[Congressional Record (Bound Edition), Volume 153 (2007), Part 27]
[Senate]
[Pages 36064-36073]
[From the U.S. Government Publishing Office, www.gpo.gov]




          MEDICARE, MEDICAID, AND SCHIP EXTENSION ACT OF 2007

  Mr. DURBIN. Mr. President, I ask unanimous consent that the Senate 
proceed to immediate consideration S. 2499, introduced earlier today.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The assistant legislative clerk read as follows:

       A bill (S. 2499) to amend titles XVIII, XIX, and XXI of the 
     Social Security Act to extend provisions under the Medicare, 
     Medicaid, and SCHIP programs, and for other purposes.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. GRASSLEY. Mr. President, as we approach the end of 2007, one 
cannot help but look ahead and see that there are many challenges that 
await us in the second session of the 110th Congress, specially in 
addressing issues relating to health care. In 2008, we will need to 
take a serious look at many issues in the Medicare Program. Among them 
will be continuing to work on developing a solution for Medicare's 
flawed physician reimbursement system. As usual, I look forward to 
working with my partner on the Senate Finance Committee, chairman, 
Senator Max Baucus, in our usual bipartisan way to address this and 
many other issues.
  However, before we could adjourn this first session and go home to 
enjoy the holidays with our families, there was still urgent work to 
finish. That was the purpose of this exercise. In the legislation we 
considered today, there were several provisions that rise to the level 
of ``must do's.'' These included ensuring that physicians do not 
receive a drastic cut in their Medicare reimbursement and extending a 
number of expiring provisions including the State Children's Health 
Insurance Program.
  Ensuring health care access to my constituents is a top priority of 
mine and the possibility of a negative update for physicians was of 
great concern to me as well as to doctors and patients in Iowa and 
elsewhere. When discussions began to solve this problem I was in favor 
of a 2-year update. I know that several of my colleagues were as well. 
But in continuing negotiations with the House and Senate colleagues it 
became apparent that a 2-year fix was not possible.
  I wanted to do more. I know Senator Baucus wanted to do more. We were 
unable to reach consensus even on the Republican side either and, 
therefore, the Finance Committee was unable to move ahead with the 
legislation that Senator Baucus and I had been developing. 
Unfortunately, for a variety of complex reasons, we are now here with a 
much more limited package. This is a disappointment for many of us. So 
the purpose of moving forward with a 6-month package now is to provide 
the opportunity for the Finance Committee to address these priorities 
next year.
  One of my first priorities has been to ensure access to rural 
hospital services. Since hospitals are often not only the sole provider 
of health care in rural areas, but also significant employers and 
purchasers in the community, it is especially important that they are 
able to keep their doors open. One group of hospitals that I am 
especially concerned about are ``tweener'' hospitals, which are too 
large to be critical access hospitals, but too small to be financially 
viable under the Medicare hospital prospective payment systems. The 
struggles these facilities face in Iowa are real and serious. I am very 
disappointed we were not able to help these hospitals in this package. 
I look forward to working with Senator Baucus and other Members to 
include ``tweener'' hospital improvements in next year's package.
  Second, we must address the problem of specialty hospitals. I have 
been an outspoken advocate against these facilities for several years 
now. My primary concern with these facilities is the inherent conflict 
of interest that exists when physicians have an ownership interest in 
the facilities to which they refer patients. The best interest of the 
patient should always be the deciding factor when a referral for 
treatment is made, not the financial self-interest of the doctor who is 
treating the patient. I strongly support a competitive marketplace and 
free market forces, but not at the expense of decreasing access to 
health care for the poor and uninsured or decreasing the quality of 
care for and safety of patients. I have been and remain concerned about 
the ability of community hospitals to provide care to all patients. I 
also look forward to working with Senator Baucus on addressing this 
issue in our package next year.
  There are a number of other important issues that need to be 
addressed as well. We need to take on the reforms of the Medicare 
Quality Improvement Organization Program, we need to inject some 
sunshine into the payments that drug companies make to doctors, and we 
also need to make sure that Medicare is part of the solution when it 
comes to greater use of electronic prescribing and electronic health 
records.
  In the meantime, we have this package with the following provisions 
that extend a number of Medicare, Medicaid and SCHIP provisions.
  This legislation prevents the 10.1 percent cut to physician payment 
that would have occurred as of January 1, 2008, and instead gives a 6-
month 0.5 percent update for physicians through June 30, 2008. In 
effect, this provides a 10.5 percent increase in physician fees from 
what they would otherwise have received beginning in January under 
current law. While this is not what many of us had in mind when we 
began this process, providing an update through next June will allow 
more time and the opportunity for a bill to fully go through the 
legislative process beginning with a committee markup next year.
  This legislation also continues to provide additional payment 
incentives for physicians and other health care practitioners who 
report quality measures in the Physician Quality Reporting System. We 
must ensure that health care providers can afford to continue to 
practice medicine. We must also ensure that beneficiaries have access 
to physicians and other health care providers. And we must provide 
incentives for quality improvement.
  We also accommodate physicians ordered to active duty in the Armed 
Services by extending for 6-months a provision that permits them to 
engage in substitute billing arrangements for longer than the 60 days 
allowed under

[[Page 36065]]

current law when they are ordered to active duty.
  Our legislation also revises the Physician Assistance and Quality 
Initiative Fund, which is intended to help stabilize physician payments 
and promote physician quality initiatives.
  This new fund will be available in 2008 to help minimize fluctuations 
in physician payments and promote physician quality initiatives.
  The physician payment changes will be offset, in part, by an 
adjustment to the Medicare Advantage stabilization fund. Our 
legislation does not repeal the stabilization fund but rather preserves 
the fund for future years. We use the $1.5 billion available in 2012, 
while preserving the fund in 2013. Given the continued strong 
participation by plans in the program right now, the legislation 
preserves the fund so that Congress can add more funds in future years 
if they are needed.
  The legislation extends Medicare private plan cost contracts through 
2009, which, without this legislation, are due to expire at the end of 
2008. These are longstanding plans that provide health care to Medicare 
beneficiaries in many communities but have been unable to convert to 
Medicare Advantage plans. In addition, the legislation includes a 1-
year extension to Medicare Advantage special needs plans through 2009. 
At the same time, the legislation puts a moratorium on new special 
needs plans. When Congress enacted the Medicare Modernization Act in 
2003, it created a category of plans intended to provide specialized 
care models for certain populations, including Medicare beneficiaries 
who are also eligible for Medicaid, those who are chronically and 
severely ill or disabled, and those who are institutionalized (for 
example, in nursing homes). While these plans have proliferated, it is 
unclear how well they are meeting their mission of specialized care. 
The legislation freezes the program at the plans currently approved so 
that Congress and CMS can monitor the plans' performance and determine 
if any changes are needed.
  In addition to reforming the manner in which Medicare pays for 
physician services, this legislation will extend several expiring 
provisions enacted in the Medicare Modernization Act to help ensure 
that beneficiaries will continue to have access to needed medical 
services. This includes provisions applicable to rural payments to 
physicians, extending the 1.0 floor on the work geographic adjustment, 
continuing direct payments to independent laboratories for physician 
pathology services, and continuing Medicare reasonable cost payments 
for lab tests in small rural hospitals.
  Our legislation also provides a 6-month extension of the therapy cap 
exceptions process that was included in the Tax Relief and Health Care 
Act last year to ensure that beneficiaries receive the physical, 
occupational, and speech language therapy services they need. It also 
extends the existing payment methodology for brachytherapy services and 
extends it to therapeutic radiopharmaceuticals through June 30, 2008.
  As in previous legislation that Congress has passed, this legislation 
will continue to improve accountability in the Medicare Program. There 
are situations when Medicare is not the primary payer for a 
beneficiary's health care, but it is currently difficult to identify 
these situations. This legislation will improve the Secretary's ability 
to identify beneficiaries for whom Medicare is the secondary payer by 
requiring group health plans and liability insurers to submit data to 
the Secretary.
  The legislation will ensure beneficiary access to long-term care 
hospitals. These facilities will receive regulatory relief for 3-years. 
In order to ensure patients are receiving appropriate levels of care at 
long-term care hospitals, facility and medical review requirements will 
be established, and the Secretary will be required to conduct a study 
on long-term care hospital facility and patient criteria. Also, there 
will be a limited moratorium on the development of new long-term care 
facilities and a freeze to the annual long-term care hospital payment 
update for one quarter in rate year 2008.
  The legislation will also ensure beneficiary access to inpatient 
rehabilitation facility services by addressing the 75-percent rule. 
This rule has been criticized as too blunt an instrument for ensuring 
that appropriate patients receive care at these facilities. Under 
current law, a percentage of Medicare patients must have at least 1 of 
13 listed medical conditions in order to be classified as an inpatient 
rehabilitation facility. This percentage or compliance threshold is 
currently at 65 percent. This legislation would permanently freeze the 
compliance threshold at 60 percent and allow comorbid conditions to 
count permanently toward this threshold. The Secretary will be required 
to study beneficiary access to inpatient rehabilitation services and 
care at inpatient rehabilitation facilities and to make recommendations 
for alternatives to the 75-percent rule. In addition, there will be a 
freeze to the annual inpatient rehabilitation facility payment update 
from April 1, 2008 through fiscal year 2009.
  This legislation will also continue to promote more accurate hospital 
payments. One aspect of Medicare hospital payments that has been 
subject to much criticism is the area wage index. Many say that the 
current method of calculating the wage index does not reflect a 
hospital's actual labor costs and is instead arbitrary in nature so 
that similarly situated hospitals can receive significantly different 
wage index values. Since the enactment of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003, hospitals have been 
able to obtain relief from this unfair situation temporarily.
  The legislation also provides more accurate payment for Part B drugs. 
It implements recommendations of HHS Office of Inspector General and 
requires CMS to adjust its average sales price, ASP, calculation to use 
volume-weighted ASPs based on actual sales volume. It also establishes 
appropriate reimbursement rates for generic albuterol and for glycated 
hemoglobin diabetes laboratory tests.
  In the Medicaid arena, the legislation extends the provision of 
disproportionate share hospital payments to Tennessee and Hawaii for 
the first three-quarters of the current fiscal year. These payments 
were authorized for these States for the first time in last year's Tax 
Relief and Health Care Act and this is an extension of that policy.
  The legislation also delays implementation of recently released 
regulations on school-based services and rehabilitation services in 
Medicaid so that the Finance Committee can appropriately review those 
regulations.
  And finally, the legislation also includes an extension of the State 
Children's Health Insurance Program, SCHIP, through March 31, 2009. 
This provision makes additional funding available so that States do not 
have to scale back SCHIP. This SCHIP extension will ensure that no 
State has to cut back their program due to insufficient Federal 
funding.
  I remain hopeful that when the 110th Congress reconvenes next year, 
there will be a renewed effort to reauthorize and improve SCHIP.
  The bill we considered today addressed the things Congress needed to 
do before going home for the holidays. I am pleased we were able to act 
quickly and unanimously to pass the bill. I know many of my colleagues 
wanted to do more. I know some of my colleagues are disappointed 
because their individual priorities could not be included. It is 
unfortunate. I do hope we can do more when we come back next year.
  Next year is an election year. The caucuses in my home state of Iowa 
are but days away. We have important business to conclude in Medicare 
and Medicaid and SCHIP. We have a Democratic Congress that has to work 
with a slim majority in the Senate and a Republican President. At times 
this year, I am not sure my colleagues on the other side of the aisle 
fully grasped the consequences of that reality. It certainly shows when 
you consider what we could have done this year and what was ultimately 
accomplished. I sincerely hope we do a better job of being bipartisan 
albeit in a political year.
  Let me be clear that I stand ready to roll up my sleeves and get back 
to work come January. I am committed

[[Page 36066]]

to moving ahead with the broader Medicare package when we return here 
next year. To make law, that package will have to be one that the 
President will sign. It will require bipartisan cooperation and hard 
work. I am ready to get the job done. There are many problems that need 
to be addressed, and we can address the myriad issues that we left on 
the table. We can review and act on the proposed Medicaid regulations 
that have so many people vexed. We can pass a SCHIP reauthorization 
that can become law. We have learned the pathway to failure this year. 
I stand ready to join any of my colleagues who want to join me on the 
path not taken in 2007 to a more productive 2008.
  As we move to the end of the first session of the 110th Congress, I 
want to extend my grateful appreciation to my health staff and others 
for the work they have done in 2007. My staff director on the Finance 
Committee, Kolan Davis, has been with me for many, many years and 
provides me invaluable counsel. My chief health policy counsel, Mark 
Hayes, accomplishes more every day than any other hundred people on the 
Hill combined and for his tireless work ethic, I am truly thankful. My 
Medicare Part A counsel, Mike Park, labored through the last several 
weeks though he was sick as a dog because it is that important. My 
Medicare Part B counsel, Sue Walden, ably deciphered the multiple 
variations we considered for providing an update to the physicians. The 
newest member of my team, Kristin Bass, who handles Medicare Parts C 
and D, helped us reach thoughtful compromises on numerous challenging 
issues. My Medicaid staffer, Rodney Whitlock, deftly handles the most 
controversial of issues day in and day out. I particularly want to pay 
tribute to my SCHIP staffer, Becky Shipp. We may have not accomplished 
what we hoped to do with SCHIP this year, but we wouldn't have been 
remotely close without Becky's expertise and effort. My team benefits 
from the able assistance of Sean McGuire and Shaun Freiman going above 
and beyond the call of duty to make sure the little things get done. I 
also want to thank Senator McConnell's point person on health care, Meg 
Hauck, for working with us throughout the year. The Finance Committee 
benefits from that strong working relationship.
  We work as hard as we possibly can to achieve bipartisan consensus in 
the Finance Committee and so I also want to pay tribute to Senator 
Baucus' staff: staff director Russ Sullivan, Michelle Easton, Neleen 
Eisinger, Billy Wynne, Shawn Bishop, David Schwartz, and Catherine 
Dratz.
  We benefit greatly from the Congressional support staff as well. Tom 
Bradley, Tim Gronniger, Shinobu Suzuki, Jeanne De Sa, Eric Rollins and 
all of the hard-working scoring gurus at CBO. Jim Fransen, John 
Goetcheus, Kelly Malone, and Ruth Ernst at Senate Legislative Counsel. 
Jennifer O'Sullivan, Rich Rimkunas, Chris Peterson, April Grady, Elicia 
Herz, Sybil Tyson, Mark Hamelburg, Erin Taylor and all the folks at 
CRS. Mark Miller and all of his staff at MedPAC. They make us look a 
lot more intelligent and effective than we actually are some days.
  Finally, I want to thank some folks at CMS. Liz Hall, Erin Clapton, 
Ira Burney, Richard Strauss are people who help make sure we get things 
right even when we aren't in complete agreement.
  In closing, I want to thank all those folks for their hard work in 
2007 in service to the people of Iowa, Montana, and all of America. 
Thank you.
  Mr. HATCH. Mr. President, I rise in support of this package and want 
to commend my colleagues on a job well done.
  To be fair, it would have been my preference to do a broader bill and 
resolve the myriad of Medicare-, Medicaid- and CHIP-related issues we 
have been discussing for many months now. Given that this has proven 
impossible, my overriding concern is that we move ahead with flawed 
correction to the physician reimbursement formula, as this bill does.
  Indeed, while most of us would have preferred to have a longer term 
physician fix, this bill is a reasonable compromise. Physicians will be 
able to practice medicine without having their Medicare reimbursement 
rates significantly reduced. And that means that Medicare beneficiaries 
will continue to have access to quality health care.
  I also am pleased about other provisions in this legislation, 
particularly those related to policy on long-term care hospitals and 
inpatient rehabilitation facilities, IRFs. With regard to long-term 
care hospitals, Senator Conrad and I introduced legislation, S. 1958, 
Medicare Long-Term Care Hospital Patient Safety and Improvement Act of 
2007. I am proud that the long-term care hospital provisions in today's 
Medicare legislation are based on the legislative language from the 
Conrad-Hatch bill. The legislation before us provides regulatory relief 
to allow continued access to current long-term care hospital services; 
requires new facility and medical reviews to ensure that patients are 
receiving appropriate care; and authorizes a study by the Secretary of 
Health and Human Services, HHS, on long-term care hospitals and patient 
criteria. This legislative language reflects compromises that were made 
between the various trade groups for long-term care hospitals and 
finding policy solutions which generate savings for Medicare.
  As a proud cosponsor of S. 543, Preserving Patient Access to 
Inpatient Rehabilitation Hospitals Act of 2007, I am also pleased that 
the Medicare bill eliminates the 75 percent rule implemented by the 
Centers for Medicare and Medicaid Services, CMS, for rehabilitation 
hospitals. Instead, this legislation permanently freezes the inpatient 
rehabilitation services compliance threshold at 60 percent and allows 
comorbid conditions to count toward this threshold. Finally, it 
requires the Secretary of HHS to study beneficiary access to inpatient 
rehabilitation services and care at IRFs and make recommendations on 
how to classify inpatient rehabilitation facility hospitals and units.
  Additionally, the legislation before the Senate extends the State 
Children's Health Insurance Program, CHIP, through March 31, 2009. Let 
me make one point perfectly clear on this provision--I am not going to 
give up on reauthorizing the CHIP program for an additional 5 years. I 
am still committed to that goal and intend to work with my colleagues 
early next year. I will not rest until this program is reauthorized and 
all eligible, low-income children are covered by the CHIP program.
  On balance, while this bill is not what any of us would have liked, 
it does address many of the immediate concerns of Medicare patients, 
their physician and other health care providers. I strongly support 
this bipartisan legislation and urge my colleagues to support this 
bill.
  Mr. AKAKA. Mr. President, I support the Medicare, Medicaid, SCHIP 
Extension Act of 2007. I appreciate the hard work and leadership of 
Senators Baucus and Grassley in putting together this important 
legislation that will improve Medicare reimbursements, extend the State 
Children's Health Insurance Program, and extend other important 
Medicare and Medicaid policies.
  In addition, this legislation includes a provision that extends 
Medicaid disproportionate share hospital, DSH, allotments for Hawaii 
and Tennessee for another 6 months. Medicaid DSH resources help support 
hospitals that care for significant numbers of Medicaid and uninsured 
patients.
  Hawaii and Tennessee are the only two States that do not have 
permanent DSH allotments. The Balanced Budget Act of 1997 created 
specific DSH allotments for each State based on their actual DSH 
expenditures for fiscal year 1995. In 1994, Hawaii implemented the 
QUEST demonstration program that was designed to reduce the number of 
uninsured and improve access to health care. The prior Medicaid DSH 
program was incorporated into QUEST. As a result of the demonstration 
program, Hawaii did not have DSH expenditures in 1995 and was not 
provided a DSH allotment.
  The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection 
Act of 2000 made further changes to the

[[Page 36067]]

DSH program, which included the establishment of a floor for DSH 
allotments. However, States without allotments were again left out.
  The Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 made additional changes in the DSH program. This included an 
increase in DSH allotments for low DSH States. Again, States without 
allotments were left out.
  In the Tax Relief and Health Care Act of 2006, DSH allotments were 
finally provided for Hawaii and Tennessee for 2007. The act included a 
$10 million Medicaid DSH allotment for Hawaii for 2007. The Medicare, 
Medicaid, and SCHIP Extension Act of 2007 will extend the DSH 
allotments for Hawaii and Tennessee for an additional 6 months.
  This extension authorizes the submission by the State of Hawaii of a 
State plan amendment covering a DSH payment methodology to hospitals 
which is consistent with the requirements of existing law relating to 
DSH payments. The purpose of providing a DSH allotment for Hawaii is to 
provide additional funding to the State of Hawaii to permit a greater 
contribution toward the uncompensated costs of hospitals that are 
providing indigent care. It is not meant to alter existing arrangements 
between the State of Hawaii and the Centers for Medicare and Medicaid 
Services, CMS, or to reduce in any way the level of Federal funding for 
Hawaii's QUEST program.
  I look forward to continuing to work with Senators Alexander, Corker, 
and Inouye to permanently restore allotments for Hawaii and Tennessee. 
I thank the chairman and ranking member of the Finance Committee for 
all of their efforts on this legislation and for their support on this 
issue of great importance.
  Mr. DURBIN. Mr. President, I ask unanimous consent that the bill be 
read a third time and passed, the motion to reconsider be laid upon the 
table, and that any statements relating to the bill be printed in the 
Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (S. 2499) was ordered to be engrossed for a third reading, 
was read the third time, and passed, as follows:

                                S. 2499

       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) In General.--This Act may be cited as the ``Medicare, 
     Medicaid, and SCHIP Extension 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--MEDICARE

Sec. 101. Increase in physician payment update; extension of the 
              physician quality reporting system.
Sec. 102. Extension of Medicare incentive payment program for physician 
              scarcity areas.
Sec. 103. Extension of floor on work geographic adjustment under the 
              Medicare physician fee schedule.
Sec. 104. Extension of treatment of certain physician pathology 
              services under Medicare.
Sec. 105. Extension of exceptions process for Medicare therapy caps.
Sec. 106. Extension of payment rule for brachytherapy; extension to 
              therapeutic radiopharmaceuticals.
Sec. 107. Extension of Medicare reasonable costs payments for certain 
              clinical diagnostic laboratory tests furnished to 
              hospital patients in certain rural areas.
Sec. 108. Extension of authority of specialized Medicare Advantage 
              plans for special needs individuals to restrict 
              enrollment.
Sec. 109. Extension of deadline for application of limitation on 
              extension or renewal of Medicare reasonable cost contract 
              plans.
Sec. 110. Adjustment to the Medicare Advantage stabilization fund.
Sec. 111. Medicare secondary payor.
Sec. 112. Payment for part B drugs.
Sec. 113. Payment rate for certain diagnostic laboratory tests.
Sec. 114. Long-term care hospitals.
Sec. 115. Payment for inpatient rehabilitation facility (IRF) services.
Sec. 116. Extension of accommodation of physicians ordered to active 
              duty in the Armed Services.
Sec. 117. Treatment of certain hospitals.
Sec. 118. Additional Funding for State Health Insurance Assistance 
              Programs, Area Agencies on Aging, and Aging and 
              Disability Resource Centers.

                      TITLE II--MEDICAID AND SCHIP

Sec. 201. Extending SCHIP funding through March 31, 2009.
Sec. 202. Extension of transitional medical assistance (TMA) and 
              abstinence education program.
Sec. 203. Extension of qualifying individual (QI) program.
Sec. 204. Medicaid DSH extension.
Sec. 205. Improving data collection.
Sec. 206. Moratorium on certain payment restrictions.

                        TITLE III--MISCELLANEOUS

Sec. 301. Medicare Payment Advisory Commission status.
Sec. 302. Special Diabetes Programs for Type I Diabetes and Indians.

                           TITLE I--MEDICARE

     SEC. 101. INCREASE IN PHYSICIAN PAYMENT UPDATE; EXTENSION OF 
                   THE PHYSICIAN QUALITY REPORTING SYSTEM.

       (a) Increase in Physician Payment Update.--
       (1) In general.--Section 1848(d) of the Social Security Act 
     (42 U.S.C. 1395w-4(d)) is amended--
       (A) in paragraph (4)(B), by striking ``and paragraphs (5) 
     and (6)'' and inserting ``and the succeeding paragraphs of 
     this subsection''; and
       (B) by adding at the end the following new paragraph:
       ``(8) Update for a portion of 2008.--
       ``(A) In general.--Subject to paragraph (7)(B), in lieu of 
     the update to the single conversion factor established in 
     paragraph (1)(C) that would otherwise apply for 2008, for the 
     period beginning on January 1, 2008, and ending on June 30, 
     2008, the update to the single conversion factor shall be 0.5 
     percent.
       ``(B) No effect on computation of conversion factor for the 
     remaining portion of 2008 and 2009.--The conversion factor 
     under this subsection shall be computed under paragraph 
     (1)(A) for the period beginning on July 1, 2008, and ending 
     on December 31, 2008, and for 2009 and subsequent years as if 
     subparagraph (A) had never applied.''.
       (2) Revision of the physician assistance and quality 
     initiative fund.--
       (A) Revision.--Section 1848(l)(2) of the Social Security 
     Act (42 U.S.C. 1395w-4(l)(2)) is amended--
       (i) by striking subparagraph (A) and inserting the 
     following:
       ``(A) Amount available.--
       ``(i) In general.--Subject to clause (ii), there shall be 
     available to the Fund the following amounts:

       ``(I) For expenditures during 2008, an amount equal to 
     $150,500,000.
       ``(II) For expenditures during 2009, an amount equal to 
     $24,500,000.
       ``(III) For expenditures during 2013, an amount equal to 
     $4,960,000,000.

       ``(ii) Limitations on expenditures.--

       ``(I) 2008.--The amount available for expenditures during 
     2008 shall be reduced as provided by subparagraph (A) of 
     section 225(c)(1) and section 524 of the Departments of 
     Labor, Health and Human Services, and Education, and Related 
     Agencies Appropriations Act, 2008 (division G of the 
     Consolidated Appropriations Act, 2008).
       ``(II) 2009.--The amount available for expenditures during 
     2009 shall be reduced as provided by subparagraph (B) of such 
     section 225(c)(1).
       ``(III) 2013.--The amount available for expenditures during 
     2013 shall only be available for an adjustment to the update 
     of the conversion factor under subsection (d) for that 
     year.''; and

       (ii) in subparagraph (B), by striking ``entire amount 
     specified in the first sentence of subparagraph (A)'' and all 
     that follows and inserting the following: ``entire amount 
     available for expenditures, after application of subparagraph 
     (A)(ii), during--
       ``(i) 2008 for payment with respect to physicians' services 
     furnished during 2008;
       ``(ii) 2009 for payment with respect to physicians' 
     services furnished during 2009; and
       ``(iii) 2013 for payment with respect to physicians' 
     services furnished during 2013.''.
       (B) Effective date.--
       (i) In general.--Subject to clause (ii), the amendments 
     made by subparagraph (A) shall take effect on the date of the 
     enactment of this Act.
       (ii) Special rule for coordination with consolidated 
     appropriations act, 2008.--If the date of the enactment of 
     the Consolidated Appropriations Act, 2008, occurs on or after 
     the date described in clause (i), the amendments made by 
     subparagraph (A) shall be deemed to be made on the day after 
     the effective date of sections 225(c)(1) and 524 of the 
     Departments of Labor, Health and Human Services, and 
     Education, and Related Agencies Appropriations Act, 2008 
     (division G of the Consolidated Appropriations Act, 2008).
       (C) Transfer of funds to part b trust fund.--Amounts that 
     would have been available to the Physician Assistance and 
     Quality Initiative Fund under section 1848(l)(2) of the 
     Social Security Act (42 U.S.C. 1395w-4(l)(2)) for payment 
     with respect to physicians' services furnished prior to 
     January 1, 2013, but for the amendments made by subparagraph 
     (A), shall be deposited into, and made available for 
     expenditures from, the Federal Supplementary Medical 
     Insurance Trust Fund

[[Page 36068]]

     under section 1841 of such Act (42 U.S.C. 1395t).
       (b) Extension of the Physician Quality Reporting System.--
       (1) System.--Section 1848(k)(2)(B) of the Social Security 
     Act (42 U.S.C. 1395w-4(k)(2)(B)) is amended--
       (A) in the heading, by inserting ``and 2009'' after 
     ``2008'';
       (B) in clause (i), by inserting ``and 2009'' after 
     ``2008''; and
       (C) in each of clauses (ii) and (iii)--
       (i) by striking ``, 2007'' and inserting ``of each of 2007 
     and 2008''; and
       (ii) by inserting ``or 2009, as applicable'' after 
     ``2008''.
       (2) Reporting.--Section 101(c) of division B of the Tax 
     Relief and Health Care Act of 2006 (42 U.S.C. 1395w-4 note) 
     is amended--
       (A) in the heading, by inserting ``and 2008'' after 
     ``2007'';
       (B) in paragraph (5), by adding at the end the following:
       ``(F) Extension.--For 2008 and 2009, paragraph (3) shall 
     not apply, and the Secretary shall establish alternative 
     criteria for satisfactorily reporting under paragraph (2) and 
     alternative reporting periods under paragraph (6)(C) for 
     reporting groups of measures under paragraph (2)(B) of 
     section 1848(k) of the Social Security Act (42 U.S.C. 1395w-
     4(k)) and for reporting using the method specified in 
     paragraph (4) of such section.''; and
       (C) in paragraph (6), by striking subparagraph (C) and 
     inserting the following new subparagraph:
       ``(C) Reporting period.--The term `reporting period' 
     means--
       ``(i) for 2007, the period beginning on July 1, 2007, and 
     ending on December 31, 2007; and
       ``(ii) for 2008, all of 2008.''.
       (c) Implementation.--For purposes of carrying out the 
     provisions of, and amendments made by subsections (a) and 
     (b), in addition to any amounts otherwise provided in this 
     title, there are appropriated to the Centers for Medicare & 
     Medicaid Services Program Management Account, out of any 
     money in the Treasury not otherwise appropriated, $25,000,000 
     for the period of fiscal years 2008 and 2009.

     SEC. 102. EXTENSION OF MEDICARE INCENTIVE PAYMENT PROGRAM FOR 
                   PHYSICIAN SCARCITY AREAS.

       Section 1833(u) of the Social Security Act (42 U.S.C. 
     1395l(u)) is amended--
       (1) in paragraph (1), by striking ``before January 1, 
     2008'' and inserting ``before July 1, 2008''; and
       (2) in paragraph (4)--
       (A) by redesignating subparagraph (D) as subparagraph (E); 
     and
       (B) by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) Special rule.--With respect to physicians' services 
     furnished on or after January 1, 2008, and before July 1, 
     2008, for purposes of this subsection, the Secretary shall 
     use the primary care scarcity counties and the specialty care 
     scarcity counties (as identified under the preceding 
     provisions of this paragraph) that the Secretary was using 
     under this subsection with respect to physicians' services 
     furnished on December 31, 2007.''.

     SEC. 103. EXTENSION OF FLOOR ON WORK GEOGRAPHIC ADJUSTMENT 
                   UNDER THE MEDICARE PHYSICIAN FEE SCHEDULE.

       Section 1848(e)(1)(E) of the Social Security Act (42 U.S.C. 
     1395w-4(e)(1)(E)), as amended by section 102 of division B of 
     the Tax Relief and Health Care Act of 2006, is amended by 
     striking ``before January 1, 2008'' and inserting ``before 
     July 1, 2008''.

     SEC. 104. EXTENSION OF 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 enacted 
     into law by section 1(a)(6) of Public Law 106-554), as 
     amended by section 732 of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (42 U.S.C. 1395w-4 
     note) and section 104 of division B of the Tax Relief and 
     Health Care Act of 2006 (42 U.S.C. 1395w-4 note), is amended 
     by striking ``and 2007'' and inserting ``2007, and the first 
     6 months of 2008''.

     SEC. 105. EXTENSION OF EXCEPTIONS PROCESS FOR MEDICARE 
                   THERAPY CAPS.

       Section 1833(g)(5) of the Social Security Act (42 U.S.C. 
     1395l(g)(5)) is amended by striking ``December 31, 2007'' and 
     inserting ``June 30, 2008''.

     SEC. 106. EXTENSION OF PAYMENT RULE FOR BRACHYTHERAPY; 
                   EXTENSION TO THERAPEUTIC RADIOPHARMACEUTICALS.

       (a) Extension of Payment Rule for Brachytherapy.--Section 
     1833(t)(16)(C) of the Social Security Act (42 U.S.C. 
     1395l(t)(16)(C)), as amended by section 107(a) of division B 
     of the Tax Relief and Health Care Act of 2006, is amended by 
     striking ``January 1, 2008'' and inserting ``July 1, 2008''.
       (b) Payment for Therapeutic Radiopharmaceuticals.--Section 
     1833(t)(16)(C) of the Social Security Act (42 U.S.C. 
     1395l(t)(16)(C)), as amended by subsection (a), is amended--
       (1) in the heading, by inserting ``and therapeutic 
     radiopharmaceuticals'' before ``at charges'';
       (2) in the first sentence--
       (A) by inserting ``and for therapeutic radiopharmaceuticals 
     furnished on or after January 1, 2008, and before July 1, 
     2008,'' after ``July 1, 2008,'';
       (B) by inserting ``or therapeutic radiopharmaceutical'' 
     after ``the device''; and
       (C) by inserting ``or therapeutic radiopharmaceutical'' 
     after ``each device''; and
       (3) in the second sentence, by inserting ``or therapeutic 
     radiopharmaceuticals'' after ``such devices''.

     SEC. 107. 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 (42 U.S.C. 1395l-
     4), as amended by section 105 of division B of the Tax Relief 
     and Health Care Act of 2006 (42 U.S.C. 1395l note), is 
     amended by striking ``the 3-year period beginning on July 1, 
     2004'' and inserting ``the period beginning on July 1, 2004, 
     and ending on June 30, 2008''.

     SEC. 108. EXTENSION OF AUTHORITY OF SPECIALIZED MEDICARE 
                   ADVANTAGE PLANS FOR SPECIAL NEEDS INDIVIDUALS 
                   TO RESTRICT ENROLLMENT.

       (a) Extension of Authority To Restrict Enrollment.--Section 
     1859(f) of the Social Security Act (42 U.S.C. 1395w-28(f)) is 
     amended by striking ``2009'' and inserting ``2010''.
       (b) Moratorium.--
       (1) Authority to designate other plans as specialized ma 
     plans.--During the period beginning on January 1, 2008, and 
     ending on December 31, 2009, the Secretary of Health and 
     Human Services shall not exercise the authority provided 
     under section 231(d) of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (42 U.S.C. 1395w-
     21 note) to designate other plans as specialized MA plans for 
     special needs individuals under part C of title XVIII of the 
     Social Security Act. The preceding sentence shall not apply 
     to plans designated as specialized MA plans for special needs 
     individuals under such authority prior to January 1, 2008.
       (2) Enrollment in new plans.--During the period beginning 
     on January 1, 2008, and ending on December 31, 2009, the 
     Secretary of Health and Human Services shall not permit 
     enrollment of any individual residing in an area in a 
     specialized Medicare Advantage plan for special needs 
     individuals under part C of title XVIII of the Social 
     Security Act to take effect unless that specialized Medicare 
     Advantage plan for special needs individuals was available 
     for enrollment for individuals residing in that area on 
     January 1, 2008.

     SEC. 109. EXTENSION OF DEADLINE FOR APPLICATION OF LIMITATION 
                   ON EXTENSION OR RENEWAL OF MEDICARE REASONABLE 
                   COST CONTRACT PLANS.

       Section 1876(h)(5)(C)(ii) of the Social Security Act (42 
     U.S.C. 1395mm(h)(5)(C)(ii)), in the matter preceding 
     subclause (I), is amended by striking ``January 1, 2008'' and 
     inserting ``January 1, 2009''.

     SEC. 110. ADJUSTMENT TO THE MEDICARE ADVANTAGE STABILIZATION 
                   FUND.

       Section 1858(e)(2)(A)(i) of the Social Security Act (42 
     U.S.C. 1395w-27a(e)(2)(A)(i)), as amended by section 3 of 
     Public Law 110-48, is amended by striking ``the Fund'' and 
     all that follows and inserting ``the Fund during 2013, 
     $1,790,000,000.''

     SEC. 111. MEDICARE SECONDARY PAYOR.

       (a) In General.--Section 1862(b) of the Social Security Act 
     (42 U.S.C. 1395y(b)) is amended by adding at the end the 
     following new paragraphs:
       ``(7) Required submission of information by group health 
     plans.--
       ``(A) Requirement.--On and after the first day of the first 
     calendar quarter beginning after the date that is 1 year 
     after the date of the enactment of this paragraph, an entity 
     serving as an insurer or third party administrator for a 
     group health plan, as defined in paragraph (1)(A)(v), and, in 
     the case of a group health plan that is self-insured and 
     self-administered, a plan administrator or fiduciary, shall--
       ``(i) secure from the plan sponsor and plan participants 
     such information as the Secretary shall specify for the 
     purpose of identifying situations where the group health plan 
     is or has been a primary plan to the program under this 
     title; and
       ``(ii) submit such information to the Secretary in a form 
     and manner (including frequency) specified by the Secretary.
       ``(B) Enforcement.--
       ``(i) In general.--An entity, a plan administrator, or a 
     fiduciary described in subparagraph (A) that fails to comply 
     with the requirements under such subparagraph shall be 
     subject to a civil money penalty of $1,000 for each day of 
     noncompliance for each individual for which the information 
     under such subparagraph should have been submitted. The 
     provisions of subsections (e) and (k) of section 1128A shall 
     apply to a civil money penalty under the previous sentence in 
     the same manner as such provisions apply to a penalty or 
     proceeding under section 1128A(a). A civil money penalty 
     under this clause shall be in addition to any other penalties 
     prescribed by law and in addition to any Medicare secondary 
     payer claim under this title with respect to an individual.

[[Page 36069]]

       ``(ii) Deposit of amounts collected.--Any amounts collected 
     pursuant to clause (i) shall be deposited in the Federal 
     Hospital Insurance Trust Fund under section 1817.
       ``(C) Sharing of information.--Notwithstanding any other 
     provision of law, under terms and conditions established by 
     the Secretary, the Secretary--
       ``(i) shall share information on entitlement under Part A 
     and enrollment under Part B under this title with entities, 
     plan administrators, and fiduciaries described in 
     subparagraph (A);
       ``(ii) may share the entitlement and enrollment information 
     described in clause (i) with entities and persons not 
     described in such clause; and
       ``(iii) may share information collected under this 
     paragraph as necessary for purposes of the proper 
     coordination of benefits.
       ``(D) Implementation.--Notwithstanding any other provision 
     of law, the Secretary may implement this paragraph by program 
     instruction or otherwise.
       ``(8) Required submission of information by or on behalf of 
     liability insurance (including self-insurance), no fault 
     insurance, and workers' compensation laws and plans.--
       ``(A) Requirement.--On and after the first day of the first 
     calendar quarter beginning after the date that is 18 months 
     after the date of the enactment of this paragraph, an 
     applicable plan shall--
       ``(i) determine whether a claimant (including an individual 
     whose claim is unresolved) is entitled to benefits under the 
     program under this title on any basis; and
       ``(ii) if the claimant is determined to be so entitled, 
     submit the information described in subparagraph (B) with 
     respect to the claimant to the Secretary in a form and manner 
     (including frequency) specified by the Secretary.
       ``(B) Required information.--The information described in 
     this subparagraph is--
       ``(i) the identity of the claimant for which the 
     determination under subparagraph (A) was made; and
       ``(ii) such other information as the Secretary shall 
     specify in order to enable the Secretary to make an 
     appropriate determination concerning coordination of 
     benefits, including any applicable recovery claim.
       ``(C) Timing.--Information shall be submitted under 
     subparagraph (A)(ii) within a time specified by the Secretary 
     after the claim is resolved through a settlement, judgment, 
     award, or other payment (regardless of whether or not there 
     is a determination or admission of liability).
       ``(D) Claimant.--For purposes of subparagraph (A), the term 
     `claimant' includes--
       ``(i) an individual filing a claim directly against the 
     applicable plan; and
       ``(ii) an individual filing a claim against an individual 
     or entity insured or covered by the applicable plan.
       ``(E) Enforcement.--
       ``(i) In general.--An applicable plan that fails to comply 
     with the requirements under subparagraph (A) with respect to 
     any claimant shall be subject to a civil money penalty of 
     $1,000 for each day of noncompliance with respect to each 
     claimant. The provisions of subsections (e) and (k) of 
     section 1128A shall apply to a civil money penalty under the 
     previous sentence in the same manner as such provisions apply 
     to a penalty or proceeding under section 1128A(a). A civil 
     money penalty under this clause shall be in addition to any 
     other penalties prescribed by law and in addition to any 
     Medicare secondary payer claim under this title with respect 
     to an individual.
       ``(ii) Deposit of amounts collected.--Any amounts collected 
     pursuant to clause (i) shall be deposited in the Federal 
     Hospital Insurance Trust Fund.
       ``(F) Applicable plan.--In this paragraph, the term 
     `applicable plan' means the following laws, plans, or other 
     arrangements, including the fiduciary or administrator for 
     such law, plan, or arrangement:
       ``(i) Liability insurance (including self-insurance).
       ``(ii) No fault insurance.
       ``(iii) Workers' compensation laws or plans.
       ``(G) Sharing of information.--The Secretary may share 
     information collected under this paragraph as necessary for 
     purposes of the proper coordination of benefits.
       ``(H) Implementation.--Notwithstanding any other provision 
     of law, the Secretary may implement this paragraph by program 
     instruction or otherwise.''.
       (b) Rule of Construction.--Nothing in the amendments made 
     by this section shall be construed to limit the authority of 
     the Secretary of Health and Human Services to collect 
     information to carry out Medicare secondary payer provisions 
     under title XVIII of the Social Security Act, including under 
     parts C and D of such title.
       (c) Implementation.--For purposes of implementing 
     paragraphs (7) and (8) of section 1862(b) of the Social 
     Security Act, as added by subsection (a), to ensure 
     appropriate payments under title XVIII of such Act, the 
     Secretary of Health and Human Services shall provide for the 
     transfer, from the Federal Hospital Insurance Trust Fund 
     established under section 1817 of the Social Security Act (42 
     U.S.C. 1395i) and the Federal Supplementary Medical Insurance 
     Trust Fund established under section 1841 of such Act (42 
     U.S.C. 1395t), in such proportions as the Secretary 
     determines appropriate, of $35,000,000 to the Centers for 
     Medicare & Medicaid Services Program Management Account for 
     the period of fiscal years 2008, 2009, and 2010.

     SEC. 112. PAYMENT FOR PART B DRUGS.

       (a) Application of Alternative Volume Weighting in 
     Computation of ASP.--Section 1847A(b) of the Social Security 
     Act (42 U.S.C. 1395w-3a(b)) is amended--
       (1) in paragraph (1)(A), by inserting ``for a multiple 
     source drug furnished before April 1, 2008, or 106 percent of 
     the amount determined under paragraph (6) for a multiple 
     source drug furnished on or after April 1, 2008'' after 
     ``paragraph (3)'';
       (2) in each of subparagraphs (A) and (B) of paragraph (4), 
     by inserting ``for single source drugs and biologicals 
     furnished before April 1, 2008, and using the methodology 
     applied under paragraph (6) for single source drugs and 
     biologicals furnished on or after April 1, 2008,'' after 
     ``paragraph (3)''; and
       (3) by adding at the end the following new paragraph:
       ``(6) Use of volume-weighted average sales prices in 
     calculation of average sales price.--
       ``(A) In general.--For all drug products included within 
     the same multiple source drug billing and payment code, the 
     amount specified in this paragraph is the volume-weighted 
     average of the average sales prices reported under section 
     1927(b)(3)(A)(iii) determined by--
       ``(i) computing the sum of the products (for each National 
     Drug Code assigned to such drug products) of--

       ``(I) the manufacturer's average sales price (as defined in 
     subsection (c)), determined by the Secretary without dividing 
     such price by the total number of billing units for the 
     National Drug Code for the billing and payment code; and
       ``(II) the total number of units specified under paragraph 
     (2) sold; and

       ``(ii) dividing the sum determined under clause (i) by the 
     sum of the products (for each National Drug Code assigned to 
     such drug products) of--

       ``(I) the total number of units specified under paragraph 
     (2) sold; and
       ``(II) the total number of billing units for the National 
     Drug Code for the billing and payment code.

       ``(B) Billing unit defined.--For purposes of this 
     subsection, the term `billing unit' means the identifiable 
     quantity associated with a billing and payment code, as 
     established by the Secretary.''.
       (b) Treatment of Certain Drugs.--Section 1847A(b) of the 
     Social Security Act (42 U.S.C. 1395w-3a(b)), as amended by 
     subsection (a), is amended--
       (1) in paragraph (1), by inserting ``paragraph (7) and'' 
     after ``Subject to''; and
       (2) by adding at the end the following new paragraph:
       ``(7) Special rule.--Beginning with April 1, 2008, the 
     payment amount for--
       ``(A) each single source drug or biological described in 
     section 1842(o)(1)(G) 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 described in section 
     1842(o)(1)(G) (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.''.

     SEC. 113. PAYMENT RATE FOR CERTAIN DIAGNOSTIC LABORATORY 
                   TESTS.

       Section 1833(h) of the Social Security Act (42 U.S.C. 
     1395l(h)) is amended by adding at the end the following new 
     paragraph:
       ``(9) Notwithstanding any other provision in this part, in 
     the case of any diagnostic laboratory test for HbA1c that is 
     labeled by the Food and Drug Administration for home use and 
     is furnished on or after April 1, 2008, the payment rate for 
     such test shall be the payment rate established under this 
     part for a glycated hemoglobin test (identified as of October 
     1, 2007, by HCPCS code 83036 (and any succeeding codes)).''.

     SEC. 114. LONG-TERM CARE HOSPITALS.

       (a) Definition of Long-Term Care Hospital.--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 a hospital 
     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) of greater than 25 days, or 
     meets the requirements of clause (II) of section 
     1886(d)(1)(B)(iv);
       ``(3) satisfies the requirements of subsection (e); and

[[Page 36070]]

       ``(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; and
       ``(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.''.
       (b) Study and Report on Long-Term Care Hospital Facility 
     and Patient Criteria.--
       (1) In general.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     conduct a study on the establishment of national long-term 
     care hospital facility and patient criteria for purposes of 
     determining medical necessity, appropriateness of admission, 
     and continued stay at, and discharge from, long-term care 
     hospitals.
       (2) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Secretary shall submit to Congress 
     a report on the study conducted under paragraph (1), together 
     with recommendations for such legislation and administrative 
     actions, including timelines for implementation of patient 
     criteria or other actions, as the Secretary determines 
     appropriate.
       (3) Considerations.--In conducting the study and preparing 
     the report under this subsection, the Secretary shall 
     consider--
       (A) 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; and
       (B) ongoing work by the Secretary to evaluate and determine 
     the feasibility of such recommendations.
       (c) Payment for Long-Term Care Hospital Services.--
       (1) No application of 25 percent patient threshold payment 
     adjustment to freestanding and grandfathered ltchs.--The 
     Secretary shall not apply, for cost reporting periods 
     beginning on or after the date of the enactment of this Act 
     for a 3-year period--
       (A) section 412.536 of title 42, Code of Federal 
     Regulations, or any similar provision, to freestanding long-
     term care hospitals; and
       (B) 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 the amendment made by 
     section 4417(a) of the Balanced Budget Act of 1997 (Public 
     Law 105-33).
       (2) Payment for hospitals-within-hospitals.--
       (A) In general.--Payment 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 paragraph 
     (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 
     paragraph (c)(3) of such section) 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 cost reporting periods beginning on or after the date of 
     the enactment of this Act for a 3-year period.
       (3) No application of very short-stay outlier policy.--The 
     Secretary shall not apply, for the 3-year period beginning on 
     the date of the enactment of this Act, the amendments 
     finalized on May 11, 2007 (72 Federal Register 26904, 26992) 
     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.
       (4) No application of one-time adjustment to standard 
     amount.--The Secretary shall not, for the 3-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.
       (d) Moratorium on the Establishment of Long-Term Care 
     Hospitals, Long-Term Care Satellite Facilities and on the 
     Increase of Long-Term Care Hospital Beds in Existing Long-
     Term Care Hospitals or Satellite Facilities.--
       (1) In general.--During the 3-year period beginning on the 
     date of the enactment of this Act, the Secretary shall impose 
     a moratorium for purposes of the Medicare program under title 
     XVIII of the Social Security Act--
       (A) subject to paragraph (2), on the establishment and 
     classification of a long-term care hospital or satellite 
     facility, other than an existing long-term care hospital or 
     facility; and
       (B) subject to paragraph (3), on an increase of long-term 
     care hospital beds in existing long-term care hospitals or 
     satellite facilities.
       (2) Exception for certain long-term care hospitals.--The 
     moratorium under paragraph (1)(A) shall not apply to a long-
     term care hospital that as of the date of the enactment of 
     this Act--
       (A) began its qualifying period for payment as a long-term 
     care hospital under section 412.23(e) of title 42, Code of 
     Federal Regulations, on or before the date of the enactment 
     of this Act;
       (B) has a binding written agreement with an outside, 
     unrelated party for the actual construction, renovation, 
     lease, or demolition for a long-term care hospital, and 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); or
       (C) has obtained an approved certificate of need in a State 
     where one is required on or before the date of the enactment 
     of this Act.
       (3) Exception for bed increases during moratorium.--
       (A) In general.--Subject to subparagraph (B), the 
     moratorium under paragraph (1)(B) shall not apply to an 
     increase in beds in an existing hospital or satellite 
     facility if the hospital or facility--
       (i) is located in a State where there is only one other 
     long-term care hospital; and
       (ii) requests an increase in beds following the closure or 
     the decrease in the number of beds of another long-term care 
     hospital in the State.
       (B) No effect on certain limitation.--The exception under 
     subparagraph (A) shall not effect the limitation on 
     increasing beds under sections 412.22(h)(3) and 412.22(f) of 
     title 42, Code of Federal Regulations.
       (4) Existing hospital or satellite facility defined.--For 
     purposes of this subsection, the term ``existing'' means, 
     with respect to a hospital or satellite facility, a hospital 
     or satellite facility that received payment under the 
     provisions of subpart O of part 412 of title 42, Code of 
     Federal Regulations, as of the date of the enactment of this 
     Act.
       (5) Judicial review.--There shall be no administrative or 
     judicial review under section 1869 of the Social Security Act 
     (42 U.S.C. 1395ff), section 1878 of such Act (42 U.S.C. 
     1395oo), or otherwise, of the application of this subsection 
     by the Secretary.
       (e) 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 the 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 rate year ending in 2007.''.
       (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 April 1, 2008.
       (f) Expanded Review of Medical Necessity.--
       (1) 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)

[[Page 36071]]

     of the Social Security Act (42 U.S.C. 1395kk-1(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 consistent with this subsection. 
     Such reviews shall be made for discharges occurring on or 
     after October 1, 2007.
       (2) Review methodology.--The medical necessity reviews 
     under paragraph (1) shall be conducted on an annual basis in 
     accordance with rules specified by the Secretary. Such 
     reviews shall--
       (A) provide for a statistically valid and representative 
     sample of admissions of such individuals sufficient to 
     provide results at a 95 percent confidence interval; and
       (B) 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)).
       (3) Continuation of reviews.--Under contracts under this 
     subsection, the Secretary shall establish an error rate with 
     respect to such reviews that could require further review of 
     the medical necessity of admissions and continued stay in the 
     hospital involved and other actions as determined by the 
     Secretary.
       (4) Termination of required reviews.--
       (A) In general.--Subject to subparagraph (B), the previous 
     provisions of this subsection shall cease to apply for 
     discharges occurring on or after October 1, 2010.
       (B) Continuation.--As of the date specified in subparagraph 
     (A), 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.
       (5) Funding.--The costs to fiscal intermediaries or 
     medicare administrative contractors conducting the medical 
     necessity reviews under paragraph (1) 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.
       (g) Implementation.--For purposes of carrying out the 
     provisions of, and amendments made by, this title, in 
     addition to any amounts otherwise provided in this title, 
     there are appropriated to the Centers for Medicare & Medicaid 
     Services Program Management Account, out of any money in the 
     Treasury not otherwise appropriated, $35,000,000 for the 
     period of fiscal years 2008 and 2009.

     SEC. 115. 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 each of fiscal years 2008 and 
     2009 shall be 0 percent.''.
       (2) Delayed effective date.--The amendment made by 
     paragraph (1) shall not apply to payment units occurring 
     before April 1, 2008.
       (b) Inpatient Rehabilitation Facility Classification 
     Criteria.--
       (1) In general.--Section 5005 of the Deficit Reduction Act 
     of 2005 (Public Law 109-171; 42 U.S.C. 1395ww note) 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 cost reporting 
     periods beginning on or after July 1, 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 toward the percent specified 
     in subsection (a).''.
       (2) Effective date.--The amendment made by paragraph (1)(A) 
     shall apply for cost reporting periods beginning on or after 
     July 1, 2007.
       (c) Recommendations for Classifying Inpatient 
     Rehabilitation Hospitals and Units.--
       (1) Report to congress.--Not later than 18 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 the 
     following:
       (A) An analysis of Medicare beneficiaries' access to 
     medically necessary rehabilitation services, including the 
     potential effect of the 75 percent rule (as defined in 
     paragraph (2)) on access to care.
       (B) An analysis of alternatives or refinements to the 75 
     percent rule policy for determining criteria for inpatient 
     rehabilitation hospital and unit designation under the 
     Medicare program, including alternative criteria which would 
     consider a patient's functional status, diagnosis, co-
     morbidities, and other relevant factors.
       (C) An analysis of the conditions for which individuals are 
     commonly admitted to inpatient rehabilitation hospitals that 
     are 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.
       (2) 75 percent rule defined.--For 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.

     SEC. 116. EXTENSION OF ACCOMMODATION OF PHYSICIANS ORDERED TO 
                   ACTIVE DUTY IN THE ARMED SERVICES.

       Section 1842(b)(6)(D)(iii) of the Social Security Act (42 
     U.S.C. 1395u(b)(6)(D)(iii)), as amended by Public Law 110-54 
     (121 Stat. 551) is amended by striking ``January 1, 2008'' 
     and inserting ``July 1, 2008''.

     SEC. 117. TREATMENT OF CERTAIN HOSPITALS.

       (a) Extending Certain Medicare Hospital Wage Index 
     Reclassifications Through Fiscal Year 2008.--
       (1) In general.--Section 106(a) of division B of the Tax 
     Relief and Health Care Act of 2006 (42 U.S.C. 1395 note) is 
     amended by striking ``September 30, 2007'' and inserting 
     ``September 30, 2008''.
       (2) Special exception reclassifications.--The Secretary of 
     Health and Human Services shall extend for discharges 
     occurring through September 30, 2008, the special exception 
     reclassifications 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).
       (3) Use of particular wage index.--For purposes of 
     implementation of this subsection, the Secretary shall use 
     the hospital wage index that was promulgated by the Secretary 
     in the Federal Register on October 10, 2007 (72 Fed. Reg. 
     57634), and any subsequent corrections.
       (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) of the Social Security Act for purposes 
     of discharges occurring during fiscal year 2008, 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 continuing such a group for such 
     purpose.''.
       (c) Correction of Application of Wage Index During Tax 
     Relief and Health Care Act Extension.--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)) with 
     respect to which--
       (1) a reclassification of its wage index for purposes of 
     such section was extended for the period beginning on April 
     1, 2007, and ending on September 30, 2007, pursuant to 
     subsection (a) of section 106 of division B of the Tax Relief 
     and Health Care Act of 2006 (42 U.S.C. 1395 note); and
       (2) the wage index applicable for such hospital during such 
     period was lower than the wage index applicable for such 
     hospital during the period beginning on October 1, 2006, and 
     ending on March 31, 2007,
     the Secretary shall apply the higher wage index that was 
     applicable for such hospital during the period beginning on 
     October 1, 2006, and ending on March 31, 2007, for the entire 
     fiscal year 2007. If the Secretary determines that the 
     application of the preceding sentence to a hospital will 
     result in a hospital being owed additional reimbursement, the 
     Secretary shall make such payments within 90 days after the 
     settlement of the applicable cost report.

[[Page 36072]]



     SEC. 118. ADDITIONAL FUNDING FOR STATE HEALTH INSURANCE 
                   ASSISTANCE PROGRAMS, AREA AGENCIES ON AGING, 
                   AND AGING AND DISABILITY RESOURCE CENTERS.

       (a) State Health Insurance Assistance Programs.--
       (1) In general.--The Secretary of Health and Human Services 
     shall use amounts made available under paragraph (2) to make 
     grants to States for State health insurance assistance 
     programs receiving assistance under section 4360 of the 
     Omnibus Budget Reconciliation Act of 1990.
       (2) Funding.--For purposes of making grants under this 
     subsection, the Secretary shall provide for the transfer, 
     from the Federal Hospital Insurance Trust Fund under section 
     1817 of the Social Security Act (42 U.S.C. 1395i) and the 
     Federal Supplementary Medical Insurance Trust Fund under 
     section 1841 of such Act (42 U.S.C. 1395t), in the same 
     proportion as the Secretary determines under section 1853(f) 
     of such Act (42 U.S.C. 1395w-23(f)), of $15,000,000 to the 
     Centers for Medicare & Medicaid Services Program Management 
     Account for fiscal year 2008.
       (b) Area Agencies on Aging and Aging and Disability 
     Resource Centers.--
       (1) In general.--The Secretary of Health and Human Services 
     shall use amounts made available under paragraph (2) to make 
     grants--
       (A) to States for area agencies on aging (as defined in 
     section 102 of the Older Americans Act of 1965 (42 U.S.C. 
     3002)); and
       (B) to Aging and Disability Resource Centers under the 
     Aging and Disability Resource Center grant program.
       (2) Funding.--For purposes of making grants under this 
     subsection, the Secretary shall provide for the transfer, 
     from the Federal Hospital Insurance Trust Fund under section 
     1817 of the Social Security Act (42 U.S.C. 1395i) and the 
     Federal Supplementary Medical Insurance Trust Fund under 
     section 1841 of such Act (42 U.S.C. 1395t), in the same 
     proportion as the Secretary determines under section 1853(f) 
     of such Act (42 U.S.C. 1395w-23(f)), of $5,000,000 to the 
     Centers for Medicare & Medicaid Services Program Management 
     Account for the period of fiscal years 2008 through 2009.

                      TITLE II--MEDICAID AND SCHIP

     SEC. 201. EXTENDING SCHIP FUNDING THROUGH MARCH 31, 2009.

       (a) Through the Second Quarter of Fiscal Year 2009.--
       (1) In general.--Section 2104 of the Social Security Act 
     (42 U.S.C. 1397dd) is amended--
       (A) in subsection (a)--
       (i) by striking ``and'' at the end of paragraph (9);
       (ii) by striking the period at the end of paragraph (10) 
     and inserting ``; and''; and
       (iii) by adding at the end the following new paragraph:
       ``(11) for each of fiscal years 2008 and 2009, 
     $5,000,000,000.''; and
       (B) in subsection (c)(4)(B), by striking ``for fiscal year 
     2007'' and inserting ``for each of fiscal years 2007 through 
     2009''.
       (2) Availability of extended funding.--Funds made available 
     from any allotment made from funds appropriated under 
     subsection (a)(11) or (c)(4)(B) of section 2104 of the Social 
     Security Act (42 U.S.C. 1397dd) for fiscal year 2008 or 2009 
     shall not be available for child health assistance for items 
     and services furnished after March 31, 2009, or, if earlier, 
     the date of the enactment of an Act that provides funding for 
     fiscal years 2008 and 2009, and for one or more subsequent 
     fiscal years for the State Children's Health Insurance 
     Program under title XXI of the Social Security Act.
       (3) End of funding under continuing resolution.--Section 
     136(a)(2) of Public Law 110-92 is amended by striking ``after 
     the termination date'' and all that follows and inserting 
     ``after the date of the enactment of the Medicare, Medicaid, 
     and SCHIP Extension Act of 2007.''.
       (4) Clarification of application of funding under 
     continuing resolution.--Section 107 of Public Law 110-92 
     shall apply with respect to expenditures made pursuant to 
     section 136(a)(1) of such Public Law.
       (b) Extension of Treatment of Qualifying States; Rules on 
     Redistribution of Unspent Fiscal Year 2005 Allotments Made 
     Permanent.--
       (1) In general.--Section 2105(g)(1)(A) of the Social 
     Security Act (42 U.S.C. 1397ee(g)(1)(A)), as amended by 
     subsection (d) of section 136 of Public Law 110-92, is 
     amended by striking ``or 2008'' and inserting ``2008, or 
     2009''.
       (2) Applicability.--The amendment made by paragraph (1) 
     shall be in effect through March 31, 2009.
       (3) Certain rules made permanent.--Subsection (e) of 
     section 136 of Public Law 110-92 is repealed.
       (c) Additional Allotments To Eliminate Remaining Funding 
     Shortfalls Through March 31, 2009.--
       (1) In general.--Section 2104 of the Social Security Act 
     (42 U.S.C. 1397dd) is amended by adding at the end the 
     following new subsections:
       ``(j) Additional Allotments To Eliminate Funding Shortfalls 
     for Fiscal Year 2008.--
       ``(1) Appropriation; allotment authority.--For the purpose 
     of providing additional allotments described in subparagraphs 
     (A) and (B) of paragraph (3), there is appropriated, out of 
     any money in the Treasury not otherwise appropriated, such 
     sums as may be necessary, not to exceed $1,600,000,000 for 
     fiscal year 2008.
       ``(2) Shortfall states described.--For purposes of 
     paragraph (3), a shortfall State described in this paragraph 
     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 as of November 
     30, 2007, that the Federal share amount of the projected 
     expenditures under such plan for such State for fiscal year 
     2008 will exceed the sum of--
       ``(A) the amount of the State's allotments for each of 
     fiscal years 2006 and 2007 that will not be expended by the 
     end of fiscal year 2007;
       ``(B) the amount, if any, that is to be redistributed to 
     the State during fiscal year 2008 in accordance with 
     subsection (i); and
       ``(C) the amount of the State's allotment for fiscal year 
     2008.
       ``(3) Allotments.--In addition to the allotments provided 
     under subsections (b) and (c), subject to paragraph (4), of 
     the amount available for the additional allotments under 
     paragraph (1) for fiscal year 2008, the Secretary shall 
     allot--
       ``(A) to each shortfall State described in paragraph (2) 
     not described in subparagraph (B), such amount as the 
     Secretary determines will eliminate the estimated shortfall 
     described in such paragraph for the State; and
       ``(B) to each commonwealth or territory described in 
     subsection (c)(3), an amount equal to the percentage 
     specified in subsection (c)(2) for the commonwealth or 
     territory multiplied by 1.05 percent of the sum of the 
     amounts determined for each shortfall State under 
     subparagraph (A).
       ``(4) Proration rule.--If the amounts available for 
     additional allotments under paragraph (1) are less than the 
     total of the amounts determined under subparagraphs (A) and 
     (B) of paragraph (3), the amounts computed under such 
     subparagraphs shall be reduced proportionally.
       ``(5) Retrospective adjustment.--The Secretary may adjust 
     the estimates and determinations made to carry out this 
     subsection as necessary on the basis of the amounts reported 
     by States not later than November 30, 2008, on CMS Form 64 or 
     CMS Form 21, as the case may be, and as approved by the 
     Secretary.
       ``(6) One-year availability; no redistribution of 
     unexpended additional allotments.--Notwithstanding 
     subsections (e) and (f), amounts allotted to a State pursuant 
     to this subsection for fiscal year 2008, subject to paragraph 
     (5), shall only remain available for expenditure by the State 
     through September 30, 2008. Any amounts of such allotments 
     that remain unexpended as of such date shall not be subject 
     to redistribution under subsection (f).
       ``(k) Redistribution of Unused Fiscal Year 2006 Allotments 
     to States With Estimated Funding Shortfalls During the First 
     2 Quarters of Fiscal Year 2009.--
       ``(1) In general.--Notwithstanding subsection (f) and 
     subject to paragraphs (3) and (4), with respect to months 
     beginning during the first 2 quarters of fiscal year 2009, 
     the Secretary shall provide for a redistribution under such 
     subsection from the allotments for fiscal year 2006 under 
     subsection (b) that are not expended by the end of fiscal 
     year 2008, to a fiscal year 2009 shortfall State described in 
     paragraph (2), such amount as the Secretary determines will 
     eliminate the estimated shortfall described in such paragraph 
     for such State for the month.
       ``(2) Fiscal year 2009 shortfall state described.--A fiscal 
     year 2009 shortfall State described in this paragraph is a 
     State with a State child health plan approved under this 
     title for which the Secretary estimates, on a monthly basis 
     using the most recent data available to the Secretary as of 
     such month, that the Federal share amount of the projected 
     expenditures under such plan for such State for the first 2 
     quarters of fiscal year 2009 will exceed the sum of--
       ``(A) the amount of the State's allotments for each of 
     fiscal years 2007 and 2008 that was not expended by the end 
     of fiscal year 2008; and
       ``(B) the amount of the State's allotment for fiscal year 
     2009.
       ``(3) Funds redistributed in the order in which states 
     realize funding shortfalls.--The Secretary shall redistribute 
     the amounts available for redistribution under paragraph (1) 
     to fiscal year 2009 shortfall States described in paragraph 
     (2) in the order in which such States realize monthly funding 
     shortfalls under this title for fiscal year 2009. The 
     Secretary shall only make redistributions under this 
     subsection to the extent that there are unexpended fiscal 
     year 2006 allotments under subsection (b) available for such 
     redistributions.
       ``(4) Proration rule.--If the amounts available for 
     redistribution under paragraph (1) are less than the total 
     amounts of the estimated shortfalls determined for the month 
     under that paragraph, the amount computed under such 
     paragraph for each fiscal year 2009 shortfall State for the 
     month shall be reduced proportionally.

[[Page 36073]]

       ``(5) Retrospective adjustment.--The Secretary may adjust 
     the estimates and determinations made to carry out this 
     subsection as necessary on the basis of the amounts reported 
     by States not later than May 31, 2009, on CMS Form 64 or CMS 
     Form 21, as the case may be, and as approved by the 
     Secretary.
       ``(6) Availability; no further redistribution.--
     Notwithstanding subsections (e) and (f), amounts 
     redistributed to a State pursuant to this subsection for the 
     first 2 quarters of fiscal year 2009 shall only remain 
     available for expenditure by the State through March 31, 
     2009, and any amounts of such redistributions that remain 
     unexpended as of such date, shall not be subject to 
     redistribution under subsection (f).
       ``(l) Additional Allotments To Eliminate Funding Shortfalls 
     for the First 2 Quarters of Fiscal Year 2009.--
       ``(1) Appropriation; allotment authority.--For the purpose 
     of providing additional allotments described in subparagraphs 
     (A) and (B) of paragraph (3), there is appropriated, out of 
     any money in the Treasury not otherwise appropriated, such 
     sums as may be necessary, not to exceed $275,000,000 for the 
     first 2 quarters of fiscal year 2009.
       ``(2) Shortfall states described.--For purposes of 
     paragraph (3), a shortfall State described in this paragraph 
     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 Federal 
     share amount of the projected expenditures under such plan 
     for such State for the first 2 quarters of fiscal year 2009 
     will exceed the sum of--
       ``(A) the amount of the State's allotments for each of 
     fiscal years 2007 and 2008 that will not be expended by the 
     end of fiscal year 2008;
       ``(B) the amount, if any, that is to be redistributed to 
     the State during fiscal year 2009 in accordance with 
     subsection (k); and
       ``(C) the amount of the State's allotment for fiscal year 
     2009.
       ``(3) Allotments.--In addition to the allotments provided 
     under subsections (b) and (c), subject to paragraph (4), of 
     the amount available for the additional allotments under 
     paragraph (1) for the first 2 quarters of fiscal year 2009, 
     the Secretary shall allot--
       ``(A) to each shortfall State described in paragraph (2) 
     not described in subparagraph (B) such amount as the 
     Secretary determines will eliminate the estimated shortfall 
     described in such paragraph for the State; and
       ``(B) to each commonwealth or territory described in 
     subsection (c)(3), an amount equal to the percentage 
     specified in subsection (c)(2) for the commonwealth or 
     territory multiplied by 1.05 percent of the sum of the 
     amounts determined for each shortfall State under 
     subparagraph (A).
       ``(4) Proration rule.--If the amounts available for 
     additional allotments under paragraph (1) are less than the 
     total of the amounts determined under subparagraphs (A) and 
     (B) of paragraph (3), the amounts computed under such 
     subparagraphs shall be reduced proportionally.
       ``(5) Retrospective adjustment.--The Secretary may adjust 
     the estimates and determinations made to carry out this 
     subsection as necessary on the basis of the amounts reported 
     by States not later than May 31, 2009, on CMS Form 64 or CMS 
     Form 21, as the case may be, and as approved by the 
     Secretary.
       ``(6) Availability; no redistribution of unexpended 
     additional allotments.--Notwithstanding subsections (e) and 
     (f), amounts allotted to a State pursuant to this subsection 
     for fiscal year 2009, subject to paragraph (5), shall only 
     remain available for expenditure by the State through March 
     31, 2009. Any amounts of such allotments that remain 
     unexpended as of such date shall not be subject to 
     redistribution under subsection (f).''.

     SEC. 202. EXTENSION OF TRANSITIONAL MEDICAL ASSISTANCE (TMA) 
                   AND ABSTINENCE EDUCATION PROGRAM.

       Section 401 of division B of the Tax Relief and Health Care 
     Act of 2006 (Public Law 109-432, 120 Stat. 2994), as amended 
     by section 1 of Public Law 110-48 (121 Stat. 244) and section 
     2 of the TMA, Abstinence, Education, and QI Programs 
     Extension Act of 2007 (Public Law 110-90, 121 Stat. 984), is 
     amended--
       (1) by striking ``December 31, 2007'' and inserting ``June 
     30, 2008''; and
       (2) by striking ``first quarter'' and inserting ``third 
     quarter'' each place it appears.

     SEC. 203. EXTENSION OF QUALIFYING INDIVIDUAL (QI) PROGRAM.

       (a) Extension.--Section 1902(a)(10)(E)(iv) of the Social 
     Security Act (42 U.S.C. 1396a(a)(10)(E)(iv)) is amended by 
     striking ``December 2007'' and inserting ``June 2008''.
       (b) Extending Total Amount Available for Allocation.--
     Section 1933(g)(2) of the Social Security Act (42 U.S.C. 
     1396u-3(g)(2)) is amended--
       (1) in subparagraph (G), by striking ``and'' at the end;
       (2) in subparagraph (H), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following new subparagraph:
       ``(I) for the period that begins on January 1, 2008, and 
     ends on June 30, 2008, the total allocation amount is 
     $200,000,000.''.

     SEC. 204. MEDICAID DSH EXTENSION.

       Section 1923(f)(6) of the Social Security Act (42 U.S.C. 
     1396r-4(f)(6)) is amended--
       (1) in the heading, by inserting ``and portions of fiscal 
     year 2008'' after ``fiscal year 2007''; and
       (2) in subparagraph (A)--
       (A) in clause (i), by adding at the end (after and below 
     subclause (II)) the following:
     ``Only with respect to fiscal year 2008 for the period ending 
     on June 30, 2008, the DSH allotment for Tennessee for such 
     portion of the fiscal year, notwithstanding such table or 
     terms, shall be \3/4\ of the amount specified in the previous 
     sentence for fiscal year 2007.'';
       (B) in clause (ii)--
       (i) by inserting ``or for a period in fiscal year 2008 
     described in clause (i)'' after ``fiscal year 2007''; and
       (ii) by inserting ``or period'' after ``such fiscal year''; 
     and
       (C) in clause (iv)--
       (i) in the heading, by inserting ``and fiscal year 2008'' 
     after ``fiscal year 2007'';
       (ii) in subclause (I)--

       (I) by inserting ``or for a period in fiscal year 2008 
     described in clause (i)'' after ``fiscal year 2007''; and
       (II) by inserting ``or period'' after ``for such fiscal 
     year''; and

       (iii) in subclause (II)--

       (I) by inserting ``or for a period in fiscal year 2008 
     described in clause (i)'' after ``fiscal year 2007''; and
       (II) by inserting ``or period'' after ``such fiscal year'' 
     each place it appears; and

       (3) in subparagraph (B)(i), by adding at the end the 
     following: ``Only with respect to fiscal year 2008 for the 
     period ending on June 30, 2008, the DSH allotment for Hawaii 
     for such portion of the fiscal year, notwithstanding the 
     table set forth in paragraph (2), shall be $7,500,000.''.

     SEC. 205. IMPROVING DATA COLLECTION.

       Section 2109(b)(2) of the Social Security Act (42 U.S.C. 
     1397ii(b)(2)) is amended by inserting before the period at 
     the end the following ``(except that only with respect to 
     fiscal year 2008, there are appropriated $20,000,000 for the 
     purpose of carrying out this subsection, to remain available 
     until expended)''.

     SEC. 206. MORATORIUM ON CERTAIN PAYMENT RESTRICTIONS.

       Notwithstanding any other provision of law, the Secretary 
     of Health and Human Services shall not, prior to June 30, 
     2008, take any action (through promulgation of regulation, 
     issuance of regulatory guidance, use of Federal payment audit 
     procedures, or other administrative action, policy, or 
     practice, including a Medical Assistance Manual transmittal 
     or letter to State Medicaid directors) to impose any 
     restrictions relating to coverage or payment under title XIX 
     of the Social Security Act for rehabilitation services or 
     school-based administration and school-based transportation 
     if such restrictions are more restrictive in any aspect than 
     those applied to such areas as of July 1, 2007.

                        TITLE III--MISCELLANEOUS

     SEC. 301. 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. 302. SPECIAL DIABETES PROGRAMS FOR TYPE I DIABETES AND 
                   INDIANS.

       (a) Special Diabetes Programs for Type I Diabetes.--Section 
     330B(b)(2)(C) of the Public Health Service Act (42 U.S.C. 
     254c-2(b)(2)(C)) is amended by striking ``2008'' and 
     inserting ``2009''.
       (b) Special Diabetes Programs for Indians.--Section 
     330C(c)(2)(C) of the Public Health Service Act (42 U.S.C. 
     254c-3(c)(2)(C)) is amended by striking ``2008'' and 
     inserting ``2009''.

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