       ``(C) enter into contracts or make other arrangements, as 
     may be necessary for the conduct of the work of the 
     Commission (without regard to section 3709 of the Revised 
     Statutes (41 U.S.C. 5));
       ``(D) make advance, progress, and other payments which 
     relate to the work of the Commission;
       ``(E) provide transportation and subsistence for persons 
     serving without compensation; and
       ``(F) prescribe such rules and regulations as it deems 
     necessary with respect to the internal organization and 
     operation of the Commission.
       ``(12) Powers.--
       ``(A) Obtaining official data.--The Commission may secure 
     directly from any department or agency of the United States 
     information necessary to enable it to carry out this section. 
     Upon request of the Executive Director, the head of that 
     department or agency shall furnish that information to the 
     Commission on an agreed upon schedule.
       ``(B) Data collection.--In order to carry out its 
     functions, the Commission shall--
       ``(i) utilize existing information, both published and 
     unpublished, where possible, collected and assessed either by 
     its own staff or under other arrangements made in accordance 
     with this section,
       ``(ii) carry out, or award grants or contracts for, 
     original research and experimentation, where existing 
     information is inadequate, and
       ``(iii) adopt procedures allowing any interested party to 
     submit information for the Commission's use in making reports 
     and recommendations.
       ``(C) Access of gao to information.--The Comptroller 
     General shall have unrestricted access to all deliberations, 
     records, and nonproprietary data of the Commission, 
     immediately upon request.
       ``(D) Periodic audit.--The Commission shall be subject to 
     periodic audit by the Comptroller General.
       ``(c) Research Requirements.--Any research conducted, 
     supported, or synthesized under this section shall meet the 
     following requirements:
       ``(1) Ensuring transparency, credibility, and access.--
       ``(A) The establishment of the agenda and conduct of the 
     research shall be insulated from inappropriate political or 
     stakeholder influence.
       ``(B) Methods of conducting such research shall be 
     scientifically based.

[[Page 22270]]

       ``(C) All aspects of the prioritization of research, 
     conduct of the research, and development of conclusions based 
     on the research shall be transparent to all stakeholders.
       ``(D) The process and methods for conducting such research 
     shall be publicly documented and available to all 
     stakeholders.
       ``(E) Throughout the process of such research, the Center 
     shall provide opportunities for all stakeholders involved to 
     review and provide comment on the methods and findings of 
     such research.
       ``(2) Use of clinical perspective advisory panels.--The 
     research shall meet a national research priority determined 
     under subsection (b)(2)(A) and shall examine the specific 
     research inquiry framed by the clinical perspective advisory 
     panel for the national research priority.
       ``(3) Stakeholder input.--The priorities of the research, 
     the research, and the dissemination of the research shall 
     involve the consultation of patients, health care providers, 
     and health care consumer representatives through transparent 
     mechanisms recommended by the Commission.
       ``(d) Public Access to Comparative Effectiveness 
     Information.--
       ``(1) In general.--Not later than 90 days after receipt by 
     the Center or Commission, as applicable, of a relevant report 
     described in paragraph (2) made by the Center, Commission, or 
     clinical perspective advisory panel under this section, 
     appropriate information contained in such report shall be 
     posted on the official public Internet site of the Center and 
     of the Commission, as applicable.
       ``(2) Relevant reports described.--For purposes of this 
     section, a relevant report is each of the following submitted 
     by a grantee or contractor of the Center:
       ``(A) An interim progress report.
       ``(B) A draft final comparative effectiveness review.
       ``(C) A final progress report on new research submitted for 
     publication by a peer review journal.
       ``(D) Stakeholder comments.
       ``(E) A final report.
       ``(3) Access by congress and the commission to the center's 
     information.--Congress and the Commission shall each have 
     unrestricted access to all deliberations, records, and 
     nonproprietary data of the Center, immediately upon request.
       ``(e) Dissemination and Incorporation of Comparative 
     Effectiveness Information.--
       ``(1) Dissemination.--The Center shall provide for the 
     dissemination of appropriate findings produced by research 
     supported, conducted, or synthesized under this section to 
     health care providers, patients, vendors of health 
     information technology focused on clinical decision support, 
     appropriate professional associations, and Federal and 
     private health plans.
       ``(2) Incorporation.--The Center shall assist users of 
     health information technology focused on clinical decision 
     support to promote the timely incorporation of the findings 
     described in paragraph (1) into clinical practices and to 
     promote the ease of use of such incorporation.
       ``(f) Reports to Congress.--
       ``(1) Annual reports.--Beginning not later than one year 
     after the date of the enactment of this section, the Director 
     of the Agency of Healthcare Research and Quality and the 
     Commission shall submit to Congress an annual report on the 
     activities of the Center and the Commission, as well as the 
     research, conducted under this section.
       ``(2) Recommendation for fair share per capita amount for 
     all-payer financing.--Beginning not later than December 31, 
     2009, the Secretary shall submit to Congress an annual 
     recommendation for a fair share per capita amount described 
     in subsection (c)(1) of section 9511 of the Internal Revenue 
     Code of 1986 for purposes of funding the CERTF under such 
     section.
       ``(3) Analysis and review.--Not later than December 31, 
     2011, the Secretary, in consultation with the Commission, 
     shall submit to Congress a report on all activities conducted 
     or supported under this section as of such date. Such report 
     shall include an evaluation of the return on investment 
     resulting from such activities, the overall costs of such 
     activities, and an analysis of the backlog of any research 
     proposals approved by the Commission but not funded. Such 
     report shall also address whether Congress should expand the 
     responsibilities of the Center and of the Commission to 
     include studies of the effectiveness of various aspects of 
     the health care delivery system, including health plans and 
     delivery models, such as health plan features, benefit 
     designs and performance, and the ways in which health 
     services are organized, managed, and delivered.
       ``(g) Coordinating Council for Health Services Research.--
       ``(1) Establishment.--The Secretary shall establish a 
     permanent council (in this section referred to as the 
     `Council') for the purpose of--
       ``(A) assisting the offices and agencies of the Department 
     of Health and Human Services, the Department of Veterans 
     Affairs, the Department of Defense, and any other Federal 
     department or agency to coordinate the conduct or support of 
     health services research; and
       ``(B) advising the President and Congress on--
       ``(i) the national health services research agenda;
       ``(ii) strategies with respect to infrastructure needs of 
     health services research; and
       ``(iii) appropriate organizational expenditures in health 
     services research by relevant Federal departments and 
     agencies.
       ``(2) Membership.--
       ``(A) Number and appointment.--The Council shall be 
     composed of 20 members. One member shall be the Director of 
     the Agency for Healthcare Research and Quality. The Director 
     shall appoint the other members not later than 30 days after 
     the enactment of this Act.
       ``(B) Terms.--
       ``(i) In general.--Except as provided in clause (ii), each 
     member of the Council shall be appointed for a term of 4 
     years.
       ``(ii) Terms of initial appointees.--Of the members first 
     appointed--

       ``(I) 10 shall be appointed for a term of 4 years; and
       ``(II) 9 shall be appointed for a term of 3 years.

       ``(iii) Vacancies.--Any vacancies shall not affect the 
     power and duties of the Council and shall be filled in the 
     same manner as the original appointment.
       ``(C) Qualifications.--
       ``(i) In general.--The members of the Council shall include 
     one senior official from each of the following agencies:

       ``(I) The Veterans Health Administration.
       ``(II) The Department of Defense Military Health Care 
     System.
       ``(III) The Centers for Disease Control and Prevention.
       ``(IV) The National Center for Health Statistics.
       ``(V) The National Institutes of Health.
       ``(VI) The Center for Medicare & Medicaid Services.
       ``(VII) The Federal Employees Health Benefits Program.

       ``(ii) National, philanthropic foundations.--The members of 
     the Council shall include 4 senior leaders from major 
     national, philanthropic foundations that fund and use health 
     services research.
       ``(iii) Stakeholders.--The remaining members of the Council 
     shall be representatives of other stakeholders in health 
     services research, including private purchasers, health 
     plans, hospitals and other health facilities, and health 
     consumer groups.
       ``(3) Annual report.--The Council shall submit to Congress 
     an annual report on the progress of the implementation of the 
     national health services research agenda.
       ``(h) Funding of Comparative Effectiveness Research.--For 
     fiscal year 2008 and each subsequent fiscal year, amounts in 
     the Comparative Effectiveness Research Trust Fund (referred 
     to in this section as the `CERTF') under section 9511 of the 
     Internal Revenue Code of 1986 shall be available to the 
     Secretary to carry out this section.''.
       (b) Comparative Effectiveness Research Trust Fund; 
     Financing for Trust Fund.--
       (1) Establishment of trust fund.--
       (A) In general.--Subchapter A of chapter 98 of the Internal 
     Revenue Code of 1986 (relating to trust fund code) is amended 
     by adding at the end the following new section:

     ``SEC. 9511. HEALTH CARE COMPARATIVE EFFECTIVENESS RESEARCH 
                   TRUST FUND.

       ``(a) Creation of Trust Fund.--There is established in the 
     Treasury of the United States a trust fund to be known as the 
     `Health Care Comparative Effectiveness Research Trust Fund' 
     (hereinafter in this section referred to as the `CERTF'), 
     consisting of such amounts as may be appropriated or credited 
     to such Trust Fund as provided in this section and section 
     9602(b).
       ``(b) Transfers to Fund.--There are hereby appropriated to 
     the Trust Fund the following:
       ``(1) For fiscal year 2008, $90,000,000.
       ``(2) For fiscal year 2009, $100,000,000.
       ``(3) For fiscal year 2010, $110,000,000.
       ``(4) For each fiscal year beginning with fiscal year 
     2011--
       ``(A) an amount equivalent to the net revenues received in 
     the Treasury from the fees imposed under subchapter B of 
     chapter 34 (relating to fees on health insurance and self-
     insured plans) for such fiscal year; and
       ``(B) subject to subsection (c)(2), amounts determined by 
     the Secretary of Health and Human Services to be equivalent 
     to the fair share per capita amount computed under subsection 
     (c)(1) for the fiscal year multiplied by the average number 
     of individuals entitled to benefits under part A, or enrolled 
     under part B, of title XVIII of the Social Security Act 
     during such fiscal year.

     The amounts appropriated under paragraphs (1), (2), (3), and 
     (4)(B) shall be transferred from the Federal Hospital 
     Insurance Trust Fund and from the Federal Supplementary 
     Medical Insurance Trust Fund (established under section 1841 
     of such Act), and from the Medicare Prescription Drug Account 
     within such Trust Fund, in proportion (as estimated by the 
     Secretary) to the total expenditures during such fiscal year 
     that are made under title XVIII of such Act from the 
     respective trust fund or account.
       ``(c) Fair Share Per Capita Amount.--
       ``(1) Computation.--
       ``(A) In general.--Subject to subparagraph (B), the fair 
     share per capita amount under this paragraph for a fiscal 
     year (beginning with fiscal year 2011) is an amount computed 
     by the Secretary of Health and Human Services for such fiscal 
     year that, when applied under this section and subchapter B 
     of chapter 34 of the Internal Revenue Code of 1986, will 
     result in revenues to the CERTF of $375,000,000 for the 
     fiscal year.
       ``(B) Alternative computation.--
       ``(i) In general.--If the Secretary is unable to compute 
     the fair share per capita amount under

[[Page 22271]]

     subparagraph (A) for a fiscal year, the fair share per capita 
     amount under this paragraph for the fiscal year shall be the 
     default amount determined under clause (ii) for the fiscal 
     year.
       ``(ii) Default amount.--The default amount under this 
     clause for--

       ``(I) fiscal year 2011 is equal to $2; or
       ``(II) a subsequent year is equal to the default amount 
     under this clause for the preceeding fiscal year increased by 
     the annual percentage increase in the medical care component 
     of the consumer price index (United States city average) for 
     the 12-month period ending with April of the preceding fiscal 
     year.

     Any amount determined under subclause (II) shall be rounded 
     to the nearest penny.
       ``(2) Limitation on medicare funding.--In no case shall the 
     amount transferred under subsection (b)(4)(B) for any fiscal 
     year exceed $90,000,000.
       ``(d) Expenditures From Fund.--
       ``(1) In general.--Subject to paragraph (2), amounts in the 
     CERTF are available to the Secretary of Health and Human 
     Services for carrying out section 1822 of the Social Security 
     Act.
       ``(2) Allocation for commission.--Not less than the 
     following amounts in the CERTF for a fiscal year shall be 
     available to carry out the activities of the Comparative 
     Effectiveness Research Commission established under section 
     1822(b) of the Social Security Act for such fiscal year:
       ``(A) For fiscal year 2008, $7,000,000.
       ``(B) For fiscal year 2009, $9,000,000.
       ``(C) For each fiscal year beginning with 2010, 
     $10,000,000.

     Nothing in this paragraph shall be construed as preventing 
     additional amounts in the CERTF from being made available to 
     the Comparative Effectiveness Research Commission for such 
     activities.
       ``(e) Net Revenues.--For purposes of this section, the term 
     `net revenues' means the amount estimated by the Secretary 
     based on the excess of--
       ``(1) the fees received in the Treasury under subchapter B 
     of chapter 34, over
       ``(2) the decrease in the tax imposed by chapter 1 
     resulting from the fees imposed by such subchapter.''.
       (B) Clerical amendment.--The table of sections for such 
     subchapter A is amended by adding at the end thereof the 
     following new item:

``Sec. 9511. Health Care Comparative Effectiveness Research Trust 
              Fund.''.

       (2) Financing for fund from fees on insured and self-
     insured health plans.--
       (A) General rule.--Chapter 34 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     subchapter:

         ``Subchapter B--Insured and Self-Insured Health Plans

``Sec. 4375. Health insurance.
``Sec. 4376. Self-insured health plans
``Sec. 4377. Definitions and special rules

     ``SEC. 4375. HEALTH INSURANCE.

       ``(a) Imposition of Fee.--There is hereby imposed on each 
     specified health insurance policy for each policy year a fee 
     equal to the fair share per capita amount determined under 
     section 9511(c)(1) multiplied by the average number of lives 
     covered under the policy.
       ``(b) Liability for Fee.--The fee imposed by subsection (a) 
     shall be paid by the issuer of the policy.
       ``(c) Specified Health Insurance Policy.--For purposes of 
     this section--
       ``(1) In general.--Except as otherwise provided in this 
     section, the term `specified health insurance policy' means 
     any accident or health insurance policy issued with respect 
     to individuals residing in the United States.
       ``(2) Exemption of certain policies.--The term `specified 
     health insurance policy' does not include any insurance 
     policy if substantially all of its coverage is of excepted 
     benefits described in section 9832(c).
       ``(A) liabilities incurred under workers' compensation 
     laws,
       ``(B) tort liabilities,
       ``(C) liabilities relating to ownership or use of property,
       ``(D) credit insurance,
       ``(E) medicare supplemental coverage, or
       ``(F) such other similar liabilities as the Secretary may 
     specify by regulations.
       ``(3) Treatment of prepaid health coverage arrangements.--
       ``(A) In general.--In the case of any arrangement described 
     in subparagraph (B)--
       ``(i) such arrangement shall be treated as a specified 
     health insurance policy, and
       ``(ii) the person referred to in such subparagraph shall be 
     treated as the issuer.
       ``(B) Description of arrangements.--An arrangement is 
     described in this subparagraph if under such arrangement 
     fixed payments or premiums are received as consideration for 
     any person's agreement to provide or arrange for the 
     provision of accident or health coverage to residents of the 
     United States, regardless of how such coverage is provided or 
     arranged to be provided.

     ``SEC. 4376. SELF-INSURED HEALTH PLANS.

       ``(a) Imposition of Fee.--In the case of any applicable 
     self-insured health plan for each plan year, there is hereby 
     imposed a fee equal to the fair share per capita amount 
     determined under section 9511(c)(1) multiplied by the average 
     number of lives covered under the plan.
       ``(b) Liability for Fee.--
       ``(1) In general.--The fee imposed by subsection (a) shall 
     be paid by the plan sponsor.
       ``(2) Plan sponsor.--For purposes of paragraph (1) the term 
     `plan sponsor' means--
       ``(A) the employer in the case of a plan established or 
     maintained by a single employer,
       ``(B) the employee organization in the case of a plan 
     established or maintained by an employee organization,
       ``(C) in the case of--
       ``(i) a plan established or maintained by 2 or more 
     employers or jointly by 1 or more employers and 1 or more 
     employee organizations,
       ``(ii) a multiple employer welfare arrangement, or
       ``(iii) a voluntary employees' beneficiary association 
     described in section 501(c)(9),

     the association, committee, joint board of trustees, or other 
     similar group of representatives of the parties who establish 
     or maintain the plan, or
       ``(D) the cooperative or association described in 
     subsection (c)(2)(F) in the case of a plan established or 
     maintained by such a cooperative or association.
       ``(c) Applicable Self-Insured Health Plan.--For purposes of 
     this section, the term `applicable self-insured health plan' 
     means any plan for providing accident or health coverage if--
       ``(1) any portion of such coverage is provided other than 
     through an insurance policy, and
       ``(2) such plan is established or maintained--
       ``(A) by one or more employers for the benefit of their 
     employees or former employees,
       ``(B) by one or more employee organizations for the benefit 
     of their members or former members,
       ``(C) jointly by 1 or more employers and 1 or more employee 
     organizations for the benefit of employees or former 
     employees,
       ``(D) by a voluntary employees' beneficiary association 
     described in section 501(c)(9),
       ``(E) by any organization described in section 501(c)(6), 
     or
       ``(F) in the case of a plan not described in the preceding 
     subparagraphs, by a multiple employer welfare arrangement (as 
     defined in section 3(40) of Employee Retirement Income 
     Security Act of 1974), a rural electric cooperative (as 
     defined in section 3(40)(B)(iv) of such Act), or a rural 
     telephone cooperative association (as defined in section 
     3(40)(B)(v) of such Act).

     ``SEC. 4377. DEFINITIONS AND SPECIAL RULES.

       ``(a) Definitions.--For purposes of this subchapter--
       ``(1) Accident and health coverage.--The term `accident and 
     health coverage' means any coverage which, if provided by an 
     insurance policy, would cause such policy to be a specified 
     health insurance policy (as defined in section 4375(c)).
       ``(2) Insurance policy.--The term `insurance policy' means 
     any policy or other instrument whereby a contract of 
     insurance is issued, renewed, or extended.
       ``(3) United states.--The term `United States' includes any 
     possession of the United States.
       ``(b) Treatment of Governmental Entities.--
       ``(1) In general.--For purposes of this subchapter--
       ``(A) the term `person' includes any governmental entity, 
     and
       ``(B) notwithstanding any other law or rule of law, 
     governmental entities shall not be exempt from the fees 
     imposed by this subchapter except as provided in paragraph 
     (2).
       ``(2) Treatment of exempt governmental programs.--In the 
     case of an exempt governmental program, no fee shall be 
     imposed under section 4375 or section 4376 on any covered 
     life under such program.
       ``(3) Exempt governmental program defined.--For purposes of 
     this subchapter, the term `exempt governmental program' 
     means--
       ``(A) any insurance program established under title XVIII 
     of the Social Security Act,
       ``(B) the medical assistance program established by title 
     XIX or XXI of the Social Security Act,
       ``(C) any program established by Federal law for providing 
     medical care (other than through insurance policies) to 
     individuals (or the spouses and dependents thereof) by reason 
     of such individuals being--
       ``(i) members of the Armed Forces of the United States, or
       ``(ii) veterans, and
       ``(D) any program established by Federal law for providing 
     medical care (other than through insurance policies) to 
     members of Indian tribes (as defined in section 4(d) of the 
     Indian Health Care Improvement Act).
       ``(c) Treatment as Tax.--For purposes of subtitle F, the 
     fees imposed by this subchapter shall be treated as if they 
     were taxes.
       ``(d) No Cover Over to Possessions.--Notwithstanding any 
     other provision of law, no amount collected under this 
     subchapter shall be covered over to any possession of the 
     United States.''
       (B) Clerical amendments.--
       (i) Chapter 34 of such Code is amended by striking the 
     chapter heading and inserting the following:

           ``CHAPTER 34--TAXES ON CERTAIN INSURANCE POLICIES

          ``subchapter a. policies issued by foreign insurers

         ``subchapter b. insured and self-insured health plans

         ``Subchapter A--Policies Issued By Foreign Insurers''.

       (ii) The table of chapters for subtitle D of such Code is 
     amended by striking the item relating to chapter 34 and 
     inserting the following new item:

          ``Chapter 34--Taxes on Certain Insurance Policies''.

       (C) Effective date.--The amendments made by this subsection 
     shall apply with respect to

[[Page 22272]]

     policies and plans for portions of policy or plan years 
     beginning on or after October 1, 2010.

     SEC. 905. IMPLEMENTATION OF HEALTH INFORMATION TECHNOLOGY 
                   (IT) UNDER MEDICARE.

       (a) In General.--Not later than January 1, 2010, the 
     Secretary of Health and Human Services shall submit to 
     Congress a report that includes--
       (1) a plan to develop and implement a health information 
     technology (health IT) system for all health care providers 
     under the Medicare program that meets the specifications 
     described in subsection (b); and
       (2) an analysis of the impact, feasibility, and costs 
     associated with the use of health information technology in 
     medically underserved communities.
       (b) Plan Specification.--The specifications described in 
     this subsection, with respect to a health information 
     technology system described in subsection (a), are the 
     following:
       (1) The system protects the privacy and security of 
     individually identifiable health information.
       (2) The system maintains and provides permitted access to 
     health information in an electronic format (such as through 
     computerized patient records or a clinical data repository).
       (3) The system utilizes interface software that allows for 
     interoperability.
       (4) The system includes clinical decision support.
       (5) The system incorporates e-prescribing and computerized 
     physician order entry.
       (6) The system incorporates patient tracking and reminders.
       (7) The system utilizes technology that is open source (if 
     available) or technology that has been developed by the 
     government.

     The report shall include an analysis of the financial and 
     administrative resources necessary to develop such system and 
     recommendations regarding the level of subsidies needed for 
     all such health care providers to adopt the system.

     SEC. 906. DEVELOPMENT, REPORTING, AND USE OF HEALTH CARE 
                   MEASURES.

       (a) In General.--Part E of title XVIII of the Social 
     Security Act (42 U.S.C. 1395x et seq.) is amended by 
     inserting after section 1889 the following:


       ``DEVELOPMENT, REPORTING, AND USE OF HEALTH CARE MEASURES

       ``Sec. 1890.  (a) Fostering Development of Health Care 
     Measures.--The Secretary shall designate, and have in effect 
     an arrangement with, a single organization (such as the 
     National Quality Forum) that meets the requirements described 
     in subsection (c), under which such organization provides the 
     Secretary with advice on, and recommendations with respect 
     to, the key elements and priorities of a national system for 
     establishing health care measures. The arrangement shall be 
     effective beginning no sooner than January 1, 2008, and no 
     later than September 30, 2008.
       ``(b) Duties.--The duties of the organization designated 
     under subsection (a) (in this title referred to as the 
     `designated organization') shall, in accordance with 
     subsection (d), include--
       ``(1) establishing and managing an integrated national 
     strategy and process for setting priorities and goals in 
     establishing health care measures;
       ``(2) coordinating the development and specifications of 
     such measures;
       ``(3) establishing standards for the development and 
     testing of such measures;
       ``(4) endorsing national consensus health care measures; 
     and
       ``(5) advancing the use of electronic health records for 
     automating the collection, aggregation, and transmission of 
     measurement information.
       ``(c) Requirements Described.--For purposes of subsection 
     (a), the requirements described in this subsection, with 
     respect to an organization, are the following:
       ``(1) Private nonprofit.--The organization is a private 
     nonprofit entity governed by a board and an individual 
     designated as president and chief executive officer.
       ``(2) Board membership.--The members of the board of the 
     organization include representatives of--
       ``(A) health care providers or groups representing such 
     providers;
       ``(B) health plans or groups representing health plans;
       ``(C) groups representing health care consumers;
       ``(D) health care purchasers and employers or groups 
     representing such purchasers or employers; and
       ``(E) health care practitioners or groups representing 
     practitioners.
       ``(3) Other membership requirements.--The membership of the 
     organization is representative of individuals with experience 
     with--
       ``(A) urban health care issues;
       ``(B) safety net health care issues;
       ``(C) rural and frontier health care issues; and
       ``(D) health care quality and safety issues.
       ``(4) Open and transparent.--With respect to matters 
     related to the arrangement described in subsection (a), the 
     organization conducts its business in an open and transparent 
     manner and provides the opportunity for public comment.
       ``(5) Voluntary consensus standards setting organization.--
     The organization 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).
       ``(6) Experience.--The organization has at least 7 years 
     experience in establishing national consensus standards.
       ``(d) Requirements for Health Care Measures.--In carrying 
     out its duties under subsection (b), the designated 
     organization shall ensure the following:
       ``(1) Measures.--The designated organization shall ensure 
     that the measures established or endorsed under subsection 
     (b) are evidence-based, reliable, and valid; and include--
       ``(A) measures of clinical processes and outcomes, patient 
     experience, efficiency, and equity;
       ``(B) measures to assess effectiveness, timeliness, patient 
     self-management, patient centeredness, and safety; and
       ``(C) measures of under use and over use.
       ``(2) Priorities.--
       ``(A) In general.--The designated organization shall ensure 
     that priority is given to establishing and endorsing--
       ``(i) measures with the greatest potential impact for 
     improving the effectiveness and efficiency of health care;
       ``(ii) measures that may be rapidly implemented by group 
     health plans, health insurance issuers, physicians, 
     hospitals, nursing homes, long-term care providers, and other 
     providers;
       ``(iii) measures which may inform health care decisions 
     made by consumers and patients; and
       ``(iv) measures that apply to multiple services furnished 
     by different providers during an episode of care.
       ``(B) Annual report on priorities; secretarial publication 
     and comment.--
       ``(i) Annual report.--The designated organization shall 
     issue and submit to the Secretary a report by March 31 of 
     each year (beginning with 2009) on the organization's 
     recommendations for priorities and goals in establishing and 
     endorsing health care measures under this section over the 
     next five years.
       ``(ii) Secretarial review and comment.--After receipt of 
     the report under clause (i) for a year, the Secretary shall 
     publish the report in the Federal Register, including any 
     comments of the Secretary on the priorities and goals set 
     forth in the report.
       ``(3) Risk adjustment.--The designated organization, in 
     consultation with health care measure developers and other 
     stakeholders, shall establish procedures to assure that 
     health care measures established and endorsed under this 
     section account for differences in patient health status, 
     patient characteristics, and geographic location, as 
     appropriate.
       ``(4) Maintenance.--The designated organization, in 
     consultation with owners and developers of health care 
     measures, shall require the owners or developers of such 
     measures to update and enhance such measures, including the 
     development of more accurate and precise specifications, and 
     retire existing outdated measures. Such updating shall occur 
     not more often than once during each 12-month period, except 
     in the case of emergent circumstances requiring a more 
     immediate update to a measure.
       ``(e) Use of Health Care Measures; Reporting.--
       ``(1) Use of measures.--For purposes of activities 
     authorized or required under this title, the Secretary shall 
     select from health care measures--
       ``(A) recommended by multi-stakeholder groups; and
       ``(B) endorsed by the designated organization under 
     subsection (b)(4).
       ``(2) Reporting.--The Secretary shall implement procedures, 
     consistent with generally accepted standards, to enable the 
     Department of Health and Human Services to accept the 
     electronic submission of data for purposes of--
       ``(A) effectiveness measurement using the health care 
     measures developed pursuant to this section; and
       ``(B) reporting to the Secretary measures used to make 
     value-based payments under this title.
       ``(f) Contracts.--The Secretary, acting through the Agency 
     for Healthcare Research and Quality, may contract with 
     organizations to support the development and testing of 
     health care measures meeting the standards established by the 
     designated organization.
       ``(g) Dissemination of Information.--In order to make 
     information on health care measures available to health care 
     consumers, health professionals, public health officials, 
     oversight organizations, researchers, and other appropriate 
     individuals and entities, the Secretary shall work with 
     multi-stakeholder groups to provide for the dissemination of 
     information developed pursuant to this title.
       ``(h) Funding.--For purposes of carrying out subsections 
     (a), (b), (c), and (d), including for expenses incurred for 
     the arrangement under subsection (a) with the designated 
     organization, there is payable from the Federal Hospital 
     Insurance Trust Fund (established under section 1817) and the 
     Federal Supplementary Medical Insurance Trust Fund 
     (established under section 1841)--
       ``(1) for fiscal year 2008, $15,000,000, multiplied by the 
     ratio of the total number of months in the year to the number 
     of months (and portions of months) of such year during which 
     the arrangement under subsection (a) is effective; and
       ``(2) for each of the fiscal years, 2009 through 2012, 
     $15,000,000.''.

     SEC. 907. IMPROVEMENTS TO THE MEDIGAP PROGRAM.

       (a) Implementation of NAIC Recommendations.--The Secretary 
     of Health and Human Services shall provide, under subsections

[[Page 22273]]

     (p)(1)(E) of section 1882 of the Social Security Act (42 
     U.S.C. 1395s), for implementation of the changes in the NAIC 
     model law and regulations recommended by the National 
     Association of Insurance Commissioners in its Model #651 
     (``Model Regulation to Implement the NAIC Medicare Supplement 
     Insurance Minimum Standards Model Act'') on March 11, 2007, 
     as modified to reflect the changes made under this Act. In 
     carrying out the previous sentence, the benefit packages 
     classified as ``K'' and ``L'' shall be eliminated and such 
     NAIC recommendations shall be treated as having been adopted 
     by such Association as of January 1, 2008.
       (b) Required Offering of a Range of Policies.--
       (1) In general.--Subsection (o) of such section is amended 
     by adding at the end the following new paragraph:
       ``(4) In addition to the requirement of paragraph (2), the 
     issuer of the policy must make available to the individual at 
     least medicare supplemental policies with benefit packages 
     classified as `C' or `F'.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to medicare supplemental policies issued on or 
     after January 1, 2008.
       (c) Removal of New Benefit Packages.--Such section is 
     further amended--
       (1) in subsection (o)(1), by striking ``(p), (v), and (w)'' 
     and inserting ``(p) and (v)'';
       (2) in subsection (v)(3)(A)(i), by striking ``or a benefit 
     package described in subparagraph (A) or (B) of subsection 
     (w)(2)''; and
       (3) in subsection (w)--
       (A) by striking ``Policies'' and all that follows through 
     ``The Secretary'' and inserting ``Policies.--The Secretary'';
       (B) by striking the second sentence; and
       (C) by striking paragraph (2) .

     SEC. 908. IMPLEMENTATION FUNDING.

       For purposes of implementing the provisions of this Act 
     (other than title X), the Secretary of Health and Human 
     Services shall provide for the transfer, from the Federal 
     Supplementary Medical Insurance Trust Fund established under 
     section 1841 of the Social Security Act (42 U.S.C. 1395t), of 
     $40,000,000 to the Centers for Medicare & Medicaid Services 
     Program Management Account for fiscal year 2008.

     SEC. 909. ACCESS TO DATA ON PRESCRIPTION DRUG PLANS AND 
                   MEDICARE ADVANTAGE PLANS.

       (a) In General.--Section 1875 of the Social Security Act 
     (42 U.S.C. 1395ll) is amended--
       (1) in the heading, by inserting ``to congress; providing 
     information to congressional support agencies'' after ``and 
     recommendations''; and
       (2) by adding at the end the following new subsection:
       ``(c) Providing Information to Congressional Support 
     Agencies.--
       ``(1) In general.--Notwithstanding any provision under part 
     D that limits the use of prescription drug data collected 
     under such part, upon the request of a Congressional support 
     agency, the Secretary shall provide such agency with 
     information submitted to, or compiled by, the Secretary under 
     part D (subject to the restriction on disclosure under 
     paragraph (2)), including--
       ``(A) only with respect to Congressional support agencies 
     that make official baseline spending projections, conduct 
     oversight studies mandated by Congress, or make official 
     recommendations on the program under this title to Congress--
       ``(i) aggregate negotiated prices for drugs covered under 
     prescription drug plans and MA-PD plans;
       ``(ii) negotiated rebates, discounts, and other price 
     concessions by drug and by contract or plan (as reported 
     under section 1860D-2(d)(2));
       ``(iii) bid information (described in section 1860D-
     11(b)(2)(C)) submitted by such plans;
       ``(iv) data or a representative sample of data regarding 
     drug claims and other data submitted under section 1860D-
     15(c)(1)(C) (as determined necessary and appropriate by the 
     Congressional support agency to carry out the legislatively 
     mandated duties of the agency);
       ``(v) the amount of reinsurance payments paid under section 
     1860D-15(a)(2), provided at the plan level; and
       ``(vi) the amount of any adjustments of payments made under 
     subparagraph (B) or (C) of section 1860D-15(e)(2), provided 
     at the plan level aggregate negotiated prices for drugs 
     covered under prescription drug plans and MA-PD plans; and
       ``(B) access to drug event data submitted by such plans 
     under section 1860D-15(d)(2)(A), except, with respect to data 
     that reveals prices negotiated with drug manufacturers, such 
     data shall only be available to Congressional support 
     agencies that make official baseline spending projections, 
     conduct oversight studies mandated by Congress, or make 
     official recommendations on the program under this title to 
     Congress.
       ``(2) Restriction on data disclosure.--
       ``(A) In general.--Data provided to a Congressional support 
     agency under this subsection shall not be disclosed, 
     reported, or released in identifiable form.
       ``(B) Identifiable form.--For purposes of subparagraph (A), 
     the term `identifiable form' means any representation of 
     information that permits identification of a specific 
     prescription drug plan, MA-PD plan, pharmacy benefit manager, 
     drug manufacturer, drug wholesaler, or individual enrolled in 
     a prescription drug plan or an MA-PD plan under part D.
       ``(3) Timing.--The Secretary shall release data under this 
     subsection in a timeframe that enables Congressional support 
     agencies to complete congressional requests.
       ``(4) Use of the data provided.--Data provided to a 
     Congressional support agency under this subsection shall only 
     be used by such agency for carrying out the functions and 
     activities of the agency mandated by Congress.
       ``(5) Confidentiality.--The Secretary shall establish 
     safeguards to protect the confidentiality of data released 
     under this subsection. Such safeguards shall not provide for 
     greater disclosure than is permitted under any of the 
     following:
       ``(A) The Federal regulations (concerning the privacy of 
     individually identifiable health information) promulgated 
     under section 264(c) of the Health Insurance Portability and 
     Accountability Act of 1996.
       ``(B) Sections 552 or 552a of title 5, United States Code, 
     with regard to the privacy of individually identifiable 
     beneficiary health information.
       ``(6) Definitions.--In this subsection:
       ``(A) Congressional support agency.--The term 
     `Congressional support agency' means--
       ``(i) the Medicare Payment Advisory Commission;
       ``(ii) the Government Accountability Office; and
       ``(iii) the Congressional Budget Office.
       ``(B) Ma-pd plan.--The term `MA-PD plan' has the meaning 
     given such term in section 1860D-1(a)(3)(C).
       ``(C) Prescription drug plan.--The term `prescription drug 
     plan' has the meaning given such term in section 1860D-
     41(a)(14).''.
       (b) Conforming Amendment.--Section 1805(b)(2) of the Social 
     Security Act (42 U.S.C. 1395b-6(b)(2)) is amended by adding 
     at the end the following new subparagraph:
       ``(D) Part d.--Specifically, the Commission shall review 
     payment policies with respect to the Voluntary Prescription 
     Drug Benefit Program under part D, including--
       ``(i) the factors affecting expenditures;
       ``(ii) payment methodologies; and
       ``(iii) their relationship to access and quality of care 
     for Medicare beneficiaries.''.

     SEC. 910. ABSTINENCE EDUCATION.

       Section 510 of the Social Security Act (42 U.S.C. 710) is 
     amended to read as follows:

     ``SEC. 510. SEPARATE PROGRAM FOR ABSTINENCE EDUCATION.

       ``(a) In General.--For the purpose described in subsection 
     (b), the Secretary shall, for fiscal year 2008 and fiscal 
     year 2009, allot to each State which has transmitted an 
     application for the fiscal year under section 505(a) an 
     amount equal to the product of--
       ``(1) the amount appropriated in subsection (d) for the 
     fiscal year; and
       ``(2) the percentage determined for the State under section 
     502(c)(1)(B)(ii).
       ``(b) Purpose of Allotment.--
       ``(1) Purpose.--The purpose of an allotment under 
     subsection (a) to a State is to enable the State to provide 
     abstinence education, and where appropriate, mentoring, 
     counseling, and adult supervision to promote abstinence from 
     sexual activity, with a focus on those groups which are most 
     likely to bear children out-of-wedlock.
       ``(2) Definition; state option.--For purposes of this 
     section, the term `abstinence education' has, at the option 
     of each State receiving an allotment under subsection (a), 
     the meaning given such term in subparagraph (A), or the 
     meaning given such term in subparagraph (B), as follows:
       ``(A) Such term means a medically and scientifically 
     accurate educational or motivational program which--
       ``(i) has as its exclusive purpose, teaching the social, 
     psychological, and health gains to be realized by abstaining 
     from sexual activity;
       ``(ii) teaches abstinence from sexual activity outside 
     marriage as the expected standard for all school age 
     children;
       ``(iii) teaches that abstinence from sexual activity is the 
     only certain way to avoid out-of-wedlock pregnancy, sexually 
     transmitted diseases, and other associated health problems;
       ``(iv) teaches that a mutually faithful monogamous 
     relationship in context of marriage is the expected standard 
     of human sexual activity;
       ``(v) teaches that sexual activity outside of the context 
     of marriage is likely to have harmful psychological and 
     physical effects;
       ``(vi) teaches that bearing children out-of-wedlock is 
     likely to have harmful consequences for the child, the 
     child's parents, and society;
       ``(vii) teaches young people how to reject sexual advances 
     and how alcohol and drug use increases vulnerability to 
     sexual advances; and
       ``(viii) teaches the importance of attaining self-
     sufficiency before engaging in sexual activity.
       ``(B) Such term means a medically and scientifically 
     accurate educational or motivational program which promotes 
     abstinence and educates those who are currently sexually 
     active or at risk of sexual activity about additional methods 
     to prevent unintended pregnancy or reduce other health risks.
       ``(3) Certain requirements.--
       ``(A) Limitation regarding inaccurate information.--None of 
     the funds made available under this section may be used to 
     provide abstinence education that includes information that 
     is medically and scientifically inaccurate. For purposes of 
     this section, the term `medically and scientifically 
     inaccurate' means information that is unsupported or 
     contradicted by a preponderance of peer-reviewed research by 
     leading medical, psychological, psychiatric, and public 
     health publications, organizations and agencies.
       ``(B) Effectiveness regarding certain matters.--None of the 
     funds made available under

[[Page 22274]]

     this section may be used for a program unless the program is 
     based on a model that has been demonstrated to be effective 
     in preventing unintended pregnancy, or in reducing the 
     transmission of a sexually transmitted disease, including the 
     human immunodeficiency virus. The preceding sentence does not 
     apply to any program that was approved and funded under this 
     section on or before September 30, 2007.
       ``(c) Applicability of Certain Sections.--
       ``(1) Requirements.--Sections 503, 507, and 508 apply to 
     allotments under subsection (a) to the same extent and in the 
     same manner as such sections apply to allotments under 
     section 502(c).
       ``(2) Discretion of secretary.--Sections 505 and 506 apply 
     to allotments under subsection (a) to the extent determined 
     by the Secretary to be appropriate.
       ``(d) Authorization of Appropriations.--For the purpose of 
     allotments under subsection (a), there is authorized to be 
     appropriated $50,000,000 for each of fiscal years 2008 and 
     2009.''.

                           TITLE X--REVENUES

     SEC. 1001. INCREASE IN RATE OF EXCISE TAXES ON TOBACCO 
                   PRODUCTS AND CIGARETTE PAPERS AND TUBES.

       (a) Small Cigarettes.--Paragraph (1) of section 5701(b) of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``$19.50 per thousand ($17 per thousand on cigarettes removed 
     during 2000 or 2001)'' and inserting ``$42 per thousand''.
       (b) Large Cigarettes.--Paragraph (2) of section 5701(b) of 
     such Code is amended by striking ``$40.95 per thousand 
     ($35.70 per thousand on cigarettes removed during 2000 or 
     2001)'' and inserting ``$88.20 per thousand''.
       (c) Small Cigars.--Paragraph (1) of section 5701(a) of such 
     Code is amended by striking ``$1.828 cents per thousand 
     ($1.594 cents per thousand on cigars removed during 2000 or 
     2001)'' and inserting ``$42 per thousand''.
       (d) Large Cigars.--Paragraph (2) of section 5701(a) of such 
     Code is amended--
       (1) by striking ``20.719 percent (18.063 percent on cigars 
     removed during 2000 or 2001)'' and inserting 40 percent (33 
     percent on cigars removed after December 31, 2007, and before 
     October 1, 2013).
       (2) by striking ``$48.75 per thousand ($42.50 per thousand 
     on cigars removed during 2000 or 2001)'' and inserting ``$1 
     per cigar''.
       (e) Cigarette Papers.--Subsection (c) of section 5701 of 
     such Code is amended by striking ``1.22 cents (1.06 cents on 
     cigarette papers removed during 2000 or 2001)'' and inserting 
     ``2.63 cents''.
       (f) Cigarette Tubes.--Subsection (d) of section 5701 of 
     such Code is amended by striking ``2.44 cents (2.13 cents on 
     cigarette tubes removed during 2000 or 2001)'' and inserting 
     ``5.26 cents''.
       (g) Snuff.--Paragraph (1) of section 5701(e) of such Code 
     is amended by striking ``58.5 cents (51 cents on snuff 
     removed during 2000 or 2001)'' and inserting ``$1.26''.
       (h) Chewing Tobacco.--Paragraph (2) of section 5701(e) of 
     such Code is amended by striking ``19.5 cents (17 cents on 
     chewing tobacco removed during 2000 or 2001)'' and inserting 
     ``42 cents''.
       (i) Pipe Tobacco.--Subsection (f) of section 5701 of such 
     Code is amended by striking ``$1.0969 cents (95.67 cents on 
     pipe tobacco removed during 2000 or 2001)'' and inserting 
     ``$2.36''.
       (j) Roll-Your-Own Tobacco.--
       (1) In general.--Subsection (g) of section 5701 of such 
     Code is amended by striking ``$1.0969 cents (95.67 cents on 
     roll-your-own tobacco removed during 2000 or 2001)'' and 
     inserting ``$7.4667''.
       (2) Inclusion of cigar tobacco.--Subsection (o) of section 
     5702 of such Code is amended by inserting ``or cigars, or for 
     use as wrappers for making cigars'' before the period at the 
     end.
       (k) Effective Date.--The amendments made by this section 
     shall apply to articles removed after December 31, 2007.
       (l) Floor Stocks Taxes.--
       (1) Imposition of tax.--On cigarettes manufactured in or 
     imported into the United States which are removed before 
     January 1, 2008, and held on such date for sale by any 
     person, there is hereby imposed a tax in an amount equal to 
     the excess of--
       (A) the tax which would be imposed under section 5701 of 
     the Internal Revenue Code of 1986 on the article if the 
     article had been removed on such date, over
       (B) the prior tax (if any) imposed under section 5701 of 
     such Code on such article.
       (2) Authority to exempt cigarettes held in vending 
     machines.--To the extent provided in regulations prescribed 
     by the Secretary, no tax shall be imposed by paragraph (1) on 
     cigarettes held for retail sale on January 1, 2008, by any 
     person in any vending machine. If the Secretary provides such 
     a benefit with respect to any person, the Secretary may 
     reduce the $500 amount in paragraph (3) with respect to such 
     person.
       (3) Credit against tax.--Each person shall be allowed as a 
     credit against the taxes imposed by paragraph (1) an amount 
     equal to $500. Such credit shall not exceed the amount of 
     taxes imposed by paragraph (1) for which such person is 
     liable.
       (4) Liability for tax and method of payment.--
       (A) Liability for tax.--A person holding cigarettes on 
     January 1, 2008, to which any tax imposed by paragraph (1) 
     applies shall be liable for such tax.
       (B) Method of payment.--The tax imposed by paragraph (1) 
     shall be paid in such manner as the Secretary shall prescribe 
     by regulations.
       (C) Time for payment.--The tax imposed by paragraph (1) 
     shall be paid on or before April 14, 2008.
       (5) Articles in foreign trade zones.--- Notwithstanding the 
     Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a) and any 
     other provision of law, any article which is located in a 
     foreign trade zone on January 1, 2008, shall be subject to 
     the tax imposed by paragraph (1) if--
       (A) internal revenue taxes have been determined, or customs 
     duties liquidated, with respect to such article before such 
     date pursuant to a request made under the 1st proviso of 
     section 3(a) of such Act, or
       (B) such article is held on such date under the supervision 
     of a customs officer pursuant to the 2d proviso of such 
     section 3(a).
       (6) Definitions.--For purposes of this subsection--
       (A) In general.--Terms used in this subsection which are 
     also used in section 5702 of the Internal Revenue Code of 
     1986 shall have the respective meanings such terms have in 
     such section.
       (B) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury or the Secretary's delegate.
       (7) Controlled groups.--Rules similar to the rules of 
     section 5061(e)(3) of such Code shall apply for purposes of 
     this subsection.
       (8) Other laws applicable.--All provisions of law, 
     including penalties, applicable with respect to the taxes 
     imposed by section 5701 of such Code shall, insofar as 
     applicable and not inconsistent with the provisions of this 
     subsection, apply to the floor stocks taxes imposed by 
     paragraph (1), to the same extent as if such taxes were 
     imposed by such section 5701. The Secretary may treat any 
     person who bore the ultimate burden of the tax imposed by 
     paragraph (1) as the person to whom a credit or refund under 
     such provisions may be allowed or made.

     SEC. 1002. EXEMPTION FOR EMERGENCY MEDICAL SERVICES 
                   TRANSPORTATION.

       (a) In General.--Subsection (l) of section 4041 of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(l) Exemption for Certain Uses.--
       ``(1) Certain aircraft.--No tax shall be imposed under this 
     section on any liquid sold for use in, or used in, a 
     helicopter or a fixed-wing aircraft for purposes of providing 
     transportation with respect to which the requirements of 
     subsection (f) or (g) of section 4261 are met.
       ``(2) Emergency medical services.--No tax shall be imposed 
     under this section on any liquid sold for use in, or used in, 
     any ambulance for purposes of providing transportation for 
     emergency medical services. The preceding sentence shall not 
     apply to any liquid used after December 31, 2012.''.
       (b) Fuels Not Used for Taxable Purposes.--Section 6427 of 
     such Code is amended by inserting after subsection (e) the 
     following new subsection:
       ``(f) Use to Provide Emergency Medical Services.--Except as 
     provided in subsection (k), if any fuel on which tax was 
     imposed by section 4081 or 4041 is used in an ambulance for a 
     purpose described in section 4041(l)(2), the Secretary shall 
     pay (without interest) to the ultimate purchaser of such fuel 
     an amount equal to the aggregate amount of the tax imposed on 
     such fuel. The preceding sentence shall not apply to any 
     liquid used after December 31, 2012.''.
       (c) Time for Filing Claims; Period Covered.--Paragraphs (1) 
     and (2)(A) of section 6427(i) of such Code are each amended 
     by inserting ``(f),'' after ``(d),''.
       (d) Conforming Amendment.--Section 6427(d) of such Code is 
     amended by striking ``4041(l)'' and inserting ``4041(l)(1)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to fuel used in transportation provided in 
     quarters beginning after the date of the enactment of this 
     Act.

  The SPEAKER pro tempore. Debate shall not exceed 2 hours, with 1 hour 
equally divided and controlled by the chairman and ranking minority 
member of the Committee on Ways and Means and 1 hour equally divided 
and controlled by the chairman and ranking minority member of the 
Committee on Energy and Commerce.
  The gentleman from New York (Mr. Rangel), the gentleman from 
Louisiana (Mr. McCrery), the gentleman from Michigan (Mr. Dingell) and 
the gentleman from Texas (Mr. Barton) each will control 30 minutes.
  The Chair recognizes the gentleman from New York.
  Mr. RANGEL. Mr. Speaker, I rise in support of this great piece of 
legislation that this august body has the privilege of supporting.
  There may be some concerns in the House, some with merit, about 
procedure, but we on the Ways and Means Committee are so proud of the 
work that has been done by the subcommittee, led by Mr. Stark, working 
with Mr. Camp, that we had 15 hearings on what was involved in this 
bill and a half a dozen sessions where we just talked with the 
professionals to make certain that not only did we support the great 
work that had been done by

[[Page 22275]]

the Dean of our House in terms of education, in terms of Energy and 
Commerce and the SCHIP bill, but so at the same time we could preserve 
the benefits that are provided to our senior citizens through medical 
programs.
  Mr. Stark did one great job at making certain that we worked with the 
administration, tried to find out where the abuses were and, where we 
could, we were able to raise $15 billion so that the poorest of our 
seniors would have the ability to receive health care enhanced.

                              {time}  1415

  Of course, those who live in rural areas and who for years have not 
be able to receive the type of access to health care, we found $5 
billion to do it.
  I am not thoroughly convinced as to what PAYGO is going to mean in 
the future, but it is the rules of our party. It seems now that it 
makes some sense. But when you say that you have to enlarge this 
program so that an additional 6 million people, kids, that are already 
on the program, adding 5 million people to it, nobody, Republican or 
Democrat, liberal or conservative, does not believe that these children 
should be entitled to health care.
  It is not just the right and moral thing to do. But in terms of being 
fiscally responsible, everyone would tell you that having a kid in the 
family exposed to preventive care actually costs less money than just 
ignoring the care of our children. I could go even further in saying 
that, even kids that go to school, if they are not well, they can't 
learn. And God knows we have millions of people in the street that had 
health impediments, that they thought they were educational 
impediments, and they are out there. I personally believe that a 
stronger country is a healthier country and a well-educated country.
  Now, it is true when you have these PAYGO rules and you don't want to 
raise taxes that you have to find the money. And so it is a great deal 
of empathy that I have for our poor cigarette smokers, because I used 
to be one; and, two, I just don't like the idea of regressive taxes 
where the poor are penalized. But I am learning to live with it in such 
a sense that these cigarette smokers, these addicts, they hate 
themselves for smoking. And I have stretched it to the point that when 
I talk with them and tell them what we are about to do, after they 
finish coughing and spitting, they said, ``I have got to stop this 
smoking.'' Then, when you look at the little kids, this is the one 
thing that an increase in prices sharply reduces, it is kids going to 
smoke.
  So, I am trying to get myself to think that maybe I am doing it for 
the tobacco companies, because they advertise they don't want kids to 
smoke, and we are going to help them by increasing the price of 
cigarettes, which one thing is abundantly clear, it will stop a lot of 
children from smoking.
  Mr. Speaker, I am going to yield the rest of my time to the gentleman 
from California, Pete Stark, who has done such a fantastic job in 
finding out where the problems were and bringing to this floor not only 
a great child insurance bill, but also improving Medicare, increasing 
the benefits of our seniors who are poor and help into rural areas.
  While we may have a lot of procedural differences, and I understand 
that, I just hope that whether you are Republican or Democrat that you 
feel comfortable being able to say that there may be some pain for 
cigarette smokers who really are costing us a lot of money with these 
lung transplants and whatnot. But that is painful enough.
  So you may have some problem with your smokers. But just think about 
11 million children and their families that love them so much and a 
country that wants them healthy, and I am certain that at the end of 
the day that the kids are going to win, we will have a better health 
care delivery system, and you will feel very, very comfortable in 
talking about the procedural differences that you differed with. But, 
in your heart, you would know that every major advocate for children 
and health and hospitals and doctors have signed up saying, ``do the 
right thing.'' I personally believe that that is what you are going to 
do today.
  Mr. Speaker, I yield the balance of my time to the gentleman from 
California, Pete Stark, the chairman of the Subcommittee on Health, and 
I thank him publicly, and the staff, for the fantastic job that they 
have done in having hearings and letting all Members have a better 
understanding of the problem, but, better than that, in being able to 
bring a solution to this floor today.
  The SPEAKER pro tempore. Without objection, the gentleman from 
California will manage the remainder of the time for the Ways and Means 
Committee majority.
  There was no objection.
  Mr. BARTON of Texas. Mr. Speaker, I ask unanimous consent that there 
be one 1 hour of additional debate, equally divided between the 
majority and the minority, and within each of those subsegments, 
equally divided between the Ways and Means Committee and the Energy and 
Commerce Committee.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  Mr. STARK. Mr. Speaker, I object.
  The SPEAKER pro tempore. Objection is heard. The time will remain the 
same.
  Mr. DINGELL. Mr. Speaker, I hope that my good friend from California 
will not object.
  Mr. BARTON of Texas. Mr. Speaker, I would repeat that unanimous 
consent request.
  Mr. DINGELL. Mr. Speaker, I would hope my good friend would not 
object.
  Mr. STARK. Mr. Speaker, I reserve the right to object. I may discuss 
it at a later point, but at this time, I must object.
  The SPEAKER pro tempore. The gentleman from California reserves the 
right to object.
  Mr. BARTON of Texas. Mr. Speaker, does that mean we discuss the 
reservation now?
  Mr. DINGELL. Mr. Speaker, reserving the right to object.
  Mr. STARK. Mr. Speaker, I object.
  The SPEAKER pro tempore. The gentleman from California has reserved 
the right to object.
  Mr. STARK. Mr. Speaker, I object.
  The SPEAKER pro tempore. Now he objects. The gentleman from 
California objects.
  Does the gentleman from California rise to object?
  Mr. STARK. Yes, Mr. Speaker, I object.
  The SPEAKER pro tempore. Objection is heard.
  Mr. RANGEL. Mr. Speaker, may I be recognized to respond?
  The SPEAKER pro tempore. For what purpose does the gentleman from New 
York rise?
  Mr. RANGEL. Mr. Speaker, it appears as though the decision for extra 
time should be one that our leadership should have decided on. It just 
seems to me that since our leader has not been conferred with, that if 
you just reserve the opportunity, that in a very short while we will be 
able to discuss this.
  Mr. BARTON of Texas. Mr. Speaker, if the gentleman will yield, we 
have, just from the Energy and Commerce Committee on the minority side, 
a request for 25 speakers, plus several of our leadership. So if this 
unanimous consent request were to be agreed to, it would give each 
committee on both sides of the aisle an additional 15 minutes. I am 
sure there are many Members on the majority side, as on the minority, 
that wish to speak. I will offer it later on if you want to check on 
it.
  Mr. RANGEL. Well, Mr. Speaker, the minority somehow manages to find 
time to speak on this and many other subjects. But I am saying that 
under normal conditions, you would think that your leadership would 
have discussed this issue with ours so that at some times the Members 
would know exactly what to expect.
  Now, I don't see any reason why this should not be agreed upon, but I 
just don't think Members can come to the floor by unanimous consent and 
ask for an hour or 2 hours or 3 hours. We don't even know whether or 
not the minority intends to follow any other procedures that could kind 
of take away floor time

[[Page 22276]]

in terms of debates and exchanges. Just based on some of the things 
that I've seen from your committee, it appears to me that we have to 
find out what you want to do with that hour.
  Mr. BARTON of Texas. Mr. Speaker, if the gentleman will yield, the 
gentleman has every right to be suspicious of the ranking member of the 
Energy and Commerce Committee. I am a devious fellow and I reserve all 
my options. But on this one, we were shooting straight and dealing off 
the top of the deck.
  The SPEAKER pro tempore. The gentleman from California has objected. 
Does the gentleman stand to object, or does he withdraw his objection?
  Mr. STARK. I object.
  The SPEAKER pro tempore. Objection is heard.
  Mr. DINGELL. Mr. Speaker, I am going to make the same unanimous 
consent request, and then I will withdraw it. But first I want to make 
an observation here for the benefit of all of my colleagues and 
friends.
  This is a very important piece of legislation. I am not going to 
defend the behavior of any Member here, and I am not going to criticize 
the behavior of any Member, but I am going to make an observation that 
I think is important.
  This is a very important piece of legislation. Twelve million of our 
kids are going to have their health insurance increased or not 
depending on how we conduct ourselves today. I want to have a broad 
exposition. If you look at the time that we have to give to Members who 
wish to be heard on this, we are talking about a minute or 30 seconds, 
hardly enough time for any Member to adequately make a position on 
something which is important to him and to the kids.
  I think that we have a chance to do a great deal of good for our 
young people. I don't think that it is excessive to say we are going to 
give enough time so that this matter can be properly discussed, nor do 
I think there is any benefit in denying our Members the time to do this 
and denying the Members a chance to be heard.
  Now, I am going to withdraw this.
  The SPEAKER pro tempore. The gentleman withdraws his request. Members 
may engage in debate by using their time.
  Mr. DINGELL. Mr. Speaker, I have asked unanimous consent and I 
reserved the right to object.
  The SPEAKER pro tempore. The gentleman cannot reserve the right to 
object on his own request. The gentleman reiterates a unanimous consent 
request.
  Is there objection?
  Mr. WAXMAN. Mr. Speaker, I reserve the right to object.
  The SPEAKER pro tempore. The gentleman from California.
  Mr. WAXMAN. Mr. Speaker and my colleagues, for goodwill, I would see 
it a wise course of action to give additional time, since the minority 
requests it, but I wouldn't be prepared to give them that time now.
  The reason we are starting so late today on this bill is because we 
have been interrupted with procedural votes to delay us from debating 
this issue. In our own committee, the Energy and Commerce Committee, 
the gentleman from Texas said he had a lot of people from our committee 
who wanted to speak on the issue. They wouldn't let us debate any 
single issue of merit. They made us read the bill, to frustrate the 
committee from meeting at all.
  Let's renew this request for additional time later as a reward for 
good behavior, if we can see some good behavior. But right now, to this 
point, I haven't seen a lot of good behavior from the other side.
  The SPEAKER pro tempore. Does the gentleman object or does he 
withdraw his reservation of the right to object?
  Mr. WAXMAN. I object.
  The SPEAKER pro tempore. Objection is heard.
  Mr. BARTON of Texas. Mr. Speaker, I proudly stand for the First 
Amendment rights of even the Members of the minority, and I also stand 
for honoring the rules and the procedures developed over 200 years in 
the most Democratic body the free world has ever known, the House of 
Representatives.
  With that, I yield 1 minute to the distinguished minority leader from 
the great State of Ohio (Mr. Boehner).
  Mr. BOEHNER. Mr. Speaker, let me thank my colleague for yielding.
  Mr. Speaker and my colleagues, the State Children's Health Insurance 
Program was created 10 years ago by a Republican Congress, along with 
our Democrat colleagues and a Democrat President. It clearly was a very 
bipartisan process from the beginning, and as we reauthorize this 
important program that Republicans, Democrats, the White House, 
everyone supports, I am saddened that we are here today with a very 
partisan bill done in a very partisan way.
  I thought in this reauthorization process, I know on our side, Mr. 
Barton, Mr. McCrery, their respective committees, wanted to work with 
our Democrat colleagues to develop a bill that we could all vote for. 
But that process never even got started. While there may have been some 
hearings in the Ways and Means Committee on this bill, there were no 
hearings in the Energy and Commerce Committee. We were presented with a 
488-page bill the night before the markup. Now we have brought this to 
the floor without a markup in committee, no amendments allowed to be 
offered by the minority and a limited time for debate. This saddens me 
and disappoints me. It did not have to be this way.
  The result of this flawed process is a bill that expands government-
run health care beyond anything that any one of us could have imagined 
over the last 10 years. I really do believe that Republicans and 
Democrats can work together to reauthorize this program in a way that 
will receive bipartisan support.
  Last November, the American people sent us a message here in 
Congress, but I don't think that message was, ``I want you to cut my 
Medicare and I want you to raise taxes. I did not want you to raise my 
taxes.''
  When you look at the bill that we have before us, we have $193 
billion worth of cuts to Medicare, a program to provide health 
insurance for our seniors. We are going to cut this $193 billion over 
10 years, and we are going to raise tobacco taxes, which affects the 
poorest of America's citizens, and lay more of this tax burden on their 
backs.

                              {time}  1430

  In my district alone, some 14,267 seniors are going to have their 
Medicare costs increased, and about 73 percent of that number are 
likely to lose their Medicare Advantage Program altogether.
  That is not what the voters sent us here to do; and, believe me, the 
seniors in my district who take advantage of this very valuable program 
don't want to lose their benefits which will result from the passage of 
this bill.
  And so I say to my colleagues, we have a flawed bill on the floor 
today; and the flawed bill is the result of a flawed process. As I said 
last night to all of my colleagues, we represent nearly half of the 
American people. We have a right to be heard. We have a right to 
participate. And through the process over the last couple of weeks we 
have been denied the right to be involved in the process, denied the 
right today to be involved in trying to amend the bill to a point where 
we can have a bipartisan product to send to the other body. I am 
disappointed by that.
  Later today, Republicans will offer a motion to recommit this bill, 
the only option that we have. And that motion to recommit will do this: 
It will reauthorize the SCHIP program for 1 year. There will be no 
Medicare cuts involved in this program, no benefits will go to illegal 
immigrants, and we will see to that in the motion to recommit.
  Fourthly, it will have a sense of the Congress that this bill should 
go back to the committee and, over the course of the next year, have 
the Republicans and Democrats on the respective committees work 
together to produce a bipartisan product that the President can sign 
into law. I think that is a responsible course of action, given what we 
have dealt with here over the last couple of weeks.
  I would ask my colleagues to reject the underlying bill and vote for 
the motion to recommit.

[[Page 22277]]


  Mr. DINGELL. Mr. Speaker, I yield myself 3 minutes.
  Mr. Speaker, the Children's Health and Medicare Protection Act, the 
CHAMP Act, is a good piece of legislation. It expands and improves a 
most successful program, bipartisan in character, created in 1997. That 
program has cut the rate of uninsured children by a full third. Some 
States have been able to ensure as many as 60 percent of the children 
who previously had no health insurance.
  This bill is about taking care of our kids. It is about taking care 
of the future of the country. Today, 6 million of our youngsters get 
their health care through the program. With this legislation, an 
additional 5 million previously uninsured children will be able to see 
doctors, receive immunizations, and get dental and mental health 
coverage.
  The bill requires that children receive priority in coverage. It 
allows States to cover pregnant women, recognizing that healthy moms 
make for healthy babies. I am certain my Republican colleagues on 
Energy and Commerce understood this point, because our clerk read this 
bill to them. As I am sure all of us there will recall, all some 486 
pages were to be read.
  The CHAMP Act does not allow one thin dime to be spent on illegal 
aliens. You will find this prohibition in section 135 of the bill. Nor 
does it create a government-run health insurance system. Coverage under 
CHIP and Medicaid are provided primarily through private health 
insurance. All but two States use some form of managed care for their 
programs. Nothing here will change that, and the newly covered children 
will be exactly the same kind of child in the same situation that every 
one of the children now covered happens to be.
  The CHAMP Act also covers and secures Medicare for the future. This 
past Monday marked the 42nd anniversary of President Johnson signing 
that wonderful piece of legislation into law. I was there.
  The CHAMP Act shores up the Medicare trust fund, improves benefits 
for seniors, protects their ability to choose their own doctors, and 
these reforms effectively provide low-income seniors on Medicare with 
an additional $1,200 in benefits.
  The CHAMP Act is an act of fiscal responsibility. Seniors in 
traditional Medicare will pay approximately three-quarters of a billion 
dollars in excess premiums to cover the overpayments now being made to 
HMOs, a great injustice. The things that my Republican colleagues are 
complaining about are that we stop that evil practice. The CHAMP Act 
also adds 3 years to the life of the trust fund by stopping these 
overpayments which are accelerating the insolvency of the Medicare 
trust fund.
  I know that President Bush has pledged to veto counterpart 
legislation in the Senate that is much more modest in its ambitions.
  I include the rest of my speech for the Record and urge my Republican 
colleagues to read it. It is an excellent speech.
  The legislation before us accomplishes two critical goals. It will 
provide health care to as many as 12 million children. And it will 
allow our elderly to continue seeing their own doctors.
  The CHAMP Act--the Children's Health and Medicare Protection Act--
improves a most successful program created with bipartisan support in 
1997. That program has cut the rate of low-income uninsured children by 
one-third. Some States have been able to insure as many as 60 percent 
of their children who previously had no health insurance.
  Today, six million children get their health care through this 
program. With this legislation, five million previously uninsured 
children will be able to see doctors, receive immunizations, get dental 
care, and other coverage.
  This legislation requires that children receive priority in coverage. 
It allows States to cover pregnant women, recognizing that healthy moms 
make for healthy babies.
  While I am certain that my Republican colleagues on the Committee on 
Energy and Commerce understand this point--because our wonderful clerk 
read the bill to them--I will restate it for others listening:
  The CHAMP Act does not allow one Federal dime to be spent on illegal 
aliens. You will find this prohibition in section 135 of the bill.
  Nor does the bill create a ``government run'' health care system. 
Coverage under CHIP and Medicaid are provided primarily through private 
insurance--all but two States use some form of managed care for their 
programs. Nothing here would change that. And the newly covered 
children are exactly the same as those now covered.
  The CHAMP Act also secures Medicare for the future. This past Monday 
marked the 42nd anniversary of President Johnson signing Medicare into 
law. The CHAMP Act shores up the Medicare trust fund, improves benefits 
for seniors, and protects their ability to choose their own doctors. 
These reforms will effectively provide low-income seniors on Medicare 
with an additional $1,200 in their pockets.
  The CHAMP Act is an act of fiscal responsibility. This year, seniors 
in traditional Medicare will pay nearly three-quarters of a billion 
dollars in excess premiums to finance overpayments to HMOs. Those 
overpayments will accelerate the insolvency of the Medicare trust fund. 
The CHAMP Act adds three years to the life of the Trust Fund.
  I am well aware that President Bush has pledged to veto counterpart 
legislation in the Senate that is much more modest in its ambitions, 
and I have received my own veto letter from the Secretary of the 
Department of Health and Human Services. They stand on one side of the 
debate.
  Let's look at who stands on the other side: 12 million children. The 
American Medical Association. The American Academy of Pediatrics. The 
National Rural Health Association. The National Council on Aging. The 
AARP. The Federation of American Hospitals. The March of Dimes. The 
Children's Defense Fund. The NAACP. The National Governors Association, 
including the Governors of New York, Michigan, California, Illinois, 
and Maryland, and the Catholic Health Association--which notes that 
``the most important pro-life thing the Congress can do right now is 
ensure that the State Children's Health Insurance Program is 
reauthorized.''
  A vote against this bill is a vote to deprive six million children of 
healthcare. A vote against this bill is a vote to continue the plunder 
of the Medicare Trust Fund by bloated private interests. A vote against 
this bill is a vote to deny seniors in Medicare additional benefits.
  I urge all of my colleagues to stand up for what's right for 
children, seniors, people with disabilities, and taxpayers: support the 
speedy passage of the CHAMP Act.
  Mr. BARTON of Texas. Mr. Speaker, I yield myself 2 minutes.
  To follow up on our distinguished minority leader, I want to say what 
the Republicans are for in this debate before we talk about some of the 
flaws in the pending bill.
  We are for authorization of the SCHIP legislation. We are for 
covering low-income and near-low-income children so they have health 
care benefits.
  We are for making sure that the States that are out of funding 
receive additional funds beginning October, 2007.
  So we want to reauthorize the SCHIP program. We do believe that it 
should be maintained as a block grant program and not become an 
entitlement program. We believe it should be reauthorized for a 
specific period of time, not become an open-ended entitlement.
  We believe that SCHIP payments should be restricted to citizens of 
the United States and legal residents who have been here at least 5 
years. We do not believe SCHIP payments should be allowed for illegal 
aliens who have come into this country without the proper 
documentation. So we are for reauthorization of SCHIP. We are for 
covering our low-income and near-low-income children.
  We disagree with our friends on the majority side on the number of 
individuals that we are talking about. We believe that children below 
200 percent of poverty that do not have health insurance or health 
coverage today are in the neighborhood of 700,000, not 7 million.
  But we do understand that if you raise the level to 400 percent, if 
you allow States to self-certify above that level so there really is no 
income test, we do understand if you do that, almost every child in 
America, 78 million children, could be eligible for some sort of SCHIP 
assistance under the majority Democratic plan. But if you restrict it 
to low-income and near-low-income children below 200 percent of 
poverty, we believe that the Republican substitute, which was not made 
in order by the Rules Committee at 2 a.m. this morning, solves that.

[[Page 22278]]


  Mr. STARK. Mr. Speaker, I yield myself such time as I may consume.
  Much has been said by the distinguished chairman of the Energy and 
Commerce Committee, by the distinguished chairman of the Ways and Means 
Committee on how this bill helps Americans. Five million kids will 
receive medical coverage insurance that they don't now have. Seniors 
will receive preventative care with no copayments. They will receive 
mental health care at parity. Rural benefits will be extended to the 
rural communities that need assistance for access to their population. 
Low-income seniors will receive assistance in paying for their co-pays 
and their premiums.
  This bill is fully funded over 10 years, something my Republican 
colleagues never did in the past. I want to remind my colleagues that 
there are many myths being floated around here today. It is important 
to note that 83 of my Republican friends in 1997 voted for an identical 
bill. The bill that they voted on has the exact same income eligibility 
that was passed in 1997. The minority leader, the ranking member of the 
Ways and Means Committee, the ranking member of the Health Subcommittee 
on the Ways and Means Committee, all voted for this and included a 
cigarette tax to pay for it.
  And I might added that the reductions that they put in their Medicare 
bill were five times greater than the adjustments we made in the bill 
today. It included an increase in the Federal tobacco tax.
  Now I don't know what has changed. Maybe they have learned to hate 
children in the interim, but nothing has changed in the eligibility. It 
is the same bill. If it was good for you, then it is better now. And it 
does a fair thing.
  The public is sick of radical ranting. They want health care for kids 
and seniors, and the way to get that is to support the bill before us 
today.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BARTON of Texas. Mr. Speaker, I yield 2 minutes to the ranking 
member of the Health Subcommittee on the Energy and Commerce Committee, 
the gentleman from Georgia (Mr. Deal).
  Mr. DEAL of Georgia. Mr. Speaker, this is a program that started 10 
years ago with a $40 billion Federal authorization of expenditures. The 
current bill before us would spend $128.7 billion over the next 10 
years. When added with the State money, that is over $255 billion in 
taxpayer money over the next 10 years. That is over a quarter of a 
trillion dollars. And what do you get for it?
  CBO says you will cover 600,000 more eligible children, 600,000 
children. You would be better off to give each one of them $80,000 in 
cash, and they would probably get better results.
  In 1996, we had an immigration bill that provided that if you wanted 
to bring somebody and sponsor somebody to come into this country 
legally, you would have to say they would not go on the public rolls of 
Medicaid and other programs for 5 years. This bill removes that. CBO 
says that alone will cost $2.2 billion, and we let sponsors off the 
hook and we put them on the public payroll.
  If we have a bill like the Senate was considering that would make 20 
million illegals legal, that cost alone would be $140 billion a year. 
What it does, too, is it says, in the area of immigration, we are going 
to spend $400 billion paying for translators, not just to serve people 
but to enroll them in the program. That is $400 million.
  Now they can say this does not open it up to illegal immigrants just 
by saying that. CBO says it will cost $2 billion because they think 
that is the cost that it is. What they are saying is just sign an 
affidavit that says you are legally in this country. I have speeders 
who would just like to sign an affidavit saying they have a driver's 
license. I have taxpayers who would like on April 15 to sign an 
affidavit saying they didn't have any taxable income; just take my word 
for it. And if you believe just signing an affidavit is a deterrent to 
people illegally in the country, then you also believe we can just put 
a sign at the Mexican border saying, if you don't have permission, just 
don't come in.
  This is a ridiculous piece of legislation. It will undermine the 
purposes of the original bill.
  Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the gentleman from 
Michigan (Mr. Stupak).
  Mr. STUPAK. Mr. Speaker, I want to congratulate Mr. Dingell and Mr. 
Pallone on crafting a well-balanced bill and for all of the hard work 
you and your staff have spent on the CHAMP Act.
  The State Children's Health Initiative Program was enacted with 
bipartisan support a decade ago to reduce the number of low-income, 
uninsured children by expanding eligibility levels and simplifying 
application procedures.
  In 2006, SCHIP provided insurance to 6.7 million children. In 
Michigan, roughly 118,000 children are enrolled in SCHIP. Eighty-six 
percent of these SCHIP children are of working parents who are unable 
to afford private health insurance for their children.
  SCHIP is vitally important to children living in our country's rural 
areas. Of the 50 counties with the highest rates of uninsured children, 
44 are rural counties.
  This legislation commits $50 billion to reauthorize and improve the 
SCHIP program to protect and continue coverage for 6 million children. 
In addition, this legislation ensures coverage for an additional 5 
million children that are eligible but currently uninsured.
  I am also very pleased to see the rural investments in the CHAMP Act 
which maintains Congress's commitment to rural America by extending a 
number of provisions that, if left to expire, would negatively affect 
rural beneficiaries' access to Medicare health services.
  The CHAMP Act provides health care for children, expands preventive 
Medicare medicine for our seniors and helps make health care more 
affordable, available and accessible in rural America.
  Mr. Speaker, I urge my colleagues to vote in favor of this 
legislation.
  Mr. BARTON of Texas. Mr. Speaker, I yield 2 minutes to the 
distinguished former Speaker of the House and currently the ranking 
member of the Energy and Air Quality Subcommittee of the Energy and 
Commerce Committee, the gentleman from the great State of Illinois (Mr. 
Hastert).
  Mr. HASTERT. Mr. Speaker, I stand somewhat chagrined that we bring 
this bill to the floor of this great House, the floor that deliberates 
on the issues that take care of the needs of people, but this bill 
comes under a charade, a charade that we are going to help the poorest 
and most disadvantaged children.

                              {time}  1445

  The SCHIP program that we put in place 10 years ago started to do 
that, and we can't expand that, but this bill covers people up to four 
times of poverty. That is a family of four earning $82,000 a year.
  What it does is say if you go out into the private sector and you 
continue to buy health care for you and your family, you're going to 
pay a tax, and that tax will fund other people, not just children, but 
expand the amount of adults covered by SCHIP, which is supposed to be 
for children.
  In the State of Illinois, my State, 60 percent of the people on SCHIP 
are adults, not children; 40 percent are covered by children. If we 
want to cover children, let's change it so we cover children. This bill 
doesn't do that. This bill expands what we do for adults, adults that 
should be able to be paying their own way in American society.
  What this bill does is open the doors for all other types of people 
to be able to be involved in government-paid health care, and that's 
the bottom line. It's government-paid health care. It's Hillary care 
all over again.
  And what we do is take, at the cost of seniors who get Medicare 
Advantage, who get choices of their own health care plans, we take it 
away. We wipe it out, and we give it to people who are illegal aliens 
and aliens. And don't kid yourself, it's going to happen.
  So, if we want to take health care on the backs and take it away from 
seniors and give it to people who haven't made their way in this 
country, who

[[Page 22279]]

haven't got their citizenship, then this bill does it. It's a bad bill 
for a bad time, and it's coming under the false pretences of trying to 
do something for children.
  Vote ``no.''
  Mr. Speaker, it's unfortunate that today we are considering 
legislation which was rushed through the House without proper 
consideration in the Energy and Commerce Committee. There were no 
legislative hearings held by the Subcommittee or full committee on a 
bill that could cost taxpayers over $300 billion. That is simply 
unacceptable and the American people have the right to know what this 
bill is really about.
  This Congress has the opportunity to correct flaws in SCHIP and bring 
spending in the program under control. Rather than return the focus 
back to our most vulnerable children, the CHAMP Act would greatly 
expand coverage.
  First, it changes law to now define a child as someone as old as 21. 
It also expands coverage to more adults, and families with incomes 
upwards of 400 percent of the poverty line. This equates to an annual 
salary of over $82,000.
  We are sending the message to families across the country--drop your 
children from your private insurance--the American taxpayer will foot 
the bill.
  Furthermore, at a time when Americans look to Congress to secure our 
borders and enforce our existing immigration laws, the Democrat 
leadership, through the CHAMP Act, is taking leaps in the opposite 
direction by opening the door to free health insurance for illegal 
aliens.
  It does so by removing language from the Deficit Reduction Act 
requiring proof of citizenship to receive SCHIP and Medicaid. This will 
make it nearly impossible for the Federal Government to prevent illegal 
immigrants from accessing these programs.
  The American people are getting a clear message today from the new 
majority. They want your tax dollars to provide incentives to those who 
choose to break our laws and enter this country illegally.
  And our Democrat colleagues would pay for this reckless expansion of 
SCHIP by cutting Medicare Advantage plans and significantly raising 
premiums on seniors.
  Millions of seniors depend on Medicare Advantage plans to provide the 
benefits they need and services they can't otherwise get with 
traditional Medicare. Especially our seniors in rural and underserved 
communities. The CHAMP Act will immediately eliminate these enhanced 
benefits and choices so many have come to rely on.
  Our Democrat friends are once again attempting to empower the 
Government to ration healthcare in this country. This will take choices 
out of every American's hands when it comes to their well-being and 
leaves the decisions to a government-run managed care system.
  Instead, we should be encouraging the participation of private plans 
regardless if it is for children, families, or seniors. This creates 
competition in the marketplace, which we know lowers out-of-pocket 
costs while expanding benefits for the insured.
  I believe, given the opportunity to properly debate and offer 
amendments, we could ensure coverage to our most vulnerable children in 
a fiscally responsible way without raising taxes and sacrificing 
Medicare services for our seniors. Unfortunately Republicans were 
denied that right today. I urge my colleagues to vote ``no'' on the 
CHAMP Act.
  Mr. STARK. Mr. Speaker, I just remind the former Speaker that he 
voted for the same benefits in 1997, and nothing has changed since 
then.
  I yield 1 minute to the gentleman from Michigan (Mr. Levin), who 
remembers what happened in 1997.
  Mr. LEVIN. Mr. Speaker, some issues are complicated. This one is 
quite simple. It's kids and more benefits for seniors.
  Five million more kids. I just wonder how many on the minority side 
are going to stand up and say no to 5 million kids, including kids 
where you live. Benefits for seniors are improved. And then we hear 
there will be benefits for illegal aliens, illegal immigrants? It's 
false. It's a lie.
  This does not go to illegal immigrants. I did read the bill, and I 
also read the minds of the American people.
  I also read the minds of the American people. They want the children 
of America covered by health insurance, and the Republicans have failed 
to do it in their years here.
  We're going to do it today for the 5 million kids in the United 
States of America. That's what this is all about.
  I rise in strong support of the Children's Health and Medicare 
Improvement Act of 2007. This legislation re-authorizes the State 
Children's Health Insurance Program and improves Medicare for all 
beneficiaries.
  Some of the issues we debate in Congress are complicated. This issue 
is quite simple. It is about kids getting health care and seniors 
getting better Medicare benefits. The American people want the children 
of America covered by health msurance.
  The current health insurance program covers 6 million children 
nationwide, including 55,000 kids in my home State of Michigan. But 
when two-thirds of the 9 million uninsured kids in America are 
eligible, but not participating, we need to extend the reach of the 
program. Extending this program means giving States the resources they 
need to reach out and cover these 6 million kids.
  This important legislation not only allows more kids to have health 
insurance, but it also makes long-needed improvements to the Medicare 
program. Improvements include ensuring physician access for Medicare 
beneficiaries, lowering the cost of mental health care for seniors, 
eliminating co-pays and deductibles for preventative services like 
mammograms and colonoscopy screenings, and expanding programs that help 
low-income seniors pay for their health care and prescriptions.
  The Republicans reject this bill because it does not fit their rigid 
ideology. This bill is about a program that works and kids that need 
health care.
  Mr. BARTON of Texas. Mr. Speaker, I yield 1 minute to the 
distinguished gentlewoman from Nashville, Tennessee (Mrs. Blackburn), a 
member of the committee.
  Mrs. BLACKBURN. Mr. Speaker, I support the original intent of SCHIP 
to cover our low-income children at 200 percent of the Federal poverty 
level; yet the bill before us really strays from that, and we all know 
it.
  And we're debating this under a lockdown rule because the Rules 
Committee refused to allow Republican amendments to this bill, and I 
will tell you, I found that 1 a.m. meeting for the Rules Committee 
informative and entertaining in an unfortunate sense.
  The debate on this, as my colleague said, is pretty simple: Who will 
manage and control the health care sector that comprises one-seventh of 
our Nation's economy. That's what this is about today. Are individual 
Americans going to have the freedom to make those choices or are those 
Americans going to be relegated to being a faceless file on a 
bureaucrat's desk with that bureaucrat making those life-and-death 
decisions? Our future health care system is going to be shaped by the 
way we answer those questions on this floor today.
  Under this Democrat bill, there will be billions spent to enroll 
children into SCHIP.
  I encourage my colleagues to oppose this bill.
  Mr. DINGELL. Mr. Speaker, my good Republican friends will be 
discussing process, and we want to discuss kids and the future of the 
country.
  For that purpose, I yield 2 minutes to the distinguished chairman of 
the subcommittee, my friend, Mr. Pallone of New Jersey.
  Mr. PALLONE. Mr. Speaker, there shouldn't be any doubt here today 
about what the Republicans are trying to do. They are trying to destroy 
the SCHIP program.
  We spent 18 hours in our committee where they wouldn't let the bill 
come up. The substitute that they had in the committee would put so 
many barriers in the program that, in effect, the program would die.
  Don't believe them. They don't want to provide the additional funds. 
They know that this expires on September 30, and it will if we don't do 
something today; that there will be a million kids that will 
automatically not have their health insurance.
  We're not changing any of the eligibility today. It's they that want 
to change the eligibility.
  The fact of the matter is CBO tells us, and I have it right here, 
that this bill would cover another 5 million children who are currently 
uninsured.
  Now, my colleagues on the other side know that the States have run 
out of money. Georgia ran out of money in March. They came to us and 
begged us for more money. States ran out each month of money. We had to 
put money

[[Page 22280]]

in the supplemental appropriations bill because the States ran out of 
money.
  We need a lot more money to make sure that these 5 million kids are 
covered. They want to stop that. They're not proposing to cover any 
additional kids. They want to cut that.
  There's no illegal aliens covered in this bill. There never were. 
There's no language in here that says that.
  This is not an entitlement. It's a block grant set up by Newt 
Gingrich. Newt Gingrich was the guy who set it up as a block grant, 
giving the States flexibility. The States want flexibility. Some of 
them want to go a little higher. Well, it's George Bush, the President 
of the United States, that granted the waiver so they could have some 
adults or kids at higher incomes.
  Who are you kidding? This is a Republican program, but you are now 
walking away from it. You don't want to fund it. You want to deny 
eligibility. You want to kill the program. That's what you're all about 
here today.
  And don't let anybody kid you. Eighteen hours we had to listen while 
the bill was being read. Today, they want to delay. They're kidding no 
one saying that they want an SCHIP program. Don't believe what they 
say. It's simply not true.
  You vote for this bill today to expand this program to provide more 
kids, not more eligibility. And if you don't, this will die and those 
kids are not going to have health insurance.
  We have health insurance for our kids as Members of Congress. That's 
okay for our own kids but not for the rest of these poor kids.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore. All Members are reminded to direct their 
comments to the Chair.
  Mr. BARTON of Texas. Mr. Speaker, page 76 and 77, section 143 of the 
original committee print repeals the requirement for documentation 
presentation for children covered under SCHIP.
  With that, I yield 1 minute to the gentleman from Michigan, a member 
of the committee, Mr. Rogers.
  Mr. ROGERS of Michigan. Mr. Speaker, a letter recently from the NAACP 
says: We strongly support maintaining adequate funding for the Medicare 
Advantage program that serves as a critical funding for accessing 
health care services, particularly for low-income and minority Medicare 
beneficiaries.
  Talk about what's in the bill. Don't use children as your shield. 
This is the single largest cut to Medicare in the program's history. 
Absolutely, it is, and let me tell you what you are cutting. Read the 
bill.
  You're cutting stroke victims from inpatient rehab. You're cutting 
doctors. You're cutting oxygen equipment and wheelchair services to 
seniors. You're cutting seniors' home health care, cutting hospital 
payments, cutting skilled nursing care for the sickest seniors in 
nursing homes. You're cutting dialysis services for kidney cancer 
patients. You're cutting imaging services for cancer and cardiac 
patients.
  The list goes on. You're telling seniors once we slash the Medicare 
Advantage payments, we're going to push you on to part B, and guess 
what, your premiums are going up. We can work this out.
  This was a Republican-generated idea when it started, SCHIP, to 
include those 200 percent or below of children in poverty, and I will 
tell you that there's not one thing that helps those kids under 200 
percent of poverty, and you will get more of illegal immigrants at the 
expense of seniors. This is a bad bill.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore. The time has expired. Would the gentleman 
please refrain from talking on.
  The gentleman from California.
  Mr. STARK. Mr. Speaker, I yield 1 minute to the distinguished 
gentleman from Washington (Mr. McDermott), a member of the Ways and 
Means Committee. Pending that, I would like to point out that he 
understands that in 1997 the Republican bill had five times greater 
reduction in Medicare spending than this bill does today, which 83 
Members of the Republican party who are still in Congress voted for at 
that time.
  Mr. McDERMOTT. Mr. Speaker, the debate comes down to this: Do you 
favor big tobacco or children? Do you favor big tobacco and insurance 
company profits or seniors? We come down on the side of children and 
seniors, and that's what this bill is all about.
  You've heard over and over and over again there is no change of 
eligibility, but you insist on saying the same untruth because you want 
to make a point in the press. That is wrong. There are not any illegal 
aliens going to get in here. What we took out was what you put in. The 
fact is that we took out your requirement that people bring in papers 
when their kid is sick and dying, and you're saying to a parent, now 
you've got to prove you're a citizen before we'll take care of your 
kid.
  That's what you're doing. You've taken your clothes off in public. 
You don't want to take care of children.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore. All Members are reminded to please address 
their remarks to the Chair.
  The gentleman from Texas.
  Mr. BARTON of Texas. Mr. Speaker, I'd like to point out CBO scores 
this as $1.9 billion. So somebody is not telling the truth on the 
floor.
  I yield 1 minute to a distinguished member of the committee, Mr. 
Burgess of Texas.
  Mr. BURGESS. Mr. Speaker, I thank the chairman. One minute is 
scarcely enough time to discuss what we need to discuss today. So I 
would, just like the chairman of the full committee, put my entire 
statement into the Record.
  Mr. Speaker, I want to confine my comments today to issues that 
surround issues for physician reimbursement. I had two amendments last 
night in Rules Committee that were not made in order that would have 
vastly improved physician reimbursement. Instead, we have language in 
the Democratic underlying bill that provides a small uptick for the 
next 2 years, then you fall off the cliff, and then you're frozen for 
the next 10 years. Hardly measures that will encourage people to go 
into the practice of medicine in the future.
  I also want to reference section 651, the whole hospital exemption. 
Mr. Speaker, I would just point out that in the Rules Committee it was 
made in order that several hospitals would actually be grandfathered 
out or carved out of that exemption, and most of these hospitals lie in 
Democratic districts. I have a letter from 75 constituents, physicians 
back in my home State of Texas, who strongly object to the whole 
hospital exemption in this bill, and I will submit that for the Record 
as well.
  The Democratic party is prepared to take its first step toward cradle 
to grave government involvement in the lives of all Americans. The 40-
plus page SCHIP bill that was unveiled to this committee in the wee 
hours of last Wednesday represents legislative malpractice. We 
shouldn't be surprised because we've been here before. A handful of 
Democratic staff, working behind closed doors, without any input from 
the real world have produced just what we should expect: a bloated and 
complicated proposal that grows the size of government, diminishes 
state fiscal accountability and an individual's personal 
responsibility, and likely erodes the independent practice of medicine.
  I doubt anybody in this body, Republican or Democrat, really 
understands what is in this proposal. We've not had one legislative 
hearing on this bill and haven't even taken this bill through regular 
order in the Energy and Commerce Committee. As a member of the Health 
Subcommittee of that panel, I'm disappointed in that fact because the 
subcommittee has shown an ability to come together and work out 
partisan differences. I haven't spoken with Chairman Pallone, but I 
imagine he shares that sentiment to some degree.
  Just recently, Republicans and Democrats came together to report out 
a bill that improves drug safety and FDA review of new drugs and 
devices. We worked through our differences and produced superior 
legislation. But all that bipartisan comity has been thrown out the 
window. Any rationalization of how we can vote on this bill and report 
to our constituents that we conducted an in-depth review of this 
legislation would be farcical at best, especially when we have learned 
that the Rules Committee plans to report out a completely different 
measure in the dark and early hours this coming Wednesday.

[[Page 22281]]

  Kids need a safety net, but the safety net shouldn't apply to those 
that can and should help themselves. Taking money from taxpayers to 
give it to families that have the resources to purchase health 
insurance for their children is irresponsible. And if affordable 
options don't exist for these families, well forget it, because this 
bill doesn't lift a finger to reform an insurance market burdened by 
regulation and lack of choice.
  On immigration, this bill all but ensures that states like mine and 
other border states will be saddled with more cost as it rewards those 
that illegally enter our country. The debate on illegal immigration is 
often ruled by emotion but the provisions in this bill relating to 
immigrant health care are equally suited--this bill makes little to no 
effort to understand this dynamic and only serves to pour gasoline on 
an inferno.
  On Medicare, this bill misses the mark widely. This bill would make a 
bad investment in an attempt to fix Medicare physician payment and in 
doing so, members will find themselves in the position of spending 
billions more in the future to fix the problem again.
  We shouldn't fool ourselves that this is realistic policy making. For 
those members about to head home and face their constituents at 
coffees, lunches, and town halls they should be wary of what Speaker 
Pelosi is force feeding this body.

                              Baylor Medical Center at Frisco,

                                       Frisco, TX, August 1, 2007.
     Hon. Michael C. Burgess, MD,
     U.S. Congressman,
     Washington, DC.
       Dear Congressman Burgess: We are physicians that practice 
     at Baylor Medical Center at Frisco. Today, we are writing to 
     express our deep concern about the language in the S-CHIP 
     bill (CHAMP Act) once again attempting to prohibit physicians 
     from owning or investing in any hospital. While this 
     legislation contains many important and generous provisions, 
     such as the reauthorization of SCHIP and the SGR fix, Section 
     651 virtually eliminates physician owned hospitals for no 
     reason other than the enmity of certain competitors.
       Much has been written about the negative effect this 
     ownership has had on our community hospitals where we also 
     practice. Many of the large hospital systems claim they are 
     being harmed by physician-owned specialty hospitals in their 
     communities. Yet none of them has provided any factual data 
     to support their claim that they are unable to provide 
     ``essential services'' as a result of specialty hospitals. In 
     fact each of the last 6 years the American Hospital 
     Association has reported a 6% increase in profits in their 
     member hospitals. And many of their arguments (e.g. 
     ``specialty hospitals typically do not provide emergency 
     care'') simply is not accurate.
       The benefits of the physician ownership model are so 
     convincing that a growing number of not-for-profit healthcare 
     systems, including some of the largest members of the 
     American Hospital Association, have embraced the concept of 
     physician ownership.
       MedPAC, CMS, and GAO have all studied this issue. Not one 
     of them has concluded that physician owned hospitals 
     represent a threat to the community hospitals where they 
     exist. To the contrary, some have concluded that the overall 
     increase in quality of care greatly benefits the communities 
     in which they exist.
       We believe that a major part of our success is due to the 
     fact that individual physicians are partners in the ownership 
     in the facility. As any business owner, we take pride in our 
     facility and have worked hard to make sure the quality of 
     medical care remains high. And frankly, we are much more 
     aware of the costs and how to better deliver care more cost 
     effectively. Through disclosure policies our patients are 
     aware of the physician ownership and our surveys reveal very 
     high patient satisfaction.
       The best way to manage health care costs is to encourage 
     physicians to become involved in the development of new 
     models for the delivery of surgical and other health 
     services. Maintaining the status quo by giving acute care 
     hospitals protection from market forces will only lead to 
     higher health care costs for us all.
       When voting, please consider carefully the decision you 
     will be asked to make regarding physician ownership, it will 
     not only affect your constituents' rights as a patient to 
     have the most convenient cost effective care, it will affect 
     the delivery of health care for generations to come.
           Sincere regards,
         Benton Ellis, MD; James Gill, MD; David Layden, MD; James 
           Montgomery, MD; Mark Allen, MD; Dawn Bankston, MD; F. 
           Alan Barber, MD; Richard Bowman, MD; Dale Burleson, MD; 
           Cameron Carmody, MD; John Schweers, MD; William Cobb, 
           MD; Stephen Courtney, MD; A. Joe Cribbins, MD; Bruce 
           Douthit, MD; Dennis Eisenberg, MD; Berry Fleming, MD; 
           Richard Guyer, MD; Lloyd Haggard, MD; Stephen Hamn, MD; 
           Andrea Ku, MD; Briant Herzog, MD; Stephen Hochschuler, 
           MD; James Hudguns, MD; Fawzia Jaffee, MD; Warrett 
           Kennard, MD; Adam Kouyoumjian, DO; Jimmy Laferney, MD; 
           Stephen Lieman, MD; Samuel Lifshitz, MD; Earl Lund, MD; 
           Gary Mashigian, DPM; Mark McQuaid, MD; William 
           Mitchell, MD; Dr. Keith Matheny; William Montgomery, 
           MD; John Moore, MD; Mickey Morgan, MD; William Mulchin, 
           MD; John Peloza, MD; Ralph Rashbaum, MD; Jon Ricks, MD; 
           Alfred Rodriguez, MD; Vince Rogenes, MD; David Rogers, 
           MD; Ivan Rovner, MD; Michael Schwartz, MD; James 
           Smrekar, MD; Robert Taylor, DPM; Ewen Tseng, MD; Gary 
           Webb, MD; Stanley Whisenant, MD; Michael Wierschem, MD; 
           Kathryn White, MD; Kathryn Wood, MD; Iddriss Yusufali, 
           MD; Roger Skiles, MD; Scott Fitzgerald, MD; Leonard 
           Bays, MD; Donald Mackenzie, MD; Lloyd Haggard, MD; 
           David Holder, MD; Joe Hughes, MD; David Perkins; Robert 
           Purnell, MD; Eddie Pybatt, MD; Elaine Allen, MD; Steven 
           Michelsen, DO.


                         amendment to h.r. 3162

  This amendment would modify Title III of H.R. 3162 that addresses 
Medicare physician reimbursement. While H.R. 3162 provides temporary 
relief to address scheduled Medicare physician payment cuts, it does 
nothing to address the problem in the long-term, and would in fact 
exacerbate the problem in the long-term. The amendment does the 
following:
  1. Reset to 2007 the base year for application of the Sustainable 
Growth Rate (SGR), and eliminates the Sustainable Growth Rate in 2010. 
The practical effect of this on Medicare physician payment would 
provide physicians with over a 1 percentage increase in 2008 and 2009, 
and stable and sustainable growth rate in payment from 2010 and into 
the future.
  2. Makes available incentive payments for increased quality reporting 
and implementation of health information technology.
  3. Provides annual reports to physicians on billing patterns under 
Medicare.
  4. Provides an annual report to Medicare beneficiaries on annual 
Medicare expenditures.
  5. Mandates a study on whether quality reporting requirements on 
health care disparities.

   Amendment to H.R. 3162, as Reported [By The Committee on Ways and 
                 Means] Offered By Mr. Burgess of Texas

                           (CHAMP amendment)

       Strike sections 301, 302, 303, 304, and 307, and insert the 
     following sections (and redesignate sections 305 and 306 
     accordingly):

     SEC. 301. RESETTING TO 2007 THE BASE YEAR FOR APPLICATION OF 
                   SUSTAINABLE GROWTH RATE FORMULA; ELIMINATION OF 
                   SUSTAINABLE GROWTH RATE FORMULA IN 2010.

       (a) In General.--Section 1848(d)(4) of the Social Security 
     Act (42 U.S.C. 1395w-4(d)(4)) is amended--
       (1) in paragraph (4)--
       (A) in subparagraph (B), by striking ``subparagraph (D)'' 
     and inserting ``subparagraphs (D) and (G)''; and
       (B) by adding at the end the following new subparagraph:
       ``(G) Rebasing to 2007 for update adjustments beginning 
     with 2008.--In determining the update adjustment factor under 
     subparagraph (B) for 2008 and 2009--
       ``(i) the allowed expenditures for 2007 shall be equal to 
     the amount of the actual expenditures for physicians' 
     services during 2007;
       ``(ii) subparagraph (B)(ii) shall not apply to 2008; and
       ``(iii) the reference in subparagraph (B)(ii)(I) to `April 
     1, 1996' shall be treated, beginning with 2009, as a 
     reference to `January 1, 2007'.''; and
       (2) by adding at the end the following new paragraph:
       ``(8) Updating beginning with 2010.--The update to the 
     single conversion factor for each year beginning with 2010 
     shall be the percentage increase in the MEI (as defined in 
     section 1842(i)(3)) for that year.''.
       (b) Conforming Sunset.--Section 1848(f)(1)(B) of such Act 
     is amended by inserting ``(ending with 2008)'' after ``each 
     succeeding year''.

     SEC. 302. QUALITY INCENTIVES.

       (a) Extension of Current Quality Reporting System and 
     Transitional Bonus Incentive Payments for 2008 and 2009.--
       (1) Extension of quality reporting system through 2009.--
     Section 1848(k) of the Social Security Act (42 U.S.C. 
     1395w(k)) is amended--
       (A) in the heading of paragraph (2)(B), by inserting ``and 
     2009'' after ``2008''; and
       (B) in paragraphs (2)(B) and (4), by inserting ``and 2009'' 
     after ``2008'' each place it appears.
       (2) Extension of and increase in bonus payments for 2008 
     and 2009.--Section 101(c) of the Medicare Improvement and 
     Extension Act of 2006 (division B of Public Law 109-432) is 
     amended--
       (A) in the heading, by inserting ``, 2008, and 2009'' after 
     ``2007'';
       (B) in paragraph (1), by inserting ``(or 3 percent in the 
     case of reporting periods beginning after December 31, 
     2007)'' after ``1.5 percent'';

[[Page 22282]]

       (C) in paragraph (4), by striking ``single consolidated 
     payment.'' and inserting ``single consolidated payment for 
     each reporting period. Such payment shall be made for a 
     reporting period within 30 days after the date that required 
     information has been submitted with respect to claims for 
     such period.''; and
       (D) in paragraph (6)(C), by striking ``the period beginning 
     on July 1, 2007, and ending on December 31, 2007'' and 
     inserting ``each of the five consecutive 6-month periods 
     beginning on July 1, 2007, and ending on December 31, 2009''.
       (b) Establishment of New Quality Incentive System Effective 
     in 2010.--
       (1) In general.--Section 1848 of the Social Security Act 
     (42 U.S.C. 1395w) is amended by striking subsection (k) and 
     inserting the following:
       ``(k) Physician Quality Incentive System.--
       ``(1) In general.--The Secretary shall establish a 
     reporting system (in this subsection referred to as the 
     `Physician Quality Incentive System' or `System') for quality 
     measures relating to physicians' services that focuses on 
     disease-specific high cost conditions. Not later than January 
     1, 2010, the Secretary shall--
       ``(A) identify the 10 health conditions that have the 
     highest proportion of spending under this part, due in part 
     to a gap in patient care, and for which reporting measures 
     are feasible; and
       ``(B) adopt reporting measures on these conditions, based 
     on measures developed by the Physician Consortium of the 
     American Medical Association.
       ``(2) Add-on payment.--
       ``(A) In general.--The Secretary shall provide, in a form 
     and manner specified by the Secretary, for a bonus or other 
     add-on payment for physicians that submit information 
     required on the conditions identified under paragraph (1).
       ``(B) Amount.--Such a bonus or add-on payment shall be 
     equal to 1.0 percent of the payment amount otherwise computed 
     under this section.
       ``(C) Timely payments.--Such a payment shall be made, with 
     respect to information submitted for a month, by not later 
     than 30 days after the date the information is submitted for 
     such month.
       ``(D) Deductible and coinsurance not applicable.--Such 
     payment shall not be subject to the deductible or coinsurance 
     otherwise applicable to physicians' services under this part.
       ``(E) Use of registry.--In carrying out subparagraph (A), 
     the Secretary shall allow the submission of the required 
     information through an appropriate medical registry 
     identified by the Secretary.
       ``(3) Monitoring.--The Secretary shall monitor and report 
     to Congress on an annual basis physician participation in the 
     Physician Quality Incentive System, administrative burden 
     encountered by participants, barriers to participation, as 
     well as savings accrued to the Medicare program due to 
     quality care improvements based on measures established under 
     the Physician Quality Incentive System.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to payment for physicians' services for services 
     furnished in years beginning with 2010.

     SEC. 303. HEALTH INFORMATION TECHNOLOGY (HIT) PAYMENT 
                   INCENTIVE.

       Section 1848 of the Social Security Act is amended by 
     adding at the end the following new subsection:
       ``(m) Health Information Technology Payment Incentives.--
       ``(1) Standards.--Not later than January 1, 2008, the 
     Secretary shall create standards for the certification of 
     health information technology used in the furnishing of 
     physicians' services.
       ``(2) Add-on payment.--The Secretary shall provide for a 
     bonus or other add-on payment for physicians that implement a 
     health information technology system that is certified under 
     paragraph (1). Such a bonus shall be equal to 3.0 percent of 
     the payment amount otherwise computed under this section, 
     except that--
       ``(A) in no case may total of such bonus and the bonus 
     provided under subsection (k)(2) exceed 6 percent of such 
     payment amount; and
       ``(B) such payments with respect to a physician shall only 
     apply to physicians' services furnished during a period of 36 
     consecutive months beginning with the first day of the first 
     month after the date of such certification.

     The bonus payment under this paragraph shall not be subject 
     to the deductible or coinsurance otherwise applicable to 
     physicians' services under this part.''.

     SEC. 304. INFORMATION FOR PHYSICIANS ON MEDICARE BILLINGS.

       (a) In General.--Section 1848 of the Social Security Act, 
     as amended by section 201, is further amended by adding at 
     the end the following new subsection:
       ``(n) Annual Reporting of Information to Physicians.--
       ``(1) In general.--The Secretary shall annually report to 
     each physician information on total billings by the physician 
     (including laboratory tests and other items and services 
     ordered by the physician) under this title. Such information 
     shall be provided in a comparative format by code, weighting 
     for practice size, number of Medicare patients treated, and 
     relative number of Medicare beneficiaries in the geographical 
     area.
       ``(2) Confidentiality.--Information reported under 
     paragraph (1) is confidential and shall not be disclosed to 
     other than the physician to whom the information relates.''.
       (b) Effective Date.--The Secretary of Health and Human 
     Services shall first provide for reporting of information 
     under the amendment made by subsection (a) for billings 
     during 2007.

     SEC. 305. INFORMATION FOR BENEFICIARIES ON MEDICARE 
                   EXPENDITURES.

       (a) In General.--Section 1804 of the Social Security Act is 
     amended by adding at the end the following new subsection:
       ``(d) Annual Report on Individual Resource Utilization.--
     The Secretary shall provide for the reporting, on an annual 
     basis, to each individual entitled to benefits under part A 
     or enrolled under part B, on the amount of payments made to 
     or on behalf of the individual under this title during the 
     year involved. Such information shall be provided in a format 
     that compares such amount with the average per capita 
     expenditures in the region or area involved.''.
       (b) Effective Date.--The Secretary of Health and Human 
     Services shall first provide for reporting of information 
     under the amendment made by subsection (a) for payments made 
     during 2007.

     SEC. 306. COLLECTION OF DATA ON MEDICARE SAVINGS FROM 
                   PHYSICIANS' SERVICES DIVERSION.

       (a) In General.--The Secretary of Health and Human Services 
     shall collect data on annual savings in expenditures in the 
     Medicare program due to physicians' services that resulted in 
     hospital or in-patient diversion.
       (b) Report.--The Secretary shall transmit to Congress 
     annually a summary of the data collected under subsection 
     (a).

     SEC. 307. STUDY OF REPORTING REQUIREMENTS ON HEALTH CARE 
                   DISPARITIES.

       (a) In General.--The Secretary of Health and Human Services 
     shall provide for a study of health care disparities in high-
     risk health condition areas and minority communities about 
     the impact reporting requirements may have on physician 
     penetration in such communities.
       (b) Report.--The Secretary shall provide for the completion 
     of the study by not later than January 1, 2011, and shall 
     submit to Congress a report on the study upon its completion.
       ``(m) Health Information Technology Payment Incentives.--
       ``(1) Standards.--Not later than January 1, 2008, the 
     Secretary shall create standards for the certification of 
     health information technology used in the furnishing of 
     physicians' services.
       ``(2) Add-on payment.--The Secretary shall provide for a 
     bonus or other add-on payment for physicians that implement a 
     health information technology system that is certified under 
     paragraph (1). Such a bonus shall be equal to 3.0 percent of 
     the payment amount otherwise computed under this section, 
     except that--
       ``(A) in no case may total of such bonus and the bonus 
     provided under subsection (k)(2) exceed 6 percent of such 
     payment amount; and
       ``(B) such payments with respect to a physician shall only 
     apply to physicians' services furnished during a period of 36 
     consecutive months beginning with the first day of the first 
     month after the date of such certification.

     The bonus payment under this paragraph shall not be subject 
     to the deductible or coinsurance otherwise applicable to 
     physicians' services under this part.''.


                         amendment to h.r. 3162

  This amendment would modify section 704 of H.R. 3162 that would 
require the Secretary of HHS to develop a plan to implement for never 
events. Never events, pursuant to H.R. 3162, are defined as an event 
involving the delivery of (or failure to deliver) physician services in 
which there is an error in medical care that is clearly identifiable, 
usually preventable, and serious in consequences to patients and that 
indicates a deficiency in the safety and process controls of the 
services furnished with respect to the physician, hospital, or 
ambulatory surgical center involved. This amendment would ensure that 
the identification of a never event is confidential in nature, as it 
applies to patient work product under Section 922 of the Public Health 
Service Act.


                              never events

  This amendment would ensure that the identification of never events 
as required by CHAMP does not lead to frivolous lawsuits against 
physicians.
  While I may not agree with how ``never events'' are defined by this 
bill, I agree that physicians should be able to operate in an 
environment that supports improvement of processes and outcomes and not 
a punitive legal environment.
  Under the bill, ``never events'' are defined as an event involving 
the delivery of (or failure

[[Page 22283]]

to deliver) physician services in which there is an error in medical 
care that is clearly identifiable, usually preventable, and serious in 
consequences to patients and that indicates a deficiency in the safety 
and process controls of the services furnished with respect to the 
physician, hospital, or ambulatory surgical center involved.
  This simple amendment ensures that identification of these ``never 
events'' would not be used in a legal proceeding and would be 
considered patient work product as they are under other areas of 
federal law.

   Amendment to H.R. 3162, as Reported [by the Committee on Ways and 
                                 Means]

                    Offered by Mr. Burgess of Texas

                           (CHAMP Amendment)

       Amend section 704 (relating to never events plan) by 
     redesignating subsection (d) as subsection (e) and inserting 
     after subsection (c) the following:
       (d) Liability Protection.--
       (1) In general.--Section 922 of the Public Health Service 
     Act (42 U.S.C. 299b-22) (relating to liability and 
     confidentiality protections) shall apply to never event 
     information under this section in the same manner as it 
     applies to patient work product under such section 922.
       (2) Never event information defined.--For purposes of this 
     subsection the term ``never event information'' means 
     information required to be provided by a hospital, ambulatory 
     surgical center, or physician under the never events plan 
     with respect to a determination to reduce or deny payment 
     under title XVIII of the Social Security Act for services 
     furnished by the hospital, ambulatory surgical center, or 
     physician, respectively, on the basis of the finding of a 
     never event.


                         amendment to h.r. 3162

  This amendment would prohibit the Secretary of Health and Human 
Services from approving future State waivers that would cover adults 
other than pregnant adults under the State Children's Health Insurance 
Program. This amendment would also terminate existing State waivers 
that cover adults other than pregnant adults under a State's Children's 
Health Insurance Program. SCHIP is designed to cover uninsured 
children, and taxpayer funds used to cover adults cannot achieve that 
goal. This amendment would save State and Federal Governments hundreds 
of millions of dollars that could be used to cover more uninsured 
children.


                                 adults

  Since Congress enacted SCHIP in 1997, States have been successful in 
making affordable health insurance available to millions of low-income 
children.
  Prior to the enactment of SCHIP, low-income families that made too 
much money to be eligible for Medicaid coverage found it difficult to 
find affordable coverage for their children. Several million children 
were left without health coverage for important preventative health 
services, forcing their families to seek care in emergency departments 
and lacking vital continuity of care.
  With the Federal and State partnership that is the cornerstone of 
SCHIP, needy families were able to obtain health coverage for their 
children that was previously just out of reach.
  Unfortunately some States have extended coverage to adults under 
their SCHIP program, taking limited dollars away from the needs of the 
children the program was intended to meet. One dollar a State spends on 
an adult is $1 not spent on a needy child. This amendment would 
eliminate this inequitable development that needs to be stopped dead in 
its tracks.
  My bill would prohibit States from spending even a single SCHIP 
dollar on anyone but a child or a pregnant woman. Currently, 14 States 
extend SCHIP coverage to adults and four of those States cover more 
adults than children in their programs.
  We can debate coverage of adults and affordable options and States 
can take this responsibility upon their shoulders as well. But we 
shouldn't spend a dollar dedicated to a child on an adult. It does a 
disservice to the very needy children we're trying to provide coverage 
to.

   Amendment to H.R. 3162, as Reported [by the Committee on Ways and 
                                 Means]

                    Offered by Mr. Burgess of Texas

                           (CHAMP amendment)

       At the end of subtitle D of title I add the following new 
     section:

     SEC. ___. PROHIBITION OF SECTION 1115 WAIVERS FOR COVERAGE OF 
                   NONPREGNANT ADULTS UNDER SCHIP.

       (a) In General.--Section 2107(f) of the Social Security Act 
     (42 U.S.C. 1397gg) is amended, as added by section 6102(a) of 
     the Deficit Reduction Act of 2005 (Public law 109-171) is 
     amended--
       (1) in the first sentence, by striking ``childless''; and
       (2) by striking the second sentence.
       (b) Conforming Amendments.--Section 2105(c)(1) of the 
     Social Security Act (42 U.S.C. 1397ee(c)(1)) is amended--
       (1) in the first sentence, by striking ``childless''; and
       (2) by striking the second sentence.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.
       (d) Termination of Funding of Coverage Under Current 
     Waivers.--In the case of any waiver, experimental, pilot, or 
     demonstration project that would allow funds made available 
     under title XXI of the Social Security Act (42 U.S.C. 1397aa 
     et seq.) to be used to provide child health assistance or 
     other health benefits coverage to an adult (other than 
     pregnant adult) that is approved as of the date of the 
     enactment of this Act, on and after such date the Secretary 
     of Health and Human Services shall not extend or renew such a 
     waiver or project in a manner that permits funds under the 
     waiver or project to be used for such purpose and shall 
     otherwise take such action as is necessary to prevent the use 
     of funds under the waiver or project to be used for such 
     purpose on and after January 1, 2008.


                         amendment to h.r. 3162

  This amendment would require a State submitting a SCHIP waiver 
request to the Secretary of Health and Human Services to certify that 
children in that state have access to an adequate level of 
pediatricians, pediatric specialists and pediatric sub-specialists for 
targeted low-income children covered under the State's child health 
plan.
  The State must include a survey conducted by the American Academy of 
Pediatrics, a state professional medical society, or other qualified 
organization and the Secretary may not approve a waiver application 
unless the survey is included in the State's submission.


                                 access

  This amendment would ensure that as states seek to expand their CHIP 
programs, that an adequate number of pediatricians, pediatric 
specialists and sub-specialists are available to meet increased demand 
by new patients.
  To quote the American Academy of Pediatrics Workforce Committee, ``an 
appropriate pediatrician workforce is essential to attain the optimal 
physical, mental, and social health and well-being for all infants, 
children, adolescents, and young adults. To fully realize such a 
workforce requires careful examination of the needs of children and the 
consequences of policies that influence the pediatrician workforce.''
  This amendment would attempt to achieve this goal, by requiring 
adequate access to these medical professionals as a condition approval 
of a waiver submission.
  The amendment would require the American Academy of Pediatrics or 
other state medical society to survey and certify that the state's 
children have access to a sufficient number of pediatricians and 
specialists, should a state request a waiver from federal SCHIP 
requirements.
  States have a variety of policy options to ensure that an adequate 
physician workforce is available in the state and this amendment would 
encourage those states to exercise those options.
  The growth of the number of pediatricians per child has been positive 
over the past decade.
  We should ensure that this momentum is sustained and this amendment 
will do just that.
  I think this is an amendment that should have broad bipartisan 
support because its goal is ensuring access to needed medical 
professionals for our children.
  More broadly, in the coming years this country will face a physician 
workforce shortage and this committee and this Congress needs to begin 
addressing this now.
  I look forward to working with the members of this committee on this 
very broad and complicated issue, but this amendment would be a good 
first step.

   Amendment to H.R. 3162, as Reported [by the Committee on Ways and 
                                 Means]

                    Offered by Mr. Burgess of Texas

                           (CHAMP amendment)

       Add at the end of subtitle E of title I the following new 
     section:

     SEC. ___. LIMITATION ON APPROVAL OF SCHIP WAIVERS.

       The Secretary of Health and Human Services shall not 
     approve any application submitted by a State for a waiver of 
     any provision of title XXI of the Social Security Act 
     unless--
       (1) the State has certified that there is access to an 
     adequate level of pediatricians, pediatric specialists and 
     pediatric sub-specialists for targeted low-income children 
     covered under the State child health plan under such title; 
     and
       (2) the State includes in such application the results of a 
     survey, that may be conducted by the American Academy of 
     Pediatrics, a State professional medical society, or other 
     qualified organization, that establishes that such an 
     adequate level exists on a per capita child basis.


[[Page 22284]]

  Mr. DINGELL. Mr. Speaker, I yield to the distinguished gentleman from 
Virginia (Mr. Moran) for purposes of a unanimous consent request.
  Mr. MORAN of Virginia. Mr. Speaker, I ask unanimous consent to insert 
a statement for the Record refuting the fact that this has anything to 
do with undocumented children. The fact is that the current provision 
prohibits undocumented children from getting health care, but if we 
don't pass it, it will deny tens of thousands of children who are 
legally eligible.
  Mr. BURGESS. I object.
  The SPEAKER pro tempore. Objection is heard.


                         Parliamentary Inquiry

  Mr. BARTON of Texas. Mr. Speaker, parliamentary inquiry, where are 
we?
  The SPEAKER pro tempore. Objection has been heard. The gentleman 
objected. It's for the gentleman from Michigan to yield time.
  Mr. BARTON of Texas. So Mr. Dingell controls the time?
  The SPEAKER pro tempore. That's correct.
  Mr. DINGELL. Mr. Speaker, I yield to the distinguished gentlewoman 
from California (Ms. Eshoo) 1 minute.
  Ms. ESHOO. Mr. Speaker, I thank the distinguished chairman of the 
Energy and Commerce Committee.
  Mr. Speaker, today is one of the most exciting days since I've come 
to the Congress, having been elected first in 1992. I think today is a 
day of history, a day of history for the children of our country, 
because the fact is that there are nearly 9 million American children 
without guaranteed access to health care in our Nation today. I think 
that is a national shame.
  Today, we correct that. We build on a successful bipartisan program 
of Republican and Democratic Governors, of leaders in the Congress 
past, of a program that has worked.
  It has not been riddled by fraud, and what we do today very simply is 
add 5 million American children in the rolls of health care. It is 
private insurance for almost all of the States.
  We also strengthen Medicare. I would suggest that my friends on this 
side of the aisle are on the wrong side of history.

                              {time}  1500

  Mr. BARTON of Texas. Mr. Speaker, I yield 1 minute to the 
distinguished gentleman of the committee from the great State of 
Florida (Mr. Stearns).
  Mr. STEARNS. Mr. Speaker, I would say to the gentlelady from 
California who said this is a great day in history, it was a great day 
in history when, in 1997, the Republicans, who had the majority, 
initiated and started this program. The Democrats are saying this is a 
great day, what a great day, when the Republicans started the SCHIP 
program.
  Now, this bill, you have heard it all before. Obviously, it creates a 
new entitlement, crowds out private insurance with government coverage, 
offers perverse incentives to States; and, my friends, it contains a 
huge tax increase, with more on the way. Lastly, it punishes Medicare 
beneficiaries. This is very troubling, particularly in Florida. We have 
so many seniors that actually use Medicare Advantage.
  The fact that they are going to eliminate this program to pay for 
this is really outrageous. It will disproportionately harm racial 
minorities and rural senior citizens by taking funds away from Medicare 
Advantage, a successful, lower-cost option for health care for seniors 
and use it to enroll and federally insure adult men and women who have 
the ability to work and receive health care from their employers in the 
open market.
  Mr. STARK. Mr. Speaker, I yield to the distinguished member of the 
Ways and Means Committee, a member of the Health Subcommittee, the 
gentleman from Georgia (Mr. Lewis).
  Pending that, I would explain that he knows that the NAACP, in a 
letter of endorsement, has said that this legislation fills a much-
needed gap that currently exists in health care services for some of 
the most vulnerable citizens, low-income children, seniors and the 
disabled.
  Mr. LEWIS of Georgia. Mr. Speaker, health care is a basic human 
right. It is unacceptable to see a young child die because his family 
could not afford for him to see a dentist. This should never, ever, 
happen in the United States of America. It is wrong. It must not be 
tolerated any longer, and today we said ``no more''.
  This bill would give 6 million children access to health care. For 
our seniors who rely on Medicare, this bill helps our low-income 
seniors and makes prevention more affordable.
  I applaud the work of Chairman Rangel and Chairman Stark for making 
these important improvements. I am proud to have worked on this bill to 
help those who suffer from chronic kidney disease and end-stage renal 
disease receive the highest quality care and to take the first of many 
steps towards preventing these terrible diseases.
  Until we can make health care right for every American, we have a 
moral mission, a mission and a mandate to start with the most 
vulnerable among us, our children and our seniors. We can do no less. 
Vote ``yes'' on the CHAMP Act. Do it now. Do it today.
  Mr. BARTON of Texas. Mr. Speaker, could I inquire of the time 
remaining on each side on this part of the bill?
  The SPEAKER pro tempore. The gentleman from Texas has 18 minutes 
remaining, and the gentleman from Michigan has 22\1/2\ minutes 
remaining.
  The gentleman from California has 19 minutes remaining, and the 
gentleman from Louisiana has 30 minutes remaining.
  Mr. BARTON of Texas. Mr. Speaker, I yield 1 minute to a distinguished 
member of the committee from the great State of Illinois (Mr. Shimkus), 
the winning pitcher on the congressional baseball team.
  Mr. SHIMKUS. Mr. Speaker, under the current Illinois SCHIP program, 
it covers up to 200 percent of poverty, $41,300 in annual income for a 
family of four; 26,830, or 31 percent of all families with children 
under the age of 18, in my district are already eligible for either 
Medicaid or SCHIP.
  In this bill, Democrats have opposed cutting at least $194 billion in 
Medicare spending. Specifically, the Democrats have proposed cutting 
Medicare spending for 6,070 seniors in my district who are currently 
enrolled in Medicare Advantage. Payments for hospital inpatient care 
will be cut $2.7 billion; inpatient rehabilitation services, $6.6 
billion; skilled nursing facilities, a $6.5 billion cut; certain drugs, 
$1.9 billion in cuts; home health care, $7.2 billion; end-stage renal 
disease cut by $3.6 billion; motorized wheelchair and oxygen cuts.
  Mr. STARK. Mr. Speaker, I reserve the balance of my time.
  Mr. DINGELL. Mr. Speaker, I yield 1 minute to the distinguished 
gentleman from Texas (Mr. Gene Green).
  Mr. GENE GREEN of Texas. Mr. Speaker, I rise in strong support of the 
Children's Health and Medicare Protection Act.
  This is the best piece of legislation since 1997 when the children's 
health care was created, but this time we will cover 5 million more 
children if we vote ``yes'' today for this bill.
  I want to particularly thank the committee, although we didn't get to 
have a markup in ours because the Republican minority refused to let us 
even have votes on our amendments, so we have to have it on the floor 
today. We have to have that discussion. I am just glad they included 
that it would cover 12 months of insurability for our children, because 
some States have made 6 months the way to cut children off of health 
care.
  Let me say one other thing. I have heard, particularly last night, I 
think it was insulting to say that this bill takes money away from 
seniors to give to illegal alien children. You ought to be ashamed of 
yourself. That's just outrageous. When you look at the bill and 
actually current law that we don't change, it prohibits undocumented 
children from getting any assistance.
  Now the States are going to be the ones that have to prove that. If 
the States can't do it, they have to pay for it. It is just outrageous 
that you throw out the ``illegals'' every time you don't have any other 
argument.
  I am particularly proud of the SCHIP provisions in this legislation, 
which would provide much-needed health insurance coverage to low-income 
children in need.

[[Page 22285]]

  Currently, the SCHIP program provides coverage to 6 million low-
income American children.
  Unfortunately, an additional 6 million children are eligible for 
SCHIP benefits, yet remain uninsured.
  This legislation would reach about 5 million of those children by 
putting in place a more efficient funding formula based on projected 
enrollment and providing states with incentives to find eligible 
children and get them enrolled.
  I am particularly thankful for the committee's support of our 
language to ensure that children in SCHIP get 12 months of continuous 
eligibility.
  This provision is critical to ensuring that eligible SCHIP children 
remain in the program and are not dropped due to cumbersome 
bureaucratic requirements imposed on families whose primary focus is on 
making ends meet.
  A recent Health Affairs article underscores the importance of 
continuous eligibility in addressing retention problems in SCHIP.
  Of the policy options suggested, the authors state that ``[f]irst and 
foremost, the renewal process should be simplified as much as possible, 
by reducing the frequency of renewal to once a year.''
  This bill does just that.
  For many states, this bill reaffirms the compassionate and effective 
policies currently in place.
  But for a state like mine, this bill will ensure that the State of 
Texas does right by Texas children and doesn't use the flexibility 
inherent in the program to kick them off the rolls on a budgetary whim.
  I encourage my colleagues to stand up for low-income children and 
pass this important legislation.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore. All Members are reminded to please address 
their remarks through the Chair.
  Mr. BARTON of Texas. Mr. Speaker, the CBO baseline score shows that 
Medicare cuts total $157 billion over the 10-year period.
  Mr. Speaker, I yield 1 minute to the gentleman from Staten Island, a 
member of the committee, Mr. Fossella.
  Mr. FOSSELLA. Mr. Speaker, Mr. Addison Good is an 80 year-old retired 
cook from Staten Island. He survives on a very limited income of Social 
Security and a small pension. Through every step of his hip operations, 
his Medicare Advantage plan paid for the services and drugs that he 
needed. He switched to a new plan that provides even better benefits at 
lower cost. He says he does not know how he would get the care he needs 
without his Medicare Advantage.
  Let me say up front, we will consider Mr. Addison Good as we consider 
the legislation; and I support the SCHIP program, I support its 
reauthorization, I support expanding access to health care for low-
income children.
  I do not support this ill-conceived plan that pits parents against 
their grandchildren. Make no mistake, the bill cuts Medicare by more 
than $190 billion. In my district alone, it will reduce funds for 
Medicare Advantage by $58 million for the 38,000 enrollees in just the 
first year.
  The real-world impact of slashing $58 million in Medicare in Staten 
Island, Brooklyn, for seniors enrolled in this program could result in 
the following: either denied access to the program altogether, to lose 
health care benefits like hearing, vision and dental services or have 
to pay more out of pocket. We should not gut Medicare or punish seniors 
to achieve a Democratic goal.
  Mr. STARK. Mr. Speaker, I reserve the balance of my time.
  Mr. DINGELL. Mr. Speaker, we reserve the balance of our time.
  Mr. BARTON of Texas. Mr. Speaker, I yield 1 minute to another member 
of the committee, Mr. Sullivan of Oklahoma.
  Mr. SULLIVAN. Mr. Speaker, it's really astounding that there is 
nothing in this bill that stops States from covering illegal 
immigrations in this bill. People have come up to me and said, you 
know, the Democrats, the people in the Senate wanted to allow illegal 
aliens to get free Social Security benefits. Now they want to give free 
health care, and that's wrong.
  There is nothing in this bill that prevents adults, States from 
covering adults, giving them health care. There's nothing in this bill 
that prevents States from even covering the children of the Members of 
Congress in this bill.
  I think this is a bill that should not happen. I rise today in strong 
opposition to it.
  One of my problems is that it eliminates the 5-year waiting period 
for immigrants who deserve to be eligible for Medicare and SCHIP. 
Congress wisely created this waiting period, and eliminating this 
waiting period will exacerbate our current immigration problems and 
further endanger government health care programs. By repealing this 
current law, millions of citizens will be eligible for Medicaid and 
SCHIP immediately.
  Had this bill been brought to the committee, the proper thing, I had 
an amendment that would have saved taxpayers $2.2 billion having this 
waiting period.
  I urge my colleagues to vote ``no.''
  Mr. BARTON of Texas. Mr. Speaker, I yield 1 minute to another 
distinguished member of the Energy and Commerce Committee, the 
gentleman from California (Mr. Radanovich).
  Mr. RADANOVICH. I thought I would use my time to talk about the Ag 
approps bill. Just kidding.
  Mr. Speaker, we must ensure that all children who qualify for the 
SCHIP program are taken care of, but I have grave concerns about the 
SCHIP reauthorization bill, which doesn't target low-income kids but 
does increase mandatory spending by almost $130 billion over 10 years. 
This is not the way to provide coverage for anybody.
  I am particularly concerned that the CHAMP bill defines children as 
up to the age of 25. I am not aware of any other Federal program that 
defines the term ``children'' this broadly, and I certainly don't think 
that my constituents could agree that governments should be using 
health care funds intended for low-income children to cover a 25-year-
old.
  This is not what SCHIP is supposed to be about. I don't believe that 
the creation of a new entitlement program costing hundreds of billions 
of dollars is in the best interests of our children. Are we going to 
encourage people and make it easier for them to take advantage of the 
private health care market, or are we going to have the government 
grabbing for control of all health care services?
  This legislation certainly indicates where our majority is trying to 
go. These are not procedural differences but major philosophical 
differences. Under this bill, Donald Trump's daughter, Ivanka, will be 
enrolled in the SCHIP program.
  Mr. BARTON of Texas. Mr. Speaker, might I inquire as to the time?
  The SPEAKER pro tempore. The gentleman from Texas has 14 minutes 
remaining, the gentleman from Michigan has 21\1/2\ minutes remaining, 
the gentleman from California has 19 minutes remaining, and the 
gentleman from Louisiana has 30 minutes remaining.
  Mr. BARTON of Texas. Mr. Speaker, I reserve the balance of my time.
  Mr. DINGELL. Mr. Speaker, our problem is a simple one, and I say this 
with respect and affection to my colleague. Our Republican colleagues 
have chosen to allocate time with two committees on this side and one 
committee on that side. The end result is that there is one committee 
on the Republican side which is not using its time. In order to balance 
out the time use, Mr. Stark and I are reserving our time at this time.
  Mr. BARTON of Texas. Mr. Speaker, the gentleman from Texas is in a 
quandary. I am not aware we were able to determine anything for the 
other side. I don't know why they are allocating their time.
  Mr. Speaker, I reserve the balance of my time.
  Mr. STARK. Mr. Speaker, it was just my intent to accommodate my 
friends in the minority who have been asking for all this extra time, 
but I guess if they have lost their speakers, they really don't need 
any.
  Mr. Speaker, I yield 1 minute to the gentleman from California (Mr. 
Thompson), a member of the Health Subcommittee of the Ways and Means 
Committee, who recognizes that the American Medical Association has, in 
their endorsement, has said that this legislation addresses two of the 
AMA's highest priorities, providing health insurance coverage for low-
income coverage and protecting seniors' access to

[[Page 22286]]

care by preventing drastic cuts in the Medicare funding for physician 
services.
  Mr. THOMPSON of California. Mr. Speaker, keeping kids healthy today 
means that the government will inherit a healthier Medicare population 
tomorrow. Investing in our children is both common sense and it's cost-
effective.
  It was very difficult to watch the former majority allow the national 
debt to grow to record heights. Today, I am proud that the new 
Democratic leadership has said no to deficit spending.
  The CHAMP Act is emblematic of that shift. It is completely paid for. 
The CHAMP Act guarantees that both eligible children and Medicare 
seniors can access qualify health care.
  Make no mistake. Without this legislation, 5 million new kids won't 
be able to get health care, and millions more already in the program 
will see their benefits cut.
  Without this legislation, physicians will take the biggest rate cut 
in the history of the Medicare program.
  Without this legislation, Medicare benefits that are critical to 
rural communities will expire.
  Today, with the passage of the CHAMP Act, Congress has taken an 
historic step. So be a champion for kids, be a champion for seniors and 
be a champion for common sense.
  Vote ``aye'' on the CHAMP Act.
  Mr. BARTON of Texas. Mr. Speaker, I yield 1 minute to the 
distinguished leader of the Republican Study Committee, Mr. Hensarling 
of Texas.

                              {time}  1515

  Mr. HENSARLING. Mr. Speaker, today the Democrat majority in Congress 
will no doubt ram through a bill representing the single largest step 
in Washington-controlled, bureaucratized, rationed, socialized health 
care, and they will do this under the guise of insuring needy children 
who are already insured under Medicaid or are already insured under the 
SCHIP program, which we could reauthorize. And they do this by turning 
SCHIP into a new entitlement, threatening to bankrupt the very children 
they claim to be helping. They do this by cutting Medicare, hastening 
the bankruptcy of the Medicare trust fund. They do this by cutting 
Medicare Advantage plan, threatening the health care choices of 
millions of our seniors. They do this by increasing taxes on working 
Americans.
  This is a threat to our children's fiscal health, it is a threat to 
our Nation's and children's physical health. It should be rejected.
  Mr. BARTON of Texas. Mr. Speaker, I renew my unanimous consent for 1 
additional hour of time equally divided between the majority and the 
minority.
  Ms. DeGETTE. I object.
  The SPEAKER pro tempore. Objection is heard.
  Does the gentleman from Texas wish to yield time?
  Mr. BARTON of Texas. Who objected, Mr. Speaker?
  The gentleman has to be on his feet to object.
  The SPEAKER pro tempore. The gentlewoman from Colorado has objected. 
She is on her feet.
  Mr. BARTON of Texas. I reserve the balance of my time.
  Mr. STARK. I reserve the balance of my time.
  Mr. DINGELL. I reserve the balance of my time.
  Mr. Speaker, it would appear at this time that many of the 
difficulties that confront us could be addressed by the appearance of 
our good friends on the minority side of the Ways and Means.
  Mr. BARTON of Texas. Mr. Speaker, I move that the House do now 
adjourn.
  The SPEAKER pro tempore. Pursuant to House Resolution 594, the 
previous question is ordered to final passage without such an 
intervening motion.
  A motion to adjourn may not be entertained.
  Mr. BARTON of Texas. Parliamentary inquiry. I thought a motion to 
adjourn was in order at any time.
  The SPEAKER pro tempore. Pursuant to House Resolution 594, the 
previous question is ordered to final passage without intervening 
motion other than recommittal. As such, a motion to adjourn may not be 
entertained.
  Mr. BARTON of Texas. Parliamentary inquiry. What is House Resolution 
594? Is that the closed rule?
  The SPEAKER pro tempore. The rule for consideration of this bill.
  Mr. BARTON of Texas. Then I suggest the absence of a quorum, Mr. 
Speaker.
  The SPEAKER pro tempore. That may not be entertained unless the Chair 
is putting the question, in accord with clause 7 of rule XX.
  Mr. BARTON of Texas. Then I yield 1 minute to a member of the 
committee, Mr. Terry of Nebraska.
  Mr. TERRY. Mr. Speaker, first of all, I want to state that I believe 
that we should cover our low-income uninsured children, and I do 
believe we should make efforts to get them all in. If it was just that, 
we would be all in agreement. But that is not before us today. And I do 
believe that part of this attacks health insurance as we know it today.
  Number one, they defund Medicare Advantage, which is where people can 
opt out of Medicare and actually go into a managed program by a health 
insurance company. So they defund that, attacking that.
  Next is, for the first time, they are going to place a tax on health 
insurance policies, driving up the costs, so making it more 
unaffordable so more people drop out.
  Then probably just as egregious as the other, an amendment that was 
denied, a Republican amendment, that says if there is a child that is 
eligible by the requirements but already insured can't drop that 
insurance or their insurer can't drop them, forcing them to go into the 
State-run free health insurance. That was denied.
  So what we see here is a step-by-step process of making health 
insurance companies less effective and nationalizing health care.
  Mr. BARTON of Texas. I reserve the balance of my time.
  Mr. STARK. I reserve the balance of my time.
  Mr. DINGELL. Mr. Speaker, I yield to the distinguished gentlewoman 
from California (Ms. Harman) for purposes of a unanimous consent 
request.
  Ms. HARMAN. Mr. Speaker, I rise in strong support of this bill and 
commend Chairman Dingell for his enormous work.
  Regardless of the business before the House, for the past two weeks, 
a drumbeat of dire predictions has been maintained on this floor about 
the so-called terrorism gap--the failure of Democrats to fix the 
Foreign Intelligence Surveillance Act, or FISA, to permit our 
intelligence agencies to intercept foreign-to-foreign communications 
related to international terrorism. The argument is specious on its 
face. Democrats are just as committed as our colleagues on the other 
side of the aisle to preventing another terrorist attack on the United 
States.
  As a member of the Gang of Eight from 2002-2006, I am very familiar 
with FISA and our Terrorist Surveillance Program. While I agree that 
some technical adjustments are appropriate, the core principle of FISA 
and the 4th Amendment--that individualized court warrants are required 
if the communications of a U.S. person are involved--must be preserved.
  But my question is, in the context of the CHAMP Act now before us: 
where is the outrage for the 5 million American kids who have no health 
insurance and no prospect of getting it unless we pass this bill?
  What is the real objective of Members who continue to clutter an 
essential debate on improving health outcomes for our neediest children 
with alarmist exchanges on the surveillance of potential terrorists? 
Perhaps it is to jam Democrats and score partisan points before the 
August recess instead of reaching out to the most vulnerable among us.
  The CHAMP Act reaches out by providing insurance to 11 million 
children, covering mental health and dental benefits, and by allowing 
States to cover pregnant women and family planning.
  It reauthorizes Title V abstinence education, but requires that it be 
medically and scientifically accurate, as well as proven effective. I 
expect every Member agrees that no Federal program should use taxpayer 
dollars to give inaccurate information to young people.
  The CHAMP Act makes improvements to the Medicare program, too, 
providing our most vulnerable seniors with better coverage for

[[Page 22287]]

cost-saving preventive care and by making it easier to apply for 
benefits.
  Let me bring the issue close to home. The Venice Family Clinic, 
located in my congressional district, is the largest free clinic in the 
Nation. They know something about reaching out to the most vulnerable 
in our communities.
  Clinic staff told me today about an 8-year-old boy and his younger 
brother. Both of them are on the waiting list for SCHIP because the 
program is maxed-out--and their working mother doesn't earn enough to 
buy health insurance.
  This child suffers epileptic seizures every couple of weeks. He 
worries constantly about when the next one will occur, when and if he 
will be able to see a doctor or have access to medication that could 
help him. These are not things an 8-year-old in a country as rich as 
ours should be worrying about.
  Expanding SCHIP will cover these children. It will change their 
lives, and the lives of 11 million other low income American kids.
  FISA can, should and will be fixed--and we can fix health insurance 
for kids, too. Every child deserves the health insurance that my four 
children and one grandchild have. And I have two more grandchildren on 
the way. Hopefully, the CHAMP Act will be law before they are born 
early next year.
  Mr. DINGELL. Mr. Speaker, I reserve the balance of my time.
  Mr. BARTON of Texas. Mr. Speaker, I yield 1 minute to another 
distinguished member of the Energy and Commerce Committee, Mr. Pitts of 
Pennsylvania.
  Mr. PITTS. Mr. Speaker, I would like to focus on one important 
failure of this legislation that I think the pro-lifers on the other 
side of the aisle would be interested in.
  Since 2002, the present administration has granted the States the 
option of providing SCHIP coverage to the child before birth, the 
unborn child, prenatal care and other health services for the unborn 
child and the pregnant mother. Unfortunately, the bill offered today 
would override current regulation and extend coverage in the name of 
the pregnant woman only. My amendment to codify the words ``unborn 
child'' was disallowed, not made in order last night.
  Protecting only the pregnant woman could lead to a greater number of 
abortions. It would make the woman eligible for all publicly-funded 
services, including State-funded elective abortions. In States with 
Medicaid expansion programs, this could increase the number of women 
eligible for free abortions, thus promoting more abortions of unborn 
children in the name of children's health. This bill's language 
essentially classifies the pregnant woman herself. It does not make 
sense.
  Mr. BARTON of Texas. Mr. Speaker, I reserve the balance of my time.
  Mr. STARK. Mr. Speaker, I ask unanimous consent that the time 
allotted to the minority members of the Ways and Means Committee be 
forfeited.
  Mr. BARTON of Texas. I object to that.
  The SPEAKER pro tempore. Objection is heard.
  Mr. STARK. I reserve the balance of my time.
  The SPEAKER pro tempore. The gentleman from Michigan? Does anybody 
wish to yield time?
  Mr. DOGGETT. Mr. Speaker, could you give us a time report? How much 
time remains for each?
  The SPEAKER pro tempore. The gentleman from Louisiana has 30 minutes; 
the gentleman from California has 17\1/2\ minutes; the gentleman from 
Texas has 11 minutes; the gentleman from Michigan has 21\1/2\ minutes.
  Mr. DOGGETT. How much does the gentleman from Louisiana have?
  The SPEAKER pro tempore. 30 minutes.
  Mr. DOGGETT. None of it has been used.


                         Parliamentary Inquiry

  Mr. LINDER. Mr. Speaker, I have a parliamentary inquiry.
  The SPEAKER pro tempore. The gentleman will state his inquiry.
  Mr. LINDER. Would you tell us how much time they have combined, the 
two committees and our two committees combined, left?
  The SPEAKER pro tempore. The gentleman from Michigan has 21\1/2\ 
minutes remaining; the gentleman from California has 17\1/2\ minutes 
remaining; the gentleman from Louisiana has 30 minutes remaining; and 
the gentleman from Texas has 11 minutes remaining.
  Mr. BARTON of Texas. Mr. Speaker, I ask unanimous consent to proceed 
out of order and engage in a colloquy with Mr. Stark and Mr. Dingell 
for purposes of trying to understand what is going on.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  Mr. STARK. I object.
  The SPEAKER pro tempore. Objection is heard.
  Mr. STARK. Mr. Speaker, I ask unanimous consent to insert in the 
Record a letter from the Catholic Health Association of the United 
States, which in part states that: We believe the most important pro-
life thing that Congress can do right now is to ensure that the State 
Children's Health Insurance Program is reauthorized.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  Mr. BARTON of Texas. Reserving the right to object, Mr. Speaker, I 
will not object if the gentleman from California will explain to me why 
we are fighting over what was in a pre-agreed-upon time arrangement. We 
have got six or seven speakers from the Energy and Commerce Committee. 
We are simply trying to do it in a balanced way. The gentleman from 
California has 17 minutes; the gentleman from Michigan has, I believe, 
21 minutes. We just wish that the time go down in a balanced way. I 
don't understand why that should be a problem.
  The SPEAKER pro tempore. The gentleman from Texas will suspend.
  The Chair will clarify. The gentleman from Michigan has 21\1/2\ 
minutes remaining; the gentleman from California has 17\1/2\ minutes 
remaining; the gentleman from Louisiana has 30 minutes remaining; and 
the gentleman from Texas has 11 minutes remaining.
  Mr. BARTON of Texas. I yield to my friend from California to explain 
to me why they don't want to use some of their time right now.
  Mr. STARK. I am happy to respond. You are a couple minutes ahead of 
us, and of course I am dying to hear what my colleagues on the 
Republican side of the Ways and Means have to say.
  Mr. BARTON of Texas. Reclaiming my reservation, my understanding was 
that the Energy and Commerce Committee was going to go first, and then 
the Ways and Means Committee was going to go in the second hour. That 
is why Mr. McCrery is reserving his 30 minutes.
  Mr. STARK. If the gentleman would yield.
  Mr. BARTON of Texas. I would be happy to yield.
  Mr. STARK. I think you have just touched on a misunderstanding. We 
had been led to believe that we would be rotating around among the 
various committees, and so that now we are kind of out of balance. Our 
understanding is that we would rotate back and forth between Energy and 
Commerce and Ways and Means for the full time. I apologize to the 
gentleman if we misled. Our concern was that we would be out of balance 
in the time between the two committees.
  The SPEAKER pro tempore. The Chair will clarify that the gentlemen 
from California and from Michigan have a combined total of 39 minutes 
remaining; the gentlemen from Louisiana and from Texas have a total of 
41 minutes remaining.
  Mr. BARTON of Texas. I withdraw my reservation on the gentleman's 
unanimous consent request.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  Mr. PRICE of Georgia. Reserving the right to object, Mr. Speaker, it 
is apparent that that was the letter that was requested to be inserted 
earlier, and the gentleman himself objected to it.
  Mr. STARK. Mr. Speaker, I withdraw my unanimous consent request.
  The SPEAKER pro tempore. The request is withdrawn.
  Does the gentleman from Texas wish to yield time?
  Mr. BARTON of Texas. Mr. Speaker, I yield 2 minutes to the gentleman 
from Arizona, a distinguished member of the committee, Mr. Shadegg.
  Mr. SHADEGG. I thank the gentleman for yielding, and I really wish

[[Page 22288]]

this debate was about what my colleagues on the other side want to make 
it about. I wish this bill was a debate about the uninsured children of 
the near poor or the working poor. I wish it was a debate like we had 
10 years ago about insuring children too well off to get Medicaid but 
not well enough to buy insurance. But that is not what it is about. It 
is about cutting Medicare to provide health care services to middle- 
and upper middle-income children and to provide health care services to 
adults.
  And when you hear SCHIP, children, you don't expect that. When you 
think it is to go to the uninsured, you don't expect that.
  The median income in America, listen carefully, is $45,000. This bill 
will extend SCHIP benefits to families earning $60,000 and up to 
$80,000. That means it does not provide money for health insurance to 
the poor or the near poor or the working poor. We are all for that. 
That is why we initiated the program. We just don't think it ought to 
go to upper middle-income Americans.
  And let's see what the program has done. Sixty-one percent of the 
children who are in the SCHIP program today had private health 
insurance before the program was created. They dropped their private 
health insurance to take SCHIP. Is that what generous, compassionate 
Americans want to do for the poor? I don't think so. They dropped their 
private insurance to take SCHIP.
  CBO says that the Democrats' billions of dollars larger program will 
produce one person dropping private insurance for every one person who 
gets SCHIP insurance. Speaker after speaker on the other side has said 
this will insure 5 million more children.

                              {time}  1530

  What they don't tell you is that 5 million children, according to 
SCHIP, will drop their private insurance. Obviously, what they want is 
to take people off of private insurance and put them on SCHIP. That's 
not what the American people understand when they understand that that 
is supposed to be a bill about the children of the working poor.
  I urge my colleagues to oppose this bill. It's a fraud.
  Mr. STARK. Mr. Speaker, I yield to the gentleman from Rhode Island 
(Mr. Kennedy) for a unanimous consent request.
  Mr. KENNEDY. Mr. Speaker, I rise in support of this legislation that 
raises parity for mental health for Medicare enrollees from 50 percent 
to 80 percent and for SCHIP from 75 percent to 100 percent, an 
additional $3 billion in this bill for mental health care. That's why 
we ought to support it.
  Mr. STARK. Mr. Speaker, I reserve the balance of my time.
  Mr. BARTON of Texas. Mr. Speaker, I yield 1 minute to another 
distinguished member of the committee, the ranking member of the 
Veterans Affairs Committee, the gentleman from Indiana (Mr. Buyer).
  Mr. BUYER. Mr. Speaker, I don't consider this a high-water mark for 
Congress in the 15 years I've been here. I don't consider it a high-
water mark because I'm very disappointed in us, in how we have 
conducted ourselves with regard to our process, in how we have treated 
ourselves to each other, the lack of intolerance with regard to how we 
view each others' opinions. I don't think this is a high-water mark. A 
lot of this is taking place at the committee levels, and I have to 
reiterate my disappointment.
  We can battle it out. The democratic process is never meant to be 
pretty and easy. It's a difficult process, but it's exactly what it was 
meant to do so we wouldn't have capricious actions, that we wouldn't 
have power centralized and imperialistic from the top down. And that's 
what kind of happened here, and I'm very bothered by it.
  There is no ``time of the essence.'' Yes, this is a program that we 
came together in a bipartisan fashion and passed almost 10 years ago to 
care for children, poor and impoverished and to take care of them; and 
we've done that.
  We can extend that existing program and work together in a bipartisan 
fashion, if that's what this was really about. But it's not.
  Mr. BARTON of Texas. Mr. Speaker, in addition to myself, I only have 
one additional speaker that's currently on the floor. I would encourage 
my friend from Michigan, if he has any speakers, to use some of his 
time at this point in time.
  The SPEAKER pro tempore. The gentleman from Michigan has 21\1/2\ 
minutes remaining. Does he wish to yield any time?
  Mr. DINGELL. The gentleman from Michigan will continue to reserve.
  Mr. STARK. I continue to reserve, Mr. Speaker.
  Mr. BARTON of Texas. I reserve.
  The SPEAKER pro tempore. The gentleman from Louisiana has 30 minutes 
remaining. The gentleman from Texas has 8 minutes remaining. So 38 
minutes total on the minority side, 39 minutes total on the majority 
side.
  Mr. DINGELL. Mr. Speaker, out of a surcease of good will for my 
Republican colleagues, at this time I yield 1 minute to the 
distinguished gentlewoman from Colorado (Ms. DeGette).
  Ms. DeGETTE. Mr. Speaker, children who receive well-child care begin 
their lives healthy and ready to learn in school; and this care is 
cheaper and more humane than reliance on the emergency room.
  Because of SCHIP, 6 million children of the working poor get the care 
they need for a healthy start to their lives. Despite the success, our 
work is not complete. Six million uninsured children are still eligible 
for SCHIP but not currently enrolled. The CHAMP Act will build on the 
strong bipartisan foundation of SCHIP and insure these remaining 
children.
  Those on the other side of the aisle will put forth a proposal in the 
motion to recommit that not only fails to cover these 6 million 
remaining children, but it will result in current beneficiaries losing 
coverage.
  We are halfway to covering the uninsured children in this country, 
and the Republicans want to pack up and go home. Thank goodness they 
weren't in charge of the mission to the moon. Neil Armstrong would have 
gone halfway to the moon and been ordered back to earth. Mission 
accomplished.
  Mr. Speaker, halfway is not mission accomplished. Vote ``yes'' for 
kids, vote ``yes'' on this bill.
  Mr. BARTON of Texas. Mr. Speaker, I yield 1 minute to a distinguished 
member of the committee, Mr. Walden of the great State of Oregon.
  Mr. WALDEN of Oregon. Mr. Speaker, I agree that the SCHIP program is 
a good program, as it was created in a bipartisan manner many years 
ago. Its extension would be a good thing. But what we have before us 
today on the floor is not, because it robs from senior citizens in my 
district and elsewhere to provide extraordinary and expanded coverage 
of health care to people who may already have it, as well as much 
higher income levels. Eighty to one hundred thousand dollars you could 
be making, your kids could be eligible for your current health 
insurance from your employer, and this program, as proposed by the 
Democrats, would actually take those off, or potentially could take 
those kids off, as well as take away the Medicare choice that seniors 
in my district, some 31,798 seniors in my district run the potential of 
losing the choice they have for Medicare.
  I was at a town meeting in the eastern part of my district about 2 
weeks ago; and a woman said, please, Congressman, don't let them take 
away my Medicare. And that's what's happening today. And it's 
unfortunate the process has been so usurped that we didn't have time 
other than 1 minute to talk about it.
  The SPEAKER pro tempore. The gentleman from Michigan has 20\1/2\ 
minutes remaining. The gentleman from California has 17\1/2\ minutes 
remaining, for a total of 38 minutes. The gentleman from Louisiana has 
a total of 30 minutes remaining. The gentleman from Texas has 7 minutes 
remaining.
  Mr. DINGELL. Mr. Speaker, I would yield 1 minute at this time to the 
distinguished gentlewoman from California, my dear friend, Mrs. Capps.
  Mrs. CAPPS. Mr. Speaker, this bill is the reason I came to Congress, 
to continue my work for children's health.

[[Page 22289]]

It's a blight on our Nation that millions of children in hardworking 
families still have no access to health care, and today we can undo 
that wrong. Through this fiscally responsible bill we ensure that 
millions more eligible children will be able to get primary care, 
manage life-threatening illnesses, improve their school attendance and 
grow into healthy, productive adults. And how fitting that at the same 
time we will improve Medicare for seniors.
  I wish to submit for the Record the piece by Ron Brownstein in 
today's L.A. Times where he calls the Bush and Republican arguments 
against this bill as not much more than stealing health care from 
babies.
  We do have a choice today. We can continue to ignore the health of 
millions of babies and children, or we can take the high moral ground 
and pass this bill which will provide health care to those who need it 
most.
  I want to commend Chairmen Dingell, Pallone, Rangel, and Stark for 
all the hard work they and the committee staff have done. I urge my 
colleagues to vote ``yes'' on the CHAMP Act. Do something positive 
today for America's children.

               [From the Los Angeles Times, Aug. 1, 2007]

                    Stealing Healthcare From Babies

                         (By Ronald Brownstein)

       Does President Bush really believe what he's saying about 
     the effort from congressional Democrats and some leading 
     Senate Republicans to provide health coverage for millions of 
     uninsured children? He's portraying it as the first step on a 
     slippery slope toward ``government-run healthcare,'' as if 
     senior senators in both parties were conspiring with Michael 
     Moore to import Cuban doctors to inoculate and indoctrinate 
     American children.
       In fact, Congress is moving responsibly to remove a blot on 
     the nation: the 8 million children without health insurance. 
     It is doing so by expanding the State Children's Health 
     Insurance Program, or SCHIP, a state-federal partnership that 
     the Republican Congress and President Clinton created in 1997 
     to cover kids in working-poor families. Final votes on the 
     House and Senate floors could come this week.
       Bush, seemingly determined to provoke every possible 
     confrontation with congressional Democrats, has pledged to 
     veto the bills. And with the GOP congressional leadership, he 
     is fighting the proposals with a swarm of misleading and 
     hypocritical arguments.
       Bush complains that expanding the program costs too much. 
     But cost was no object when Bush and congressional 
     Republicans sought to court seniors by creating the Medicare 
     prescription drug benefit in 2003.
       Under the bipartisan Senate bill, Washington would spend 
     about $56 billion over the next five years to cover almost 
     half of the nation's uninsured children. Over the same 
     period, the Medicare entitlement that Bush signed (after more 
     than four-fifths of House and Senate Republicans voted for 
     it) will cost nearly $330 billion. Is social spending 
     affordable only when it benefits constituencies Republicans 
     prize in elections?
       Next, Bush complains that the SCHIP expansion would require 
     ``a huge tax increase.'' Actually, both the House and Senate 
     plans would raise taxes just on tobacco. And the sponsors are 
     increasing taxes only because they have committed to the 
     novel notion of paying for their program. When Bush and the 
     Republican Congress created the expensive Medicare drug 
     benefit, they did not provide any new revenue to fund it. 
     They just billed the cost to the next generation through 
     higher federal deficits. Now Bush is condemning Democrats for 
     displaying more responsibility.
       Bush also disparages the SCHIP expansion as an attempt ``to 
     encourage people to transfer from the private sector to 
     government healthcare plans.'' But studies have found that 
     three-fourths of children covered under the current program 
     receive their care through private insurance plans that 
     contract with the states, notes Edwin Park of the liberal 
     Center on Budget and Policy Priorities. In that way, the 
     program is no different than Bush's prescription drug plan: 
     The government pays for services delivered by private 
     insurance companies.
       Bush's argument that the SCHIP changes will unacceptably 
     ``crowd out'' private insurance is misleading in another 
     respect. It's true, as Bush charges, that if the program is 
     expanded, some eligible families would shift their children 
     into it from private coverage, hoping to save money or 
     improve care. The Congressional Budget Office estimates that 
     children making such a switch would account for about one-
     third of the 6 million kids expected to enroll in the 
     expanded SCHIP program under the Senate plan, and hence one-
     third of the added cost.
       But as CBO Director Peter Orszag notes, all efforts to 
     expand coverage for the uninsured inevitably spill some 
     benefits on those who already have insurance. And the Senate 
     SCHIP plan, by limiting that spillover to one-third of its 
     cost, is actually more efficient than most alternatives for 
     expanding coverage.
       Bush, for instance, wants to reduce the number of uninsured 
     by providing new tax incentives for buying coverage. But the 
     Lewin Group, an independent consulting firm, recently 
     calculated that 80 percent of the benefits from Bush's plan 
     would flow to people who already have insurance. Such numbers 
     help explain why Orszag recently said that, dollar for 
     dollar, expanding SCHIP ``is pretty much as efficient as you 
     can possibly get'' to insure more kids.
       Bush's most outrageous argument is that expanding SCHIP 
     ``empower[s] bureaucrats.'' In reality, covering more 
     children would empower parents like Sheila Miguel of Sun 
     Valley, Calif.
       Miguel used to spend hours in emergency rooms trying to 
     obtain asthma medicine for her daughter, Chelsea, but since 
     enrolling her in a SCHIP-funded program, Miguel can take her 
     to reliably scheduled clinic visits.
       Bush says he wants ``to put more power'' over healthcare 
     ``in the hands of individuals.'' By freeing Miguel's family 
     from the worry and drudgery of repeated emergency room 
     visits, that's exactly what SCHIP does.
       Few of the lower-income working families that rely on this 
     program have the time to follow this week's legislative 
     struggle, much less analyze how it serves the White House's 
     apparent strategy of embroiling congressional Democrats in 
     unrelenting conflicts with Bush that alienate swing voters. 
     In that political skirmishing, these families have been 
     reduced to collateral damage. They deserve something better 
     from a president who once called himself a ``compassionate 
     conservative.''

  Mr. BARTON of Texas. I would like to yield 2 minutes to the 
distinguished Republican whip and a member of the committee who is on 
leave, Mr. Blunt of Missouri.
  Mr. BLUNT. Mr. Speaker, I'm thankful to the former chairman and the 
ranking member for yielding to me on this bill.
  It seems to me that what we have here is a bill that has not 
benefited from the process of hearings. Most of our friends in the 
majority today, I assume, will vote for this bill. Most of our friends 
on our side are going to vote against this bill, and I believe that 
during the month of August the voters will have the hearings that we 
should have had in advance. I believe what we'll find out is this bill 
has needless problems in it in the name of expanding SCHIP.
  My good friend, Ms. DeGette, mentioned the moon mission. It does seem 
to me that, in this bill now, the moon is the limit. The original bill 
said 200 percent of poverty, with some flexibility to the States. We're 
in favor of extending these guidelines.
  The original proposal, as we understood it from the majority, was 400 
percent of poverty. Families who made 80, $85,000 would get free health 
insurance for their children. I don't think that limit is there any 
more. I believe it's up to the States under this bill. If you made 
1,000 times the poverty rate and your State wanted to insure you, they 
could do that and your initial payment from the Federal Government 
would be 95 cents on every dollar.
  We're going to offer a recommital today that extends the current 
SCHIP program; that gives us the time to talk about it and ways that 
make it better; that reinstates the current law on immigrants, where, 
if you come to this country, you have to have a sponsor, and you can't 
participate in programs like this for the first 5 years. That's been 
one of the workable parts of our immigration policy.
  We would propose we don't have self-verification, where people who 
are here illegally just can walk up and sign up and say I'm legally 
here.
  We'll have a doctor fix. We'll do something about the therapy caps. 
And, in my district, 21,033 people who would lose their choice of 
Medicare don't lose their choice of Medicare. Restricting Medicare 
benefits to pay for children's health care is not the right thing.
  Mr. STARK. I reserve the balance of my time.
  Mr. BARTON of Texas. I'm going to try one more time here.
  Mr. Speaker, I ask unanimous consent that there be 1 hour of 
additional time allotted on the pending legislation, equally divided 
between the majority and the minority, and, within that, equally 
divided between the Ways and Means Committee and the Energy and 
Commerce Committee.
  Mr. STARK. Reserving the right to object.

[[Page 22290]]

  The SPEAKER pro tempore. The gentleman reserves the right to object.
  Mr. DINGELL. And I make a similar reservation.
  Mr. STARK. If I could inquire of the distinguished gentleman from 
Texas, it's my understanding that this unanimous consent request has 
been negotiated between the majority and minority leadership.
  Mr. BARTON of Texas. We share the same understanding.
  Mr. STARK. And as part of it that we would proceed expeditiously to 
use the debate, move to passage, and without intervening stalling 
motions.
  Mr. BARTON of Texas. We have the same understanding.
  Mr. STARK. Then I withdraw my reservation.
  Mr. DINGELL. I have no objection.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. BARTON of Texas. Hallelujah.
  Mr. Speaker, at this point in time, I reserve my time.
  Mr. STARK. Mr. Speaker, with this new-found wealth of time, I'm happy 
to yield 1 minute to the senior member of the Health Ways and Means 
Subcommittee, the gentleman from Texas (Mr. Doggett), who understands 
that the Lance Armstrong Foundation has urged a vote in favor of 3162, 
a legislation scored as a key vote for people affected by cancer; and 
Mr. Armstrong is a constituent of Mr. Doggett.
  Mr. DOGGETT. Surely if Lance Armstrong can overcome mountains in 
France, we can overcome the mountains of obstructionism and of excuses 
to provide our children and our seniors the health coverage that they 
need.
  By including significant portions of two Medicare bills that I filed, 
today's legislation supports grandparents as well as grandchildren. All 
seniors would get preventive care, and many of the 3.3 million poor 
seniors not receiving any help today would get the extra help for which 
they qualify.
  Today, those seniors most in need are often least aware that help 
exists. We must identify and notify those entitled to extra help with 
prescription drugs and simplify the application process.
  We also ensure that drug coverage is not lost by our seniors who 
saved a small nest egg or receive help and groceries from their 
children--behavior that we ought to encourage, not punish.

                              {time}  1545

  Importantly, we mandate that patients suffering from cancer, AIDS, 
and mental illness receive access to life-saving medications. Without 
this protection, vulnerable patients are held hostage by ``cost cutting 
decisions'' by private insurance companies.
  While Lance inspires us to live strong, we can ``vote strong'' and 
improve the lives of children, seniors, and Americans fighting to get 
well again. Approve this important legislation.
  Mr. BARTON of Texas. Mr. Speaker, could I inquire as to how much time 
there is remaining?
  The SPEAKER pro tempore. The gentleman from Michigan has 34\1/2\ 
minutes remaining; the gentleman from California has 31\1/2\ minutes 
remaining; the gentleman from Texas has 20 minutes remaining; and the 
gentleman from Louisiana has 45 minutes remaining.
  Mr. BARTON of Texas. Mr. Speaker, I yield 2\1/2\ minutes to a 
distinguished member from the great State of Georgia, Dr. Gingrey.
  Mr. GINGREY. Mr. Speaker, I thank the gentleman for yielding.
  Mr. Speaker, I want to talk about policy and process.
  This is a situation where in the process the voices on both sides of 
the aisle have literally been shut down by bringing forward one of the 
most important pieces of legislation, I think, that I have had to 
discuss in the 4\1/2\ years that I have been a Member of this Congress. 
To say to the 11 position Members, almost equally divided between the 
Democrats and the Republicans, that we don't want to hear your voice, 
we don't want to hear some amendments that you might want to proffer 
because you have spent maybe 30 years, in my case maybe 25 years, 250 
years in the aggregate of these 11 physicians' practicing medicine, no 
one being able to bring meaningful amendments to this issue.
  The other side has talked many times about the Republican former 
majority running up this massive debt and borrowing money from the 
Chinese. I am going to tell you something. This might be a time, Mr. 
Speaker, where the new majority should borrow this $75 billion massive 
expansion of the SCHIP program from the Chinese rather than getting the 
money off the backs of our Medicare recipients under Medicare 
Advantage, 8 million of whom choose that option, and many of those are 
the lowest income; and also encouraging 22 million people to become 
addicted to smoking so they could raise this revenue. The chairman says 
it is a modest increase in tax on a pack of cigarettes. Indeed, Mr. 
Speaker, it doubles the tax on a pack of cigarettes.
  So we have a better idea. I am opposed to this bill in its present 
form, and I support the Republican motion to recommit, which is the 
Barton-Deal bill, which says, look, we will cover children that are 
slipping through the cracks. The CBO estimates, Mr. Speaker, that 
600,000 children have fallen through the cracks. They are in that group 
100 to 200 percent of the Federal poverty level. Under the Barton-Deal 
plan, we can cover them and we will do that. We don't need to increase 
the funding by $50 billion and start covering children who already have 
health insurance because their families make more than $100,000 a year.
  Mr. DINGELL. Mr. Speaker, at this time, I yield 2 minutes to the 
distinguished gentleman from Maine (Mr. Allen).
  Mr. ALLEN. Mr. Speaker, there are 11 million reasons to vote for this 
bill, and each is a child in a working-class family who will grow up 
healthier and stronger as a result of its passage.
  Every dollar we invest in the SCHIP program saves money over time. 
The children we cover are far less likely to require more expensive 
health care later on, far more likely to be better achievers in school 
and much better prepared to become productive adults.
  SCHIP today provides health care to 6 million children. This bill 
will cover an additional 5 million children who qualify for SCHIP but 
today lack coverage.
  Maine has developed one of the best SCHIP programs in the Nation. 
This bill offers States the flexibility to tailor outreach efforts to 
their specific needs and capacities. Failure to pass this legislation 
would mean the loss of health coverage for millions of children. But 
every child should have access to quality, affordable health care.
  I am proud of the comparative effectiveness research provision in 
this bill. It will reduce health care costs and improve quality for all 
Americans. It does that by providing doctors and their patients with 
valid evidence-based information on how different treatments for 
particular medical conditions compare to one another. This data can 
help doctors and their patients determine whether or not new or high-
priced drugs, devices, and other medical treatments provide better 
clinical outcomes.
  This is a critically important piece of legislation. It helps our 
kids. It preserves Medicare for our seniors. It makes sure our 
physicians and other providers are adequately reimbursed. I urge my 
colleagues to support this legislation.
  Mr. BARTON of Texas. Mr. Speaker, I yield 1\1/2\ minutes to the 
gentleman from Georgia, Dr. Price.
  Mr. PRICE of Georgia. Mr. Speaker, I appreciate the opportunity.
  I have in my hand here a letter from the American Association for 
Homecare, Coalition for Pulmonary Fibrosis, the COPD Alert, the Council 
for Quality Respiratory Care, and the National Emphysema/COPD 
Association asking us not to vote for this bill that would enact cuts 
in their programs.
  As a physician, I understand the negative consequences of greater 
governmental involvement in health care. This bill will cut Medicare 
benefits. It will tax every single American with private health 
insurance.
  Now, why would they do this? Why would they pass a bill like this? 
The answer, Mr. Speaker, is because they can. But their motives are 
laid bare. Their motives are laid today.

[[Page 22291]]

  The true desire of those on the left is to gradually and enticingly 
move all Americans to Washington-controlled bureaucratic health care. 
Read the bill. Read the bill. It's right there.
  It's not what we ought to be doing. It's not what Americans want. I 
urge my colleagues to oppose this bill.
  Mr. STARK. Mr. Speaker, I would like to yield 1 minute to the 
distinguished gentleman from California, a member of the Ways and Means 
Committee (Mr. Becerra). Pending that, I would point out that he is 
well aware that the National Hispanic Medical Association has endorsed 
the bill, and I would like to submit their endorsing letter into the 
Record.

                                           NHMA, National Hispanic


                                          Medical Association,

                                    Washington, DC, July 25, 2007.
     Hon. John Dingell,
     Chairman, House Committee on Energy and Commerce, House of 
         Representatives, Washington, DC.
       Dear Chairman Dingell: On behalf of the National Hispanic 
     Medical Association (NHMA), a non-profit association 
     representing 36,000 licensed Hispanic physicians in the 
     United States, we write to express our strong support for the 
     Children's Health and Medicare Protection Act, H.R. 3162, 
     which will allow the State Children's Health Insurance 
     Program (SCHIP), Medicare, and Medicaid to expand enrollment 
     of Hispanic children and elderly. Since one in five Hispanic 
     children are currently uninsured and only 10 percent of 
     Hispanics eligible for Medicare are enrolled, these programs 
     are vital to increasing access to health care.
       The mission of NHMA is to improve the health of Hispanics 
     and other underserved populations. We support the SCHIP 
     section that allows states to cover legal immigrant children 
     and legal immigrant pregnant women, covers dental care and 
     mental health care, provides state performance bonuses if 
     they can demonstrate that they have enrolled new children who 
     are currently eligible, but not enrolled, and creates the 
     Children's Access, Payment and Equity Commission, that will 
     examine issues of health disparities. We support the Medicare 
     section that calls for reducing health disparities through 
     demonstrations for language services reimbursement and 
     targeted outreach, new quality data relating to disparities, 
     expands the Low Income Subsidy and Medicare Savings Programs, 
     and mandates a report on Culturally and Linguistically 
     Appropriate Standards use by providers. We do not support 
     total elimination of Medicare Advantage with a Hispanic 
     enrollment of 21 percent receiving comprehensive care 
     management and with Puerto Rico covering dual eligibles. 
     Finally, we support the Medicaid section that increases funds 
     for transition to work, disabilities, family planning, adult 
     day care and Puerto Rico.
       In summary, the National Hispanic Medical Association 
     supports the Children's Health and Medicare Protection Act, 
     H.R. 3161, because it will increase access to health 
     insurance for Hispanics and will, thus, improve the health of 
     all Americans.
           Sincerely,
                                       Elena Rios, M.D., M.S.P.H.,
                                                President and CEO.

  Mr. BECERRA. Mr. Speaker, I thank the gentleman for yielding.
  The CHAMP Act is a victory for children's health, it is a victory for 
seniors' health, and it is a victory for American taxpayers who expect 
us to be fiscally responsible.
  Why shouldn't 11 million American children from working families in 
this country have the same access to health care that the children of 
every single Member of Congress has? The taxpayers pay our salary and 
they make it possible for us to get health care benefits. Why shouldn't 
11 million American children who live with parents who are working day 
to day have the same access?
  Like our victory this year in increasing the minimum wage for 
America's workers, expanding health care coverage to 5 million children 
is long overdue.
  My colleagues on the Republican side of the aisle voted a few years 
ago to add a prescription drug benefit under Medicare that costs about 
eight times as much as the benefit we would offer to the 11 million 
children would cost. Why not do it for our kids?
  We are doing this in a way that is fiscally responsible. The CHAMP 
Act will not add a single cent to the Federal deficit that the Bush 
administration has created.
  This is sound policy. Let's vote for the CHAMP Act for our kids and 
our seniors.
  Mr. BARTON of Texas. Mr. Speaker, I would like to yield 1 minute to 
the distinguished gentleman from the great State of Nebraska (Mr. 
Fortenberry).
  Mr. FORTENBERRY. Mr. Speaker, everyone agrees that children deserve 
proper health care. The SCHIP program is an important program that 
provides health insurance for over 6.6 million of America's neediest 
children. I supported its renewal, but I believe it must be done 
responsibly.
  This legislation overreaches. It cuts Medicare and also allows some 
adults to claim health care coverage meant for children. Good public 
policy should not pit the children against their grandparents.
  This 465-page bill makes sweeping changes to American health care and 
tax policies. It needs thorough, thoughtful, and deliberate analysis, 
and time has not been provided for adequate examination. The SCHIP bill 
could have clear bipartisan support, I believe, but instead it contains 
a labyrinth of provisions, some of which hurts seniors. Mr. Speaker, I 
believe this Congress can do better.
  Mr. DINGELL. Mr. Speaker, I yield at this time 1 minute to my very 
dear friend, the gentleman from New Jersey (Mr. Andrews).
  Mr. ANDREWS. Mr. Speaker, somewhere in America right now an 8-year-
old girl comes home to her mother and father and says she has a 
numbness and ache in her right arm, and they worry about it, wondering 
whether it is just a strain from playing on the playground or whether 
she has a serious disease of her nervous system. But they can't send 
her to the pediatrician because they do not have enough money left in 
the family budget this week and they have no health insurance.
  The question before the House is whether or not to provide health 
insurance for that family and that little girl. Yes or no?
  The bill says ``yes.'' It pays for it responsibly by a modest 
increase in the cigarette tax and by eliminating subsidies to health 
insurance companies. You can say whatever you want, but the question 
comes down to that: yes or no? It is time we voted ``yes'' for that 
little girl and her family, voted ``yes'' on this bill.
  Mr. BARTON of Texas. Mr. Speaker, I want to yield 1 minute to the 
Member of Congress with the largest number of Social Security 
recipients, the gentlewoman from the great State of Florida (Ms. Ginny 
Brown-Waite).
  Ms. GINNY BROWN-WAITE of Florida. Mr. Speaker, I rise today on behalf 
of the 43,000 senior citizens living in my congressional district who 
will lose their Medicare benefits if the bill before us today becomes 
law.
  Everyone in this Chamber wants to extend SCHIP because it has helped 
many children, but not at the expense of their grandparents. Let me 
repeat: 43,000 of my constituents, 693,000 Floridians, and 8.3 million 
seniors nationwide will be pushed off of Medicare plans in favor of 
other priorities.
  Today we are seeing the biggest raid on the Medicare trust fund 
seniors have ever seen, with no regard to those who rely on Medicare 
Advantage for their only access in many rural areas to health care 
benefits.
  Some of the specific cuts that are in this bill are a 43 percent cut 
to patients who rent lifesaving oxygen equipment, a $7.2 billion cut 
for home health services, a $6.5 billion cut for skilled nursing 
facilities.
  Mr. Speaker, cutting the only health care program many of my 
constituents use would be unconscionable.
  The SPEAKER pro tempore. The gentleman from Michigan has a total of 
31\1/2\ minutes remaining, and the gentleman from California has 30 
minutes remaining, for an aggregate total of 61\1/2\ minutes. The 
gentleman from Texas has 14 minutes, and the gentleman from Louisiana 
has 45 minutes, for an aggregate total of 59 minutes.
  Mr. DINGELL. Mr. Speaker, I continue to reserve the balance of my 
time.
  Mr. STARK. Mr. Speaker, I continue to reserve the balance of my time.
  Mr. BARTON of Texas. Mr. Speaker, I respectfully reserve the balance 
of my time at this time.

                              {time}  1600

  Mr. DINGELL. Mr. Speaker, I note that Mr. McCrery has time remaining.

[[Page 22292]]

 He is a very valuable Member of this body, and I'm sure he would make 
very good use of the time that's available to him, and I would suggest 
that the business of the House could be expedited by having Mr. McCrery 
proceed to yield time to members of the Ways and Means Committee on the 
minority side.
  Mr. BARTON of Texas. Mr. Speaker, I just wish to make an observation 
that the tradition of normal procedure is to alternate between majority 
and minority. We just had a minority speaker. It should be the 
opportunity of the majority to tell their side of the story.
  The SPEAKER pro tempore. The Chair notes that it was an alternation 
between two committees on one side and two committees on the other side 
of the House.
  The gentleman from Michigan has 31\1/2\ minutes remaining, the 
gentleman from California has 30\1/2\ minutes remaining, for an 
aggregate of 61\1/2\ minutes.
  The gentleman from Texas has 14 minutes remaining, the gentleman from 
Louisiana continues to have his full 45 minutes remaining, for an 
aggregate of 59 minutes.
  Mr. DINGELL. Mr. Speaker, I would then yield, with the understanding 
that the Democrats want to give the choice of the doctor, while our 
good Republican friends want to give a choice of HMOs.
  With that, I yield 2 minutes to the distinguished gentleman from New 
York (Mr. Engel).
  Mr. ENGEL. I thank the gentleman.
  Mr. Speaker, the reauthorization of State Children's Health Insurance 
is unquestionably one of the most important bills we will pass this 
year. This bill will protect six million kids currently covered by 
SCHIP and provide coverage for an additional five million children.
  This bill provides aggressive outreach to enroll children by 
simplifying enrollment procedures and awarding States bonuses for 
finding more children. This is important since two-thirds of the 
uninsured children in our Nation are actually eligible but not enrolled 
in Medicaid or SCHIP.
  What is the response of our Republican friends? Block the bill from 
coming up in our committee; create phony issues because they're against 
insuring children. Illegal amnesty? Give me a break. No hearings? We've 
had seven hearings on this bill. Eligible for private insurance? 93.5 
percent of the children we cover in this bill would have no private 
insurance without this bill.
  What is the President's response? Under the President's plan, this 
program would see its funding cut from last year; and, worse, the 
amount allocated for its reauthorization would be less than half of the 
amount required to maintain coverage for current beneficiaries.
  He says he will veto this bill because it covers too many children. 
This is unconscionable. Sixty-one national advocacy groups devoted to 
improving children's health request that we fund the SCHIP program at 
60 billion additional dollars. The President countered with $4.8 
billion. Clearly, there is a disconnect.
  We are proud that, despite budgetary constraints, we will be able to 
reauthorize our SCHIP program at $50 billion. I am proud that we will 
be covering 11 million low-income children under this reauthorization, 
and I know our Nation will be better off for it.
  This is an amazing feat. Passing bills like this is why we should all 
feel honored to be Members of Congress. I'm sorry that my Republican 
friends just continue to say no. We say yes, yes to 11 million 
children, yes to saying that our children ought to be insured, yes to 
saying that America's children need our help. Pass this bill. It is 
good for all our children.
  Mr. BARTON of Texas. Mr. Speaker, I wish to yield 2 minutes to the 
distinguished gentleman from Georgia (Mr. Deal), ranking member of the 
Health Subcommittee.
  Mr. DEAL of Georgia. I thank the gentleman for yielding.
  Mr. Speaker, we've heard a lot of opinions today about the effects of 
this bill; and opinions are, of course, of different perspectives on 
the bill. But there is an agency that we all rely on, supposedly, to 
give us the facts, and that is the Congressional Budget Office.
  Now, there has been an argument about whether or not this bill, in 
its reforms, will go back to a system that would allow illegal 
immigrants to be covered. Now, we can say that it doesn't, but CBO says 
that, by changing that provision back to the way it used to be, that 
over the next 5 years it will cost $800 million and over the next 10 
years it will cost $1.9 billion.
  Now, CBO is simply saying that if you make it easier for illegals to 
enter the program, that's the price tag. They wouldn't say that if they 
didn't have some basis for coming up with those numbers. They didn't 
just pull them out of the air.
  The other part deals with legal immigrants. We have had a policy in 
this country that if someone wants to bring a family member, a friend, 
or sponsor somebody to come in and we give that person coming in legal 
status, that they are not eligible to participate in our social 
programs, such as Medicaid, for the first 5 years. Their sponsor signs 
an affidavit that they will be personally responsible for that.
  This bill removes that waiting time. So when you bring someone in, 
they can immediately sign up for the Medicaid rolls. Now, CBO says that 
that will cost $900 million over the next 5 years and $2.2 billion over 
the next 10 years. Now, the truth of the matter is that this bill gives 
incentives to States to allow this to happen.
  I urge a ``no'' vote.

                          ____________________