IB 

Union Calendar No. 2 

111TH CONGRESS 

1ST SESSION H. R. 598 

[Report No. 111–8, Part I] 

To provide for a portion of the economic recovery package relating to revenue 

measures, unemployment, and health. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 16, 2009 

Mr. RANGEL (for himself, Mr. STARK, and Mr. MCDERMOTT) introduced the 

following bill; which was referred to the Committee on Ways and Means, 

and in addition to the Committees on Energy and Commerce, Science and 

Technology, Education and Labor, and Financial Services, for a period 

to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee 

concerned 

JANUARY 27, 2009 

Reported from the Committee on Ways and Means with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

JANUARY 27, 2009 

Committees on Energy and Commerce, Science and Technology, Education 

and Labor, and Financial Services discharged; committed to the Committee of the Whole House on the State of the Union and ordered to be 

printed 

[For text of introduced bill, see copy of bill as introduced on January 16, 2009] 

A BILL 

To provide for a portion of the economic recovery package 

relating to revenue measures, unemployment, and health. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 TITLE I—TAX PROVISIONS 

4 SECTION 1000. SHORT TITLE, ETC. 

5 (a) SHORT TITLE.—This title may be cited as the 

6 ‘‘American Recovery and Reinvestment Tax Act of 2009’’. 

7 (b) REFERENCE.—Except as otherwise expressly pro8 vided, whenever in this title an amendment or repeal is ex9 pressed in terms of an amendment to, or repeal of, a section 

10 or other provision, the reference shall be considered to be 

11 made to a section or other provision of the Internal Revenue 

12 Code of 1986. 

13 (c) TABLE OF CONTENTS.—The table of contents for 

14 this title is as follows: 

Sec. 1000. Short title, etc. 

Subtitle A—Making Work Pay 

Sec. 1001. Making work pay credit. 

Subtitle B—Additional Tax Relief for Families With Children 

Sec. 1101. Increase in earned income tax credit. 

Sec. 1102. Increase of refundable portion of child credit. 

Subtitle C—American Opportunity Tax Credit 

Sec. 1201. American opportunity tax credit. 

Subtitle D—Housing Incentives 

Sec. 1301. Waiver of requirement to repay first-time homebuyer credit. 

Sec. 1302. Coordination of low-income housing credit and low-income housing 

grants. 

Subtitle E—Tax Incentives for Business 

PART I—TEMPORARY INVESTMENT INCENTIVES

Sec. 1401. Special allowance for certain property acquired during 2009. 


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Sec. 1402. Temporary increase in limitations on expensing of certain depreciable 

business assets. 

PART II—5-YEAR CARRYBACK OF OPERATING LOSSES

Sec. 1411. 5-year carryback of operating losses. 

Sec. 1412. Exception for TARP recipients. 

PART III—INCENTIVES FOR NEW JOBS

Sec. 1421. Incentives to hire unemployed veterans and disconnected youth. 

PART IV—CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON

CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE

Sec. 1431. Clarification of regulations related to limitations on certain built-in 

losses following an ownership change. 

Subtitle F—Fiscal Relief for State and Local Governments 

PART I—IMPROVED MARKETABILITY FOR TAX-EXEMPT BONDS

Sec. 1501. De minimis safe harbor exception for tax-exempt interest expense of financial institutions. 

Sec. 1502. Modification of small issuer exception to tax-exempt interest expense 

allocation rules for financial institutions. 

Sec. 1503. Temporary modification of alternative minimum tax limitations on 

tax-exempt bonds. 

PART II—TAX CREDIT BONDS FOR SCHOOLS

Sec. 1511. Qualified school construction bonds. 

Sec. 1512. Extension and expansion of qualified zone academy bonds. 

PART III—TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS

Sec. 1521. Taxable bond option for governmental bonds. 

PART IV—RECOVERY ZONE BONDS

Sec. 1531. Recovery zone bonds. 

Sec. 1532. Tribal economic development bonds. 

PART V—REPEAL OF WITHHOLDING TAX ON GOVERNMENT CONTRACTORS

Sec. 1541. Repeal of withholding tax on government contractors. 

Subtitle G—Energy Incentives 

PART I—RENEWABLE ENERGY INCENTIVES

Sec. 1601. Extension of credit for electricity produced from certain renewable resources. 

Sec. 1602. Election of investment credit in lieu of production credit. 

Sec. 1603. Repeal of certain limitations on credit for renewable energy property. 

Sec. 1604. Coordination with renewable energy grants. 


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PART II—INCREASED ALLOCATIONS OF NEW CLEAN RENEWABLE ENERGY

BONDS AND QUALIFIED ENERGY CONSERVATION BONDS

Sec. 1611. Increased limitation on issuance of new clean renewable energy bonds. 

Sec. 1612. Increased limitation and expansion of qualified energy conservation 

bonds. 

PART III—ENERGY CONSERVATION INCENTIVES

Sec. 1621. Extension and modification of credit for nonbusiness energy property. 

Sec. 1622. Modification of credit for residential energy efficient property. 

Sec. 1623. Temporary increase in credit for alternative fuel vehicle refueling 

property. 

PART IV—ENERGY RESEARCH INCENTIVES

Sec. 1631. Increased research credit for energy research. 

Subtitle H—Other Provisions 

PART I—APPLICATION OF CERTAIN LABOR STANDARDS TO PROJECTS

FINANCED WITH CERTAIN TAX-FAVORED BONDS

Sec. 1701. Application of certain labor standards to projects financed with certain tax-favored bonds. 

PART II—GRANTS TO PROVIDE FINANCING FOR LOW-INCOME HOUSING

Sec. 1711. Grants to States for low-income housing projects in lieu of low-income 

housing credit allocations for 2009. 

PART III—GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX

CREDITS

Sec. 1721. Grants for specified energy property in lieu of tax credits. 

PART IV—STUDY OF ECONOMIC, EMPLOYMENT, AND RELATED EFFECTS OF

THIS ACT

Sec. 1731. Study of economic, employment, and related effects of this Act. 

1 Subtitle A—Making Work Pay 

2 SEC. 1001. MAKING WORK PAY CREDIT. 

3 (a) IN GENERAL.—Subpart C of part IV of subchapter 

4 A of chapter 1 is amended by inserting after section 36 the 

5 following new section: 

6 ‘‘SEC. 36A. MAKING WORK PAY CREDIT. 

7 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eligi8 ble individual, there shall be allowed as a credit against 


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1 the tax imposed by this subtitle for the taxable year an 

2 amount equal to the lesser of— 

3 ‘‘(1) 6.2 percent of earned income of the tax4 payer, or 

5 ‘‘(2) $500 ($1,000 in the case of a joint return). 

6 ‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED

7 GROSS INCOME.— 

8 ‘‘(1) IN GENERAL.—The amount allowable as a 

9 credit under subsection (a) (determined without re10 gard to this paragraph) for the taxable year shall be 

11 reduced (but not below zero) by 2 percent of so much 

12 of the taxpayer’s modified adjusted gross income as 

13 exceeds $75,000 ($150,000 in the case of a joint re14 turn). 

15 ‘‘(2) MODIFIED ADJUSTED GROSS INCOME.—For 

16 purposes of subparagraph (A), the term ‘modified ad17 justed gross income’ means the adjusted gross income 

18 of the taxpayer for the taxable year increased by any 

19 amount excluded from gross income under section 

20 911, 931, or 933. 

21 ‘‘(c) DEFINITIONS.—For purposes of this section— 

22 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 

23 individual’ means any individual other than— 

24 ‘‘(A) any nonresident alien individual, 


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1 ‘‘(B) any individual with respect to whom 

2 a deduction under section 151 is allowable to an3 other taxpayer for a taxable year beginning in 

4 the calendar year in which the individual’s tax5 able year begins, and 

6 ‘‘(C) an estate or trust. 

7 Such term shall not include any individual unless the 

8 requirements of section 32(c)(1)(E) are met with re9 spect to such individual. 

10 ‘‘(2) EARNED INCOME.—The term ‘earned in11 come’ has the meaning given such term by section 

12 32(c)(2), except that such term shall not include net 

13 earnings from self-employment which are not taken 

14 into account in computing taxable income. For pur15 poses of the preceding sentence, any amount excluded 

16 from gross income by reason of section 112 shall be 

17 treated as earned income which is taken into account 

18 in computing taxable income for the taxable year. 

19 ‘‘(d) TERMINATION.—This section shall not apply to 

20 taxable years beginning after December 31, 2010.’’. 

21 (b) TREATMENT OF POSSESSIONS.— 

22 (1) PAYMENTS TO POSSESSIONS.— 

23 (A) MIRROR CODE POSSESSION.—The Sec24 retary of the Treasury shall pay to each posses25 sion of the United States with a mirror code tax 


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1 system amounts equal to the loss to that posses2 sion by reason of the amendments made by this 

3 section with respect to taxable years beginning 

4 in 2009 and 2010. Such amounts shall be deter5 mined by the Secretary of the Treasury based on 

6 information provided by the government of the 

7 respective possession. 

8 (B) OTHER POSSESSIONS.—The Secretary 

9 of the Treasury shall pay to each possession of 

10 the United States which does not have a mirror 

11 code tax system amounts estimated by the Sec12 retary of the Treasury as being equal to the ag13 gregate benefits that would have been provided to 

14 residents of such possession by reason of the 

15 amendments made by this section for taxable 

16 years beginning in 2009 and 2010 if a mirror 

17 code tax system had been in effect in such posses18 sion. The preceding sentence shall not apply with 

19 respect to any possession of the United States 

20 unless such possession has a plan, which has 

21 been approved by the Secretary of the Treasury, 

22 under which such possession will promptly dis23 tribute such payments to the residents of such 

24 possession. 


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1 (2) COORDINATION WITH CREDIT ALLOWED

2 AGAINST UNITED STATES INCOME TAXES.—No credit 

3 shall be allowed against United States income taxes 

4 for any taxable year under section 36A of the Internal 

5 Revenue Code of 1986 (as added by this section) to 

6 any person— 

7 (A) to whom a credit is allowed against 

8 taxes imposed by the possession by reason of the 

9 amendments made by this section for such tax10 able year, or 

11 (B) who is eligible for a payment under a 

12 plan described in paragraph (1)(B) with respect 

13 to such taxable year. 

14 (3) DEFINITIONS AND SPECIAL RULES.— 

15 (A) POSSESSION OF THE UNITED STATES.— 

16 For purposes of this subsection, the term ‘‘posses17 sion of the United States’’ includes the Common18 wealth of Puerto Rico and the Commonwealth of 

19 the Northern Mariana Islands. 

20 (B) MIRROR CODE TAX SYSTEM.—For pur21 poses of this subsection, the term ‘‘mirror code 

22 tax system’’ means, with respect to any posses23 sion of the United States, the income tax system 

24 of such possession if the income tax liability of 

25 the residents of such possession under such sysVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 tem is determined by reference to the income tax 

2 laws of the United States as if such possession 

3 were the United States. 

4 (C) TREATMENT OF PAYMENTS.—For pur5 poses of section 1324(b)(2) of title 31, United 

6 States Code, the payments under this subsection 

7 shall be treated in the same manner as a refund 

8 due from the credit allowed under section 36A of 

9 the Internal Revenue Code of 1986 (as added by 

10 this section). 

11 (c) REFUNDS DISREGARDED IN THE ADMINISTRATION

12 OF FEDERAL PROGRAMS AND FEDERALLY ASSISTED PRO13 GRAMS.—Any credit or refund allowed or made to any indi14 vidual by reason of section 36A of the Internal Revenue 

15 Code of 1986 (as added by this section) or by reason of sub16 section (b) of this section shall not be taken into account 

17 as income and shall not be taken into account as resources 

18 for the month of receipt and the following 2 months, for 

19 purposes of determining the eligibility of such individual 

20 or any other individual for benefits or assistance, or the 

21 amount or extent of benefits or assistance, under any Fed22 eral program or under any State or local program financed 

23 in whole or in part with Federal funds. 

24 (d) CONFORMING AMENDMENTS.— 


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1 (1) Section 6211(b)(4)(A) is amended by insert2 ing ‘‘36A,’’ after ‘‘36,’’. 

3 (2) Section 1324(b)(2) of title 31, United States 

4 Code, is amended by inserting ‘‘36A,’’ after ‘‘36,’’. 

5 (3) The table of sections for subpart C of part IV 

6 of subchapter A of chapter 1 is amended by inserting 

7 after the item relating to section 36 the following new 

8 item: 

‘‘Sec. 36A. Making work pay credit.’’. 

9 (e) EFFECTIVE DATE.—This section shall apply to tax10 able years beginning after December 31, 2008. 

11 Subtitle B—Additional Tax Relief 

12 for Families With Children 

13 SEC. 1101. INCREASE IN EARNED INCOME TAX CREDIT. 

14 (a) IN GENERAL.—Subsection (b) of section 32 is 

15 amended by adding at the end the following new paragraph: 

16 ‘‘(3) SPECIAL RULES FOR 2009 AND 2010.—In the 

17 case of any taxable year beginning in 2009 or 2010— 

18 ‘‘(A) INCREASED CREDIT PERCENTAGE FOR

19 3 OR MORE QUALIFYING CHILDREN.—In the case 

20 of a taxpayer with 3 or more qualifying chil21 dren, the credit percentage is 45 percent. 

22 ‘‘(B) REDUCTION OF MARRIAGE PENALTY.— 

23 ‘‘(i) IN GENERAL.—The dollar amount 

24 in effect under paragraph (2)(B) shall be 

25 $5,000. 


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1 ‘‘(ii) INFLATION ADJUSTMENT.—In the 

2 case of any taxable year beginning in 2010, 

3 the $5,000 amount in clause (i) shall be in4 creased by an amount equal to— 

5 ‘‘(I) such dollar amount, multi6 plied by 

7 ‘‘(II) the cost of living adjustment 

8 determined under section 1(f)(3) for 

9 the calendar year in which the taxable 

10 year begins determined by substituting 

11 ‘calendar year 2008’ for ‘calendar year 

12 1992’ in subparagraph (B) thereof. 

13 ‘‘(iii) ROUNDING.—Subparagraph (A) 

14 of subsection (j)(2) shall apply after taking 

15 into account any increase under clause 

16 (ii).’’. 

17 (b) EFFECTIVE DATE.—The amendments made by this 

18 section shall apply to taxable years beginning after Decem19 ber 31, 2008. 

20 SEC. 1102. INCREASE OF REFUNDABLE PORTION OF CHILD 

21 CREDIT. 

22 (a) IN GENERAL.—Paragraph (4) of section 24(d) is 

23 amended to read as follows: 

24 ‘‘(4) SPECIAL RULE FOR 2009 AND 2010.—Not25 withstanding paragraph (3), in the case of any taxVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 able year beginning in 2009 or 2010, the dollar 

2 amount in effect for such taxable year under para3 graph (1)(B)(i) shall be zero.’’. 

4 (b) EFFECTIVE DATE.—The amendments made by this 

5 section shall apply to taxable years beginning after Decem6 ber 31, 2008. 

7 Subtitle C—American Opportunity 

8 Tax Credit 

9 SEC. 1201. AMERICAN OPPORTUNITY TAX CREDIT. 

10 (a) IN GENERAL.—Section 25A (relating to Hope 

11 scholarship credit) is amended by redesignating subsection 

12 (i) as subsection (j) and by inserting after subsection (h) 

13 the following new subsection: 

14 ‘‘(i) AMERICAN OPPORTUNITY TAX CREDIT.—In the 

15 case of any taxable year beginning in 2009 or 2010— 

16 ‘‘(1) INCREASE IN CREDIT.—The Hope Scholar17 ship Credit shall be an amount equal to the sum of— 

18 ‘‘(A) 100 percent of so much of the qualified 

19 tuition and related expenses paid by the tax20 payer during the taxable year (for education fur21 nished to the eligible student during any aca22 demic period beginning in such taxable year) as 

23 does not exceed $2,000, plus 

24 ‘‘(B) 25 percent of such expenses so paid as 

25 exceeds $2,000 but does not exceed $4,000. 


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1 ‘‘(2) CREDIT ALLOWED FOR FIRST 4 YEARS OF

2 POST-SECONDARY EDUCATION.—Subparagraphs (A) 

3 and (C) of subsection (b)(2) shall be applied by sub4 stituting ‘4’ for ‘2’. 

5 ‘‘(3) QUALIFIED TUITION AND RELATED EX6 PENSES TO INCLUDE REQUIRED COURSE MATE7 RIALS.—Subsection (f)(1)(A) shall be applied by sub8 stituting ‘tuition, fees, and course materials’ for ‘tui9 tion and fees’. 

10 ‘‘(4) INCREASE IN AGI LIMITS FOR HOPE SCHOL11 ARSHIP CREDIT.—In lieu of applying subsection (d) 

12 with respect to the Hope Scholarship Credit, such 

13 credit (determined without regard to this paragraph) 

14 shall be reduced (but not below zero) by the amount 

15 which bears the same ratio to such credit (as so deter16 mined) as— 

17 ‘‘(A) the excess of— 

18 ‘‘(i) the taxpayer’s modified adjusted 

19 gross income (as defined in subsection 

20 (d)(3)) for such taxable year, over 

21 ‘‘(ii) $80,000 ($160,000 in the case of 

22 a joint return), bears to 

23 ‘‘(B) $10,000 ($20,000 in the case of a joint 

24 return). 


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1 ‘‘(5) CREDIT ALLOWED AGAINST ALTERNATIVE

2 MINIMUM TAX.—In the case of a taxable year to which 

3 section 26(a)(2) does not apply, so much of the credit 

4 allowed under subsection (a) as is attributable to the 

5 Hope Scholarship Credit shall not exceed the excess 

6 of— 

7 ‘‘(A) the sum of the regular tax liability (as 

8 defined in section 26(b)) plus the tax imposed by 

9 section 55, over 

10 ‘‘(B) the sum of the credits allowable under 

11 this subpart (other than this subsection and sec12 tions 23, 25D, and 30D) and section 27 for the 

13 taxable year. 

14 Any reference in this section or section 24, 25, 26, 

15 25B, 904, or 1400C to a credit allowable under this 

16 subsection shall be treated as a reference to so much 

17 of the credit allowable under subsection (a) as is at18 tributable to the Hope Scholarship Credit. 

19 ‘‘(6) PORTION OF CREDIT MADE REFUNDABLE.— 

20 40 percent of so much of the credit allowed under sub21 section (a) as is attributable to the Hope Scholarship 

22 Credit (determined after application of paragraph (4) 

23 and without regard to this paragraph and section 

24 26(a)(2) or paragraph (5), as the case may be) shall 

25 be treated as a credit allowable under subpart C (and 


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1 not allowed under subsection (a)). The preceding sen2 tence shall not apply to any taxpayer for any taxable 

3 year if such taxpayer is a child to whom subsection 

4 (g) of section 1 applies for such taxable year. 

5 ‘‘(7) COORDINATION WITH MIDWESTERN DIS6 ASTER AREA BENEFITS.—In the case of a taxpayer 

7 with respect to whom section 702(a)(1)(B) of the 

8 Heartland Disaster Tax Relief Act of 2008 applies for 

9 any taxable year, such taxpayer may elect to waive 

10 the application of this subsection to such taxpayer for 

11 such taxable year.’’. 

12 (b) CONFORMING AMENDMENTS.— 

13 (1) Section 24(b)(3)(B) is amended by inserting 

14 ‘‘25A(i),’’ after ‘‘23,’’. 

15 (2) Section 25(e)(1)(C)(ii) is amended by insert16 ing ‘‘25A(i),’’ after ‘‘24,’’. 

17 (3) Section 26(a)(1) is amended by inserting 

18 ‘‘25A(i),’’ after ‘‘24,’’. 

19 (4) Section 25B(g)(2) is amended by inserting 

20 ‘‘25A(i),’’ after ‘‘23,’’. 

21 (5) Section 904(i) is amended by inserting 

22 ‘‘25A(i),’’ after ‘‘24,’’. 

23 (6) Section 1400C(d)(2) is amended by inserting 

24 ‘‘25A(i),’’ after ‘‘24,’’. 


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1 (7) Section 1324(b)(2) of title 31, United States 

2 Code, is amended by inserting ‘‘25A,’’ before ‘‘35’’. 

3 (c) EFFECTIVE DATE.—The amendments made by this 

4 section shall apply to taxable years beginning after Decem5 ber 31, 2008. 

6 (d) APPLICATION OF EGTRRA SUNSET.—The amend7 ment made by subsection (b)(1) shall be subject to title IX 

8 of the Economic Growth and Tax Relief Reconciliation Act 

9 of 2001 in the same manner as the provision of such Act 

10 to which such amendment relates. 

11 (e) TREASURY STUDIES REGARDING EDUCATION IN12 CENTIVES.— 

13 (1) STUDY REGARDING COORDINATION WITH

14 NON-TAX EDUCATIONAL INCENTIVES.—The Secretary 

15 of the Treasury, or the Secretary’s delegate, shall 

16 study how to coordinate the credit allowed under sec17 tion 25A of the Internal Revenue Code of 1986 with 

18 the Federal Pell Grant program under section 401 of 

19 the Higher Education Act of 1965. 

20 (2) STUDY REGARDING IMPOSITION OF COMMU21 NITY SERVICE REQUIREMENTS.—The Secretary of the 

22 Treasury, or the Secretary’s delegate, shall study the 

23 feasibility of requiring students to perform commu24 nity service as a condition of taking their tuition and 


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1 related expenses into account under section 25A of the 

2 Internal Revenue Code of 1986. 

3 (3) REPORT.—Not later than 1 year after the 

4 date of the enactment of this Act, the Secretary of the 

5 Treasury, or the Secretary’s delegate, shall report to 

6 Congress on the results of the studies conducted under 

7 this paragraph. 

8 Subtitle D—Housing Incentives 

9 SEC. 1301. WAIVER OF REQUIREMENT TO REPAY FIRST-TIME 

10 HOMEBUYER CREDIT. 

11 (a) IN GENERAL.—Paragraph (4) of section 36(f) is 

12 amended by adding at the end the following new subpara13 graph: 

14 ‘‘(D) WAIVER OF RECAPTURE FOR PUR15 CHASES IN 2009.—In the case of any credit al16 lowed with respect to the purchase of a principal 

17 residence after December 31, 2008, and before 

18 July 1, 2009— 

19 ‘‘(i) paragraph (1) shall not apply, 

20 and 

21 ‘‘(ii) paragraph (2) shall apply only if 

22 the disposition or cessation described in 

23 paragraph (2) with respect to such residence 

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1 ning on the date of the purchase of such res2 idence by the taxpayer.’’. 

3 (b) CONFORMING AMENDMENT.—Subsection (g) of sec4 tion 36 is amended by striking ‘‘subsection (c)’’ and insert5 ing ‘‘subsections (c) and (f)(4)(D)’’. 

6 (c) EFFECTIVE DATE.—The amendments made by this 

7 section shall apply to residences purchased after December 

8 31, 2008. 

9 SEC. 1302. COORDINATION OF LOW-INCOME HOUSING 

10 CREDIT AND LOW-INCOME HOUSING GRANTS. 

11 Subsection (i) of section 42 of the Internal Revenue 

12 Code of 1986 is amended by adding at the end the following 

13 new paragraph: 

14 ‘‘(9) COORDINATION WITH LOW-INCOME HOUSING

15 GRANTS.— 

16 ‘‘(A) REDUCTION IN STATE HOUSING CRED17 IT CEILING FOR LOW-INCOME HOUSING GRANTS

18 RECEIVED IN 2009.—For purposes of this section, 

19 the amounts described in clauses (i) through (iv) 

20 of subsection (h)(3)(C) with respect to any State 

21 for 2009 shall each be reduced by so much of 

22 such amount as is taken into account in deter23 mining the amount of any grant to such State 

24 under section 1711 of the American Recovery 

25 and Reinvestment Tax Act of 2009. 


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1 ‘‘(B) SPECIAL RULE FOR BASIS.—Basis of a 

2 qualified low-income building shall not be re3 duced by the amount of any grant described in 

4 subparagraph (A).’’. 

5 Subtitle E—Tax Incentives for 

6 Business 

7 PART I—TEMPORARY INVESTMENT INCENTIVES 

8 SEC. 1401. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY 

9 ACQUIRED DURING 2009. 

10 (a) IN GENERAL.—Paragraph (2) of section 168(k) is 

11 amended— 

12 (1) by striking ‘‘January 1, 2010’’ and inserting 

13 ‘‘January 1, 2011’’, and 

14 (2) by striking ‘‘January 1, 2009’’ each place it 

15 appears and inserting ‘‘January 1, 2010’’. 

16 (b) CONFORMING AMENDMENTS.— 

17 (1) The heading for subsection (k) of section 168 

18 is amended by striking ‘‘JANUARY 1, 2009’’ and in19 serting ‘‘JANUARY 1, 2010’’. 

20 (2) The heading for clause (ii) of section 

21 168(k)(2)(B) is amended by striking ‘‘PRE-JANUARY 1, 

22 2009’’ and inserting ‘‘PRE-JANUARY 1, 2010’’. 

23 (3) Subparagraph (D) of section 168(k)(4) is 

24 amended— 


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1 (A) by striking ‘‘and’’ at the end of clause 

2 (i), 

3 (B) by redesignating clause (ii) as clause 

4 (v), and 

5 (C) by inserting after clause (i) the fol6 lowing new clauses: 

7 ‘‘(ii) ‘April 1, 2008’ shall be sub8 stituted for ‘January 1, 2008’ in subpara9 graph (A)(iii)(I) thereof, 

10 ‘‘(iii) ‘January 1, 2009’ shall be sub11 stituted for ‘January 1, 2010’ each place it 

12 appears, 

13 ‘‘(iv) ‘January 1, 2010’ shall be sub14 stituted for ‘January 1, 2011’ in subpara15 graph (A)(iv) thereof, and’’. 

16 (4) Subparagraph (B) of section 168(l)(5) is 

17 amended by striking ‘‘January 1, 2009’’ and insert18 ing ‘‘January 1, 2010’’. 

19 (5) Clause (ii) of section 168(n)(2)(C) is amend20 ed by striking ‘‘January 1, 2009’’ and inserting 

21 ‘‘January 1, 2010’’. 

22 (6) Subparagraph (B) of section 1400N(d)(3) is 

23 amended by striking ‘‘January 1, 2009’’ and insert24 ing ‘‘January 1, 2010’’. 

25 (c) EFFECTIVE DATES.— 


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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendments made by this section shall 

3 apply to property placed in service after December 

4 31, 2008, in taxable years ending after such date. 

5 (2) TECHNICAL AMENDMENT.—Section 

6 168(k)(4)(D)(ii) of the Internal Revenue Code of 

7 1986, as added by subsection (b)(3)(C), shall apply to 

8 taxable years ending after March 31, 2008. 

9 SEC. 1402. TEMPORARY INCREASE IN LIMITATIONS ON EX10 PENSING OF CERTAIN DEPRECIABLE BUSI11 NESS ASSETS. 

12 (a) IN GENERAL.—Paragraph (7) of section 179(b) is 

13 amended— 

14 (1) by striking ‘‘2008’’ and inserting ‘‘2008, or 

15 2009’’, and 

16 (2) by striking ‘‘2008’’ in the heading thereof and 

17 inserting ‘‘2008, AND 2009’’. 

18 (b) EFFECTIVE DATE.—The amendments made by this 

19 section shall apply to taxable years beginning after Decem20 ber 31, 2008. 

21 PART II—5-YEAR CARRYBACK OF OPERATING 

22 LOSSES 

23 SEC. 1411. 5-YEAR CARRYBACK OF OPERATING LOSSES. 

24 (a) IN GENERAL.—Subparagraph (H) of section 

25 172(b)(1) is amended to read as follows: 


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1 ‘‘(H) CARRYBACK FOR 2008 AND 2009 NET

2 OPERATING LOSSES.— 

3 ‘‘(i) IN GENERAL.—In the case of an 

4 applicable 2008 or 2009 net operating loss 

5 with respect to which the taxpayer has elect6 ed the application of this subparagraph— 

7 ‘‘(I) such net operating loss shall 

8 be reduced by 10 percent of such loss 

9 (determined without regard to this sub10 paragraph), 

11 ‘‘(II) subparagraph (A)(i) shall be 

12 applied by substituting any whole 

13 number elected by the taxpayer which 

14 is more than 2 and less than 6 for ‘2’, 

15 ‘‘(III) subparagraph (E)(ii) shall 

16 be applied by substituting the whole 

17 number which is one less than the 

18 whole number substituted under sub19 clause (II) for ‘2’, and 

20 ‘‘(IV) subparagraph (F) shall not 

21 apply. 

22 ‘‘(ii) APPLICABLE 2008 OR 2009 NET OP23 ERATING LOSS.—For purposes of this sub24 paragraph, the term ‘applicable 2008 or 

25 2009 net operating loss’ means— 


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1 ‘‘(I) the taxpayer’s net operating 

2 loss for any taxable year ending in 

3 2008 or 2009, or 

4 ‘‘(II) if the taxpayer elects to have 

5 this subclause apply in lieu of sub6 clause (I), the taxpayer’s net operating 

7 loss for any taxable year beginning in 

8 2008 or 2009. 

9 ‘‘(iii) ELECTION.—Any election under 

10 this subparagraph shall be made in such 

11 manner as may be prescribed by the Sec12 retary, and shall be made by the due date 

13 (including extension of time) for filing the 

14 taxpayer’s return for the taxable year of the 

15 net operating loss. Any such election, once 

16 made, shall be irrevocable. 

17 ‘‘(iv) COORDINATION WITH ALTER18 NATIVE TAX NET OPERATING LOSS DEDUC19 TION.—In the case of a taxpayer who elects 

20 to have clause (ii)(II) apply, section 

21 56(d)(1)(A)(ii) shall be applied by sub22 stituting ‘ending during 2001 or 2002 or 

23 beginning during 2008 or 2009’ for ‘ending 

24 during 2001, 2002, 2008, or 2009’.’’. 


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1 (b) ALTERNATIVE TAX NET OPERATING LOSS DEDUC2 TION.—Subclause (I) of section 56(d)(1)(A)(ii) is amended 

3 to read as follows: 

4 ‘‘(I) the amount of such deduction 

5 attributable to the sum of carrybacks of 

6 net operating losses from taxable years 

7 ending during 2001, 2002, 2008, or 

8 2009 and carryovers of net operating 

9 losses to such taxable years, or’’. 

10 (c) LOSS FROM OPERATIONS OF LIFE INSURANCE

11 COMPANIES.—Subsection (b) of section 810 is amended by 

12 adding at the end the following new paragraph: 

13 ‘‘(4) CARRYBACK FOR 2008 AND 2009 LOSSES.— 

14 ‘‘(A) IN GENERAL.—In the case of an appli15 cable 2008 or 2009 loss from operations with re16 spect to which the taxpayer has elected the appli17 cation of this paragraph— 

18 ‘‘(i) such loss from operations shall be 

19 reduced by 10 percent of such loss (deter20 mined without regard to this paragraph), 

21 and 

22 ‘‘(ii) paragraph (1)(A) shall be ap23 plied, at the election of the taxpayer, by 

24 substituting ‘5’ or ‘4’ for ‘3’. 


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1 ‘‘(B) APPLICABLE 2008 OR 2009 LOSS FROM

2 OPERATIONS.—For purposes of this paragraph, 

3 the term ‘applicable 2008 or 2009 loss from oper4 ations’ means— 

5 ‘‘(i) the taxpayer’s loss from operations 

6 for any taxable year ending in 2008 or 

7 2009, or 

8 ‘‘(ii) if the taxpayer elects to have this 

9 clause apply in lieu of clause (i), the tax10 payer’s loss from operations for any taxable 

11 year beginning in 2008 or 2009. 

12 ‘‘(C) ELECTION.—Any election under this 

13 paragraph shall be made in such manner as may 

14 be prescribed by the Secretary, and shall be made 

15 by the due date (including extension of time) for 

16 filing the taxpayer’s return for the taxable year 

17 of the loss from operations. Any such election, 

18 once made, shall be irrevocable. 

19 ‘‘(D) COORDINATION WITH ALTERNATIVE

20 TAX NET OPERATING LOSS DEDUCTION.—In the 

21 case of a taxpayer who elects to have subpara22 graph (B)(ii) apply, section 56(d)(1)(A)(ii) shall 

23 be applied by substituting ‘ending during 2001 

24 or 2002 or beginning during 2008 or 2009’ for 

25 ‘ending during 2001, 2002, 2008, or 2009’.’’. 


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1 (d) CONFORMING AMENDMENT.—Section 172 is 

2 amended by striking subsection (k). 

3 (e) EFFECTIVE DATE.— 

4 (1) IN GENERAL.—Except as otherwise provided 

5 in this subsection, the amendments made by this sec6 tion shall apply to net operating losses arising in tax7 able years ending after December 31, 2007. 

8 (2) ALTERNATIVE TAX NET OPERATING LOSS DE9 DUCTION.—The amendment made by subsection (b) 

10 shall apply to taxable years ending after 1997. 

11 (3) LOSS FROM OPERATIONS OF LIFE INSURANCE

12 COMPANIES.—The amendment made by subsection (d) 

13 shall apply to losses from operations arising in tax14 able years ending after December 31, 2007. 

15 (4) TRANSITIONAL RULE.—In the case of a net 

16 operating loss (or, in the case of a life insurance com17 pany, a loss from operations) for a taxable year end18 ing before the date of the enactment of this Act— 

19 (A) any election made under section 

20 172(b)(3) or 810(b)(3) of the Internal Revenue 

21 Code of 1986 with respect to such loss may (not22 withstanding such section) be revoked before the 

23 applicable date, 

24 (B) any election made under section 

25 172(b)(1)(H) or 810(b)(4) of such Code with reVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 spect to such loss shall (notwithstanding such 

2 section) be treated as timely made if made before 

3 the applicable date, and 

4 (C) any application under section 6411(a) 

5 of such Code with respect to such loss shall be 

6 treated as timely filed if filed before the applica7 ble date. 

8 For purposes of this paragraph, the term ‘‘applicable 

9 date’’ means the date which is 60 days after the date 

10 of the enactment of this Act. 

11 SEC. 1412. EXCEPTION FOR TARP RECIPIENTS. 

12 The amendments made by this part shall not apply 

13 to— 

14 (1) any taxpayer if— 

15 (A) the Federal Government acquires, at 

16 any time, an equity interest in the taxpayer 

17 pursuant to the Emergency Economic Stabiliza18 tion Act of 2008, or 

19 (B) the Federal Government acquires, at 

20 any time, any warrant (or other right) to ac21 quire any equity interest with respect to the tax22 payer pursuant to such Act, 

23 (2) the Federal National Mortgage Association 

24 and the Federal Home Loan Mortgage Corporation, 

25 and 


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1 (3) any taxpayer which at any time in 2008 or 

2 2009 is a member of the same affiliated group (as de3 fined in section 1504 of the Internal Revenue Code of 

4 1986, determined without regard to subsection (b) 

5 thereof) as a taxpayer described in paragraph (1) or 

6 (2). 

7 PART III—INCENTIVES FOR NEW JOBS 

8 SEC. 1421. INCENTIVES TO HIRE UNEMPLOYED VETERANS 

9 AND DISCONNECTED YOUTH. 

10 (a) IN GENERAL.—Subsection (d) of section 51 is 

11 amended by adding at the end the following new paragraph: 

12 ‘‘(14) CREDIT ALLOWED FOR UNEMPLOYED VET13 ERANS AND DISCONNECTED YOUTH HIRED IN 2009 OR

14 2010.— 

15 ‘‘(A) IN GENERAL.—Any unemployed vet16 eran or disconnected youth who begins work for 

17 the employer during 2009 or 2010 shall be treat18 ed as a member of a targeted group for purposes 

19 of this subpart. 

20 ‘‘(B) DEFINITIONS.—For purposes of this 

21 paragraph— 

22 ‘‘(i) UNEMPLOYED VETERAN.—The 

23 term ‘unemployed veteran’ means any vet24 eran (as defined in paragraph (3)(B), deter25 mined without regard to clause (ii) thereof) 


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1 who is certified by the designated local 

2 agency as— 

3 ‘‘(I) having been discharged or re4 leased from active duty in the Armed 

5 Forces during 2008, 2009, or 2010, 

6 and 

7 ‘‘(II) being in receipt of unem8 ployment compensation under State or 

9 Federal law for not less than 4 weeks 

10 during the 1-year period ending on the 

11 hiring date. 

12 ‘‘(ii) DISCONNECTED YOUTH.—The 

13 term ‘disconnected youth’ means any indi14 vidual who is certified by the designated 

15 local agency— 

16 ‘‘(I) as having attained age 16 

17 but not age 25 on the hiring date, 

18 ‘‘(II) as not regularly attending 

19 any secondary, technical, or post-sec20 ondary school during the 6-month pe21 riod preceding the hiring date, 

22 ‘‘(III) as not regularly employed 

23 during such 6-month period, and 


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1 ‘‘(IV) as not readily employable 

2 by reason of lacking a sufficient num3 ber of basic skills.’’. 

4 (b) EFFECTIVE DATE.—The amendments made by this 

5 section shall apply to individuals who begin work for the 

6 employer after December 31, 2008. 

7 PART IV—CLARIFICATION OF REGULATIONS RE8 LATED TO LIMITATIONS ON CERTAIN BUILT9 IN LOSSES FOLLOWING AN OWNERSHIP 

10 CHANGE 

11 SEC. 1431. CLARIFICATION OF REGULATIONS RELATED TO 

12 LIMITATIONS ON CERTAIN BUILT-IN LOSSES 

13 FOLLOWING AN OWNERSHIP CHANGE. 

14 (a) FINDINGS.—Congress finds as follows: 

15 (1) The delegation of authority to the Secretary 

16 of the Treasury under section 382(m) of the Internal 

17 Revenue Code of 1986 does not authorize the Sec18 retary to provide exemptions or special rules that are 

19 restricted to particular industries or classes of tax20 payers. 

21 (2) Internal Revenue Service Notice 2008–83 is 

22 inconsistent with the congressional intent in enacting 

23 such section 382(m). 

24 (3) The legal authority to prescribe Internal Rev25 enue Service Notice 2008–83 is doubtful. 


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1 (4) However, as taxpayers should generally be 

2 able to rely on guidance issued by the Secretary of the 

3 Treasury legislation is necessary to clarify the force 

4 and effect of Internal Revenue Service Notice 2008– 

5 83 and restore the proper application under the Inter6 nal Revenue Code of 1986 of the limitation on built7 in losses following an ownership change of a bank. 

8 (b) DETERMINATION OF FORCE AND EFFECT OF IN9 TERNAL REVENUE SERVICE NOTICE 2008–83 EXEMPTING

10 BANKS FROM LIMITATION ON CERTAIN BUILT–IN LOSSES

11 FOLLOWING OWNERSHIP CHANGE.— 

12 (1) IN GENERAL.—Internal Revenue Service No13 tice 2008–83— 

14 (A) shall be deemed to have the force and ef15 fect of law with respect to any ownership change 

16 (as defined in section 382(g) of the Internal Rev17 enue Code of 1986) occurring on or before Janu18 ary 16, 2009, and 

19 (B) shall have no force or effect with respect 

20 to any ownership change after such date. 

21 (2) BINDING CONTRACTS.—Notwithstanding 

22 paragraph (1), Internal Revenue Service Notice 

23 2008–83 shall have the force and effect of law with re24 spect to any ownership change (as so defined) which 

25 occurs after January 16, 2009 if such change— 


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1 (A) is pursuant to a written binding con2 tract entered into on or before such date, or 

3 (B) is pursuant to a written agreement en4 tered into on or before such date and such agree5 ment was described on or before such date in a 

6 public announcement or in a filing with the Se7 curities and Exchange Commission required by 

8 reason of such ownership change. 

9 Subtitle F—Fiscal Relief for State 

10 and Local Governments 

11 PART I—IMPROVED MARKETABILITY FOR TAX12 EXEMPT BONDS 

13 SEC. 1501. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX14 EXEMPT INTEREST EXPENSE OF FINANCIAL 

15 INSTITUTIONS. 

16 (a) IN GENERAL.—Subsection (b) of section 265 is 

17 amended by adding at the end the following new paragraph: 

18 ‘‘(7) DE MINIMIS EXCEPTION FOR BONDS ISSUED

19 DURING 2009 OR 2010.— 

20 ‘‘(A) IN GENERAL.—In applying paragraph 

21 (2)(A), there shall not be taken into account tax22 exempt obligations issued during 2009 or 2010. 

23 ‘‘(B) LIMITATION.—The amount of tax-ex24 empt obligations not taken into account by rea25 son of subparagraph (A) shall not exceed 2 perVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00032 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 cent of the amount determined under paragraph 

2 (2)(B). 

3 ‘‘(C) REFUNDINGS.—For purposes of this 

4 paragraph, a refunding bond (whether a current 

5 or advance refunding) shall be treated as issued 

6 on the date of the issuance of the refunded bond 

7 (or in the case of a series of refundings, the 

8 original bond).’’. 

9 (b) TREATMENT AS FINANCIAL INSTITUTION PREF10 ERENCE ITEM.—Clause (iv) of section 291(e)(1)(B) is 

11 amended by adding at the end the following: ‘‘That portion 

12 of any obligation not taken into account under paragraph 

13 (2)(A) of section 265(b) by reason of paragraph (7) of such 

14 section shall be treated for purposes of this section as having 

15 been acquired on August 7, 1986.’’. 

16 (c) EFFECTIVE DATE.—The amendments made by this 

17 section shall apply to obligations issued after December 31, 

18 2008. 

19 SEC. 1502. MODIFICATION OF SMALL ISSUER EXCEPTION TO 

20 TAX-EXEMPT INTEREST EXPENSE ALLOCA21 TION RULES FOR FINANCIAL INSTITUTIONS. 

22 (a) IN GENERAL.—Paragraph (3) of section 265(b) 

23 (relating to exception for certain tax-exempt obligations) is 

24 amended by adding at the end the following new subpara25 graph: 


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1 ‘‘(G) SPECIAL RULES FOR OBLIGATIONS

2 ISSUED DURING 2009 AND 2010.— 

3 ‘‘(i) INCREASE IN LIMITATION.—In the 

4 case of obligations issued during 2009 or 

5 2010, subparagraphs (C)(i), (D)(i), and 

6 (D)(iii)(II) shall each be applied by sub7 stituting ‘$30,000,000’ for ‘$10,000,000’. 

8 ‘‘(ii) QUALIFIED 501(C)(3) BONDS

9 TREATED AS ISSUED BY EXEMPT ORGANIZA10 TION.—In the case of a qualified 501(c)(3) 

11 bond (as defined in section 145) issued dur12 ing 2009 or 2010, this paragraph shall be 

13 applied by treating the 501(c)(3) organiza14 tion for whose benefit such bond was issued 

15 as the issuer. 

16 ‘‘(iii) SPECIAL RULE FOR QUALIFIED

17 FINANCINGS.—In the case of a qualified fi18 nancing issue issued during 2009 or 2010— 

19 ‘‘(I) subparagraph (F) shall not 

20 apply, and 

21 ‘‘(II) any obligation issued as a 

22 part of such issue shall be treated as a 

23 qualified tax-exempt obligation if the 

24 requirements of this paragraph are met 

25 with respect to each qualified portion 


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1 of the issue (determined by treating 

2 each qualified portion as a separate 

3 issue issued by the qualified borrower 

4 with respect to which such portion re5 lates). 

6 ‘‘(iv) QUALIFIED FINANCING ISSUE.— 

7 For purposes of this subparagraph, the term 

8 ‘qualified financing issue’ means any com9 posite, pooled, or other conduit financing 

10 issue the proceeds of which are used directly 

11 or indirectly to make or finance loans to 

12 one or more ultimate borrowers each of 

13 whom is a qualified borrower. 

14 ‘‘(v) QUALIFIED PORTION.—For pur15 poses of this subparagraph, the term ‘quali16 fied portion’ means that portion of the pro17 ceeds which are used with respect to each 

18 qualified borrower under the issue. 

19 ‘‘(vi) QUALIFIED BORROWER.—For 

20 purposes of this subparagraph, the term 

21 ‘qualified borrower’ means a borrower 

22 which is a State or political subdivision 

23 thereof or an organization described in sec24 tion 501(c)(3) and exempt from taxation 

25 under section 501(a).’’. 


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1 (b) EFFECTIVE DATE.—The amendments made by this 

2 section shall apply to obligations issued after December 31, 

3 2008. 

4 SEC. 1503. TEMPORARY MODIFICATION OF ALTERNATIVE 

5 MINIMUM TAX LIMITATIONS ON TAX-EXEMPT 

6 BONDS. 

7 (a) INTEREST ON PRIVATE ACTIVITY BONDS ISSUED

8 DURING 2009 AND 2010 NOT TREATED AS TAX PREF9 ERENCE ITEM.—Subparagraph (C) of section 57(a)(5) is 

10 amended by adding at the end a new clause: 

11 ‘‘(vi) EXCEPTION FOR BONDS ISSUED

12 IN 2009 AND 2010.—For purposes of clause 

13 (i), the term ‘private activity bond’ shall 

14 not include any bond issued after December 

15 31, 2008, and before January 1, 2011. For 

16 purposes of the preceding sentence, a re17 funding bond (whether a current or advance 

18 refunding) shall be treated as issued on the 

19 date of the issuance of the refunded bond (or 

20 in the case of a series of refundings, the 

21 original bond).’’. 

22 (b) NO ADJUSTMENT TO ADJUSTED CURRENT EARN23 INGS FOR INTEREST ON TAX-EXEMPT BONDS ISSUED

24 AFTER 2008.—Subparagraph (B) of section 56(g)(4) is 

25 amended by adding at the end the following new clause: 


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1 ‘‘(iv) TAX EXEMPT INTEREST ON

2 BONDS ISSUED IN 2009 AND 2010.—Clause (i) 

3 shall not apply in the case of any interest 

4 on a bond issued after December 31, 2008, 

5 and before January 1, 2011. For purposes 

6 of the preceding sentence, a refunding bond 

7 (whether a current or advance refunding) 

8 shall be treated as issued on the date of the 

9 issuance of the refunded bond (or in the case 

10 of a series of refundings, the original 

11 bond).’’. 

12 (c) EFFECTIVE DATE.—The amendments made by this 

13 section shall apply to obligations issued after December 31, 

14 2008. 

15 PART II—TAX CREDIT BONDS FOR SCHOOLS 

16 SEC. 1511. QUALIFIED SCHOOL CONSTRUCTION BONDS. 

17 (a) IN GENERAL.—Subpart I of part IV of subchapter 

18 A of chapter 1 is amended by adding at the end the fol19 lowing new section: 

20 ‘‘SEC. 54F. QUALIFIED SCHOOL CONSTRUCTION BONDS. 

21 ‘‘(a) QUALIFIED SCHOOL CONSTRUCTION BOND.—For 

22 purposes of this subchapter, the term ‘qualified school con23 struction bond’ means any bond issued as part of an issue 

24 if— 


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1 ‘‘(1) 100 percent of the available project proceeds 

2 of such issue are to be used for the construction, reha3 bilitation, or repair of a public school facility or for 

4 the acquisition of land on which such a facility is to 

5 be constructed with part of the proceeds of such issue, 

6 ‘‘(2) the bond is issued by a State or local gov7 ernment within the jurisdiction of which such school 

8 is located, and 

9 ‘‘(3) the issuer designates such bond for purposes 

10 of this section. 

11 ‘‘(b) LIMITATION ON AMOUNT OF BONDS DES12 IGNATED.—The maximum aggregate face amount of bonds 

13 issued during any calendar year which may be designated 

14 under subsection (a) by any issuer shall not exceed the sum 

15 of— 

16 ‘‘(1) the limitation amount allocated under sub17 section (d) for such calendar year to such issuer, and 

18 ‘‘(2) if such issuer is a large local educational 

19 agency (as defined in subsection (e)(4)) or is issuing 

20 on behalf of such an agency, the limitation amount 

21 allocated under subsection (e) for such calendar year 

22 to such agency. 

23 ‘‘(c) NATIONAL LIMITATION ON AMOUNT OF BONDS

24 DESIGNATED.—There is a national qualified school conVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00038 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 struction bond limitation for each calendar year. Such lim2 itation is— 

3 ‘‘(1) $11,000,000,000 for 2009, 

4 ‘‘(2) $11,000,000,000 for 2010, and 

5 ‘‘(3) except as provided in subsection (f), zero 

6 after 2010. 

7 ‘‘(d) 60 PERCENT OF LIMITATION ALLOCATED AMONG

8 STATES.— 

9 ‘‘(1) IN GENERAL.—60 percent of the limitation 

10 applicable under subsection (c) for any calendar year 

11 shall be allocated by the Secretary among the States 

12 in proportion to the respective numbers of children in 

13 each State who have attained age 5 but not age 18 

14 for the most recent fiscal year ending before such cal15 endar year. The limitation amount allocated to a 

16 State under the preceding sentence shall be allocated 

17 by the State to issuers within such State. 

18 ‘‘(2) MINIMUM ALLOCATIONS TO STATES.— 

19 ‘‘(A) IN GENERAL.—The Secretary shall ad20 just the allocations under this subsection for any 

21 calendar year for each State to the extent nec22 essary to ensure that the sum of— 

23 ‘‘(i) the amount allocated to such State 

24 under this subsection for such year, and 


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1 ‘‘(ii) the aggregate amounts allocated 

2 under subsection (e) to large local edu3 cational agencies in such State for such 

4 year, 

5 is not less than an amount equal to such State’s 

6 adjusted minimum percentage of the amount to 

7 be allocated under paragraph (1) for the cal8 endar year. 

9 ‘‘(B) ADJUSTED MINIMUM PERCENTAGE.—A 

10 State’s adjusted minimum percentage for any 

11 calendar year is the product of— 

12 ‘‘(i) the minimum percentage described 

13 in section 1124(d) of the Elementary and 

14 Secondary Education Act of 1965 (20 

15 U.S.C. 6334(d)) for such State for the most 

16 recent fiscal year ending before such cal17 endar year, multiplied by 

18 ‘‘(ii) 1.68. 

19 ‘‘(3) ALLOCATIONS TO CERTAIN POSSESSIONS.— 

20 The amount to be allocated under paragraph (1) to 

21 any possession of the United States other than Puerto 

22 Rico shall be the amount which would have been allo23 cated if all allocations under paragraph (1) were 

24 made on the basis of respective populations of indi25 viduals below the poverty line (as defined by the OfVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 fice of Management and Budget). In making other al2 locations, the amount to be allocated under paragraph 

3 (1) shall be reduced by the aggregate amount allocated 

4 under this paragraph to possessions of the United 

5 States. 

6 ‘‘(4) ALLOCATIONS FOR INDIAN SCHOOLS.—In 

7 addition to the amounts otherwise allocated under 

8 this subsection, $200,000,000 for calendar year 2009, 

9 and $200,000,000 for calendar year 2010, shall be al10 located by the Secretary of the Interior for purposes 

11 of the construction, rehabilitation, and repair of 

12 schools funded by the Bureau of Indian Affairs. In the 

13 case of amounts allocated under the preceding sen14 tence, Indian tribal governments (as defined in sec15 tion 7701(a)(40)) shall be treated as qualified issuers 

16 for purposes of this subchapter. 

17 ‘‘(e) 40 PERCENT OF LIMITATION ALLOCATED AMONG

18 LARGEST SCHOOL DISTRICTS.— 

19 ‘‘(1) IN GENERAL.—40 percent of the limitation 

20 applicable under subsection (c) for any calendar year 

21 shall be allocated under paragraph (2) by the Sec22 retary among local educational agencies which are 

23 large local educational agencies for such year. 

24 ‘‘(2) ALLOCATION FORMULA.—The amount to be 

25 allocated under paragraph (1) for any calendar year 


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1 shall be allocated among large local educational agen2 cies in proportion to the respective amounts each such 

3 agency received for Basic Grants under subpart 2 of 

4 part A of title I of the Elementary and Secondary 

5 Education Act of 1965 (20 U.S.C. 6331 et seq.) for 

6 the most recent fiscal year ending before such cal7 endar year. 

8 ‘‘(3) ALLOCATION OF UNUSED LIMITATION TO

9 STATE.—The amount allocated under this subsection 

10 to a large local educational agency for any calendar 

11 year may be reallocated by such agency to the State 

12 in which such agency is located for such calendar 

13 year. Any amount reallocated to a State under the 

14 preceding sentence may be allocated as provided in 

15 subsection (d)(1). 

16 ‘‘(4) LARGE LOCAL EDUCATIONAL AGENCY.—For 

17 purposes of this section, the term ‘large local edu18 cational agency’ means, with respect to a calendar 

19 year, any local educational agency if such agency 

20 is— 

21 ‘‘(A) among the 100 local educational agen22 cies with the largest numbers of children aged 5 

23 through 17 from families living below the pov24 erty level, as determined by the Secretary using 

25 the most recent data available from the DepartVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 ment of Commerce that are satisfactory to the 

2 Secretary, or 

3 ‘‘(B) 1 of not more than 25 local edu4 cational agencies (other than those described in 

5 subparagraph (A)) that the Secretary of Edu6 cation determines (based on the most recent data 

7 available satisfactory to the Secretary) are in 

8 particular need of assistance, based on a low 

9 level of resources for school construction, a high 

10 level of enrollment growth, or such other factors 

11 as the Secretary deems appropriate. 

12 ‘‘(f) CARRYOVER OF UNUSED LIMITATION.—If for any 

13 calendar year— 

14 ‘‘(1) the amount allocated under subsection (d) to 

15 any State, exceeds 

16 ‘‘(2) the amount of bonds issued during such 

17 year which are designated under subsection (a) pur18 suant to such allocation, 

19 the limitation amount under such subsection for such State 

20 for the following calendar year shall be increased by the 

21 amount of such excess. A similar rule shall apply to the 

22 amounts allocated under subsection (d)(4) or (e).’’. 

23 (b) CONFORMING AMENDMENTS.— 

24 (1) Paragraph (1) of section 54A(d) is amended 

25 by striking ‘‘or’’ at the end of subparagraph (C), by 


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1 inserting ‘‘or’’ at the end of subparagraph (D), and 

2 by inserting after subparagraph (D) the following 

3 new subparagraph: 

4 ‘‘(E) a qualified school construction bond,’’. 

5 (2) Subparagraph (C) of section 54A(d)(2) is 

6 amended by striking ‘‘and’’ at the end of clause (iii), 

7 by striking the period at the end of clause (iv) and 

8 inserting ‘‘, and’’, and by adding at the end the fol9 lowing new clause: 

10 ‘‘(v) in the case of a qualified school 

11 construction bond, a purpose specified in 

12 section 54F(a)(1).’’. 

13 (3) The table of sections for subpart I of part IV 

14 of subchapter A of chapter 1 is amended by adding 

15 at the end the following new item: 

‘‘Sec. 54F. Qualified school construction bonds.’’. 

16 (c) EFFECTIVE DATE.—The amendments made by this 

17 section shall apply to obligations issued after December 31, 

18 2008. 

19 SEC. 1512. EXTENSION AND EXPANSION OF QUALIFIED 

20 ZONE ACADEMY BONDS. 

21 (a) IN GENERAL.—Section 54E(c)(1) is amended by 

22 striking ‘‘and 2009’’ and inserting ‘‘and $1,400,000,000 for 

23 2009 and 2010’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by this 

2 section shall apply to obligations issued after December 31, 

3 2008. 

4 PART III—TAXABLE BOND OPTION FOR 

5 GOVERNMENTAL BONDS 

6 SEC. 1521. TAXABLE BOND OPTION FOR GOVERNMENTAL 

7 BONDS. 

8 (a) IN GENERAL.—Part IV of subchapter A of chapter 

9 1 is amended by adding at the end the following new sub10 part: 

11 ‘‘Subpart J—Taxable Bond Option for Governmental 

12 Bonds 

‘‘Sec. 54AA. Taxable bond option for governmental bonds. 

13 ‘‘SEC. 54AA. TAXABLE BOND OPTION FOR GOVERNMENTAL 

14 BONDS. 

15 ‘‘(a) IN GENERAL.—If a taxpayer holds a taxable gov16 ernmental bond on one or more interest payment dates of 

17 the bond during any taxable year, there shall be allowed 

18 as a credit against the tax imposed by this chapter for the 

19 taxable year an amount equal to the sum of the credits de20 termined under subsection (b) with respect to such dates. 

21 ‘‘(b) AMOUNT OF CREDIT.—The amount of the credit 

22 determined under this subsection with respect to any inter23 est payment date for a taxable governmental bond is 35 


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1 percent of the amount of interest payable by the issuer with 

2 respect to such date. 

3 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— 

4 ‘‘(1) IN GENERAL.—The credit allowed under 

5 subsection (a) for any taxable year shall not exceed 

6 the excess of— 

7 ‘‘(A) the sum of the regular tax liability (as 

8 defined in section 26(b)) plus the tax imposed by 

9 section 55, over 

10 ‘‘(B) the sum of the credits allowable under 

11 this part (other than subpart C and this sub12 part). 

13 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 

14 credit allowable under subsection (a) exceeds the limi15 tation imposed by paragraph (1) for such taxable 

16 year, such excess shall be carried to the succeeding 

17 taxable year and added to the credit allowable under 

18 subsection (a) for such taxable year (determined be19 fore the application of paragraph (1) for such suc20 ceeding taxable year). 

21 ‘‘(d) TAXABLE GOVERNMENTAL BOND.— 

22 ‘‘(1) IN GENERAL.—For purposes of this section, 

23 the term ‘taxable governmental bond’ means any obli24 gation (other than a private activity bond) if— 


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1 ‘‘(A) the interest on such obligation would 

2 (but for this section) be excludable from gross in3 come under section 103, and 

4 ‘‘(B) the issuer makes an irrevocable elec5 tion to have this section apply. 

6 ‘‘(2) APPLICABLE RULES.—For purposes of ap7 plying paragraph (1)— 

8 ‘‘(A) a taxable governmental bond shall not 

9 be treated as federally guaranteed by reason of 

10 the credit allowed under subsection (a) or section 

11 6432, 

12 ‘‘(B) the yield on a taxable governmental 

13 bond shall be determined without regard to the 

14 credit allowed under subsection (a), and 

15 ‘‘(C) a bond shall not be treated as a tax16 able governmental bond if the issue price has 

17 more than a de minimis amount (determined 

18 under rules similar to the rules of section 

19 1273(a)(3)) of premium over the stated principal 

20 amount of the bond. 

21 ‘‘(e) INTEREST PAYMENT DATE.—For purposes of this 

22 section, the term ‘interest payment date’ means any date 

23 on which the holder of record of the taxable governmental 

24 bond is entitled to a payment of interest under such bond. 

25 ‘‘(f) SPECIAL RULES.— 


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1 ‘‘(1) INTEREST ON TAXABLE GOVERNMENTAL

2 BONDS INCLUDIBLE IN GROSS INCOME FOR FEDERAL

3 INCOME TAX PURPOSES.—For purposes of this title, 

4 interest on any taxable governmental bond shall be 

5 includible in gross income. 

6 ‘‘(2) APPLICATION OF CERTAIN RULES.—Rules 

7 similar to the rules of subsections (f), (g), (h), and (i) 

8 of section 54A shall apply for purposes of the credit 

9 allowed under subsection (a). 

10 ‘‘(g) SPECIAL RULE FOR QUALIFIED BONDS ISSUED

11 BEFORE 2011.—In the case of a qualified bond issued before 

12 January 1, 2011— 

13 ‘‘(1) ISSUER ALLOWED REFUNDABLE CREDIT.— 

14 In lieu of any credit allowed under this section with 

15 respect to such bond, the issuer of such bond shall be 

16 allowed a credit as provided in section 6432. 

17 ‘‘(2) QUALIFIED BOND.—For purposes of this 

18 subsection, the term ‘qualified bond’ means any tax19 able governmental bond issued as part of an issue 

20 if— 

21 ‘‘(A) 100 percent of the available project 

22 proceeds (as defined in section 54A) of such issue 

23 are to be used for capital expenditures, and 

24 ‘‘(B) the issuer makes an irrevocable elec25 tion to have this subsection apply. 


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1 ‘‘(h) REGULATIONS.—The Secretary may prescribe 

2 such regulations and other guidance as may be necessary 

3 or appropriate to carry out this section and section 6432.’’. 

4 (b) CREDIT FOR QUALIFIED BONDS ISSUED BEFORE

5 2011.—Subchapter B of chapter 65, as amended by this 

6 Act, is amended by adding at the end the following new 

7 section: 

8 ‘‘SEC. 6432. CREDIT FOR QUALIFIED BONDS ALLOWED TO 

9 ISSUER. 

10 ‘‘(a) IN GENERAL.—In the case of a qualified bond 

11 issued before January 1, 2011, the issuer of such bond shall 

12 be allowed a credit with respect to each interest payment 

13 under such bond which shall be payable by the Secretary 

14 as provided in subsection (b). 

15 ‘‘(b) PAYMENT OF CREDIT.—The Secretary shall pay 

16 (contemporaneously with each interest payment date under 

17 such bond) to the issuer of such bond (or to any person 

18 who makes such interest payments on behalf of the issuer) 

19 35 percent of the interest payable under such bond on such 

20 date. 

21 ‘‘(c) APPLICATION OF ARBITRAGE RULES.—For pur22 poses of section 148, the yield on a qualified bond shall be 

23 reduced by the credit allowed under this section. 

24 ‘‘(d) INTEREST PAYMENT DATE.—For purposes of this 

25 subsection, the term ‘interest payment date’ means each 


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1 date on which interest is payable by the issuer under the 

2 terms of the bond. 

3 ‘‘(e) QUALIFIED BOND.—For purposes of this sub4 section, the term ‘qualified bond’ has the meaning given 

5 such term in section 54AA(g).’’. 

6 (c) CONFORMING AMENDMENTS.— 

7 (1) Section 1324(b)(2) of title 31, United States 

8 Code, is amended by striking ‘‘or 6428’’ and inserting 

9 ‘‘6428, or 6432,’’. 

10 (2) Section 54A(c)(1)(B) is amended by striking 

11 ‘‘subpart C’’ and inserting ‘‘subparts C and J’’. 

12 (3) Sections 54(c)(2), 1397E(c)(2), and 

13 1400N(l)(3)(B) are each amended by striking ‘‘and I’’ 

14 and inserting ‘‘, I, and J’’. 

15 (4) Section 6401(b)(1) is amended by striking 

16 ‘‘and I’’ and inserting ‘‘I, and J’’. 

17 (5) The table of subparts for part IV of sub18 chapter A of chapter 1 is amended by adding at the 

19 end the following new item: 

‘‘Subpart J. Taxable bond option for governmental bonds.’’. 

20 (6) The table of sections for subchapter B of 

21 chapter 65, as amended by this Act, is amended by 

22 adding at the end the following new item: 

‘‘Sec. 6432. Credit for qualified bonds allowed to issuer.’’. 

23 (d) TRANSITIONAL COORDINATION WITH STATE

24 LAW.—Except as otherwise provided by a State after the 


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1 date of the enactment of this Act, the interest on any taxable 

2 governmental bond (as defined in section 54AA of the Inter3 nal Revenue Code of 1986, as added by this section) and 

4 the amount of any credit determined under such section 

5 with respect to such bond shall be treated for purposes of 

6 the income tax laws of such State as being exempt from 

7 Federal income tax. 

8 (e) EFFECTIVE DATE.—The amendments made by this 

9 section shall apply to obligations issued after the date of 

10 the enactment of this Act. 

11 PART IV—RECOVERY ZONE BONDS 

12 SEC. 1531. RECOVERY ZONE BONDS. 

13 (a) IN GENERAL.—Subchapter Y of chapter 1 is 

14 amended by adding at the end the following new part: 

15 ‘‘PART III—RECOVERY ZONE BONDS 

‘‘Sec. 1400U–1. Allocation of recovery zone bonds. 

‘‘Sec. 1400U–2. Recovery zone economic development bonds. 

‘‘Sec. 1400U–3. Recovery zone facility bonds. 

16 ‘‘SEC. 1400U–1. ALLOCATION OF RECOVERY ZONE BONDS. 

17 ‘‘(a) ALLOCATIONS.— 

18 ‘‘(1) IN GENERAL.—The Secretary shall allocate 

19 the national recovery zone economic development bond 

20 limitation and the national recovery zone facility 

21 bond limitation among the States in the proportion 

22 that each such State’s 2008 State employment decline 

23 bears to the aggregate of the 2008 State employment 

24 declines for all of the States. 


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1 ‘‘(2) 2008 STATE EMPLOYMENT DECLINE.—For 

2 purposes of this subsection, the term ‘2008 State em3 ployment decline’ means, with respect to any State, 

4 the excess (if any) of— 

5 ‘‘(A) the number of individuals employed in 

6 such State determined for December 2007, over 

7 ‘‘(B) the number of individuals employed in 

8 such State determined for December 2008. 

9 ‘‘(3) ALLOCATIONS BY STATES.— 

10 ‘‘(A) IN GENERAL.—Each State with respect 

11 to which an allocation is made under paragraph 

12 (1) shall reallocate such allocation among the 

13 counties and large municipalities in such State 

14 in the proportion the each such county’s or mu15 nicipality’s 2008 employment decline bears to 

16 the aggregate of the 2008 employment declines 

17 for all the counties and municipalities in such 

18 State. 

19 ‘‘(B) LARGE MUNICIPALITIES.—For pur20 poses of subparagraph (A), the term ‘large mu21 nicipality’ means a municipality with a popu22 lation of more than 100,000. 

23 ‘‘(C) DETERMINATION OF LOCAL EMPLOY24 MENT DECLINES.—For purposes of this para25 graph, the employment decline of any municiVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00052 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 pality or county shall be determined in the same 

2 manner as determining the State employment 

3 decline under paragraph (2), except that in the 

4 case of a municipality any portion of which is 

5 in a county, such portion shall be treated as part 

6 of such municipality and not part of such coun7 ty. 

8 ‘‘(4) NATIONAL LIMITATIONS.— 

9 ‘‘(A) RECOVERY ZONE ECONOMIC DEVELOP10 MENT BONDS.—There is a national recovery zone 

11 economic development bond limitation of 

12 $10,000,000,000. 

13 ‘‘(B) RECOVERY ZONE FACILITY BONDS.— 

14 There is a national recovery zone facility bond 

15 limitation of $15,000,000,000. 

16 ‘‘(b) RECOVERY ZONE.—For purposes of this part, the 

17 term ‘recovery zone’ means— 

18 ‘‘(1) any area designated by the issuer as having 

19 significant poverty, unemployment, home foreclosures, 

20 or general distress, and 

21 ‘‘(2) any area for which a designation as an em22 powerment zone or renewal community is in effect. 


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1 ‘‘SEC. 1400U–2. RECOVERY ZONE ECONOMIC DEVELOPMENT 

2 BONDS. 

3 ‘‘(a) IN GENERAL.—In the case of a recovery zone eco4 nomic development bond— 

5 ‘‘(1) such bond shall be treated as a qualified 

6 bond for purposes of section 6432, and 

7 ‘‘(2) subsection (b) of such section shall be ap8 plied by substituting ‘55 percent’ for ‘35 percent’. 

9 ‘‘(b) RECOVERY ZONE ECONOMIC DEVELOPMENT

10 BOND.— 

11 ‘‘(1) IN GENERAL.—For purposes of this section, 

12 the term ‘recovery zone economic development bond’ 

13 means any taxable governmental bond (as defined in 

14 section 54AA(d)) issued before January 1, 2011, as 

15 part of issue if— 

16 ‘‘(A) 100 percent of the available project 

17 proceeds (as defined in section 54A) of such issue 

18 are to be used for one or more qualified economic 

19 development purposes, and 

20 ‘‘(B) the issuer designates such bond for 

21 purposes of this section. 

22 ‘‘(2) LIMITATION ON AMOUNT OF BONDS DES23 IGNATED.—The maximum aggregate face amount of 

24 bonds which may be designated by any issuer under 

25 paragraph (1) shall not exceed the amount of the reVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00054 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 covery zone economic development bond limitation al2 located to such issuer under section 1400U–1. 

3 ‘‘(c) QUALIFIED ECONOMIC DEVELOPMENT PUR4 POSE.—For purposes of this section, the term ‘qualified eco5 nomic development purpose’ means expenditures for pur6 poses of promoting development or other economic activity 

7 in a recovery zone, including— 

8 ‘‘(1) capital expenditures paid or incurred with 

9 respect to property located in such zone, 

10 ‘‘(2) expenditures for public infrastructure and 

11 construction of public facilities, and 

12 ‘‘(3) expenditures for job training and edu13 cational programs. 

14 ‘‘SEC. 1400U–3. RECOVERY ZONE FACILITY BONDS. 

15 ‘‘(a) IN GENERAL.—For purposes of part IV of sub16 chapter B (relating to tax exemption requirements for State 

17 and local bonds), the term ‘exempt facility bond’ includes 

18 any recovery zone facility bond. 

19 ‘‘(b) RECOVERY ZONE FACILITY BOND.— 

20 ‘‘(1) IN GENERAL.—For purposes of this section, 

21 the term ‘recovery zone facility bond’ means any bond 

22 issued as part of an issue if— 

23 ‘‘(A) 95 percent or more of the net proceeds 

24 (as defined in section 150(a)(3)) of such issue 

25 are to be used for recovery zone property, 


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1 ‘‘(B) such bond is issued before January 1, 

2 2011, and 

3 ‘‘(C) the issuer designates such bond for 

4 purposes of this section. 

5 ‘‘(2) LIMITATION ON AMOUNT OF BONDS DES6 IGNATED.—The maximum aggregate face amount of 

7 bonds which may be designated by any issuer under 

8 paragraph (1) shall not exceed the amount of recovery 

9 zone facility bond limitation allocated to such issuer 

10 under section 1400U–1. 

11 ‘‘(c) RECOVERY ZONE PROPERTY.—For purposes of 

12 this section— 

13 ‘‘(1) IN GENERAL.—The term ‘recovery zone 

14 property’ means any property to which section 168 

15 applies (or would apply but for section 179) if— 

16 ‘‘(A) such property was acquired by the tax17 payer by purchase (as defined in section 

18 179(d)(2)) after the date on which the designa19 tion of the recovery zone took effect, 

20 ‘‘(B) the original use of which in the recov21 ery zone commences with the taxpayer, and 

22 ‘‘(C) substantially all of the use of which is 

23 in the recovery zone and is in the active conduct 

24 of a qualified business by the taxpayer in such 

25 zone. 


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1 ‘‘(2) QUALIFIED BUSINESS.—The term ‘qualified 

2 business’ means any trade or business except that— 

3 ‘‘(A) the rental to others of real property lo4 cated in a recovery zone shall be treated as a 

5 qualified business only if the property is not res6 idential rental property (as defined in section 

7 168(e)(2)), and 

8 ‘‘(B) such term shall not include any trade 

9 or business consisting of the operation of any fa10 cility described in section 144(c)(6)(B). 

11 ‘‘(3) SPECIAL RULES FOR SUBSTANTIAL RENOVA12 TIONS AND SALE-LEASEBACK.—Rules similar to the 

13 rules of subsections (a)(2) and (b) of section 1397D 

14 shall apply for purposes of this subsection. 

15 ‘‘(d) NONAPPLICATION OF CERTAIN RULES.—Sections 

16 146 (relating to volume cap) and 147(d) (relating to acqui17 sition of existing property not permitted) shall not apply 

18 to any recovery zone facility bond.’’. 

19 (b) CLERICAL AMENDMENT.—The table of parts for 

20 subchapter Y of chapter 1 of such Code is amended by add21 ing at the end the following new item: 

‘‘PART III. RECOVERY ZONE BONDS.’’. 

22 (c) EFFECTIVE DATE.—The amendments made by this 

23 section shall apply to obligations issued after the date of 

24 the enactment of this Act. 


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1 SEC. 1532. TRIBAL ECONOMIC DEVELOPMENT BONDS. 

2 (a) IN GENERAL.—Section 7871 is amended by adding 

3 at the end the following new subsection: 

4 ‘‘(f) TRIBAL ECONOMIC DEVELOPMENT BONDS.— 

5 ‘‘(1) ALLOCATION OF LIMITATION.— 

6 ‘‘(A) IN GENERAL.—The Secretary shall al7 locate the national tribal economic development 

8 bond limitation among the Indian tribal govern9 ments in such manner as the Secretary, in con10 sultation with the Secretary of the Interior, de11 termines appropriate. 

12 ‘‘(B) NATIONAL LIMITATION.—There is a 

13 national tribal economic development bond limi14 tation of $2,000,000,000. 

15 ‘‘(2) BONDS TREATED AS EXEMPT FROM TAX.— 

16 In the case of a tribal economic development bond— 

17 ‘‘(A) notwithstanding subsection (c), such 

18 bond shall be treated for purposes of this title in 

19 the same manner as if such bond were issued by 

20 a State, and 

21 ‘‘(B) section 146 shall not apply. 

22 ‘‘(3) TRIBAL ECONOMIC DEVELOPMENT BOND.— 

23 ‘‘(A) IN GENERAL.—For purposes of this 

24 section, the term ‘tribal economic development 

25 bond’ means any bond issued by an Indian trib26 al government— 


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1 ‘‘(i) the interest on which is not ex2 empt from tax under section 103 by reason 

3 of subsection (c) (determined without regard 

4 to this subsection) but would be so exempt 

5 if issued by a State or local government, 

6 and 

7 ‘‘(ii) which is designated by the Indian 

8 tribal government as a tribal economic de9 velopment bond for purposes of this sub10 section. 

11 ‘‘(B) EXCEPTIONS.—The term tribal eco12 nomic development bond shall not include any 

13 bond issued as part of an issue if any portion 

14 of the proceeds of such issue are used to fi15 nance— 

16 ‘‘(i) any portion of a building in 

17 which class II or class III gaming (as de18 fined in section 4 of the Indian Gaming 

19 Regulatory Act) is conducted or housed or 

20 any other property actually used in the con21 duct of such gaming, or 

22 ‘‘(ii) any facility located outside the 

23 Indian reservation (as defined in section 

24 168(j)(6)). 


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1 ‘‘(C) LIMITATION ON AMOUNT OF BONDS

2 DESIGNATED.—The maximum aggregate face 

3 amount of bonds which may be designated by 

4 any Indian tribal government under subpara5 graph (A) shall not exceed the amount of na6 tional tribal economic development bond limita7 tion allocated to such government under para8 graph (1).’’. 

9 (b) STUDY.—The Secretary of the Treasury, or the Sec10 retary’s delegate, shall conduct a study of the effects of the 

11 amendment made by subsection (a). Not later than 1 year 

12 after the date of the enactment of this Act, the Secretary 

13 of the Treasury, or the Secretary’s delegate, shall report to 

14 Congress on the results of the studies conducted under this 

15 paragraph, including the Secretary’s recommendations re16 garding such amendment. 

17 (c) EFFECTIVE DATE.—The amendment made by sub18 section (a) shall apply to obligations issued after the date 

19 of the enactment of this Act. 

20 PART V—REPEAL OF WITHHOLDING TAX ON 

21 GOVERNMENT CONTRACTORS 

22 SEC. 1541. REPEAL OF WITHHOLDING TAX ON GOVERN23 MENT CONTRACTORS. 

24 Section 3402 is amended by striking subsection (t). 


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1 Subtitle G—Energy Incentives 

2 PART I—RENEWABLE ENERGY INCENTIVES 

3 SEC. 1601. EXTENSION OF CREDIT FOR ELECTRICITY PRO4 DUCED FROM CERTAIN RENEWABLE RE5 SOURCES. 

6 (a) IN GENERAL.—Subsection (d) of section 45 is 

7 amended— 

8 (1) by striking ‘‘2010’’ in paragraph (1) and in9 serting ‘‘2013’’, 

10 (2) by striking ‘‘2011’’ each place it appears in 

11 paragraphs (2), (3), (4), (6), (7), and (9) and insert12 ing ‘‘2014’’, and 

13 (3) by striking ‘‘2012’’ in paragraph (11)(B) 

14 and inserting ‘‘2014’’. 

15 (b) TECHNICAL AMENDMENT.—Paragraph (5) of sec16 tion 45(d) is amended by striking ‘‘and before’’ and all that 

17 follows and inserting ‘‘and before October 3, 2008.’’. 

18 (c) EFFECTIVE DATE.— 

19 (1) IN GENERAL.—The amendments made by 

20 subsection (a) shall apply to property placed in serv21 ice after the date of the enactment of this Act. 

22 (2) TECHNICAL AMENDMENT.—The amendment 

23 made by subsection (b) shall take effect as if included 

24 in section 102 of the Energy Improvement and Exten25 sion Act of 2008. 


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1 SEC. 1602. ELECTION OF INVESTMENT CREDIT IN LIEU OF 

2 PRODUCTION CREDIT. 

3 (a) IN GENERAL.—Subsection (a) of section 48 is 

4 amended by adding at the end the following new paragraph: 

5 ‘‘(5) ELECTION TO TREAT QUALIFIED FACILITIES

6 AS ENERGY PROPERTY.— 

7 ‘‘(A) IN GENERAL.—In the case of any 

8 qualified investment credit facility placed in 

9 service in 2009 or 2010— 

10 ‘‘(i) such facility shall be treated as en11 ergy property for purposes of this section, 

12 and 

13 ‘‘(ii) the energy percentage with respect 

14 to such property shall be 30 percent. 

15 ‘‘(B) DENIAL OF PRODUCTION CREDIT.—No 

16 credit shall be allowed under section 45 for any 

17 taxable year with respect to any qualified invest18 ment credit facility. 

19 ‘‘(C) QUALIFIED INVESTMENT CREDIT FA20 CILITY.—For purposes of this paragraph, the 

21 term ‘qualified investment credit facility’ means 

22 any facility described in paragraph (1), (2), (3), 

23 (4), (6), (7), (9), or (11) of section 45(d) if no 

24 credit has been allowed under section 45 with re25 spect to such facility and the taxpayer makes an 


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1 irrevocable election to have this paragraph apply 

2 to such facility.’’. 

3 (b) EFFECTIVE DATE.—The amendments made by this 

4 section shall apply to facilities placed in service after De5 cember 31, 2008. 

6 SEC. 1603. REPEAL OF CERTAIN LIMITATIONS ON CREDIT 

7 FOR RENEWABLE ENERGY PROPERTY. 

8 (a) REPEAL OF LIMITATION ON CREDIT FOR QUALI9 FIED SMALL WIND ENERGY PROPERTY.—Paragraph (4) of 

10 section 48(c) is amended by striking subparagraph (B) and 

11 by redesignating subparagraphs (C) and (D) as subpara12 graphs (B) and (C). 

13 (b) REPEAL OF LIMITATION ON PROPERTY FINANCED

14 BY SUBSIDIZED ENERGY FINANCING.— 

15 (1) IN GENERAL.—Subsection (a) of section 48, 

16 as amended by section 1602, is amended by striking 

17 paragraph (4) and by redesignating paragraph (5) as 

18 paragraph (4). 

19 (2) CONFORMING AMENDMENTS.— 

20 (A) Section 25C(e)(1) is amended by strik21 ing ‘‘(8), and (9)’’ and inserting ‘‘and (8)’’. 

22 (B) Section 25D(e) is amended by striking 

23 paragraph (9). 

24 (c) EFFECTIVE DATE.— 


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1 (1) IN GENERAL.—Except as provided in para2 graph (2),the amendment made by this section shall 

3 apply to periods after December 31, 2008, under rules 

4 similar to the rules of section 48(m) of the Internal 

5 Revenue Code of 1986 (as in effect on the day before 

6 the date of the enactment of the Revenue Reconcili7 ation Act of 1990). 

8 (2) CONFORMING AMENDMENTS.—The amend9 ments made by subsection (b)(2) shall apply to tax10 able years beginning after December 31, 2008. 

11 SEC. 1604. COORDINATION WITH RENEWABLE ENERGY 

12 GRANTS. 

13 Section 48 is amended by adding at the end the fol14 lowing new subsection: 

15 ‘‘(d) COORDINATION WITH DEPARTMENT OF ENERGY

16 GRANTS.—In the case of any property with respect to which 

17 the Secretary of Energy makes a grant under section 1721 

18 of the American Recovery and Reinvestment Tax Act of 

19 2009— 

20 ‘‘(1) DENIAL OF PRODUCTION AND INVESTMENT

21 CREDITS.—No credit shall be determined under this 

22 section or section 45 with respect to such property for 

23 the taxable year in which such grant is made or any 

24 subsequent taxable year. 


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1 ‘‘(2) RECAPTURE OF CREDITS FOR PROGRESS

2 EXPENDITURES MADE BEFORE GRANT.—If a credit 

3 was determined under this section with respect to 

4 such property for any taxable year ending before such 

5 grant is made— 

6 ‘‘(A) the tax imposed under subtitle A on 

7 the taxpayer for the taxable year in which such 

8 grant is made shall be increased by so much of 

9 such credit as was allowed under section 38, 

10 ‘‘(B) the general business carryforwards 

11 under section 39 shall be adjusted so as to recap12 ture the portion of such credit which was not so 

13 allowed, and 

14 ‘‘(C) the amount of such grant shall be de15 termined without regard to any reduction in the 

16 basis of such property by reason of such credit. 

17 ‘‘(3) TREATMENT OF GRANTS.—Any such grant 

18 shall— 

19 ‘‘(A) not be includible in the gross income 

20 of the taxpayer, but 

21 ‘‘(B) shall be taken into account in deter22 mining the basis of the property to which such 

23 grant relates, except that the basis of such prop24 erty shall be reduced under section 50(c) in the 


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1 same manner as a credit allowed under sub2 section (a).’’. 

3 PART II—INCREASED ALLOCATIONS OF NEW 

4 CLEAN RENEWABLE ENERGY BONDS AND 

5 QUALIFIED ENERGY CONSERVATION BONDS 

6 SEC. 1611. INCREASED LIMITATION ON ISSUANCE OF NEW 

7 CLEAN RENEWABLE ENERGY BONDS. 

8 Subsection (c) of section 54C is amended by adding 

9 at the end the following new paragraph: 

10 ‘‘(4) ADDITIONAL LIMITATION.—The national 

11 new clean renewable energy bond limitation shall be 

12 increased by $1,600,000,000. Such increase shall be 

13 allocated by the Secretary consistent with the rules of 

14 paragraphs (2) and (3).’’. 

15 SEC. 1612. INCREASED LIMITATION AND EXPANSION OF 

16 QUALIFIED ENERGY CONSERVATION BONDS. 

17 (a) INCREASED LIMITATION.—Subsection (e) of section 

18 54D is amended by adding at the end the following new 

19 paragraph: 

20 ‘‘(4) ADDITIONAL LIMITATION.—The national 

21 qualified energy conservation bond limitation shall be 

22 increased by $2,400,000,000. Such increase shall be 

23 allocated by the Secretary consistent with the rules of 

24 paragraphs (1), (2), and (3).’’. 


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1 (b) LOANS AND GRANTS TO IMPLEMENT GREEN COM2 MUNITY PROGRAMS.— 

3 (1) IN GENERAL.—Subparagraph (A) of section 

4 54D(f)(1) is amended by inserting ‘‘(or loans or 

5 grants for capital expenditures to implement any 

6 green community program)’’ after ‘‘Capital expendi7 tures’’. 

8 (2) BONDS TO IMPLEMENT GREEN COMMUNITY

9 PROGRAMS NOT TREATED AS PRIVATE ACTIVITY

10 BONDS FOR PURPOSES OF LIMITATIONS ON QUALIFIED

11 ENERGY CONSERVATION BONDS.—Subsection (e) of 

12 section 54D, as amended by subsection (a), is amend13 ed by adding at the end the following new paragraph: 

14 ‘‘(5) BONDS TO IMPLEMENT GREEN COMMUNITY

15 PROGRAMS NOT TREATED AS PRIVATE ACTIVITY

16 BONDS.—For purposes of paragraph (3) and sub17 section (f)(2), a bond shall not be treated as a private 

18 activity bond solely because proceeds of the issue of 

19 which such bond is a part are to be used for loans 

20 or grants for capital expenditures to implement any 

21 green community program.’’. 

22 (c) EFFECTIVE DATE.—The amendments made by this 

23 section shall apply to obligations issued after the date of 

24 the enactment of this Act. 


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1 PART III—ENERGY CONSERVATION INCENTIVES 

2 SEC. 1621. EXTENSION AND MODIFICATION OF CREDIT FOR 

3 NONBUSINESS ENERGY PROPERTY. 

4 (a) IN GENERAL.—Section 25C is amended by striking 

5 subsections (a) and (b) and inserting the following new sub6 sections: 

7 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an indi8 vidual, there shall be allowed as a credit against the tax 

9 imposed by this chapter for the taxable year an amount 

10 equal to 30 percent of the sum of— 

11 ‘‘(1) the amount paid or incurred by the tax12 payer during such taxable year for qualified energy 

13 efficiency improvements, and 

14 ‘‘(2) the amount of the residential energy prop15 erty expenditures paid or incurred by the taxpayer 

16 during such taxable year. 

17 ‘‘(b) LIMITATION.—The aggregate amount of the cred18 its allowed under this section for taxable years beginning 

19 in 2009 and 2010 with respect to any taxpayer shall not 

20 exceed $1,500.’’. 

21 (b) EXTENSION.—Section 25C(g)(2) is amended by 

22 striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 

23 2010’’. 

24 (c) EFFECTIVE DATE.—The amendments made by this 

25 section shall apply to taxable years beginning after Decem26 ber 31, 2008. 


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1 SEC. 1622. MODIFICATION OF CREDIT FOR RESIDENTIAL 

2 ENERGY EFFICIENT PROPERTY. 

3 (a) REMOVAL OF CREDIT LIMITATION FOR PROPERTY

4 PLACED IN SERVICE.— 

5 (1) IN GENERAL.—Paragraph (1) of section 

6 25D(b) is amended to read as follows: 

7 ‘‘(1) MAXIMUM CREDIT FOR FUEL CELLS.—In 

8 the case of any qualified fuel cell property expendi9 ture, the credit allowed under subsection (a) (deter10 mined without regard to subsection (c)) for any tax11 able year shall not exceed $500 with respect to each 

12 half kilowatt of capacity of the qualified fuel cell 

13 property (as defined in section 48(c)(1)) to which 

14 such expenditure relates.’’. 

15 (2) CONFORMING AMENDMENT.—Paragraph (4) 

16 of section 25D(e) is amended— 

17 (A) by striking all that precedes subpara18 graph (B) and inserting the following: 

19 ‘‘(4) FUEL CELL EXPENDITURE LIMITATIONS IN

20 CASE OF JOINT OCCUPANCY.—In the case of any 

21 dwelling unit with respect to which qualified fuel cell 

22 property expenditures are made and which is jointly 

23 occupied and used during any calendar year as a res24 idence by two or more individuals the following rules 

25 shall apply: 


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1 ‘‘(A) MAXIMUM EXPENDITURES FOR FUEL

2 CELLS.—The maximum amount of such expendi3 tures which may be taken into account under 

4 subsection (a) by all such individuals with re5 spect to such dwelling unit during such calendar 

6 year shall be $1,667 in the case of each half kilo7 watt of capacity of qualified fuel cell property 

8 (as defined in section 48(c)(1)) with respect to 

9 which such expenditures relate.’’, and 

10 (B) by striking subparagraph (C). 

11 (b) EFFECTIVE DATE.—The amendments made by this 

12 section shall apply to taxable years beginning after Decem13 ber 31, 2008. 

14 SEC. 1623. TEMPORARY INCREASE IN CREDIT FOR ALTER15 NATIVE FUEL VEHICLE REFUELING PROP16 ERTY. 

17 (a) IN GENERAL.—Section 30C(e) is amended by add18 ing at the end the following new paragraph: 

19 ‘‘(6) SPECIAL RULE FOR PROPERTY PLACED IN

20 SERVICE DURING 2009 AND 2010.—In the case of prop21 erty placed in service in taxable years beginning after 

22 December 31, 2008, and before January 1, 2011— 

23 ‘‘(A) in the case of any such property which 

24 does not relate to hydrogen— 


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1 ‘‘(i) subsection (a) shall be applied by 

2 substituting ‘50 percent’ for ‘30 percent’, 

3 ‘‘(ii) subsection (b)(1) shall be applied 

4 by substituting ‘$50,000’ for ‘$30,000’, and 

5 ‘‘(iii) subsection (b)(2) shall be applied 

6 by substituting ‘$2,000’ for ‘$1,000’, and 

7 ‘‘(B) in the case of any such property which 

8 relates to hydrogen, subsection (b) shall be ap9 plied by substituting ‘$200,000’ for ‘$30,000’.’’. 

10 (b) EFFECTIVE DATE.—The amendment made by this 

11 section shall apply to taxable years beginning after Decem12 ber 31, 2008. 

13 PART IV—ENERGY RESEARCH INCENTIVES 

14 SEC. 1631. INCREASED RESEARCH CREDIT FOR ENERGY RE15 SEARCH. 

16 (a) IN GENERAL.—Section 41 is amended by redesig17 nating subsection (h) as subsection (i) and by inserting 

18 after subsection (g) the following new subsection: 

19 ‘‘(h) ENERGY RESEARCH CREDIT.—In the case of any 

20 taxable year beginning in 2009 or 2010— 

21 ‘‘(1) IN GENERAL.—The credit determined under 

22 subsection (a)(1) shall be increased by 20 percent of 

23 the qualified energy research expenses for the taxable 

24 year. 


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1 ‘‘(2) QUALIFIED ENERGY RESEARCH EX2 PENSES.—For purposes of this subsection, the term 

3 ‘qualified energy research expenses’ means so much of 

4 the taxpayer’s qualified research expenses as are re5 lated to the fields of fuel cells and battery technology, 

6 renewable energy, energy conservation technology, effi7 cient transmission and distribution of electricity, and 

8 carbon capture and sequestration. 

9 ‘‘(3) COORDINATION WITH OTHER RESEARCH

10 CREDITS.— 

11 ‘‘(A) INCREMENTAL CREDIT.—The amount 

12 of qualified energy research expenses taken into 

13 account under subsection (a)(1)(A) shall not ex14 ceed the base amount. 

15 ‘‘(B) ALTERNATIVE SIMPLIFIED CREDIT.— 

16 For purposes of subsection (c)(5), the amount of 

17 qualified energy research expenses taken into ac18 count for the taxable year for which the credit is 

19 being determined shall not exceed— 

20 ‘‘(i) in the case of subsection (c)(5)(A), 

21 50 percent of the average qualified research 

22 expenses for the 3 taxable years preceding 

23 the taxable year for which the credit is 

24 being determined, and 


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1 ‘‘(ii) in the case of subsection 

2 (c)(5)(B)(ii), zero. 

3 ‘‘(C) BASIC RESEARCH AND ENERGY RE4 SEARCH CONSORTIUM PAYMENTS.—Any amount 

5 taken into account under paragraph (1) shall 

6 not be taken into account under paragraph (2) 

7 or (3) of subsection (a).’’. 

8 (b) CONFORMING AMENDMENT.—Subparagraph (B) of 

9 section 41(i)(1), as redesignated by subsection (a), is 

10 amended by inserting ‘‘(in the case of the increase in the 

11 credit determined under subsection (h), December 31, 

12 2010)’’ after ‘‘December 31, 2009’’. 

13 (c) EFFECTIVE DATE.—The amendments made by this 

14 section shall apply to taxable years beginning after Decem15 ber 31, 2008. 

16 Subtitle H—Other Provisions 

17 PART I—APPLICATION OF CERTAIN LABOR 

18 STANDARDS TO PROJECTS FINANCED WITH 

19 CERTAIN TAX-FAVORED BONDS 

20 SEC. 1701. APPLICATION OF CERTAIN LABOR STANDARDS 

21 TO PROJECTS FINANCED WITH CERTAIN TAX22 FAVORED BONDS. 

23 Subchapter IV of chapter 31 of the title 40, United 

24 States Code, shall apply to projects financed with the pro25 ceeds of— 


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1 (1) any qualified clean renewable energy bond 

2 (as defined in section 54C of the Internal Revenue 

3 Code of 1986) issued after the date of the enactment 

4 of this Act, 

5 (2) any qualified energy conservation bond (as 

6 defined in section 54D of the Internal Revenue Code 

7 of 1986) issued after the date of the enactment of this 

8 Act, 

9 (3) any qualified zone academy bond (as defined 

10 in section 54E of the Internal Revenue Code of 1986) 

11 issued after the date of the enactment of this Act, 

12 (4) any qualified school construction bond (as 

13 defined in section 54F of the Internal Revenue Code 

14 of 1986), and 

15 (5) any recovery zone economic development 

16 bond (as defined in section 1400U–2 of the Internal 

17 Revenue Code of 1986). 

18 PART II—GRANTS TO PROVIDE FINANCING FOR 

19 LOW-INCOME HOUSING 

20 SEC. 1711. GRANTS TO STATES FOR LOW-INCOME HOUSING 

21 PROJECTS IN LIEU OF LOW-INCOME HOUSING 

22 CREDIT ALLOCATIONS FOR 2009. 

23 (a) IN GENERAL.—The Secretary of the Treasury shall 

24 make a grant to the housing credit agency of each State 


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1 in an amount equal to such State’s low-income housing 

2 grant election amount. 

3 (b) LOW-INCOME HOUSING GRANT ELECTION

4 AMOUNT.—For purposes of this section, the term ‘‘low-in5 come housing grant election amount’’ means, with respect 

6 to any State, such amount as the State may elect which 

7 does not exceed 85 percent of the product of— 

8 (1) the sum of— 

9 (A) 100 percent of the State housing credit 

10 ceiling for 2009 which is attributable to amounts 

11 described in clauses (i) and (iii) of section 

12 42(h)(3)(C) of the Internal Revenue Code of 

13 1986, and 

14 (B) 40 percent of the State housing credit 

15 ceiling for 2009 which is attributable to amounts 

16 described in clauses (ii) and (iv) of such section, 

17 multiplied by 

18 (2) 10. 

19 (c) SUBAWARDS FOR LOW-INCOME BUILDINGS.— 

20 (1) IN GENERAL.—A State housing credit agency 

21 receiving a grant under this section shall use such 

22 grant to make subawards to finance the construction 

23 or acquisition and rehabilitation of qualified low-in24 come buildings. A subaward under this section may 

25 be made to finance a qualified low-income building 


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1 with or without an allocation under section 42 of the 

2 Internal Revenue Code of 1986, except that a State 

3 housing credit agency may make subawards to fi4 nance qualified low-income buildings without an allo5 cation only if it makes a determination that such use 

6 will increase the total funds available to the State to 

7 build and rehabilitate affordable housing. In com8 plying with such determination requirement, a State 

9 housing credit agency shall establish a process in 

10 which applicants that are allocated credits are re11 quired to demonstrate good faith efforts to obtain in12 vestment commitments for such credits before the 

13 agency makes such subawards. 

14 (2) SUBAWARDS SUBJECT TO SAME REQUIRE15 MENTS AS LOW-INCOME HOUSING CREDIT ALLOCA16 TIONS.—Any such subaward with respect to any 

17 qualified low-income building shall be made in the 

18 same manner and shall be subject to the same limita19 tions (including rent, income, and use restrictions on 

20 such building) as an allocation of housing credit dol21 lar amount allocated by such State housing credit 

22 agency under section 42 of the Internal Revenue Code 

23 of 1986, except that such subawards shall not be lim24 ited by, or otherwise affect (except as provided in subVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00076 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 section (h)(3)(J) of such section), the State housing 

2 credit ceiling applicable to such agency. 

3 (3) COMPLIANCE AND ASSET MANAGEMENT.—The 

4 State housing credit agency shall perform asset man5 agement functions to ensure compliance with section 

6 42 of the Internal Revenue Code of 1986 and the long7 term viability of buildings funded by any subaward 

8 under this section. The State housing credit agency 

9 may collect reasonable fees from a subaward recipient 

10 to cover expenses associated with the performance of 

11 its duties under this paragraph. The State housing 

12 credit agency may retain an agent or other private 

13 contractor to satisfy the requirements of this para14 graph. 

15 (4) RECAPTURE.—The State housing credit 

16 agency shall impose conditions or restrictions, includ17 ing a requirement providing for recapture, on any 

18 subaward under this section so as to assure that the 

19 building with respect to which such subaward is made 

20 remains a qualified low-income building during the 

21 compliance period. Any such recapture shall be pay22 able to the Secretary of the Treasury for deposit in 

23 the general fund of the Treasury and may be enforced 

24 by means of liens or such other methods as the Sec25 retary of the Treasury determines appropriate. 


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1 (d) RETURN OF UNUSED GRANT FUNDS.—Any grant 

2 funds not used to make subawards under this section before 

3 January 1, 2011, shall be returned to the Secretary of the 

4 Treasury on such date. Any subawards returned to the 

5 State housing credit agency on or after such date shall be 

6 promptly returned to the Secretary of the Treasury. Any 

7 amounts returned to the Secretary of the Treasury under 

8 this subsection shall be deposited in the general fund of the 

9 Treasury. 

10 (e) DEFINITIONS.—Any term used in this section 

11 which is also used in section 42 of the Internal Revenue 

12 Code of 1986 shall have the same meaning for purposes of 

13 this section as when used in such section 42. Any reference 

14 in this section to the Secretary of the Treasury shall be 

15 treated as including the Secretary’s delegate. 

16 (f) APPROPRIATIONS.—There is hereby appropriated to 

17 the Secretary of the Treasury such sums as may be nec18 essary to carry out this section. 

19 PART III—GRANTS FOR SPECIFIED ENERGY 

20 PROPERTY IN LIEU OF TAX CREDITS 

21 SEC. 1721. GRANTS FOR SPECIFIED ENERGY PROPERTY IN 

22 LIEU OF TAX CREDITS. 

23 (a) IN GENERAL.—Upon application, the Secretary of 

24 Energy shall, within 60 days of the application and subject 

25 to the requirements of this section, provide a grant to each 


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1 person who places in service specified energy property dur2 ing 2009 or 2010 to reimburse such person for a portion 

3 of the expense of such facility as provided in subsection (b). 

4 (b) GRANT AMOUNT.— 

5 (1) IN GENERAL.—The amount of the grant 

6 under subsection (a) with respect to any specified en7 ergy property shall be the applicable percentage of the 

8 basis of such facility. 

9 (2) APPLICABLE PERCENTAGE.—For purposes of 

10 paragraph (1), the term ‘‘applicable percentage’’ 

11 means— 

12 (A) 30 percent in the case of any property 

13 described in paragraphs (1) through (4) of sub14 section (c), and 

15 (B) 10 percent in the case of any other 

16 property. 

17 (3) DOLLAR LIMITATIONS.—In the case of prop18 erty described in paragraph (2), (6), or (7) of sub19 section (c), the amount of any grant under this sec20 tion with respect to such property shall not exceed the 

21 limitation described in section 48(c)(1)(B), 

22 48(c)(2)(B), or 48(c)(3)(B) of the Internal Revenue 

23 Code of 1986, respectively, with respect to such prop24 erty. 


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1 (c) SPECIFIED ENERGY PROPERTY.—For purposes of 

2 this section, the term ‘‘specified energy property’’ means 

3 any of the following: 

4 (1) QUALIFIED FACILITIES.—Any facility de5 scribed in paragraph (1), (2), (3), (4), (6), (7), (9), 

6 or (11) of section 45(d) of the Internal Revenue Code 

7 of 1986. 

8 (2) QUALIFIED FUEL CELL PROPERTY.—Any 

9 qualified fuel cell property (as defined in section 

10 48(c)(1) of such Code). 

11 (3) SOLAR PROPERTY.—Any property described 

12 in clause (i) or (ii) of section 48(a)(3)(A) of such 

13 Code. 

14 (4) QUALIFIED SMALL WIND ENERGY PROP15 ERTY.—Any qualified small wind energy property (as 

16 defined in section 48(c)(4) of such Code). 

17 (5) GEOTHERMAL PROPERTY.—Any property de18 scribed in clause (iii) of section 48(a)(3)(A) of such 

19 Code. 

20 (6) QUALIFIED MICROTURBINE PROPERTY.—Any 

21 qualified microturbine property (as defined in section 

22 48(c)(2) of such Code). 

23 (7) COMBINED HEAT AND POWER SYSTEM PROP24 ERTY.—Any combined heat and power system prop25 erty (as defined in section 48(c)(3) of such Code). 


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1 (8) GEOTHERMAL HEATPUMP PROPERTY.—Any 

2 property described in clause (vii) of section 

3 48(a)(3)(A) of such Code. 

4 (d) APPLICATION OF CERTAIN RULES.—In making 

5 grants under this section, the Secretary of Energy shall 

6 apply rules similar to the rules of section 50 of the Internal 

7 Revenue Code of 1986. In applying such rules, if the facility 

8 is disposed of, or otherwise ceases to be a qualified renewable 

9 energy facility, the Secretary of Energy shall provide for 

10 the recapture of the appropriate percentage of the grant 

11 amount in such manner as the Secretary of Energy deter12 mines appropriate. 

13 (e) EXCEPTION FOR CERTAIN NON-TAXPAYERS.—The 

14 Secretary of Energy shall not make any grant under this 

15 section to any Federal, State, or local government (or any 

16 political subdivision, agency, or instrumentality thereof) or 

17 any organization described in section 501(c) of the Internal 

18 Revenue Code of 1986 and exempt from tax under section 

19 501(a) of such Code. 

20 (f) DEFINITIONS.—Terms used in this section which 

21 are also used in section 45 or 48 of the Internal Revenue 

22 Code of 1986 shall have the same meaning for purposes of 

23 this section as when used in such section 45 or 48. Any 

24 reference in this section to the Secretary of the Treasury 

25 shall be treated as including the Secretary’s delegate. 


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1 (g) COORDINATION BETWEEN DEPARTMENTS OF

2 TREASURY AND ENERGY.—The Secretary of the Treasury 

3 shall provide the Secretary of Energy with such technical 

4 assistance as the Secretary of Energy may require in car5 rying out this section. The Secretary of Energy shall pro6 vide the Secretary of the Treasury with such information 

7 as the Secretary of the Treasury may require in carrying 

8 out the amendment made by section 1604. 

9 (h) APPROPRIATIONS.—There is hereby appropriated 

10 to the Secretary of Energy such sums as may be necessary 

11 to carry out this section. 

12 (i) TERMINATION.—The Secretary of Energy shall not 

13 make any grant to any person under this section unless 

14 the application of such person for such grant is received 

15 before October 1, 2011. 

16 PART IV—STUDY OF ECONOMIC, EMPLOYMENT, 

17 AND RELATED EFFECTS OF THIS ACT 

18 SEC. 1731. STUDY OF ECONOMIC, EMPLOYMENT, AND RE19 LATED EFFECTS OF THIS ACT. 

20 On February 1, 2010, and every 3 months thereafter 

21 in calendar year 2010, the Comptroller General of the 

22 United States shall submit to the Committee on Ways and 

23 Means a written report on the most recent national (and, 

24 where available, State-by-State) information on— 

25 (1) the economic effects of this Act; 


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1 (2) the employment effects of this Act, includ2 ing— 

3 (A) a comparison of the number of jobs pre4 served and the number of jobs created as a result 

5 of this Act; and 

6 (B) a comparison of the numbers of jobs 

7 preserved and the number of jobs created in each 

8 of the public and private sectors; 

9 (3) the share of tax and non-tax expenditures 

10 provided under this Act that were spent or saved, by 

11 group and income class; 

12 (4) how the funds provided to States under this 

13 Act have been spent, including a breakdown of— 

14 (A) funds used for services provided to citi15 zens; and 

16 (B) wages and other compensation for pub17 lic employees; and 

18 (5) a description of any funds made available 

19 under this Act that remain unspent, and the reasons 

20 why. 


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1 TITLE II—ASSISTANCE FOR UN2 EMPLOYED WORKERS AND 

3 STRUGGLING FAMILIES 

4 SEC. 2000. SHORT TITLE, ETC. 

5 (a) SHORT TITLE.—This title may be cited as the ‘‘As6 sistance for Unemployed Workers and Struggling Families 

7 Act’’. 

8 (b) TABLE OF CONTENTS.—The table of contents for 

9 this title is as follows: 

Sec. 2000. Short title, etc. 

Subtitle A—Unemployment Insurance 

Sec. 2001. Extension of emergency unemployment compensation program. 

Sec. 2002. Increase in unemployment compensation benefits. 

Sec. 2003. Special transfers for unemployment compensation modernization. 

Subtitle B—Assistance for Vulnerable Individuals 

Sec. 2101. Emergency fund for TANF program. 

Sec. 2102. One-time emergency payment to SSI recipients. 

Sec. 2103. Temporary resumption of prior child support law. 

10 Subtitle A—Unemployment 

11 Insurance 

12 SEC. 2001. EXTENSION OF EMERGENCY UNEMPLOYMENT 

13 COMPENSATION PROGRAM. 

14 (a) IN GENERAL.—Section 4007 of the Supplemental 

15 Appropriations Act, 2008 (Public Law 110–252; 26 U.S.C. 

16 3304 note), as amended by section 4 of the Unemployment 

17 Compensation Extension Act of 2008 (Public Law 110–449; 

18 122 Stat. 5015), is amended— 


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1 (1) by striking ‘‘March 31, 2009’’ each place it 

2 appears and inserting ‘‘December 31, 2009’’; 

3 (2) in the heading for subsection (b)(2), by strik4 ing ‘‘MARCH 31, 2009’’ and inserting ‘‘DECEMBER 31, 

5 2009’’; and 

6 (3) in subsection (b)(3), by striking ‘‘August 27, 

7 2009’’ and inserting ‘‘May 31, 2010’’. 

8 (b) FINANCING PROVISIONS.—Section 4004 of such Act 

9 is amended by adding at the end the following: 

10 ‘‘(e) TRANSFER OF FUNDS.—Notwithstanding any 

11 other provision of law, the Secretary of the Treasury shall 

12 transfer from the general fund of the Treasury (from funds 

13 not otherwise appropriated)— 

14 ‘‘(1) to the extended unemployment compensation 

15 account (as established by section 905 of the Social 

16 Security Act) such sums as the Secretary of Labor es17 timates to be necessary to make payments to States 

18 under this title by reason of the amendments made by 

19 section 2001(a) of the Assistance for Unemployed 

20 Workers and Struggling Families Act; and 

21 ‘‘(2) to the employment security administration 

22 account (as established by section 901 of the Social 

23 Security Act) such sums as the Secretary of Labor es24 timates to be necessary for purposes of assisting 


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1 States in meeting administrative costs by reason of 

2 the amendments referred to in paragraph (1). 

3 There are appropriated from the general fund of the Treas4 ury, without fiscal year limitation, the sums referred to in 

5 the preceding sentence and such sums shall not be required 

6 to be repaid.’’. 

7 SEC. 2002. INCREASE IN UNEMPLOYMENT COMPENSATION 

8 BENEFITS. 

9 (a) FEDERAL-STATE AGREEMENTS.—Any State which 

10 desires to do so may enter into and participate in an agree11 ment under this section with the Secretary of Labor (herein12 after in this section referred to as the ‘‘Secretary’’). Any 

13 State which is a party to an agreement under this section 

14 may, upon providing 30 days’ written notice to the Sec15 retary, terminate such agreement. 

16 (b) PROVISIONS OF AGREEMENT.— 

17 (1) ADDITIONAL COMPENSATION.—Any agree18 ment under this section shall provide that the State 

19 agency of the State will make payments of regular 

20 compensation to individuals in amounts and to the 

21 extent that they would be determined if the State law 

22 of the State were applied, with respect to any week 

23 for which the individual is (disregarding this section) 

24 otherwise entitled under the State law to receive reg25 ular compensation, as if such State law had been 


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1 modified in a manner such that the amount of reg2 ular compensation (including dependents’ allowances) 

3 payable for any week shall be equal to the amount de4 termined under the State law (before the application 

5 of this paragraph) plus an additional $25. 

6 (2) ALLOWABLE METHODS OF PAYMENT.—Any 

7 additional compensation provided for in accordance 

8 with paragraph (1) shall be payable either— 

9 (A) as an amount which is paid at the 

10 same time and in the same manner as any reg11 ular compensation otherwise payable for the 

12 week involved; or 

13 (B) at the option of the State, by payments 

14 which are made separately from, but on the same 

15 weekly basis as, any regular compensation other16 wise payable. 

17 (c) NONREDUCTION RULE.—An agreement under this 

18 section shall not apply (or shall cease to apply) with respect 

19 to a State upon a determination by the Secretary that the 

20 method governing the computation of regular compensation 

21 under the State law of that State has been modified in a 

22 manner such that— 

23 (1) the average weekly benefit amount of regular 

24 compensation which will be payable during the period 

25 of the agreement (determined disregarding any addiVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00087 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 tional amounts attributable to the modification de2 scribed in subsection (b)(1)) will be less than 

3 (2) the average weekly benefit amount of regular 

4 compensation which would otherwise have been pay5 able during such period under the State law, as in ef6 fect on December 31, 2008. 

7 (d) PAYMENTS TO STATES.— 

8 (1) IN GENERAL.— 

9 (A) FULL REIMBURSEMENT.—There shall be 

10 paid to each State which has entered into an 

11 agreement under this section an amount equal to 

12 100 percent of— 

13 (i) the total amount of additional com14 pensation (as described in subsection (b)(1)) 

15 paid to individuals by the State pursuant 

16 to such agreement; and 

17 (ii) any additional administrative ex18 penses incurred by the State by reason of 

19 such agreement (as determined by the Sec20 retary). 

21 (B) TERMS OF PAYMENTS.—Sums payable 

22 to any State by reason of such State’s having an 

23 agreement under this section shall be payable, ei24 ther in advance or by way of reimbursement (as 

25 determined by the Secretary), in such amounts 


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1 as the Secretary estimates the State will be enti2 tled to receive under this section for each cal3 endar month, reduced or increased, as the case 

4 may be, by any amount by which the Secretary 

5 finds that his estimates for any prior calendar 

6 month were greater or less than the amounts 

7 which should have been paid to the State. Such 

8 estimates may be made on the basis of such sta9 tistical, sampling, or other method as may be 

10 agreed upon by the Secretary and the State 

11 agency of the State involved. 

12 (2) CERTIFICATIONS.—The Secretary shall from 

13 time to time certify to the Secretary of the Treasury 

14 for payment to each State the sums payable to such 

15 State under this section. 

16 (3) APPROPRIATION.—There are appropriated 

17 from the general fund of the Treasury, without fiscal 

18 year limitation, such sums as may be necessary for 

19 purposes of this subsection. 

20 (e) APPLICABILITY.— 

21 (1) IN GENERAL.—An agreement entered into 

22 under this section shall apply to weeks of unemploy23 ment— 

24 (A) beginning after the date on which such 

25 agreement is entered into; and 


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1 (B) ending before January 1, 2010. 

2 (2) TRANSITION RULE FOR INDIVIDUALS REMAIN3 ING ENTITLED TO REGULAR COMPENSATION AS OF

4 JANUARY 1, 2010.—In the case of any individual who, 

5 as of the date specified in paragraph (1)(B), has not 

6 yet exhausted all rights to regular compensation 

7 under the State law of a State with respect to a ben8 efit year that began before such date, additional com9 pensation (as described in subsection (b)(1)) shall 

10 continue to be payable to such individual for any 

11 week beginning on or after such date for which the in12 dividual is otherwise eligible for regular compensation 

13 with respect to such benefit year. 

14 (3) TERMINATION.—Notwithstanding any other 

15 provision of this subsection, no additional compensa16 tion (as described in subsection (b)(1)) shall be pay17 able for any week beginning after June 30, 2010. 

18 (f) FRAUD AND OVERPAYMENTS.—The provisions of 

19 section 4005 of the Supplemental Appropriations Act, 2008 

20 (Public Law 110–252; 122 Stat. 2356) shall apply with re21 spect to additional compensation (as described in subsection 

22 (b)(1)) to the same extent and in the same manner as in 

23 the case of emergency unemployment compensation. 

24 (g) APPLICATION TO OTHER UNEMPLOYMENT BENE25 FITS.— 


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1 (1) IN GENERAL.—Each agreement under this 

2 section shall include provisions to provide that the 

3 purposes of the preceding provisions of this section 

4 shall be applied with respect to unemployment bene5 fits described in subsection (h)(3) to the same extent 

6 and in the same manner as if those benefits were reg7 ular compensation. 

8 (2) ELIGIBILITY AND TERMINATION RULES.— 

9 Additional compensation (as described in subsection 

10 (b)(1))— 

11 (A) shall not be payable, pursuant to this 

12 subsection, with respect to any unemployment 

13 benefits described in subsection (h)(3) for any 

14 week beginning on or after the date specified in 

15 subsection (e)(1)(B), except in the case of an in16 dividual who was eligible to receive additional 

17 compensation (as so described) in connection 

18 with any regular compensation or any unem19 ployment benefits described in subsection (h)(3) 

20 for any period of unemployment ending before 

21 such date; and 

22 (B) shall in no event be payable for any 

23 week beginning after the date specified in sub24 section (e)(3). 

25 (h) DEFINITIONS.—For purposes of this section— 


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1 (1) the terms ‘‘compensation’’, ‘‘regular com2 pensation’’, ‘‘benefit year’’, ‘‘State’’, ‘‘State agency’’, 

3 ‘‘State law’’, and ‘‘week’’ have the respective meanings 

4 given such terms under section 205 of the Federal5 State Extended Unemployment Compensation Act of 

6 1970 (26 U.S.C. 3304 note); 

7 (2) the term ‘‘emergency unemployment com8 pensation’’ means emergency unemployment com9 pensation under title IV of the Supplemental Appro10 priations Act, 2008 (Public Law 110–252; 122 Stat. 

11 2353); and 

12 (3) any reference to unemployment benefits de13 scribed in this paragraph shall be considered to refer 

14 to— 

15 (A) extended compensation (as defined by 

16 section 205 of the Federal-State Extended Unem17 ployment Compensation Act of 1970); and 

18 (B) unemployment compensation (as de19 fined by section 85(b) of the Internal Revenue 

20 Code of 1986) provided under any program ad21 ministered by a State under an agreement with 

22 the Secretary. 


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1 SEC. 2003. SPECIAL TRANSFERS FOR UNEMPLOYMENT COM2 PENSATION MODERNIZATION. 

3 (a) IN GENERAL.—Section 903 of the Social Security 

4 Act (42 U.S.C. 1103) is amended by adding at the end the 

5 following: 

6 ‘‘Special Transfers in Fiscal Years 2009, 2010, and 2011 

7 for Modernization 

8 ‘‘(f)(1)(A) In addition to any other amounts, the Sec9 retary of Labor shall provide for the making of unemploy10 ment compensation modernization incentive payments 

11 (hereinafter ‘incentive payments’) to the accounts of the 

12 States in the Unemployment Trust Fund, by transfer from 

13 amounts reserved for that purpose in the Federal unemploy14 ment account, in accordance with succeeding provisions of 

15 this subsection. 

16 ‘‘(B) The maximum incentive payment allowable 

17 under this subsection with respect to any State shall, as 

18 determined by the Secretary of Labor, be equal to the 

19 amount obtained by multiplying $7,000,000,000 by the 

20 same ratio as would apply under subsection (a)(2)(B) for 

21 purposes of determining such State’s share of any excess 

22 amount (as described in subsection (a)(1)) that would have 

23 been subject to transfer to State accounts, as of October 1, 

24 2008, under the provisions of subsection (a). 

25 ‘‘(C) Of the maximum incentive payment determined 

26 under subparagraph (B) with respect to a State— 


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1 ‘‘(i) one-third shall be transferred to the account 

2 of such State upon a certification under paragraph 

3 (4)(B) that the State law of such State meets the re4 quirements of paragraph (2); and 

5 ‘‘(ii) the remainder shall be transferred to the ac6 count of such State upon a certification under para7 graph (4)(B) that the State law of such State meets 

8 the requirements of paragraph (3). 

9 ‘‘(2) The State law of a State meets the requirements 

10 of this paragraph if such State law— 

11 ‘‘(A) uses a base period that includes the most 

12 recently completed calendar quarter before the start of 

13 the benefit year for purposes of determining eligibility 

14 for unemployment compensation; or 

15 ‘‘(B) provides that, in the case of an individual 

16 who would not otherwise be eligible for unemployment 

17 compensation under the State law because of the use 

18 of a base period that does not include the most re19 cently completed calendar quarter before the start of 

20 the benefit year, eligibility shall be determined using 

21 a base period that includes such calendar quarter. 

22 ‘‘(3) The State law of a State meets the requirements 

23 of this paragraph if such State law includes provisions to 

24 carry out at least 2 of the following subparagraphs: 


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1 ‘‘(A) An individual shall not be denied regular 

2 unemployment compensation under any State law 

3 provisions relating to availability for work, active 

4 search for work, or refusal to accept work, solely be5 cause such individual is seeking only part-time work 

6 (as defined by the Secretary of Labor), except that the 

7 State law provisions carrying out this subparagraph 

8 may exclude an individual if a majority of the weeks 

9 of work in such individual’s base period do not in10 clude part-time work (as so defined). 

11 ‘‘(B) An individual shall not be disqualified 

12 from regular unemployment compensation for sepa13 rating from employment if that separation is for any 

14 compelling family reason. For purposes of this sub15 paragraph, the term ‘compelling family reason’ 

16 means the following: 

17 ‘‘(i) Domestic violence, verified by such rea18 sonable and confidential documentation as the 

19 State law may require, which causes the indi20 vidual reasonably to believe that such individ21 ual’s continued employment would jeopardize the 

22 safety of the individual or of any member of the 

23 individual’s immediate family (as defined by the 

24 Secretary of Labor). 


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1 ‘‘(ii) The illness or disability of a member 

2 of the individual’s immediate family (as those 

3 terms are defined by the Secretary of Labor). 

4 ‘‘(iii) The need for the individual to accom5 pany such individual’s spouse— 

6 ‘‘(I) to a place from which it is im7 practical for such individual to commute; 

8 and 

9 ‘‘(II) due to a change in location of the 

10 spouse’s employment. 

11 ‘‘(C) Weekly unemployment compensation is 

12 payable under this subparagraph to any individual 

13 who is unemployed (as determined under the State 

14 unemployment compensation law), has exhausted all 

15 rights to regular unemployment compensation under 

16 the State law, and is enrolled and making satisfac17 tory progress in a State-approved training program 

18 or in a job training program authorized under the 

19 Workforce Investment Act of 1998. Such programs 

20 shall prepare individuals who have been separated 

21 from a declining occupation, or who have been invol22 untarily and indefinitely separated from employment 

23 as a result of a permanent reduction of operations at 

24 the individual’s place of employment, for entry into 

25 a high-demand occupation. The amount of unemployVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00096 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 ment compensation payable under this subparagraph 

2 to an individual for a week of unemployment shall be 

3 equal to the individual’s average weekly benefit 

4 amount (including dependents’ allowances) for the 

5 most recent benefit year, and the total amount of un6 employment compensation payable under this sub7 paragraph to any individual shall be equal to at least 

8 26 times the individual’s average weekly benefit 

9 amount (including dependents’ allowances) for the 

10 most recent benefit year. 

11 ‘‘(D) Dependents’ allowances are provided, in the 

12 case of any individual who is entitled to receive reg13 ular unemployment compensation and who has any 

14 dependents (as defined by State law), in an amount 

15 equal to at least $15 per dependent per week, subject 

16 to any aggregate limitation on such allowances which 

17 the State law may establish (but which aggregate lim18 itation on the total allowance for dependents paid to 

19 an individual may not be less than $50 for each week 

20 of unemployment or 50 percent of the individual’s 

21 weekly benefit amount for the benefit year, whichever 

22 is less). 

23 ‘‘(4)(A) Any State seeking an incentive payment under 

24 this subsection shall submit an application therefor at such 

25 time, in such manner, and complete with such information 


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1 as the Secretary of Labor may within 60 days after the 

2 date of the enactment of this subsection prescribe (whether 

3 by regulation or otherwise), including information relating 

4 to compliance with the requirements of paragraph (2) or 

5 (3), as well as how the State intends to use the incentive 

6 payment to improve or strengthen the State’s unemploy7 ment compensation program. The Secretary of Labor shall, 

8 within 30 days after receiving a complete application, no9 tify the State agency of the State of the Secretary’s findings 

10 with respect to the requirements of paragraph (2) or (3) 

11 (or both). 

12 ‘‘(B)(i) If the Secretary of Labor finds that the State 

13 law provisions (disregarding any State law provisions 

14 which are not then currently in effect as permanent law 

15 or which are subject to discontinuation) meet the require16 ments of paragraph (2) or (3), as the case may be, the Sec17 retary of Labor shall thereupon make a certification to that 

18 effect to the Secretary of the Treasury, together with a cer19 tification as to the amount of the incentive payment to be 

20 transferred to the State account pursuant to that finding. 

21 The Secretary of the Treasury shall make the appropriate 

22 transfer within 7 days after receiving such certification. 

23 ‘‘(ii) For purposes of clause (i), State law provisions 

24 which are to take effect within 12 months after the date 


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1 of their certification under this subparagraph shall be con2 sidered to be in effect as of the date of such certification. 

3 ‘‘(C)(i) No certification of compliance with the require4 ments of paragraph (2) or (3) may be made with respect 

5 to any State whose State law is not otherwise eligible for 

6 certification under section 303 or approvable under section 

7 3304 of the Federal Unemployment Tax Act. 

8 ‘‘(ii) No certification of compliance with the require9 ments of paragraph (3) may be made with respect to any 

10 State whose State law is not in compliance with the re11 quirements of paragraph (2). 

12 ‘‘(iii) No application under subparagraph (A) may be 

13 considered if submitted before the date of the enactment of 

14 this subsection or after the latest date necessary (as specified 

15 by the Secretary of Labor) to ensure that all incentive pay16 ments under this subsection are made before October 1, 

17 2011. 

18 ‘‘(5)(A) Except as provided in subparagraph (B), any 

19 amount transferred to the account of a State under this sub20 section may be used by such State only in the payment of 

21 cash benefits to individuals with respect to their unemploy22 ment (including for dependents’ allowances and for unem23 ployment compensation under paragraph (3)(C)), exclusive 

24 of expenses of administration. 


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1 ‘‘(B) A State may, subject to the same conditions as 

2 set forth in subsection (c)(2) (excluding subparagraph (B) 

3 thereof, and deeming the reference to ‘subsections (a) and 

4 (b)’ in subparagraph (D) thereof to include this subsection), 

5 use any amount transferred to the account of such State 

6 under this subsection for the administration of its unem7 ployment compensation law and public employment offices. 

8 ‘‘(6) Out of any money in the Federal unemployment 

9 account not otherwise appropriated, the Secretary of the 

10 Treasury shall reserve $7,000,000,000 for incentive pay11 ments under this subsection. Any amount so reserved shall 

12 not be taken into account for purposes of any determination 

13 under section 902, 910, or 1203 of the amount in the Fed14 eral unemployment account as of any given time. Any 

15 amount so reserved for which the Secretary of the Treasury 

16 has not received a certification under paragraph (4)(B) by 

17 the deadline described in paragraph (4)(C)(iii) shall, upon 

18 the close of fiscal year 2011, become unrestricted as to use 

19 as part of the Federal unemployment account. 

20 ‘‘(7) For purposes of this subsection, the terms ‘benefit 

21 year’, ‘base period’, and ‘week’ have the respective meanings 

22 given such terms under section 205 of the Federal-State Ex23 tended Unemployment Compensation Act of 1970 (26 

24 U.S.C. 3304 note). 


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1 ‘‘Special Transfer in Fiscal Year 2009 for Administration 

2 ‘‘(g)(1) In addition to any other amounts, the Sec3 retary of the Treasury shall transfer from the employment 

4 security administration account to the account of each 

5 State in the Unemployment Trust Fund, within 30 days 

6 after the date of the enactment of this subsection, the 

7 amount determined with respect to such State under para8 graph (2). 

9 ‘‘(2) The amount to be transferred under this sub10 section to a State account shall (as determined by the Sec11 retary of Labor and certified by such Secretary to the Sec12 retary of the Treasury) be equal to the amount obtained 

13 by multiplying $500,000,000 by the same ratio as deter14 mined under subsection (f)(1)(B) with respect to such State. 

15 ‘‘(3) Any amount transferred to the account of a State 

16 as a result of the enactment of this subsection may be used 

17 by the State agency of such State only in the payment of 

18 expenses incurred by it for— 

19 ‘‘(A) the administration of the provisions of its 

20 State law carrying out the purposes of subsection 

21 (f)(2) or any subparagraph of subsection (f)(3); 

22 ‘‘(B) improved outreach to individuals who 

23 might be eligible for regular unemployment compensa24 tion by virtue of any provisions of the State law 

25 which are described in subparagraph (A); 


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1 ‘‘(C) the improvement of unemployment benefit 

2 and unemployment tax operations, including respond3 ing to increased demand for unemployment com4 pensation; and 

5 ‘‘(D) staff-assisted reemployment services for un6 employment compensation claimants.’’. 

7 (b) REGULATIONS.—The Secretary of Labor may pre8 scribe any regulations, operating instructions, or other 

9 guidance necessary to carry out the amendment made by 

10 subsection (a). 

11 Subtitle B—Assistance for 

12 Vulnerable Individuals 

13 SEC. 2101. EMERGENCY FUND FOR TANF PROGRAM. 

14 (a) IN GENERAL.—Section 403 of the Social Security 

15 Act (42 U.S.C. 603) is amended by adding at the end the 

16 following: 

17 ‘‘(c) EMERGENCY FUND.— 

18 ‘‘(1) ESTABLISHMENT.—There is established in 

19 the Treasury of the United States a fund which shall 

20 be known as the ‘Emergency Contingency Fund for 

21 State Temporary Assistance for Needy Families Pro22 grams’ (in this subsection referred to as the ‘Emer23 gency Fund’). 

24 ‘‘(2) DEPOSITS INTO FUND.—Out of any money 

25 in the Treasury of the United States not otherwise 


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1 appropriated, there are appropriated such sums as 

2 are necessary for payment to the Emergency Fund. 

3 ‘‘(3) GRANTS.— 

4 ‘‘(A) GRANT RELATED TO CASELOAD IN5 CREASES.— 

6 ‘‘(i) IN GENERAL.—For each calendar 

7 quarter in fiscal year 2009 or 2010, the 

8 Secretary shall make a grant from the 

9 Emergency Fund to each State that— 

10 ‘‘(I) requests a grant under this 

11 subparagraph for the quarter; and 

12 ‘‘(II) meets the requirement of 

13 clause (ii) for the quarter. 

14 ‘‘(ii) CASELOAD INCREASE REQUIRE15 MENT.—A State meets the requirement of 

16 this clause for a quarter if the average 

17 monthly assistance caseload of the State for 

18 the quarter exceeds the average monthly as19 sistance caseload of the State for the cor20 responding quarter in the emergency fund 

21 base year of the State. 

22 ‘‘(iii) AMOUNT OF GRANT.—Subject to 

23 paragraph (5), the amount of the grant to 

24 be made to a State under this subparagraph 

25 for a quarter shall be 80 percent of the 


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1 amount (if any) by which the total expendi2 tures of the State for basic assistance (as de3 fined by the Secretary) in the quarter, 

4 whether under the State program funded 

5 under this part or as qualified State ex6 penditures, exceeds the total expenditures of 

7 the State for such assistance for the cor8 responding quarter in the emergency fund 

9 base year of the State. 

10 ‘‘(B) GRANT RELATED TO INCREASED EX11 PENDITURES FOR NON-RECURRENT SHORT-TERM

12 BENEFITS.— 

13 ‘‘(i) IN GENERAL.—For each calendar 

14 quarter in fiscal year 2009 or 2010, the 

15 Secretary shall make a grant from the 

16 Emergency Fund to each State that— 

17 ‘‘(I) requests a grant under this 

18 subparagraph for the quarter; and 

19 ‘‘(II) meets the requirement of 

20 clause (ii) for the quarter. 

21 ‘‘(ii) NON-RECURRENT SHORT-TERM

22 EXPENDITURE REQUIREMENT.—A State 

23 meets the requirement of this clause for a 

24 quarter if the total expenditures of the State 

25 for non-recurrent short-term benefits in the 


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1 quarter, whether under the State program 

2 funded under this part or as qualified State 

3 expenditures, exceeds the total such expendi4 tures of the State for non-recurrent short5 term benefits in the corresponding quarter 

6 in the emergency fund base year of the 

7 State. 

8 ‘‘(iii) AMOUNT OF GRANT.—Subject to 

9 paragraph (5), the amount of the grant to 

10 be made to a State under this subparagraph 

11 for a quarter shall be an amount equal to 

12 80 percent of the excess described in clause 

13 (ii). 

14 ‘‘(C) GRANT RELATED TO INCREASED EX15 PENDITURES FOR SUBSIDIZED EMPLOYMENT.— 

16 ‘‘(i) IN GENERAL.—For each calendar 

17 quarter in fiscal year 2009 or 2010, the 

18 Secretary shall make a grant from the 

19 Emergency Fund to each State that— 

20 ‘‘(I) requests a grant under this 

21 subparagraph for the quarter; and 

22 ‘‘(II) meets the requirement of 

23 clause (ii) for the quarter. 

24 ‘‘(ii) SUBSIDIZED EMPLOYMENT EX25 PENDITURE REQUIREMENT.—A State meets 


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1 the requirement of this clause for a quarter 

2 if the total expenditures of the State for sub3 sidized employment in the quarter, whether 

4 under the State program funded under this 

5 part or as qualified State expenditures, ex6 ceeds the total of such expenditures of the 

7 State in the corresponding quarter in the 

8 emergency fund base year of the State. 

9 ‘‘(iii) AMOUNT OF GRANT.—Subject to 

10 paragraph (5), the amount of the grant to 

11 be made to a State under this subparagraph 

12 for a quarter shall be an amount equal to 

13 80 percent of the excess described in clause 

14 (ii). 

15 ‘‘(4) AUTHORITY TO MAKE NECESSARY ADJUST16 MENTS TO DATA AND COLLECT NEEDED DATA.—In de17 termining the size of the caseload of a State and the 

18 expenditures of a State for basic assistance, non-re19 current short-term benefits, and subsidized employ20 ment, during any period for which the State requests 

21 funds under this subsection, and during the emer22 gency fund base year of the State, the Secretary may 

23 make appropriate adjustments to the data to ensure 

24 that the data reflect expenditures under the State pro25 gram funded under this part and qualified State exVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00106 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 penditures. The Secretary may develop a mechanism 

2 for collecting expenditure data, including procedures 

3 which allow States to make reasonable estimates, and 

4 may set deadlines for making revisions to the data. 

5 ‘‘(5) LIMITATION.—The total amount payable to 

6 a single State under subsection (b) and this subsection 

7 for a fiscal year shall not exceed 25 percent of the 

8 State family assistance grant. 

9 ‘‘(6) LIMITATIONS ON USE OF FUNDS.—A State 

10 to which an amount is paid under this subsection 

11 may use the amount only as authorized by section 

12 404. 

13 ‘‘(7) TIMING OF IMPLEMENTATION.—The Sec14 retary shall implement this subsection as quickly as 

15 reasonably possible, pursuant to appropriate guidance 

16 to States. 

17 ‘‘(8) DEFINITIONS.—In this subsection: 

18 ‘‘(A) AVERAGE MONTHLY ASSISTANCE CASE19 LOAD.—The term ‘average monthly assistance 

20 caseload’ means, with respect to a State and a 

21 quarter, the number of families receiving assist22 ance during the quarter under the State program 

23 funded under this part or as qualified State ex24 penditures, subject to adjustment under para25 graph (4). 


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1 ‘‘(B) EMERGENCY FUND BASE YEAR.— 

2 ‘‘(i) IN GENERAL.—The term ‘emer3 gency fund base year’ means, with respect 

4 to a State and a category described in 

5 clause (ii), whichever of fiscal year 2007 or 

6 2008 is the fiscal year in which the amount 

7 described by the category with respect to the 

8 State is the lesser. 

9 ‘‘(ii) CATEGORIES DESCRIBED.—The 

10 categories described in this clause are the 

11 following: 

12 ‘‘(I) The average monthly assist13 ance caseload of the State. 

14 ‘‘(II) The total expenditures of the 

15 State for non-recurrent short-term ben16 efits, whether under the State program 

17 funded under this part or as qualified 

18 State expenditures. 

19 ‘‘(III) The total expenditures of 

20 the State for subsidized employment, 

21 whether under the State program fund22 ed under this part or as qualified State 

23 expenditures. 


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1 ‘‘(C) QUALIFIED STATE EXPENDITURES.— 

2 The term ‘qualified State expenditures’ has the 

3 meaning given the term in section 409(a)(7).’’. 

4 (b) TEMPORARY MODIFICATION OF CASELOAD REDUC5 TION CREDIT.—Section 407(b)(3)(A)(i) of such Act (42 

6 U.S.C. 607(b)(3)(A)(i)) is amended by inserting ‘‘(or if the 

7 immediately preceding fiscal year is fiscal year 2009 or 

8 2010, then, at State option, during the emergency fund base 

9 year of the State with respect to the average monthly assist10 ance caseload of the State (within the meaning of section 

11 403(c)(8)(B)))’’ before ‘‘under the State’’. 

12 (c) EFFECTIVE DATE.—The amendments made by this 

13 section shall take effect on the date of the enactment of this 

14 Act. 

15 SEC. 2102. ONE-TIME EMERGENCY PAYMENT TO SSI RECIPI16 ENTS. 

17 (a) PAYMENT AUTHORITY.— 

18 (1) IN GENERAL.—At the earliest practicable 

19 date in calendar year 2009 but not later than 120 

20 days after the date of the enactment of this section, 

21 the Commissioner of Social Security shall make a 

22 one-time payment to each individual who is deter23 mined by the Commissioner in calendar year 2009 to 

24 be an individual who— 


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1 (A) is entitled to a cash benefit under the 

2 supplemental security income program under 

3 title XVI of the Social Security Act (other than 

4 pursuant to section 1611(e)(1)(B) of such Act) 

5 for at least 1 day in the calendar month in 

6 which the first payment under this section is to 

7 be made; or 

8 (B)(i) was entitled to such a cash benefit 

9 (other than pursuant to section 1611(e)(1)(B) of 

10 such Act) for at least 1 day in the 2-month pe11 riod preceding that calendar month; and 

12 (ii) whose entitlement to that benefit ceased 

13 in that 2-month period solely because the income 

14 of the individual (and the income of the spouse, 

15 if any, of the individual) exceeded the applicable 

16 income limit described in paragraph (1)(A) or 

17 (2)(A) of section 1611(a) of such Act. 

18 (2) AMOUNT OF PAYMENT.—Subject to subsection 

19 (b)(1) of this section, the amount of the payment shall 

20 be— 

21 (A) in the case of an individual eligible for 

22 a payment under this section who does not have 

23 a spouse eligible for such a payment, an amount 

24 equal to the average of the cash benefits payable 

25 in the aggregate under section 1611 or 1619(a) 


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1 of the Social Security Act to eligible individuals 

2 who do not have an eligible spouse, for the most 

3 recent month for which data on payment of the 

4 benefits are available, as determined by the Com5 missioner of Social Security; or 

6 (B) in the case of an individual eligible for 

7 a payment under this section who has a spouse 

8 eligible for such a payment, an amount equal to 

9 the average of the cash benefits payable in the 

10 aggregate under section 1611 or 1619(a) of the 

11 Social Security Act to eligible individuals who 

12 have an eligible spouse, for the most recent 

13 month for which data on payment of the benefits 

14 are available, as so determined. 

15 (b) ADMINISTRATIVE PROVISIONS.— 

16 (1) AUTHORITY TO WITHHOLD PAYMENT TO RE17 COVER PRIOR OVERPAYMENT OF SSI BENEFITS.—The 

18 Commissioner of Social Security may withhold part 

19 or all of a payment otherwise required to be made 

20 under subsection (a) of this section to an individual, 

21 in order to recover a prior overpayment of benefits to 

22 the individual under the supplemental security in23 come program under title XVI of the Social Security 

24 Act, subject to the limitations of section 1631(b) of 

25 such Act. 


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1 (2) PAYMENT TO BE DISREGARDED IN DETER2 MINING UNDERPAYMENTS UNDER THE SSI PRO3 GRAM.—A payment under subsection (a) shall be dis4 regarded in determining whether there has been an 

5 underpayment of benefits under the supplemental se6 curity income program under title XVI of the Social 

7 Security Act. 

8 (3) NONASSIGNMENT.—The provisions of section 

9 1631(d) of the Social Security Act shall apply with 

10 respect to payments under this section to the same ex11 tent as they apply in the case of title XVI of such Act. 

12 (c) PAYMENTS TO BE DISREGARDED FOR PURPOSES

13 OF ALL FEDERAL AND FEDERALLY ASSISTED PRO14 GRAMS.—A payment under subsection (a) shall not be re15 garded as income to the recipient, and shall not be regarded 

16 as a resource of the recipient for the month of receipt and 

17 the following 6 months, for purposes of determining the eli18 gibility of any individual for benefits or assistance, or the 

19 amount or extent of benefits or assistance, under any Fed20 eral program or under any State or local program financed 

21 in whole or in part with Federal funds. 

22 (d) APPROPRIATION.—Out of any sums in the Treas23 ury of the United States not otherwise appropriated, there 

24 are appropriated such sums as may be necessary to carry 

25 out this section. 


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1 SEC. 2103. TEMPORARY RESUMPTION OF PRIOR CHILD SUP2 PORT LAW. 

3 During the period that begins with October 1, 2008, 

4 and ends with September 30, 2010, section 455(a)(1) of the 

5 Social Security Act shall be applied and administered as 

6 if the phrase ‘‘from amounts paid to the State under section 

7 458 or’’ did not appear in such section. 

8 TITLE III—HEALTH INSURANCE 

9 ASSISTANCE FOR THE UNEM10 PLOYED 

11 SEC. 3001. SHORT TITLE AND TABLE OF CONTENTS OF 

12 TITLE. 

13 (a) SHORT TITLE OF TITLE.—This title may be cited 

14 as the ‘‘Health Insurance Assistance for the Unemployed 

15 Act of 2009’’. 

16 (b) TABLE OF CONTENTS OF TITLE.—The table of con17 tents of this title is as follows: 

Sec. 3001. Short title and table of contents of title. 

Sec. 3002. Premium assistance for COBRA benefits and extension of COBRA benefits for older or long-term employees. 

Sec. 3003. Temporary optional Medicaid coverage for the unemployed. 

18 SEC. 3002. PREMIUM ASSISTANCE FOR COBRA BENEFITS 

19 AND EXTENSION OF COBRA BENEFITS FOR 

20 OLDER OR LONG-TERM EMPLOYEES. 

21 (a) PREMIUM ASSISTANCE FOR COBRA CONTINU22 ATION COVERAGE FOR INDIVIDUALS AND THEIR FAMI23 LIES.— 


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1 (1) PROVISION OF PREMIUM ASSISTANCE.— 

2 (A) REDUCTION OF PREMIUMS PAYABLE.— 

3 In the case of any premium for a period of cov4 erage beginning on or after the date of the enact5 ment of this Act for COBRA continuation cov6 erage with respect to any assistance eligible indi7 vidual, such individual shall be treated for pur8 poses of any COBRA continuation provision as 

9 having paid the amount of such premium if such 

10 individual pays 35 percent of the amount of such 

11 premium (as determined without regard to this 

12 subsection). 

13 (B) PREMIUM REIMBURSEMENT.—For pro14 visions providing the balance of such premium, 

15 see section 6431 of the Internal Revenue Code of 

16 1986, as added by paragraph (12). 

17 (2) LIMITATION OF PERIOD OF PREMIUM ASSIST18 ANCE.— 

19 (A) IN GENERAL.—Paragraph (1)(A) shall 

20 not apply with respect to any assistance eligible 

21 individual for months of coverage beginning on 

22 or after the earlier of— 

23 (i) the first date that such individual 

24 is eligible for coverage under any other 

25 group health plan (other than coverage conVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00114 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 sisting of only dental, vision, counseling, or 

2 referral services (or a combination thereof), 

3 coverage under a health reimbursement ar4 rangement or a health flexible spending ar5 rangement, or coverage of treatment that is 

6 furnished in an on-site medical facility 

7 maintained by the employer and that con8 sists primarily of first-aid services, preven9 tion and wellness care, or similar care (or 

10 a combination thereof)) or is eligible for 

11 benefits under title XVIII of the Social Se12 curity Act, or 

13 (ii) the earliest of— 

14 (I) the date which is 12 months 

15 after the first day of the first month 

16 that paragraph (1)(A) applies with re17 spect to such individual, 

18 (II) the date following the expira19 tion of the maximum period of con20 tinuation coverage required under the 

21 applicable COBRA continuation cov22 erage provision, or 

23 (III) the date following the expi24 ration of the period of continuation 


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1 coverage allowed under paragraph 

2 (4)(B)(ii). 

3 (B) TIMING OF ELIGIBILITY FOR ADDI4 TIONAL COVERAGE.—For purposes of subpara5 graph (A)(i), an individual shall not be treated 

6 as eligible for coverage under a group health 

7 plan before the first date on which such indi8 vidual could be covered under such plan. 

9 (C) NOTIFICATION REQUIREMENT.—An as10 sistance eligible individual shall notify in writ11 ing the group health plan with respect to which 

12 paragraph (1)(A) applies if such paragraph 

13 ceases to apply by reason of subparagraph 

14 (A)(i). Such notice shall be provided to the group 

15 health plan in such time and manner as may be 

16 specified by the Secretary of Labor. 

17 (3) ASSISTANCE ELIGIBLE INDIVIDUAL.—For 

18 purposes of this section, the term ‘‘assistance eligible 

19 individual’’ means any qualified beneficiary if— 

20 (A) at any time during the period that be21 gins with September 1, 2008, and ends with De22 cember 31, 2009, such qualified beneficiary is el23 igible for COBRA continuation coverage, 

24 (B) such qualified beneficiary elects such 

25 coverage, and 


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1 (C) the qualifying event with respect to the 

2 COBRA continuation coverage consists of the in3 voluntary termination of the covered employee’s 

4 employment and occurred during such period. 

5 (4) EXTENSION OF ELECTION PERIOD AND EF6 FECT ON COVERAGE.— 

7 (A) IN GENERAL.—Notwithstanding section 

8 605(a) of the Employee Retirement Income Secu9 rity Act of 1974, section 4980B(f)(5)(A) of the 

10 Internal Revenue Code of 1986, section 2205(a) 

11 of the Public Health Service Act, and section 

12 8905a(c)(2) of title 5, United States Code, in the 

13 case of an individual who is a qualified bene14 ficiary described in paragraph (3)(A) as of the 

15 date of the enactment of this Act and has not 

16 made the election referred to in paragraph 

17 (3)(B) as of such date, such individual may elect 

18 the COBRA continuation coverage under the 

19 COBRA continuation coverage provisions con20 taining such sections during the 60-day period 

21 commencing with the date on which the notifica22 tion required under paragraph (7)(C) is pro23 vided to such individual. 

24 (B) COMMENCEMENT OF COVERAGE; NO

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1 erage elected by a qualified beneficiary during 

2 an extended election period under subparagraph 

3 (A)— 

4 (i) shall commence on the date of the 

5 enactment of this Act, and 

6 (ii) shall not extend beyond the period 

7 of COBRA continuation coverage that 

8 would have been required under the applica9 ble COBRA continuation coverage provision 

10 if the coverage had been elected as required 

11 under such provision. 

12 (C) PREEXISTING CONDITIONS.—With re13 spect to a qualified beneficiary who elects 

14 COBRA continuation coverage pursuant to sub15 paragraph (A), the period— 

16 (i) beginning on the date of the quali17 fying event, and 

18 (ii) ending with the day before the date 

19 of the enactment of this Act, 

20 shall be disregarded for purposes of determining 

21 the 63-day periods referred to in section 701)(2) 

22 of the Employee Retirement Income Security Act 

23 of 1974, section 9801(c)(2) of the Internal Rev24 enue Code of 1986, and section 2701(c)(2) of the 

25 Public Health Service Act. 


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1 (5) EXPEDITED REVIEW OF DENIALS OF PRE2 MIUM ASSISTANCE.—In any case in which an indi3 vidual requests treatment as an assistance eligible in4 dividual and is denied such treatment by the group 

5 health plan by reason of such individual’s ineligi6 bility for COBRA continuation coverage, the Sec7 retary of Labor (or the Secretary of Health and 

8 Human services in connection with COBRA continu9 ation coverage which is provided other than pursuant 

10 to part 6 of subtitle B of title I of the Employee Re11 tirement Income Security Act of 1974), in consulta12 tion with the Secretary of the Treasury, shall provide 

13 for expedited review of such denial. An individual 

14 shall be entitled to such review upon application to 

15 such Secretary in such form and manner as shall be 

16 provided by such Secretary. Such Secretary shall 

17 make a determination regarding such individual’s eli18 gibility within 10 business days after receipt of such 

19 individual’s application for review under this para20 graph. 

21 (6) DISREGARD OF SUBSIDIES FOR PURPOSES OF

22 FEDERAL AND STATE PROGRAMS.—Notwithstanding 

23 any other provision of law, any premium reduction 

24 with respect to an assistance eligible individual under 

25 this subsection shall not be considered income or reVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00119 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 sources in determining eligibility for, or the amount 

2 of assistance or benefits provided under, any other 

3 public benefit provided under Federal law or the law 

4 of any State or political subdivision thereof. 

5 (7) NOTICES TO INDIVIDUALS.— 

6 (A) GENERAL NOTICE.— 

7 (i) IN GENERAL.—In the case of notices 

8 provided under section 606(4) of the Em9 ployee Retirement Income Security Act of 

10 1974 (29 U.S.C. 1166(4)), section 

11 4980B(f)(6)(D) of the Internal Revenue 

12 Code of 1986, section 2206(4) of the Public 

13 Health Service Act (42 U.S.C. 300bb–6(4)), 

14 or section 8905a(f)(2)(A) of title 5, United 

15 States Code, with respect to individuals 

16 who, during the period described in para17 graph (3)(A), become entitled to elect 

18 COBRA continuation coverage, such notices 

19 shall include an additional notification to 

20 the recipient of the availability of premium 

21 reduction with respect to such coverage 

22 under this subsection. 

23 (ii) ALTERNATIVE NOTICE.—In the 

24 case of COBRA continuation coverage to 

25 which the notice provision under such secVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00120 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 tions does not apply, the Secretary of 

2 Labor, in consultation with the Secretary of 

3 the Treasury and the Secretary of Health 

4 and Human Services, shall, in coordination 

5 with administrators of the group health 

6 plans (or other entities) that provide or ad7 minister the COBRA continuation coverage 

8 involved, provide rules requiring the provi9 sion of such notice. 

10 (iii) FORM.—The requirement of the 

11 additional notification under this subpara12 graph may be met by amendment of exist13 ing notice forms or by inclusion of a sepa14 rate document with the notice otherwise re15 quired. 

16 (B) SPECIFIC REQUIREMENTS.—Each addi17 tional notification under subparagraph (A) shall 

18 include— 

19 (i) the forms necessary for establishing 

20 eligibility for premium reduction under this 

21 subsection, 

22 (ii) the name, address, and telephone 

23 number necessary to contact the plan ad24 ministrator and any other person mainVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00121 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 taining relevant information in connection 

2 with such premium reduction, 

3 (iii) a description of the extended elec4 tion period provided for in paragraph 

5 (4)(A), 

6 (iv) a description of the obligation of 

7 the qualified beneficiary under paragraph 

8 (2)(C) to notify the plan providing continu9 ation coverage of eligibility for subsequent 

10 coverage under another group health plan 

11 or eligibility for benefits under title XVIII 

12 of the Social Security Act and the penalty 

13 provided for failure to so notify the plan, 

14 and 

15 (v) a description, displayed in a 

16 prominent manner, of the qualified bene17 ficiary’s right to a reduced premium and 

18 any conditions on entitlement to the re19 duced premium. 

20 (C) NOTICE RELATING TO RETROACTIVE

21 COVERAGE.—In the case of an individual de22 scribed in paragraph (3)(A) who has elected 

23 COBRA continuation coverage as of the date of 

24 enactment of this Act or an individual described 

25 in paragraph (4)(A), the administrator of the 


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1 group health plan (or other entity) involved shall 

2 provide (within 60 days after the date of enact3 ment of this Act) for the additional notification 

4 required to be provided under subparagraph (A). 

5 (D) MODEL NOTICES.—Not later than 30 

6 days after the date of enactment of this Act, the 

7 Secretary of the Labor, in consultation with the 

8 Secretary of the Treasury and the Secretary of 

9 Health and Human Services, shall prescribe 

10 models for the additional notification required 

11 under this paragraph. 

12 (8) SAFEGUARDS.—The Secretary of the Treas13 ury shall provide such rules, procedures, regulations, 

14 and other guidance as may be necessary and appro15 priate to prevent fraud and abuse under this sub16 section. 

17 (9) OUTREACH.—The Secretary of Labor, in con18 sultation with the Secretary of the Treasury and the 

19 Secretary of Health and Human Services, shall pro20 vide outreach consisting of public education and en21 rollment assistance relating to premium reduction 

22 provided under this subsection. Such outreach shall 

23 target employers, group health plan administrators, 

24 public assistance programs, States, insurers, and 

25 other entities as determined appropriate by such SecVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00123 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 retaries. Such outreach shall include an initial focus 

2 on those individuals electing continuation coverage 

3 who are referred to in paragraph (7)(C). Information 

4 on such premium reduction, including enrollment, 

5 shall also be made available on website of the Depart6 ments of Labor, Treasury, and Health and Human 

7 Services. 

8 (10) DEFINITIONS.—For purposes of this sub9 section— 

10 (A) ADMINISTRATOR.—The term ‘‘adminis11 trator’’ has the meaning given such term in sec12 tion 3(16) of the Employee Retirement Income 

13 Security Act of 1974. 

14 (B) COBRA CONTINUATION COVERAGE.— 

15 The term ‘‘COBRA continuation coverage’’ 

16 means continuation coverage provided pursuant 

17 to part 6 of subtitle B of title I of the Employee 

18 Retirement Income Security Act of 1974 (other 

19 than under section 609), title XXII of the Public 

20 Health Service Act, section 4980B of the Internal 

21 Revenue Code of 1986 (other than subsection 

22 (f)(1) of such section insofar as it relates to pedi23 atric vaccines), or section 8905a of title 5, 

24 United States Code, or under a State program 

25 that provides continuation coverage comparable 


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1 to such continuation coverage. Such term does 

2 not include coverage under a health flexible 

3 spending arrangement. 

4 (C) COBRA CONTINUATION PROVISION.— 

5 The term ‘‘COBRA continuation provision’’ 

6 means the provisions of law described in sub7 paragraph (B). 

8 (D) COVERED EMPLOYEE.—The term ‘‘cov9 ered employee’’ has the meaning given such term 

10 in section 607(2) of the Employee Retirement In11 come Security Act of 1974. 

12 (E) QUALIFIED BENEFICIARY.—The term 

13 ‘‘qualified beneficiary’’ has the meaning given 

14 such term in section 607(3) of the Employee Re15 tirement Income Security Act of 1974. 

16 (F) GROUP HEALTH PLAN.—The term 

17 ‘‘group health plan’’ has the meaning given such 

18 term in section 607(1) of the Employee Retire19 ment Income Security Act of 1974. 

20 (G) STATE.—The term ‘‘State’’ includes the 

21 District of Columbia, the Commonwealth of 

22 Puerto Rico, the Virgin Islands, Guam, Amer23 ican Samoa, and the Commonwealth of the 

24 Northern Mariana Islands. 

25 (11) REPORTS.— 


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1 (A) INTERIM REPORT.—The Secretary of the 

2 Treasury shall submit an interim report to the 

3 Committee on Education and Labor, the Com4 mittee on Ways and Means, and the Committee 

5 on Energy and Commerce of the House of Rep6 resentatives and the Committee on Health, Edu7 cation, Labor, and Pensions and the Committee 

8 on Finance of the Senate regarding the premium 

9 reduction provided under this subsection that in10 cludes— 

11 (i) the number of individuals provided 

12 such assistance as of the date of the report; 

13 and 

14 (ii) the total amount of expenditures 

15 incurred (with administrative expenditures 

16 noted separately) in connection with such 

17 assistance as of the date of the report. 

18 (B) FINAL REPORT.—As soon as practicable 

19 after the last period of COBRA continuation cov20 erage for which premium reduction is provided 

21 under this section, the Secretary of the Treasury 

22 shall submit a final report to each Committee re23 ferred to in subparagraph (A) that includes— 

24 (i) the number of individuals provided 

25 premium reduction under this section; 


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1 (ii) the average dollar amount (month2 ly and annually) of premium reductions 

3 provided to such individuals; and 

4 (iii) the total amount of expenditures 

5 incurred (with administrative expenditures 

6 noted separately) in connection with pre7 mium reduction under this section. 

8 (12) COBRA PREMIUM ASSISTANCE.— 

9 (A) IN GENERAL.—Subchapter B of chapter 

10 65 of the Internal Revenue Code of 1986 is 

11 amended by adding at the end the following new 

12 section: 

13 ‘‘SEC. 6431. COBRA PREMIUM ASSISTANCE. 

14 ‘‘(a) IN GENERAL.—The entity to whom premiums are 

15 payable under COBRA continuation coverage shall be reim16 bursed for the amount of premiums not paid by plan bene17 ficiaries by reason of section 3002(a) of the Health Insur18 ance Assistance for the Unemployed Act of 2009. Such 

19 amount shall be treated as a credit against the requirement 

20 of such entity to make deposits of payroll taxes and the li21 ability of such entity for payroll taxes. To the extent that 

22 such amount exceeds the amount of such taxes, the Secretary 

23 shall pay to such entity the amount of such excess. No pay24 ment may be made under this subsection to an entity with 

25 respect to any assistance eligible individual until after such 


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1 entity has received the reduced premium from such indi2 vidual required under section 3002(a)(1)(A) of such Act. 

3 ‘‘(b) PAYROLL TAXES.—For purposes of this section, 

4 the term ‘payroll taxes’ means— 

5 ‘‘(1) amounts required to be deducted and with6 held for the payroll period under section 3401 (relat7 ing to wage withholding), 

8 ‘‘(2) amounts required to be deducted for the 

9 payroll period under section 3102 (relating to FICA 

10 employee taxes), and 

11 ‘‘(3) amounts of the taxes imposed for the payroll 

12 period under section 3111 (relating to FICA employer 

13 taxes). 

14 ‘‘(c) TREATMENT OF CREDIT.—Except as otherwise 

15 provided by the Secretary, the credit described in subsection 

16 (a) shall be applied as though the employer had paid to 

17 the Secretary, on the day that the qualified beneficiary’s 

18 premium payment is received, an amount equal to such 

19 credit. 

20 ‘‘(d) TREATMENT OF PAYMENT.—For purposes of sec21 tion 1324(b)(2) of title 31, United States Code, any pay22 ment under this section shall be treated in the same manner 

23 as a refund of the credit under section 35. 

24 ‘‘(e) REPORTING.— 


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1 ‘‘(1) IN GENERAL.—Each entity entitled to reim2 bursement under subsection (a) for any period shall 

3 submit such reports as the Secretary may require, in4 cluding— 

5 ‘‘(A) an attestation of involuntary termi6 nation of employment for each covered employee 

7 on the basis of whose termination entitlement to 

8 reimbursement is claimed under subsection (a), 

9 and 

10 ‘‘(B) a report of the amount of payroll taxes 

11 offset under subsection (a) for the reporting pe12 riod and the estimated offsets of such taxes for 

13 the subsequent reporting period in connection 

14 with reimbursements under subsection (a). 

15 ‘‘(2) TIMING OF REPORTS RELATING TO AMOUNT

16 OF PAYROLL TAXES.—Reports required under para17 graph (1)(B) shall be submitted at the same time as 

18 deposits of taxes imposed by chapters 21, 22, and 24 

19 or at such time as is specified by the Secretary. 

20 ‘‘(f) REGULATIONS.—The Secretary may issue such 

21 regulations or other guidance as may be necessary or appro22 priate to carry out this section, including the requirement 

23 to report information or the establishment of other methods 

24 for verifying the correct amounts of payments and credits 

25 under this section. The Secretary shall issue such regulaVerDate Nov 24 2008 02:28 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00129 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 tions or guidance with respect to the application of this sec2 tion to group health plans that are multiemployer plans.’’. 

3 (B) SOCIAL SECURITY TRUST FUNDS HELD

4 HARMLESS.—In determining any amount trans5 ferred or appropriated to any fund under the So6 cial Security Act, section 6431 of the Internal 

7 Revenue Code of 1986 shall not be taken into ac8 count. 

9 (C) CLERICAL AMENDMENT.—The table of 

10 sections for subchapter B of chapter 65 of the In11 ternal Revenue Code of 1986 is amended by add12 ing at the end the following new item: 

‘‘Sec. 6431. COBRA premium assistance.’’. 

13 (D) EFFECTIVE DATE.—The amendments 

14 made by this paragraph shall apply to pre15 miums to which subsection (a)(1)(A) applies. 

16 (13) PENALTY FOR FAILURE TO NOTIFY HEALTH

17 PLAN OF CESSATION OF ELIGIBILITY FOR PREMIUM

18 ASSISTANCE.— 

19 (A) IN GENERAL.—Part I of subchapter B 

20 of chapter 68 of the Internal Revenue Code of 

21 1986 is amended by adding at the end the fol22 lowing new section: 


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1 ‘‘SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH 

2 PLAN OF CESSATION OF ELIGIBILITY FOR 

3 COBRA PREMIUM ASSISTANCE. 

4 ‘‘(a) IN GENERAL.—Any person required to notify a 

5 group health plan under section 3002(a)(2)(C)) of the 

6 Health Insurance Assistance for the Unemployed Act of 

7 2009 who fails to make such a notification at such time 

8 and in such manner as the Secretary of Labor may require 

9 shall pay a penalty of 110 percent of the premium reduction 

10 provided under such section after termination of eligibility 

11 under such subsection. 

12 ‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty 

13 shall be imposed under subsection (a) with respect to any 

14 failure if it is shown that such failure is due to reasonable 

15 cause and not to willful neglect.’’. 

16 (B) CLERICAL AMENDMENT.—The table of 

17 sections of part I of subchapter B of chapter 68 

18 of such Code is amended by adding at the end 

19 the following new item: 

‘‘Sec. 6720C. Penalty for failure to notify health plan of cessation of eligibility 

for COBRA premium assistance.’’. 

20 (C) EFFECTIVE DATE.—The amendments 

21 made by this paragraph shall apply to failures 

22 occurring after the date of the enactment of this 

23 Act. 

24 (14) COORDINATION WITH HCTC.— 


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1 (A) IN GENERAL.—Subsection (g) of section 

2 35 of the Internal Revenue Code of 1986 is 

3 amended by redesignating paragraph (9) as 

4 paragraph (10) and inserting after paragraph 

5 (8) the following new paragraph: 

6 ‘‘(9) COBRA PREMIUM ASSISTANCE.—In the 

7 case of an assistance eligible individual who receives 

8 premium reduction for COBRA continuation coverage 

9 under section 3002(a) of the Health Insurance Assist10 ance for the Unemployed Act of 2009 for any month 

11 during the taxable year, such individual shall not be 

12 treated as an eligible individual, a certified indi13 vidual, or a qualifying family member for purposes 

14 of this section or section 7527 with respect to such 

15 month.’’. 

16 (B) EFFECTIVE DATE.—The amendment 

17 made by subparagraph (A) shall apply to tax18 able years ending after the date of the enactment 

19 of this Act. 

20 (15) EXCLUSION OF COBRA PREMIUM ASSIST21 ANCE FROM GROSS INCOME.— 

22 (A) IN GENERAL.—Part III of subchapter B 

23 of chapter 1 of the Internal Revenue Code of 

24 1986 is amended by inserting after section 139B 

25 the following new section: 


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1 ‘‘SEC. 139C. COBRA PREMIUM ASSISTANCE. 

2 ‘‘In the case of an assistance eligible individual (as 

3 defined in section 3002 of the Health Insurance Assistance 

4 for the Unemployed Act of 2009), gross income does not in5 clude any premium reduction provided under subsection (a) 

6 of such section.’’. 

7 (B) CLERICAL AMENDMENT.—The table of 

8 sections for part III of subchapter B of chapter 

9 1 of such Code is amended by inserting after the 

10 item relating to section 139B the following new 

11 item: 

‘‘Sec. 139C. COBRA premium assistance.’’. 

12 (C) EFFECTIVE DATE.—The amendments 

13 made by this paragraph shall apply to taxable 

14 years ending after the date of the enactment of 

15 this Act. 

16 (b) EXTENSION OF COBRA BENEFITS FOR OLDER OR

17 LONG-TERM EMPLOYEES.— 

18 (1) ERISA AMENDMENT.—Section 602(2)(A) of 

19 the Employee Retirement Income Security Act of 

20 1974 is amended by adding at the end the following 

21 new clauses: 

22 ‘‘(x) SPECIAL RULE FOR OLDER OR

23 LONG-TERM EMPLOYEES GENERALLY.—In 

24 the case of a qualifying event described in 

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1 ployee who (as of such qualifying event) has 

2 attained age 55 or has completed 10 or 

3 more years of service with the entity that is 

4 the employer at the time of the qualifying 

5 event, clauses (i) and (ii) shall not apply. 

6 ‘‘(xi) YEAR OF SERVICE.— For pur7 poses of this subparagraph, the term ‘year 

8 of service’ shall have the meaning provided 

9 in section 202(a)(3).’’. 

10 (2) IRC AMENDMENT.—Clause (i) of section 

11 4980B(f)(2)(B) of the Internal Revenue Code of 1986 

12 is amended by adding at the end the following new 

13 subclauses: 

14 ‘‘(X) SPECIAL RULE FOR OLDER

15 OR LONG-TERM EMPLOYEES GEN16 ERALLY.—In the case of a qualifying 

17 event described in paragraph (3)(B) 

18 with respect to a covered employee who 

19 (as of such qualifying event) has at20 tained age 55 or has completed 10 or 

21 more years of service with the entity 

22 that is the employer at the time of the 

23 qualifying event, subclauses (I) and 

24 (II) shall not apply. 


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1 ‘‘(XI) YEAR OF SERVICE.— For 

2 purposes of this clause, the term ‘year 

3 of service’ shall have the meaning pro4 vided in section 202(a)(3) of the Em5 ployee Retirement Income Security Act 

6 of 1974.’’. 

7 (3) PHSA AMENDMENT.—Section 2202(2)(A) of 

8 the Public Health Service Act is amended by adding 

9 at the end the following new clauses: 

10 ‘‘(viii) SPECIAL RULE FOR OLDER OR

11 LONG-TERM EMPLOYEES GENERALLY.—In 

12 the case of a qualifying event described in 

13 section 2203(2) with respect to a covered 

14 employee who (as of such qualifying event) 

15 has attained age 55 or has completed 10 or 

16 more years of service with the entity that is 

17 the employer at the time of the qualifying 

18 event, clauses (i) and (ii) shall not apply. 

19 ‘‘(ix) YEAR OF SERVICE.—For pur20 poses of this subparagraph, the term ‘year 

21 of service’ shall have the meaning provided 

22 in section 202(a)(3) of the Employee Retire23 ment Income Security Act of 1974.’’. 

24 (4) EFFECTIVE DATE OF AMENDMENTS.—The 

25 amendments made by this subsection shall apply to 


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1 periods of coverage which would (without regard to 

2 the amendments made by this section) end on or after 

3 the date of the enactment of this Act. 

4 SEC. 3003. TEMPORARY OPTIONAL MEDICAID COVERAGE 

5 FOR THE UNEMPLOYED. 

6 (a) IN GENERAL.—Section 1902 of the Social Security 

7 Act (42 U.S.C. 1396b) is amended— 

8 (1) in subsection (a)(10)(A)(ii)— 

9 (A) by striking ‘‘or’’ at the end of subclause 

10 (XVIII); 

11 (B) by adding ‘‘or’’ at the end of subclause 

12 (XIX); and 

13 (C) by adding at the end the following new 

14 subclause 

15 ‘‘(XX) who are described in sub16 section (dd)(1) (relating to certain un17 employed individuals and their fami18 lies);’’; and 

19 (2) by adding at the end the following new sub20 section: 

21 ‘‘(dd)(1) Individuals described in this paragraph 

22 are— 

23 ‘‘(A) individuals who— 


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1 ‘‘(i) are within one or more of the categories 

2 described in paragraph (2), as elected under the 

3 State plan; and 

4 ‘‘(ii) meet the applicable requirements of 

5 paragraph (3); and 

6 ‘‘(B) individuals who— 

7 ‘‘(i) are the spouse, or dependent child 

8 under 19 years of age, of an individual described 

9 in subparagraph (A); and 

10 ‘‘(ii) meet the requirement of paragraph 

11 (3)(B). 

12 ‘‘(2) The categories of individuals described in this 

13 paragraph are each of the following: 

14 ‘‘(A) Individuals who are receiving unemploy15 ment compensation benefits. 

16 ‘‘(B) Individuals who were receiving, but have 

17 exhausted, unemployment compensation benefits on or 

18 after July 1, 2008. 

19 ‘‘(C) Individuals who are involuntarily unem20 ployed and were involuntarily separated from em21 ployment on or after September 1, 2008, and before 

22 January 1, 2011, whose family gross income does not 

23 exceed a percentage specified by the State (not to ex24 ceed 200 percent) of the income official poverty line 

25 (as defined by the Office of Management and Budget, 


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1 and revised annually in accordance with section 

2 673(2) of the Omnibus Budget Reconciliation Act of 

3 1981) applicable to a family of the size involved, and 

4 who, but for subsection (a)(10)(A)(ii)(XX), are not el5 igible for medical assistance under this title or health 

6 assistance under title XXI. 

7 ‘‘(D) Individuals who are involuntarily unem8 ployed and were involuntarily separated from em9 ployment on or after September 1, 2008, and before 

10 January 1, 2011, who are members of households par11 ticipating in the supplemental nutrition assistance 

12 program established under the Food and Nutrition 

13 Act of 2008 (7 U.S.C. 2011 et seq), and who, but for 

14 subsection (a)(10)(A)(ii)(XX), are not eligible for 

15 medical assistance under this title or health assistance 

16 under title XXI. 

17 A State plan may elect one or more of the categories de18 scribed in this paragraph but may not elect the category 

19 described in subparagraph (B) unless the State plan also 

20 elects the category described in subparagraph (A). 

21 ‘‘(3) The requirements of this paragraph with respect 

22 to an individual are the following: 

23 ‘‘(A) In the case of individuals within a category 

24 described in subparagraph (A) or (B) of paragraph 

25 (2), the individual was involuntarily separated from 


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1 employment on or after September 1, 2008, and before 

2 January 1, 2011, or meets such comparable require3 ment as the Secretary specifies through rule, guid4 ance, or otherwise in the case of an individual who 

5 was an independent contractor. 

6 ‘‘(B) The individual is not otherwise covered 

7 under creditable coverage, as defined in section 

8 2701(c) of the Public Health Service Act (42 U.S.C. 

9 300gg(c)), but applied without regard to paragraph 

10 (1)(F) of such section and without regard to coverage 

11 provided by reason of the application of subsection 

12 (a)(10)(A)(ii)(XX). 

13 ‘‘(4)(A) No income or resources test shall be applied 

14 with respect to any category of individuals described in sub15 paragraph (A), (B), or (D) of paragraph (2) who are eligi16 ble for medical assistance only by reason of the application 

17 of subsection (a)(10)(A)(ii)(XX). 

18 ‘‘(B) Nothing in this subsection shall be construed to 

19 prevent a State from imposing a resource test for the cat20 egory of individuals described in paragraph (2)(C)). 

21 ‘‘(C) In the case of individuals provided medical as22 sistance by reason of the application of subsection 

23 (a)(10)(A)(ii)(XX), the requirements of subsections (i)(22) 

24 and (x) shall not apply.’’. 

25 (b) 100 PERCENT FEDERAL MATCHING RATE.— 


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1 (1) FMAP FOR TIME-LIMITED PERIOD.—The 

2 third sentence of section 1905(b) of such Act (42 

3 U.S.C. 1396d(b)) is amended by inserting before the 

4 period at the end the following: ‘‘and for items and 

5 services furnished on or after the date of enactment of 

6 this Act and before January 1, 2011, to individuals 

7 who are eligible for medical assistance only by reason 

8 of the application of section 1902(a)(10)(A)(ii)(XX)’’. 

9 (2) CERTAIN ENROLLMENT-RELATED ADMINIS10 TRATIVE COSTS.—Notwithstanding any other provi11 sion of law, for purposes of applying section 1903(a) 

12 of the Social Security Act (42 U.S.C. 1396b(a)), with 

13 respect to expenditures incurred on or after the date 

14 of the enactment of this Act and before January 1, 

15 2011, for costs of administration (including outreach 

16 and the modification and operation of eligibility in17 formation systems) attributable to eligibility deter18 mination and enrollment of individuals who are eligi19 ble for medical assistance only by reason of the appli20 cation of section 1902(a)(10)(A)(ii)(XX) of such Act, 

21 as added by subsection (a)(1), the Federal matching 

22 percentage shall be 100 percent instead of the match23 ing percentage otherwise applicable. 

24 (c) CONFORMING AMENDMENTS.—(1) Section 

25 1903(f)(4) of such Act (42 U.S.C. 1396c(f)(4)) is amended 


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1 by inserting ‘‘1902(a)(10)(A)(ii)(XX), or’’ after 

2 ‘‘1902(a)(10)(A)(ii)(XIX),’’. 

3 (2) Section 1905(a) of such Act (42 U.S.C. 1396d(a)) 

4 is amended, in the matter preceding paragraph (1)— 

5 (A) by striking ‘‘or’’ at the end of clause (xii); 

6 (B) by adding ‘‘or’’ at the end of clause (xiii); 

7 and 

8 (C) by inserting after clause (xiii) the following 

9 new clause: 

10 ‘‘(xiv) individuals described in section 

11 1902(dd)(1),’’. 

12 TITLE IV—HEALTH 

13 INFORMATION TECHNOLOGY 

14 SEC. 4001. SHORT TITLE; TABLE OF CONTENTS OF TITLE. 

15 (a) SHORT TITLE.—This title may be cited as the 

16 ‘‘Health Information Technology for Economic and Clinical 

17 Health Act’’ or the ‘‘HITECH Act’’. 

18 (b) TABLE OF CONTENTS OF TITLE.—The table of con19 tents of this title is as follows: 

Sec. 4001. Short title; table of contents of title. 

Subtitle A—Promotion of Health Information Technology 

PART I—IMPROVING HEALTH CARE QUALITY, SAFETY, AND EFFICIENCY

Sec. 4101. ONCHIT; standards development and adoption. 

‘‘TITLE XXX—HEALTH INFORMATION TECHNOLOGY AND QUALITY 

‘‘Sec. 3000. Definitions. 


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‘‘Subtitle A—Promotion of Health Information Technology 

‘‘Sec. 3001. Office of the National Coordinator for Health Information Technology. 

‘‘Sec. 3002. HIT Policy Committee. 

‘‘Sec. 3003. HIT Standards Committee. 

‘‘Sec. 3004. Process for adoption of endorsed recommendations; adoption of 

initial set of standards, implementation specifications, and 

certification criteria. 

‘‘Sec. 3005. Application and use of adopted standards and implementation 

specifications by Federal agencies. 

‘‘Sec. 3006. Voluntary application and use of adopted standards and implementation specifications by private entities. 

‘‘Sec. 3007. Federal health information technology. 

‘‘Sec. 3008. Transitions. 

‘‘Sec. 3009. Relation to HIPAA privacy and security law. 

‘‘Sec. 3010. Authorization for appropriations. 

Sec. 4102. Technical amendment. 

PART II—APPLICATION AND USE OF ADOPTED HEALTH INFORMATION

TECHNOLOGY STANDARDS; REPORTS

Sec. 4111. Coordination of Federal activities with adopted standards and implementation specifications. 

Sec. 4112. Application to private entities. 

Sec. 4113. Study and reports. 

Subtitle B—Testing of Health Information Technology 

Sec. 4201. National Institute for Standards and Technology testing. 

Sec. 4202. Research and development programs. 

Subtitle C—Incentives for the Use of Health Information Technology 

PART I—GRANTS AND LOANS FUNDING

Sec. 4301. Grant, loan, and demonstration programs. 

‘‘Subtitle B—Incentives for the Use of Health Information Technology 

‘‘Sec. 3011. Immediate funding to strengthen the health information technology infrastructure. 

‘‘Sec. 3012. Health information technology implementation assistance. 

‘‘Sec. 3013. State grants to promote health information technology. 

‘‘Sec. 3014. Competitive grants to States and Indian tribes for the development of loan programs to facilitate the widespread adoption 

of certified EHR technology. 

‘‘Sec. 3015. Demonstration program to integrate information technology into 

clinical education. 

‘‘Sec. 3016. Information technology professionals on health care. 

‘‘Sec. 3017. General grant and loan provisions. 

‘‘Sec. 3018. Authorization for appropriations. 

PART II—MEDICARE PROGRAM

Sec. 4311. Incentives for eligible professionals. 

Sec. 4312. Incentives for hospitals. 

Sec. 4313. Treatment of payments and savings; implementation funding. 


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Sec. 4314. Study on application of EHR payment incentives for providers not receiving other incentive payments. 

PART III—MEDICAID FUNDING

Sec. 4321. Medicaid provider HIT adoption and operation payments; implementation funding. 

Subtitle D—Privacy 

Sec. 4400. Definitions. 

PART I—IMPROVED PRIVACY PROVISIONS AND SECURITY PROVISIONS

Sec. 4401. Application of security provisions and penalties to business associates 

of covered entities; annual guidance on security provisions. 

Sec. 4402. Notification in the case of breach. 

Sec. 4403. Education on Health Information Privacy. 

Sec. 4404. Application of privacy provisions and penalties to business associates 

of covered entities. 

Sec. 4405. Restrictions on certain disclosures and sales of health information; accounting of certain protected health information disclosures; access to certain information in electronic format. 

Sec. 4406. Conditions on certain contacts as part of health care operations. 

Sec. 4407. Temporary breach notification requirement for vendors of personal 

health records and other non-HIPAA covered entities. 

Sec. 4408. Business associate contracts required for certain entities. 

Sec. 4409. Clarification of application of wrongful disclosures criminal penalties. 

Sec. 4410. Improved enforcement. 

Sec. 4411. Audits. 

PART II—RELATIONSHIP TO OTHER LAWS; REGULATORY REFERENCES; 

EFFECTIVE DATE; REPORTS

Sec. 4421. Relationship to other laws. 

Sec. 4422. Regulatory references. 

Sec. 4423. Effective date. 

Sec. 4424. Studies, reports, guidance. 

Subtitle E—Miscellaneous Medicare Provisions 

Sec. 4501. Moratoria on certain Medicare regulations. 

Sec. 4502. Long-term care hospital technical corrections. 


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1 Subtitle A—Promotion of Health 

2 Information Technology 

3 PART I—IMPROVING HEALTH CARE QUALITY, 

4 SAFETY, AND EFFICIENCY 

5 SEC. 4101. ONCHIT; STANDARDS DEVELOPMENT AND ADOP6 TION. 

7 The Public Health Service Act (42 U.S.C. 201 et seq.) 

8 is amended by adding at the end the following: 

9 ‘‘TITLE XXX—HEALTH INFORMA10 TION TECHNOLOGY AND 

11 QUALITY 

12 ‘‘SEC. 3000. DEFINITIONS. 

13 ‘‘In this title: 

14 ‘‘(1) CERTIFIED EHR TECHNOLOGY.—The term 

15 ‘certified EHR technology’ means a qualified elec16 tronic health record that is certified pursuant to sec17 tion 3001(c)(5) as meeting standards adopted under 

18 section 3004 that are applicable to the type of record 

19 involved (as determined by the Secretary, such as an 

20 ambulatory electronic health record for office-based 

21 physicians or an inpatient hospital electronic health 

22 record for hospitals). 

23 ‘‘(2) ENTERPRISE INTEGRATION.—The term ‘en24 terprise integration’ means the electronic linkage of 

25 health care providers, health plans, the government, 


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1 and other interested parties, to enable the electronic 

2 exchange and use of health information among all the 

3 components in the health care infrastructure in ac4 cordance with applicable law, and such term includes 

5 related application protocols and other related stand6 ards. 

7 ‘‘(3) HEALTH CARE PROVIDER.—The term 

8 ‘health care provider’ means a hospital, skilled nurs9 ing facility, nursing facility, home health entity or 

10 other long-term care facility, health care clinic, Feder11 ally qualified health center, group practice (as defined 

12 in section 1877(h)(4) of the Social Security Act), a 

13 pharmacist, a pharmacy, a laboratory, a physician 

14 (as defined in section 1861(r) of the Social Security 

15 Act), a practitioner (as described in section 

16 1842(b)(18)(C) of the Social Security Act), a provider 

17 operated by, or under contract with, the Indian 

18 Health Service or by an Indian tribe (as defined in 

19 the Indian Self-Determination and Education Assist20 ance Act), tribal organization, or urban Indian orga21 nization (as defined in section 4 of the Indian Health 

22 Care Improvement Act), a rural health clinic, a cov23 ered entity under section 340B, and any other cat24 egory of facility or clinician determined appropriate 

25 by the Secretary. 


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1 ‘‘(4) HEALTH INFORMATION.—The term ‘health 

2 information’ has the meaning given such term in sec3 tion 1171(4) of the Social Security Act. 

4 ‘‘(5) HEALTH INFORMATION TECHNOLOGY.—The 

5 term ‘health information technology’ means hardware, 

6 software, integrated technologies and related licenses, 

7 intellectual property, upgrades, and packaged solu8 tions sold as services that are specifically designed for 

9 use by health care entities for the electronic creation, 

10 maintenance, or exchange of health information. 

11 ‘‘(6) HEALTH PLAN.—The term ‘health plan’ has 

12 the meaning given such term in section 1171(5) of the 

13 Social Security Act. 

14 ‘‘(7) HIT POLICY COMMITTEE.—The term ‘HIT 

15 Policy Committee’ means such Committee established 

16 under section 3002(a). 

17 ‘‘(8) HIT STANDARDS COMMITTEE.—The term 

18 ‘HIT Standards Committee’ means such Committee 

19 established under section 3003(a). 

20 ‘‘(9) INDIVIDUALLY IDENTIFIABLE HEALTH IN21 FORMATION.—The term ‘individually identifiable 

22 health information’ has the meaning given such term 

23 in section 1171(6) of the Social Security Act. 

24 ‘‘(10) LABORATORY.—The term ‘laboratory’ has 

25 the meaning given such term in section 353(a). 


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1 ‘‘(11) NATIONAL COORDINATOR.—The term ‘Na2 tional Coordinator’ means the head of the Office of the 

3 National Coordinator for Health Information Tech4 nology established under section 3001(a). 

5 ‘‘(12) PHARMACIST.—The term ‘pharmacist’ has 

6 the meaning given such term in section 804(2) of the 

7 Federal Food, Drug, and Cosmetic Act. 

8 ‘‘(13) QUALIFIED ELECTRONIC HEALTH

9 RECORD.—The term ‘qualified electronic health 

10 record’ means an electronic record of health-related 

11 information on an individual that— 

12 ‘‘(A) includes patient demographic and 

13 clinical health information, such as medical his14 tory and problem lists; and 

15 ‘‘(B) has the capacity— 

16 ‘‘(i) to provide clinical decision sup17 port; 

18 ‘‘(ii) to support physician order entry; 

19 ‘‘(iii) to capture and query informa20 tion relevant to health care quality; and 

21 ‘‘(iv) to exchange electronic health in22 formation with, and integrate such infor23 mation from other sources. 

24 ‘‘(14) STATE.—The term ‘State’ means each of 

25 the several States, the District of Columbia, Puerto 


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1 Rico, the Virgin Islands, Guam, American Samoa, 

2 and the Northern Mariana Islands. 

3 ‘‘Subtitle A—Promotion of Health 

4 Information Technology 

5 ‘‘SEC. 3001. OFFICE OF THE NATIONAL COORDINATOR FOR 

6 HEALTH INFORMATION TECHNOLOGY. 

7 ‘‘(a) ESTABLISHMENT.—There is established within 

8 the Department of Health and Human Services an Office 

9 of the National Coordinator for Health Information Tech10 nology (referred to in this section as the ‘Office’). The Office 

11 shall be headed by a National Coordinator who shall be ap12 pointed by the Secretary and shall report directly to the 

13 Secretary. 

14 ‘‘(b) PURPOSE.—The National Coordinator shall per15 form the duties under subsection (c) in a manner consistent 

16 with the development of a nationwide health information 

17 technology infrastructure that allows for the electronic use 

18 and exchange of information and that— 

19 ‘‘(1) ensures that each patient’s health informa20 tion is secure and protected, in accordance with ap21 plicable law; 

22 ‘‘(2) improves health care quality, reduces med23 ical errors, and advances the delivery of patient-cen24 tered medical care; 


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1 ‘‘(3) reduces health care costs resulting from inef2 ficiency, medical errors, inappropriate care, duplica3 tive care, and incomplete information; 

4 ‘‘(4) provides appropriate information to help 

5 guide medical decisions at the time and place of care; 

6 ‘‘(5) ensures the inclusion of meaningful public 

7 input in such development of such infrastructure; 

8 ‘‘(6) improves the coordination of care and infor9 mation among hospitals, laboratories, physician of10 fices, and other entities through an effective infra11 structure for the secure and authorized exchange of 

12 health care information; 

13 ‘‘(7) improves public health activities and facili14 tates the early identification and rapid response to 

15 public health threats and emergencies, including bio16 terror events and infectious disease outbreaks; 

17 ‘‘(8) facilitates health and clinical research and 

18 health care quality; 

19 ‘‘(9) promotes prevention of chronic diseases; 

20 ‘‘(10) promotes a more effective marketplace, 

21 greater competition, greater systems analysis, in22 creased consumer choice, and improved outcomes in 

23 health care services; and 

24 ‘‘(11) improves efforts to reduce health dispari25 ties. 


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1 ‘‘(c) DUTIES OF THE NATIONAL COORDINATOR.— 

2 ‘‘(1) STANDARDS.—The National Coordinator 

3 shall review and determine whether to endorse each 

4 standard, implementation specification, and certifi5 cation criterion for the electronic exchange and use of 

6 health information that is recommended by the HIT 

7 Standards Committee under section 3003 for purposes 

8 of adoption under section 3004. The Coordinator shall 

9 make such determination, and report to the Secretary 

10 such determination, not later than 45 days after the 

11 date the recommendation is received by the Coordi12 nator. 

13 ‘‘(2) HIT POLICY COORDINATION.— 

14 ‘‘(A) IN GENERAL.—The National Coordi15 nator shall coordinate health information tech16 nology policy and programs of the Department 

17 with those of other relevant executive branch 

18 agencies with a goal of avoiding duplication of 

19 efforts and of helping to ensure that each agency 

20 undertakes health information technology activi21 ties primarily within the areas of its greatest ex22 pertise and technical capability and in a man23 ner towards a coordinated national goal. 

24 ‘‘(B) HIT POLICY AND STANDARDS COMMIT25 TEES.—The National Coordinator shall be a 


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1 leading member in the establishment and oper2 ations of the HIT Policy Committee and the 

3 HIT Standards Committee and shall serve as a 

4 liaison among those two Committees and the 

5 Federal Government. 

6 ‘‘(3) STRATEGIC PLAN.— 

7 ‘‘(A) IN GENERAL.—The National Coordi8 nator shall, in consultation with other appro9 priate Federal agencies (including the National 

10 Institute of Standards and Technology), update 

11 the Federal Health IT Strategic Plan (developed 

12 as of June 3, 2008) to include specific objectives, 

13 milestones, and metrics with respect to the fol14 lowing: 

15 ‘‘(i) The electronic exchange and use of 

16 health information and the enterprise inte17 gration of such information. 

18 ‘‘(ii) The utilization of an electronic 

19 health record for each person in the United 

20 States by 2014. 

21 ‘‘(iii) The incorporation of privacy 

22 and security protections for the electronic 

23 exchange of an individual’s individually 

24 identifiable health information. 


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1 ‘‘(iv) Ensuring security methods to en2 sure appropriate authorization and elec3 tronic authentication of health information 

4 and specifying technologies or methodologies 

5 for rendering health information unusable, 

6 unreadable, or indecipherable. 

7 ‘‘(v) Specifying a framework for co8 ordination and flow of recommendations 

9 and policies under this subtitle among the 

10 Secretary, the National Coordinator, the 

11 HIT Policy Committee, the HIT Standards 

12 Committee, and other health information 

13 exchanges and other relevant entities. 

14 ‘‘(vi) Methods to foster the public un15 derstanding of health information tech16 nology. 

17 ‘‘(vii) Strategies to enhance the use of 

18 health information technology in improving 

19 the quality of health care, reducing medical 

20 errors, reducing health disparities, improv21 ing public health, and improving the con22 tinuity of care among health care settings. 

23 ‘‘(B) COLLABORATION.—The strategic plan 

24 shall be updated through collaboration of public 

25 and private entities. 


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1 ‘‘(C) MEASURABLE OUTCOME GOALS.—The 

2 strategic plan update shall include measurable 

3 outcome goals. 

4 ‘‘(D) PUBLICATION.—The National Coordi5 nator shall republish the strategic plan, includ6 ing all updates. 

7 ‘‘(4) WEBSITE.—The National Coordinator shall 

8 maintain and frequently update an Internet website 

9 on which there is posted information on the work, 

10 schedules, reports, recommendations, and other infor11 mation to ensure transparency in promotion of a na12 tionwide health information technology infrastruc13 ture. 

14 ‘‘(5) CERTIFICATION.— 

15 ‘‘(A) IN GENERAL.—The National Coordi16 nator, in consultation with the Director of the 

17 National Institute of Standards and Technology, 

18 shall develop a program (either directly or by 

19 contract) for the voluntary certification of health 

20 information technology as being in compliance 

21 with applicable certification criteria adopted 

22 under this subtitle. Such program shall include 

23 testing of the technology in accordance with sec24 tion 4201(b) of the HITECH Act. 


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1 ‘‘(B) CERTIFICATION CRITERIA DE2 SCRIBED.—In this title, the term ‘certification 

3 criteria’ means, with respect to standards and 

4 implementation specifications for health infor5 mation technology, criteria to establish that the 

6 technology meets such standards and implemen7 tation specifications. 

8 ‘‘(6) REPORTS AND PUBLICATIONS.— 

9 ‘‘(A) REPORT ON ADDITIONAL FUNDING OR

10 AUTHORITY NEEDED.—Not later than 12 months 

11 after the date of the enactment of this title, the 

12 National Coordinator shall submit to the appro13 priate committees of jurisdiction of the House of 

14 Representatives and the Senate a report on any 

15 additional funding or authority the Coordinator 

16 or the HIT Policy Committee or HIT Standards 

17 Committee requires to evaluate and develop 

18 standards, implementation specifications, and 

19 certification criteria, or to achieve full participa20 tion of stakeholders in the adoption of a nation21 wide health information technology infrastruc22 ture that allows for the electronic use and ex23 change of health information. 

24 ‘‘(B) IMPLEMENTATION REPORT.—The Na25 tional Coordinator shall prepare a report that 


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1 identifies lessons learned from major public and 

2 private health care systems in their implementa3 tion of health information technology, including 

4 information on whether the technologies and 

5 practices developed by such systems may be ap6 plicable to and usable in whole or in part by 

7 other health care providers. 

8 ‘‘(C) ASSESSMENT OF IMPACT OF HIT ON

9 COMMUNITIES WITH HEALTH DISPARITIES AND

10 UNINSURED, UNDERINSURED, AND MEDICALLY

11 UNDERSERVED AREAS.—The National Coordi12 nator shall assess and publish the impact of 

13 health information technology in communities 

14 with health disparities and in areas with a high 

15 proportion of individuals who are uninsured, 

16 underinsured, and medically underserved indi17 viduals (including urban and rural areas) and 

18 identify practices to increase the adoption of 

19 such technology by health care providers in such 

20 communities. 

21 ‘‘(D) EVALUATION OF BENEFITS AND COSTS

22 OF THE ELECTRONIC USE AND EXCHANGE OF

23 HEALTH INFORMATION.—The National Coordi24 nator shall evaluate and publish evidence on the 

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1 change of health information and assess to whom 

2 these benefits and costs accrue. 

3 ‘‘(E) RESOURCE REQUIREMENTS.—The Na4 tional Coordinator shall estimate and publish re5 sources required annually to reach the goal of 

6 utilization of an electronic health record for each 

7 person in the United States by 2014, including 

8 the required level of Federal funding, expecta9 tions for regional, State, and private investment, 

10 and the expected contributions by volunteers to 

11 activities for the utilization of such records. 

12 ‘‘(7) ASSISTANCE.—The National Coordinator 

13 may provide financial assistance to consumer advo14 cacy groups and not-for-profit entities that work in 

15 the public interest for purposes of defraying the cost 

16 to such groups and entities to participate under, 

17 whether in whole or in part, the National Technology 

18 Transfer Act of 1995 (15 U.S.C. 272 note). 

19 ‘‘(8) GOVERNANCE FOR NATIONWIDE HEALTH IN20 FORMATION NETWORK.—The National Coordinator 

21 shall establish a governance mechanism for the na22 tionwide health information network. 

23 ‘‘(d) DETAIL OF FEDERAL EMPLOYEES.— 

24 ‘‘(1) IN GENERAL.—Upon the request of the Na25 tional Coordinator, the head of any Federal agency is 


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1 authorized to detail, with or without reimbursement 

2 from the Office, any of the personnel of such agency 

3 to the Office to assist it in carrying out its duties 

4 under this section. 

5 ‘‘(2) EFFECT OF DETAIL.—Any detail of per6 sonnel under paragraph (1) shall— 

7 ‘‘(A) not interrupt or otherwise affect the 

8 civil service status or privileges of the Federal 

9 employee; and 

10 ‘‘(B) be in addition to any other staff of the 

11 Department employed by the National Coordi12 nator. 

13 ‘‘(3) ACCEPTANCE OF DETAILEES.—Notwith14 standing any other provision of law, the Office may 

15 accept detailed personnel from other Federal agencies 

16 without regard to whether the agency described under 

17 paragraph (1) is reimbursed. 

18 ‘‘(e) CHIEF PRIVACY OFFICER OF THE OFFICE OF THE

19 NATIONAL COORDINATOR.—Not later than 12 months after 

20 the date of the enactment of this title, the Secretary shall 

21 appoint a Chief Privacy Officer of the Office of the National 

22 Coordinator, whose duty it shall be to advise the National 

23 Coordinator on privacy, security, and data stewardship of 

24 electronic health information and to coordinate with other 

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1 cies), with State and regional efforts, and with foreign 

2 countries with regard to the privacy, security, and data 

3 stewardship of electronic individually identifiable health 

4 information. 

5 ‘‘SEC. 3002. HIT POLICY COMMITTEE. 

6 ‘‘(a) ESTABLISHMENT.—There is established a HIT 

7 Policy Committee to make policy recommendations to the 

8 National Coordinator relating to the implementation of a 

9 nationwide health information technology infrastructure, 

10 including implementation of the strategic plan described in 

11 section 3001(c)(3). 

12 ‘‘(b) DUTIES.— 

13 ‘‘(1) RECOMMENDATIONS ON HEALTH INFORMA14 TION TECHNOLOGY INFRASTRUCTURE.—The HIT Pol15 icy Committee shall recommend a policy framework 

16 for the development and adoption of a nationwide 

17 health information technology infrastructure that per18 mits the electronic exchange and use of health infor19 mation as is consistent with the strategic plan under 

20 section 3001(c)(3) and that includes the recommenda21 tions under paragraph (2). The Committee shall up22 date such recommendations and make new rec23 ommendations as appropriate. 

24 ‘‘(2) SPECIFIC AREAS OF STANDARD DEVELOP25 MENT.— 


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1 ‘‘(A) IN GENERAL.—The HIT Policy Com2 mittee shall recommend the areas in which 

3 standards, implementation specifications, and 

4 certification criteria are needed for the electronic 

5 exchange and use of health information for pur6 poses of adoption under section 3004 and shall 

7 recommend an order of priority for the develop8 ment, harmonization, and recognition of such 

9 standards, specifications, and certification cri10 teria among the areas so recommended. Such 

11 standards and implementation specifications 

12 shall include named standards, architectures, 

13 and software schemes for the authentication and 

14 security of individually identifiable health infor15 mation and other information as needed to en16 sure the reproducible development of common so17 lutions across disparate entities. 

18 ‘‘(B) AREAS REQUIRED FOR CONSIDER19 ATION.—For purposes of subparagraph (A), the 

20 HIT Policy Committee shall make recommenda21 tions for at least the following areas: 

22 ‘‘(i) Technologies that protect the pri23 vacy of health information and promote se24 curity in a qualified electronic health 

25 record, including for the segmentation and 


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1 protection from disclosure of specific and 

2 sensitive individually identifiable health in3 formation with the goal of minimizing the 

4 reluctance of patients to seek care (or dis5 close information about a condition) be6 cause of privacy concerns, in accordance 

7 with applicable law, and for the use and 

8 disclosure of limited data sets of such infor9 mation. 

10 ‘‘(ii) A nationwide health information 

11 technology infrastructure that allows for the 

12 electronic use and accurate exchange of 

13 health information. 

14 ‘‘(iii) The utilization of a certified elec15 tronic health record for each person in the 

16 United States by 2014. 

17 ‘‘(iv) Technologies that as a part of a 

18 qualified electronic health record allow for 

19 an accounting of disclosures made by a cov20 ered entity (as defined for purposes of regu21 lations promulgated under section 264(c) of 

22 the Health Insurance Portability and Ac23 countability Act of 1996) for purposes of 

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1 ations (as such terms are defined for pur2 poses of such regulations). 

3 ‘‘(v) The use of certified electronic 

4 health records to improve the quality of 

5 health care, such as by promoting the co6 ordination of health care and improving 

7 continuity of health care among health care 

8 providers, by reducing medical errors, by 

9 improving population health, and by ad10 vancing research and education. 

11 ‘‘(C) OTHER AREAS FOR CONSIDERATION.— 

12 In making recommendations under subpara13 graph (A), the HIT Policy Committee may con14 sider the following additional areas: 

15 ‘‘(i) The appropriate uses of a nation16 wide health information infrastructure, in17 cluding for purposes of— 

18 ‘‘(I) the collection of quality data 

19 and public reporting; 

20 ‘‘(II) biosurveillance and public 

21 health; 

22 ‘‘(III) medical and clinical re23 search; and 

24 ‘‘(IV) drug safety. 


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1 ‘‘(ii) Self-service technologies that fa2 cilitate the use and exchange of patient in3 formation and reduce wait times. 

4 ‘‘(iii) Telemedicine technologies, in 

5 order to reduce travel requirements for pa6 tients in remote areas. 

7 ‘‘(iv) Technologies that facilitate home 

8 health care and the monitoring of patients 

9 recuperating at home. 

10 ‘‘(v) Technologies that help reduce med11 ical errors. 

12 ‘‘(vi) Technologies that facilitate the 

13 continuity of care among health settings. 

14 ‘‘(vii) Technologies that meet the needs 

15 of diverse populations. 

16 ‘‘(viii) Any other technology that the 

17 HIT Policy Committee finds to be among 

18 the technologies with the greatest potential 

19 to improve the quality and efficiency of 

20 health care. 

21 ‘‘(3) FORUM.—The HIT Policy Committee shall 

22 serve as a forum for broad stakeholder input with spe23 cific expertise in policies relating to the matters de24 scribed in paragraphs (1) and (2). 

25 ‘‘(c) MEMBERSHIP AND OPERATIONS.— 


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1 ‘‘(1) IN GENERAL.—The National Coordinator 

2 shall provide leadership in the establishment and op3 erations of the HIT Policy Committee. 

4 ‘‘(2) MEMBERSHIP.—The membership of the HIT 

5 Policy Committee shall at least reflect providers, an6 cillary healthcare workers, consumers, purchasers, 

7 health plans, technology vendors, researchers, relevant 

8 Federal agencies, and individuals with technical ex9 pertise on health care quality, privacy and security, 

10 and on the electronic exchange and use of health in11 formation. 

12 ‘‘(3) CONSIDERATION.—The National Coordi13 nator shall ensure that the relevant recommendations 

14 and comments from the National Committee on Vital 

15 and Health Statistics are considered in the develop16 ment of policies. 

17 ‘‘(d) APPLICATION OF FACA.—The Federal Advisory 

18 Committee Act (5 U.S.C. App.), other than section 14 of 

19 such Act, shall apply to the HIT Policy Committee. 

20 ‘‘(e) PUBLICATION.—The Secretary shall provide for 

21 publication in the Federal Register and the posting on the 

22 Internet website of the Office of the National Coordinator 

23 for Health Information Technology of all policy rec24 ommendations made by the HIT Policy Committee under 

25 this section. 


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1 ‘‘SEC. 3003. HIT STANDARDS COMMITTEE. 

2 ‘‘(a) ESTABLISHMENT.—There is established a com3 mittee to be known as the HIT Standards Committee to 

4 recommend to the National Coordinator standards, imple5 mentation specifications, and certification criteria for the 

6 electronic exchange and use of health information for pur7 poses of adoption under section 3004, consistent with the 

8 implementation of the strategic plan described in section 

9 3001(c)(3) and beginning with the areas listed in section 

10 3002(b)(2)(B) in accordance with policies developed by the 

11 HIT Policy Committee. 

12 ‘‘(b) DUTIES.— 

13 ‘‘(1) STANDARD DEVELOPMENT.— 

14 ‘‘(A) IN GENERAL.—The HIT Standards 

15 Committee shall recommend to the National Co16 ordinator standards, implementation specifica17 tions, and certification criteria described in sub18 section (a) that have been developed, harmonized, 

19 or recognized by the HIT Standards Committee. 

20 The HIT Standards Committee shall update 

21 such recommendations and make new rec22 ommendations as appropriate, including in re23 sponse to a notification sent under section 

24 3004(b)(2). Such recommendations shall be con25 sistent with the latest recommendations made by 

26 the HIT Policy Committee. 


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1 ‘‘(B) PILOT TESTING OF STANDARDS AND

2 IMPLEMENTATION SPECIFICATIONS.—In the de3 velopment, harmonization, or recognition of 

4 standards and implementation specifications, the 

5 HIT Standards Committee shall, as appropriate, 

6 provide for the testing of such standards and 

7 specifications by the National Institute for 

8 Standards and Technology under section 4201 of 

9 the HITECH Act. 

10 ‘‘(C) CONSISTENCY.—The standards, imple11 mentation specifications, and certification cri12 teria recommended under this subsection shall be 

13 consistent with the standards for information 

14 transactions and data elements adopted pursu15 ant to section 1173 of the Social Security Act. 

16 ‘‘(2) FORUM.—The HIT Standards Committee 

17 shall serve as a forum for the participation of a broad 

18 range of stakeholders to provide input on the develop19 ment, harmonization, and recognition of standards, 

20 implementation specifications, and certification cri21 teria necessary for the development and adoption of 

22 a nationwide health information technology infra23 structure that allows for the electronic use and ex24 change of health information. 


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1 ‘‘(3) SCHEDULE.—Not later than 90 days after 

2 the date of the enactment of this title, the HIT Stand3 ards Committee shall develop a schedule for the assess4 ment of policy recommendations developed by the 

5 HIT Policy Committee under section 3002. The HIT 

6 Standards Committee shall update such schedule an7 nually. The Secretary shall publish such schedule in 

8 the Federal Register. 

9 ‘‘(4) PUBLIC INPUT.—The HIT Standards Com10 mittee shall conduct open public meetings and develop 

11 a process to allow for public comment on the schedule 

12 described in paragraph (3) and recommendations de13 scribed in this subsection. Under such process com14 ments shall be submitted in a timely manner after the 

15 date of publication of a recommendation under this 

16 subsection. 

17 ‘‘(c) MEMBERSHIP AND OPERATIONS.— 

18 ‘‘(1) IN GENERAL.—The National Coordinator 

19 shall provide leadership in the establishment and op20 erations of the HIT Standards Committee. 

21 ‘‘(2) MEMBERSHIP.—The membership of the HIT 

22 Standards Committee shall at least reflect providers, 

23 ancillary healthcare workers, consumers, purchasers, 

24 health plans, technology vendors, researchers, relevant 

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1 pertise on health care quality, privacy and security, 

2 and on the electronic exchange and use of health in3 formation. 

4 ‘‘(3) CONSIDERATION.—The National Coordi5 nator shall ensure that the relevant recommendations 

6 and comments from the National Committee on Vital 

7 and Health Statistics are considered in the develop8 ment of standards. 

9 ‘‘(4) ASSISTANCE.—For the purposes of carrying 

10 out this section, the Secretary may provide or ensure 

11 that financial assistance is provided by the HIT 

12 Standards Committee to defray in whole or in part 

13 any membership fees or dues charged by such Com14 mittee to those consumer advocacy groups and not for 

15 profit entities that work in the public interest as a 

16 part of their mission. 

17 ‘‘(d) APPLICATION OF FACA.—The Federal Advisory 

18 Committee Act (5 U.S.C. App.), other than section 14, shall 

19 apply to the HIT Standards Committee. 

20 ‘‘(e) PUBLICATION.—The Secretary shall provide for 

21 publication in the Federal Register and the posting on the 

22 Internet website of the Office of the National Coordinator 

23 for Health Information Technology of all recommendations 

24 made by the HIT Standards Committee under this section. 


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1 ‘‘SEC. 3004. PROCESS FOR ADOPTION OF ENDORSED REC2 OMMENDATIONS; ADOPTION OF INITIAL SET 

3 OF STANDARDS, IMPLEMENTATION SPECI4 FICATIONS, AND CERTIFICATION CRITERIA. 

5 ‘‘(a) PROCESS FOR ADOPTION OF ENDORSED REC6 OMMENDATIONS.— 

7 ‘‘(1) REVIEW OF ENDORSED STANDARDS, IMPLE8 MENTATION SPECIFICATIONS, AND CERTIFICATION CRI9 TERIA.—Not later than 90 days after the date of re10 ceipt of standards, implementation specifications, or 

11 certification criteria endorsed under section 3001(c), 

12 the Secretary, in consultation with representatives of 

13 other relevant Federal agencies, shall jointly review 

14 such standards, implementation specifications, or cer15 tification criteria and shall determine whether or not 

16 to propose adoption of such standards, implementa17 tion specifications, or certification criteria. 

18 ‘‘(2) DETERMINATION TO ADOPT STANDARDS, IM19 PLEMENTATION SPECIFICATIONS, AND CERTIFICATION

20 CRITERIA.—If the Secretary determines— 

21 ‘‘(A) to propose adoption of any grouping of 

22 such standards, implementation specifications, 

23 or certification criteria, the Secretary shall, by 

24 regulation, determine whether or not to adopt 

25 such grouping of standards, implementation 

26 specifications, or certification criteria; or 


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1 ‘‘(B) not to propose adoption of any group2 ing of standards, implementation specifications, 

3 or certification criteria, the Secretary shall no4 tify the National Coordinator and the HIT 

5 Standards Committee in writing of such deter6 mination and the reasons for not proposing the 

7 adoption of such recommendation. 

8 ‘‘(3) PUBLICATION.—The Secretary shall provide 

9 for publication in the Federal Register of all deter10 minations made by the Secretary under paragraph 

11 (1). 

12 ‘‘(b) ADOPTION OF INITIAL SET OF STANDARDS, IM13 PLEMENTATION SPECIFICATIONS, AND CERTIFICATION CRI14 TERIA.— 

15 ‘‘(1) IN GENERAL.—Not later than December 31, 

16 2009, the Secretary shall, through the rulemaking 

17 process described in section 3003, adopt an initial set 

18 of standards, implementation specifications, and cer19 tification criteria for the areas required for consider20 ation under section 3002(b)(2)(B). 

21 ‘‘(2) APPLICATION OF CURRENT STANDARDS, IM22 PLEMENTATION SPECIFICATIONS, AND CERTIFICATION

23 CRITERIA.—The standards, implementation specifica24 tions, and certification criteria adopted before the 

25 date of the enactment of this title through the process 


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1 existing through the Office of the National Coordi2 nator for Health Information Technology may be ap3 plied towards meeting the requirement of paragraph 

4 (1). 

5 ‘‘SEC. 3005. APPLICATION AND USE OF ADOPTED STAND6 ARDS AND IMPLEMENTATION SPECIFICA7 TIONS BY FEDERAL AGENCIES. 

8 ‘‘For requirements relating to the application and use 

9 by Federal agencies of the standards and implementation 

10 specifications adopted under section 3004, see section 4111 

11 of the HITECH Act. 

12 ‘‘SEC. 3006. VOLUNTARY APPLICATION AND USE OF ADOPT13 ED STANDARDS AND IMPLEMENTATION SPEC14 IFICATIONS BY PRIVATE ENTITIES. 

15 ‘‘(a) IN GENERAL.—Except as provided under section 

16 4112 of the HITECH Act, any standard or implementation 

17 specification adopted under section 3004 shall be voluntary 

18 with respect to private entities. 

19 ‘‘(b) RULE OF CONSTRUCTION.—Nothing in this sub20 title shall be construed to require that a private entity that 

21 enters into a contract with the Federal Government apply 

22 or use the standards and implementation specifications 

23 adopted under section 3004 with respect to activities not 

24 related to the contract. 


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1 ‘‘SEC. 3007. FEDERAL HEALTH INFORMATION TECHNOLOGY. 

2 ‘‘(a) IN GENERAL.—The National Coordinator shall 

3 support the development, routine updating and provision 

4 of qualified EHR technology (as defined in section 3000) 

5 consistent with subsections (b) and (c) unless the Secretary 

6 determines that the needs and demands of providers are 

7 being substantially and adequately met through the market8 place. 

9 ‘‘(b) CERTIFICATION.—In making such EHR tech10 nology publicly available, the National Coordinator shall 

11 ensure that the qualified EHR technology described in sub12 section (a) is certified under the program developed under 

13 section 3001(c)(3) to be in compliance with applicable 

14 standards adopted under section 3003(a). 

15 ‘‘(c) AUTHORIZATION TO CHARGE A NOMINAL FEE.— 

16 The National Coordinator may impose a nominal fee for 

17 the adoption by a health care provider of the health infor18 mation technology system developed or approved under sub19 section (a) and (b). Such fee shall take into account the 

20 financial circumstances of smaller providers, low income 

21 providers, and providers located in rural or other medically 

22 underserved areas. 

23 ‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec24 tion shall be construed to require that a private or govern25 ment entity adopt or use the technology provided under this 

26 section. 


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1 ‘‘SEC. 3008. TRANSITIONS. 

2 ‘‘(a) ONCHIT.—To the extent consistent with section 

3 3001, all functions, personnel, assets, liabilities, and ad4 ministrative actions applicable to the National Coordinator 

5 for Health Information Technology appointed under Execu6 tive Order 13335 or the Office of such National Coordinator 

7 on the date before the date of the enactment of this title 

8 shall be transferred to the National Coordinator appointed 

9 under section 3001(a) and the Office of such National Coor10 dinator as of the date of the enactment of this title. 

11 ‘‘(b) AHIC.— 

12 ‘‘(1) To the extent consistent with sections 3002 

13 and 3003, all functions, personnel, assets, and liabil14 ities applicable to the AHIC Successor, Inc. doing 

15 business as the National eHealth Collaborative as of 

16 the day before the date of the enactment of this title 

17 shall be transferred to the HIT Policy Committee or 

18 the HIT Standards Committee, established under sec19 tion 3002(a) or 3003(a), as appropriate, as of the 

20 date of the enactment of this title. 

21 ‘‘(2) In carrying out section 3003(b)(1)(A), until 

22 recommendations are made by the HIT Policy Com23 mittee, recommendations of the HIT Standards Com24 mittee shall be consistent with the most recent rec25 ommendations made by such AHIC Successor, Inc. 

26 ‘‘(c) RULES OF CONSTRUCTION.— 


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1 ‘‘(1) ONCHIT.—Nothing in section 3001 or sub2 section (a) shall be construed as requiring the cre3 ation of a new entity to the extent that the Office of 

4 the National Coordinator for Health Information 

5 Technology established pursuant to Executive Order 

6 13335 is consistent with the provisions of section 

7 3001. 

8 ‘‘(2) AHIC.—Nothing in sections 3002 or 3003 

9 or subsection (b) shall be construed as prohibiting the 

10 AHIC Successor, Inc. doing business as the National 

11 eHealth Collaborative from modifying its charter, du12 ties, membership, and any other structure or function 

13 required to be consistent with section 3002 and 3003 

14 in a manner that would permit the Secretary to 

15 choose to recognize such Community as the HIT Pol16 icy Committee or the HIT Standards Committee. 

17 ‘‘SEC. 3009. RELATION TO HIPAA PRIVACY AND SECURITY 

18 LAW. 

19 ‘‘(a) IN GENERAL.—With respect to the relation of this 

20 title to HIPAA privacy and security law: 

21 ‘‘(1) This title may not be construed as having 

22 any effect on the authorities of the Secretary under 

23 HIPAA privacy and security law. 

24 ‘‘(2) The purposes of this title include ensuring 

25 that the health information technology standards and 


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1 implementation specifications adopted under section 

2 3004 take into account the requirements of HIPAA 

3 privacy and security law. 

4 ‘‘(b) DEFINITION.—For purposes of this section, the 

5 term ‘HIPAA privacy and security law’ means— 

6 ‘‘(1) the provisions of part C of title XI of the 

7 Social Security Act, section 264 of the Health Insur8 ance Portability and Accountability Act of 1996, and 

9 subtitle D of title IV of the HITECH Act; and 

10 ‘‘(2) regulations under such provisions. 

11 ‘‘SEC. 3010. AUTHORIZATION FOR APPROPRIATIONS. 

12 ‘‘There is authorized to be appropriated to the Office 

13 of the National Coordinator for Health Information Tech14 nology to carry out this subtitle $250,000,000 for fiscal year 

15 2009.’’. 

16 SEC. 4102. TECHNICAL AMENDMENT. 

17 Section 1171(5) of the Social Security Act (42 U.S.C. 

18 1320d) is amended by striking ‘‘or C’’ and inserting ‘‘C, 

19 or D’’. 


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1 PART II—APPLICATION AND USE OF ADOPTED 

2 HEALTH INFORMATION TECHNOLOGY 

3 STANDARDS; REPORTS 

4 SEC. 4111. COORDINATION OF FEDERAL ACTIVITIES WITH 

5 ADOPTED STANDARDS AND IMPLEMENTA6 TION SPECIFICATIONS. 

7 (a) SPENDING ON HEALTH INFORMATION TECH8 NOLOGY SYSTEMS.—As each agency (as defined in the Exec9 utive Order issued on August 22, 2006, relating to pro10 moting quality and efficient health care in Federal Govern11 ment administered or sponsored health care programs) im12 plements, acquires, or upgrades health information tech13 nology systems used for the direct exchange of individually 

14 identifiable health information between agencies and with 

15 non-Federal entities, it shall utilize, where available, health 

16 information technology systems and products that meet 

17 standards and implementation specifications adopted under 

18 section 3004(b) of the Public Health Service Act, as added 

19 by section 4101. 

20 (b) FEDERAL INFORMATION COLLECTION ACTIVI21 TIES.—With respect to a standard or implementation speci22 fication adopted under section 3004(b) of the Public Health 

23 Service Act, as added by section 4101, the President shall 

24 take measures to ensure that Federal activities involving 

25 the broad collection and submission of health information 

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1 fication, respectively, within three years after the date of 

2 such adoption. 

3 (c) APPLICATION OF DEFINITIONS.—The definitions 

4 contained in section 3000 of the Public Health Service Act, 

5 as added by section 4101, shall apply for purposes of this 

6 part. 

7 SEC. 4112. APPLICATION TO PRIVATE ENTITIES. 

8 Each agency (as defined in such Executive Order 

9 issued on August 22, 2006, relating to promoting quality 

10 and efficient health care in Federal Government adminis11 tered or sponsored health care programs) shall require in 

12 contracts or agreements with health care providers, health 

13 plans, or health insurance issuers that as each provider, 

14 plan, or issuer implements, acquires, or upgrades health in15 formation technology systems, it shall utilize, where avail16 able, health information technology systems and products 

17 that meet standards and implementation specifications 

18 adopted under section 3004(b) of the Public Health Service 

19 Act, as added by section 4101. 

20 SEC. 4113. STUDY AND REPORTS. 

21 (a) REPORT ON ADOPTION OF NATIONWIDE SYSTEM.— 

22 Not later than 2 years after the date of the enactment of 

23 this Act and annually thereafter, the Secretary of Health 

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1 mittees of jurisdiction of the House of Representatives and 

2 the Senate a report that— 

3 (1) describes the specific actions that have been 

4 taken by the Federal Government and private entities 

5 to facilitate the adoption of a nationwide system for 

6 the electronic use and exchange of health information; 

7 (2) describes barriers to the adoption of such a 

8 nationwide system; and 

9 (3) contains recommendations to achieve full im10 plementation of such a nationwide system. 

11 (b) REIMBURSEMENT INCENTIVE STUDY AND RE12 PORT.— 

13 (1) STUDY.—The Secretary of Health and 

14 Human Services shall carry out, or contract with a 

15 private entity to carry out, a study that examines 

16 methods to create efficient reimbursement incentives 

17 for improving health care quality in federally quali18 fied health centers, rural health clinics, and free clin19 ics. 

20 (2) REPORT.—Not later than 2 years after the 

21 date of the enactment of this Act, the Secretary of 

22 Health and Human Services shall submit to the ap23 propriate committees of jurisdiction of the House of 

24 Representatives and the Senate a report on the study 

25 carried out under paragraph (1). 


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1 (c) AGING SERVICES TECHNOLOGY STUDY AND RE2 PORT.— 

3 (1) IN GENERAL.—The Secretary of Health and 

4 Human Services shall carry out, or contract with a 

5 private entity to carry out, a study of matters relat6 ing to the potential use of new aging services tech7 nology to assist seniors, individuals with disabilities, 

8 and their caregivers throughout the aging process. 

9 (2) MATTERS TO BE STUDIED.—The study under 

10 paragraph (1) shall include— 

11 (A) an evaluation of— 

12 (i) methods for identifying current, 

13 emerging, and future health technology that 

14 can be used to meet the needs of seniors and 

15 individuals with disabilities and their care16 givers across all aging services settings, as 

17 specified by the Secretary; 

18 (ii) methods for fostering scientific in19 novation with respect to aging services tech20 nology within the business and academic 

21 communities; and 

22 (iii) developments in aging services 

23 technology in other countries that may be 

24 applied in the United States; and 

25 (B) identification of— 


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1 (i) barriers to innovation in aging 

2 services technology and devising strategies 

3 for removing such barriers; and 

4 (ii) barriers to the adoption of aging 

5 services technology by health care providers 

6 and consumers and devising strategies to re7 moving such barriers. 

8 (3) REPORT.—Not later than 24 months after the 

9 date of the enactment of this Act, the Secretary shall 

10 submit to the appropriate committees of jurisdiction 

11 of the House of Representatives and of the Senate a 

12 report on the study carried out under paragraph (1). 

13 (4) DEFINITIONS.—For purposes of this sub14 section: 

15 (A) AGING SERVICES TECHNOLOGY.—The 

16 term ‘‘aging services technology’’ means health 

17 technology that meets the health care needs of 

18 seniors, individuals with disabilities, and the 

19 caregivers of such seniors and individuals. 

20 (B) SENIOR.—The term ‘‘senior’’ has such 

21 meaning as specified by the Secretary. 


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1 Subtitle B—Testing of Health 

2 Information Technology 

3 SEC. 4201. NATIONAL INSTITUTE FOR STANDARDS AND 

4 TECHNOLOGY TESTING. 

5 (a) PILOT TESTING OF STANDARDS AND IMPLEMENTA6 TION SPECIFICATIONS.—In coordination with the HIT 

7 Standards Committee established under section 3003 of the 

8 Public Health Service Act, as added by section 4101, with 

9 respect to the development of standards and implementation 

10 specifications under such section, the Director of the Na11 tional Institute for Standards and Technology shall test 

12 such standards and implementation specifications, as ap13 propriate, in order to assure the efficient implementation 

14 and use of such standards and implementation specifica15 tions. 

16 (b) VOLUNTARY TESTING PROGRAM.—In coordination 

17 with the HIT Standards Committee established under sec18 tion 3003 of the Public Health Service Act, as added by 

19 section 4101, with respect to the development of standards 

20 and implementation specifications under such section, the 

21 Director of the National Institute of Standards and Tech22 nology shall support the establishment of a conformance 

23 testing infrastructure, including the development of tech24 nical test beds. The development of this conformance testing 


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1 infrastructure may include a program to accredit inde2 pendent, non-Federal laboratories to perform testing. 

3 SEC. 4202. RESEARCH AND DEVELOPMENT PROGRAMS. 

4 (a) HEALTH CARE INFORMATION ENTERPRISE INTE5 GRATION RESEARCH CENTERS.— 

6 (1) IN GENERAL.—The Director of the National 

7 Institute of Standards and Technology, in consulta8 tion with the Director of the National Science Foun9 dation and other appropriate Federal agencies, shall 

10 establish a program of assistance to institutions of 

11 higher education (or consortia thereof which may in12 clude nonprofit entities and Federal Government lab13 oratories) to establish multidisciplinary Centers for 

14 Health Care Information Enterprise Integration. 

15 (2) REVIEW; COMPETITION.—Grants shall be 

16 awarded under this subsection on a merit-reviewed, 

17 competitive basis. 

18 (3) PURPOSE.—The purposes of the Centers de19 scribed in paragraph (1) shall be— 

20 (A) to generate innovative approaches to 

21 health care information enterprise integration by 

22 conducting cutting-edge, multidisciplinary re23 search on the systems challenges to health care 

24 delivery; and 


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1 (B) the development and use of health infor2 mation technologies and other complementary 

3 fields. 

4 (4) RESEARCH AREAS.—Research areas may in5 clude— 

6 (A) interfaces between human information 

7 and communications technology systems; 

8 (B) voice-recognition systems; 

9 (C) software that improves interoperability 

10 and connectivity among health information sys11 tems; 

12 (D) software dependability in systems crit13 ical to health care delivery; 

14 (E) measurement of the impact of informa15 tion technologies on the quality and productivity 

16 of health care; 

17 (F) health information enterprise manage18 ment; 

19 (G) health information technology security 

20 and integrity; and 

21 (H) relevant health information technology 

22 to reduce medical errors. 

23 (5) APPLICATIONS.—An institution of higher 

24 education (or a consortium thereof) seeking funding 

25 under this subsection shall submit an application to 


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1 the Director of the National Institute of Standards 

2 and Technology at such time, in such manner, and 

3 containing such information as the Director may re4 quire. The application shall include, at a minimum, 

5 a description of— 

6 (A) the research projects that will be under7 taken by the Center established pursuant to as8 sistance under paragraph (1) and the respective 

9 contributions of the participating entities; 

10 (B) how the Center will promote active col11 laboration among scientists and engineers from 

12 different disciplines, such as information tech13 nology, biologic sciences, management, social 

14 sciences, and other appropriate disciplines; 

15 (C) technology transfer activities to dem16 onstrate and diffuse the research results, tech17 nologies, and knowledge; and 

18 (D) how the Center will contribute to the 

19 education and training of researchers and other 

20 professionals in fields relevant to health informa21 tion enterprise integration. 

22 (b) NATIONAL INFORMATION TECHNOLOGY RESEARCH

23 AND DEVELOPMENT PROGRAM.—The National High-Per24 formance Computing Program established by section 101 of 

25 the High-Performance Computing Act of 1991 (15 U.S.C. 


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1 5511) shall coordinate Federal research and development 

2 programs related to the development and deployment of 

3 health information technology, including activities related 

4 to— 

5 (1) computer infrastructure; 

6 (2) data security; 

7 (3) development of large-scale, distributed, reli8 able computing systems; 

9 (4) wired, wireless, and hybrid high-speed net10 working; 

11 (5) development of software and software-inten12 sive systems; 

13 (6) human-computer interaction and informa14 tion management technologies; and 

15 (7) the social and economic implications of in16 formation technology. 

17 Subtitle C—Incentives for the Use of 

18 Health Information Technology 

19 PART I—GRANTS AND LOANS FUNDING 

20 SEC. 4301. GRANT, LOAN, AND DEMONSTRATION PRO21 GRAMS. 

22 Title XXX of the Public Health Service Act, as added 

23 by section 4101, is amended by adding at the end the fol24 lowing new subtitle: 


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1 ‘‘Subtitle B—Incentives for the Use 

2 of Health Information Technology 

3 ‘‘SEC. 3011. IMMEDIATE FUNDING TO STRENGTHEN THE 

4 HEALTH INFORMATION TECHNOLOGY INFRA5 STRUCTURE. 

6 ‘‘(a) IN GENERAL.—The Secretary of Health and 

7 Human Services shall, using amounts appropriated under 

8 section 3018, invest in the infrastructure necessary to allow 

9 for and promote the electronic exchange and use of health 

10 information for each individual in the United States con11 sistent with the goals outlined in the strategic plan devel12 oped by the National Coordinator (and as available) under 

13 section 3001. To the greatest extent practicable, the Sec14 retary shall ensure that any funds so appropriated shall 

15 be used for the acquisition of health information technology 

16 that meets standards and certification criteria adopted be17 fore the date of the enactment of this title until such date 

18 as the standards are adopted under section 3004. The Sec19 retary shall invest funds through the different agencies with 

20 expertise in such goals, such as the Office of the National 

21 Coordinator for Health Information Technology, the Health 

22 Resources and Services Administration, the Agency for 

23 Healthcare Research and Quality, the Centers of Medicare 

24 & Medicaid Services, the Centers for Disease Control and 


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1 Prevention, and the Indian Health Service to support the 

2 following: 

3 ‘‘(1) Health information technology architecture 

4 that will support the nationwide electronic exchange 

5 and use of health information in a secure, private, 

6 and accurate manner, including connecting health in7 formation exchanges, and which may include updat8 ing and implementing the infrastructure necessary 

9 within different agencies of the Department of Health 

10 and Human Services to support the electronic use 

11 and exchange of health information. 

12 ‘‘(2) Development and adoption of appropriate 

13 certified electronic health records for categories of pro14 viders not eligible for support under title XVIII or 

15 XIX of the Social Security Act for the adoption of 

16 such records. 

17 ‘‘(3) Training on and dissemination of informa18 tion on best practices to integrate health information 

19 technology, including electronic health records, into a 

20 provider’s delivery of care, consistent with best prac21 tices learned from the Health Information Technology 

22 Research Center developed under section 302, includ23 ing community health centers receiving assistance 

24 under section 330 of the Public Health Service Act, 

25 covered entities under section 340B of such Act, and 


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1 providers participating in one or more of the pro2 grams under titles XVIII, XIX, and XXI of the Social 

3 Security Act (relating to Medicare, Medicaid, and the 

4 State Children’s Health Insurance Program). 

5 ‘‘(4) Infrastructure and tools for the promotion 

6 of telemedicine, including coordination among Fed7 eral agencies in the promotion of telemedicine. 

8 ‘‘(5) Promotion of the interoperability of clinical 

9 data repositories or registries. 

10 ‘‘(6) Promotion of technologies and best practices 

11 that enhance the protection of health information by 

12 all holders of individually identifiable health informa13 tion. 

14 ‘‘(7) Improve and expand the use of health infor15 mation technology by public health departments. 

16 ‘‘(8) Provide $300 million to support regional or 

17 sub-national efforts towards health information ex18 change. 

19 ‘‘(b) COORDINATION.—The Secretary shall ensure 

20 funds under this section are used in a coordinated manner 

21 with other health information promotion activities. 

22 ‘‘(c) ADDITIONAL USE OF FUNDS.—In addition to 

23 using funds as provided in subsection (a), the Secretary 

24 may use amounts appropriated under section 3018 to carry 


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1 out activities that are provided for under laws in effect on 

2 the date of the enactment of this title. 

3 ‘‘SEC. 3012. HEALTH INFORMATION TECHNOLOGY IMPLE4 MENTATION ASSISTANCE. 

5 ‘‘(a) HEALTH INFORMATION TECHNOLOGY EXTENSION

6 PROGRAM.—To assist health care providers to adopt, imple7 ment, and effectively use certified EHR technology that al8 lows for the electronic exchange and use of health informa9 tion, the Secretary, acting through the Office of the National 

10 Coordinator, shall establish a health information technology 

11 extension program to provide health information technology 

12 assistance services to be carried out through the Department 

13 of Health and Human Services. The National Coordinator 

14 shall consult with other Federal agencies with demonstrated 

15 experience and expertise in information technology services, 

16 such as the National Institute of Standards and Tech17 nology, in developing and implementing this program. 

18 ‘‘(b) HEALTH INFORMATION TECHNOLOGY RESEARCH

19 CENTER.— 

20 ‘‘(1) IN GENERAL.—The Secretary shall create a 

21 Health Information Technology Research Center (in 

22 this section referred to as the ‘Center’) to provide tech23 nical assistance and develop or recognize best prac24 tices to support and accelerate efforts to adopt, imple25 ment, and effectively utilize health information techVerDate Nov 24 2008 03:18 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00188 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 nology that allows for the electronic exchange and use 

2 of information in compliance with standards, imple3 mentation specifications, and certification criteria 

4 adopted under section 3004(b). 

5 ‘‘(2) INPUT.—The Center shall incorporate input 

6 from— 

7 ‘‘(A) other Federal agencies with dem8 onstrated experience and expertise in informa9 tion technology services such as the National In10 stitute of Standards and Technology; 

11 ‘‘(B) users of health information technology, 

12 such as providers and their support and clerical 

13 staff and others involved in the care and care co14 ordination of patients, from the health care and 

15 health information technology industry; and 

16 ‘‘(C) others as appropriate. 

17 ‘‘(3) PURPOSES.—The purposes of the Center are 

18 to— 

19 ‘‘(A) provide a forum for the exchange of 

20 knowledge and experience; 

21 ‘‘(B) accelerate the transfer of lessons 

22 learned from existing public and private sector 

23 initiatives, including those currently receiving 

24 Federal financial support; 


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1 ‘‘(C) assemble, analyze, and widely dissemi2 nate evidence and experience related to the adop3 tion, implementation, and effective use of health 

4 information technology that allows for the elec5 tronic exchange and use of information includ6 ing through the regional centers described in sub7 section (c); 

8 ‘‘(D) provide technical assistance for the es9 tablishment and evaluation of regional and local 

10 health information networks to facilitate the elec11 tronic exchange of information across health care 

12 settings and improve the quality of health care; 

13 ‘‘(E) provide technical assistance for the de14 velopment and dissemination of solutions to bar15 riers to the exchange of electronic health informa16 tion; and 

17 ‘‘(F) learn about effective strategies to adopt 

18 and utilize health information technology in 

19 medically underserved communities. 

20 ‘‘(c) HEALTH INFORMATION TECHNOLOGY REGIONAL

21 EXTENSION CENTERS.— 

22 ‘‘(1) IN GENERAL.—The Secretary shall provide 

23 assistance for the creation and support of regional 

24 centers (in this subsection referred to as ‘regional cen25 ters’) to provide technical assistance and disseminate 


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1 best practices and other information learned from the 

2 Center to support and accelerate efforts to adopt, im3 plement, and effectively utilize health information 

4 technology that allows for the electronic exchange and 

5 use of information in compliance with standards, im6 plementation specifications, and certification criteria 

7 adopted under section 3004. Activities conducted 

8 under this subsection shall be consistent with the stra9 tegic plan developed by the National Coordinator, 

10 (and, as available) under section 3001. 

11 ‘‘(2) AFFILIATION.—Regional centers shall be af12 filiated with any U.S.-based nonprofit institution or 

13 organization, or group thereof, that applies and is 

14 awarded financial assistance under this section. Indi15 vidual awards shall be decided on the basis of merit. 

16 ‘‘(3) OBJECTIVE.—The objective of the regional 

17 centers is to enhance and promote the adoption of 

18 health information technology through— 

19 ‘‘(A) assistance with the implementation, ef20 fective use, upgrading, and ongoing maintenance 

21 of health information technology, including elec22 tronic health records, to healthcare providers na23 tionwide; 


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1 ‘‘(B) broad participation of individuals 

2 from industry, universities, and State govern3 ments; 

4 ‘‘(C) active dissemination of best practices 

5 and research on the implementation, effective 

6 use, upgrading, and ongoing maintenance of 

7 health information technology, including elec8 tronic health records, to health care providers in 

9 order to improve the quality of healthcare and 

10 protect the privacy and security of health infor11 mation; 

12 ‘‘(D) participation, to the extent prac13 ticable, in health information exchanges; and 

14 ‘‘(E) utilization, when appropriate, of the 

15 expertise and capability that exists in Federal 

16 agencies other than the Department; and 

17 ‘‘(F) integration of health information tech18 nology, including electronic health records, into 

19 the initial and ongoing training of health profes20 sionals and others in the healthcare industry 

21 that would be instrumental to improving the 

22 quality of healthcare through the smooth and ac23 curate electronic use and exchange of health in24 formation. 


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1 ‘‘(4) REGIONAL ASSISTANCE.—Each regional 

2 center shall aim to provide assistance and education 

3 to all providers in a region, but shall prioritize any 

4 direct assistance first to the following: 

5 ‘‘(A) Public or not-for-profit hospitals or 

6 critical access hospitals. 

7 ‘‘(B) Federally qualified health centers (as 

8 defined in section 1861(aa)(4) of the Social Se9 curity Act). 

10 ‘‘(C) Entities that are located in rural and 

11 other areas that serve uninsured, underinsured, 

12 and medically underserved individuals (regard13 less of whether such area is urban or rural). 

14 ‘‘(D) Individual or small group practices 

15 (or a consortium thereof) that are primarily fo16 cused on primary care. 

17 ‘‘(5) FINANCIAL SUPPORT.—The Secretary may 

18 provide financial support to any regional center cre19 ated under this subsection for a period not to exceed 

20 four years. The Secretary may not provide more than 

21 50 percent of the capital and annual operating and 

22 maintenance funds required to create and maintain 

23 such a center, except in an instance of national eco24 nomic conditions which would render this cost-share 

25 requirement detrimental to the program and upon noVerDate Nov 24 2008 03:18 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00193 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 tification to Congress as to the justification to waive 

2 the cost-share requirement. 

3 ‘‘(6) NOTICE OF PROGRAM DESCRIPTION AND

4 AVAILABILITY OF FUNDS.—The Secretary shall pub5 lish in the Federal Register, not later than 90 days 

6 after the date of the enactment of this Act, a draft de7 scription of the program for establishing regional cen8 ters under this subsection. Such description shall in9 clude the following: 

10 ‘‘(A) A detailed explanation of the program 

11 and the programs goals. 

12 ‘‘(B) Procedures to be followed by the appli13 cants. 

14 ‘‘(C) Criteria for determining qualified ap15 plicants. 

16 ‘‘(D) Maximum support levels expected to be 

17 available to centers under the program. 

18 ‘‘(7) APPLICATION REVIEW.—The Secretary shall 

19 subject each application under this subsection to 

20 merit review. In making a decision whether to ap21 prove such application and provide financial support, 

22 the Secretary shall consider at a minimum the merits 

23 of the application, including those portions of the ap24 plication regarding— 


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1 ‘‘(A) the ability of the applicant to provide 

2 assistance under this subsection and utilization 

3 of health information technology appropriate to 

4 the needs of particular categories of health care 

5 providers; 

6 ‘‘(B) the types of service to be provided to 

7 health care providers; 

8 ‘‘(C) geographical diversity and extent of 

9 service area; and 

10 ‘‘(D) the percentage of funding and amount 

11 of in-kind commitment from other sources. 

12 ‘‘(8) BIENNIAL EVALUATION.—Each regional cen13 ter which receives financial assistance under this sub14 section shall be evaluated biennially by an evaluation 

15 panel appointed by the Secretary. Each evaluation 

16 panel shall be composed of private experts, none of 

17 whom shall be connected with the center involved, and 

18 of Federal officials. Each evaluation panel shall meas19 ure the involved center’s performance against the ob20 jective specified in paragraph (3). The Secretary shall 

21 not continue to provide funding to a regional center 

22 unless its evaluation is overall positive. 

23 ‘‘(9) CONTINUING SUPPORT.—After the second 

24 year of assistance under this subsection a regional 

25 center may receive additional support under this subVerDate Nov 24 2008 03:18 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00195 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 section if it has received positive evaluations and a 

2 finding by the Secretary that continuation of Federal 

3 funding to the center was in the best interest of provi4 sion of health information technology extension serv5 ices. 

6 ‘‘SEC. 3013. STATE GRANTS TO PROMOTE HEALTH INFORMA7 TION TECHNOLOGY. 

8 ‘‘(a) IN GENERAL.—The Secretary, acting through the 

9 National Coordinator, shall establish a program in accord10 ance with this section to facilitate and expand the electronic 

11 movement and use of health information among organiza12 tions according to nationally recognized standards. 

13 ‘‘(b) PLANNING GRANTS.—The Secretary may award 

14 a grant to a State or qualified State-designated entity (as 

15 described in subsection (d)) that submits an application to 

16 the Secretary at such time, in such manner, and containing 

17 such information as the Secretary may specify, for the pur18 pose of planning activities described in subsection (b). 

19 ‘‘(c) IMPLEMENTATION GRANTS.—The Secretary may 

20 award a grant to a State or qualified State-designated enti21 ty that— 

22 ‘‘(1) has submitted, and the Secretary has ap23 proved, a plan described in subsection (c) (regardless 

24 of whether such plan was prepared using amounts 

25 awarded under paragraph (1)); and 


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1 ‘‘(2) submits an application at such time, in 

2 such manner, and containing such information as the 

3 Secretary may specify. 

4 ‘‘(d) USE OF FUNDS.—Amounts received under a 

5 grant under subsection (a)(3) shall be used to conduct ac6 tivities to facilitate and expand the electronic movement 

7 and use of health information among organizations accord8 ing to nationally recognized standards through activities 

9 that include— 

10 ‘‘(1) enhancing broad and varied participation 

11 in the authorized and secure nationwide electronic use 

12 and exchange of health information; 

13 ‘‘(2) identifying State or local resources available 

14 towards a nationwide effort to promote health infor15 mation technology; 

16 ‘‘(3) complementing other Federal grants, pro17 grams, and efforts towards the promotion of health 

18 information technology; 

19 ‘‘(4) providing technical assistance for the devel20 opment and dissemination of solutions to barriers to 

21 the exchange of electronic health information; 

22 ‘‘(5) promoting effective strategies to adopt and 

23 utilize health information technology in medically un24 derserved communities; 


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1 ‘‘(6) assisting patients in utilizing health infor2 mation technology; 

3 ‘‘(7) encouraging clinicians to work with Health 

4 Information Technology Regional Extension Centers 

5 as described in section 3012, to the extent they are 

6 available and valuable; 

7 ‘‘(8) supporting public health agencies’ author8 ized use of and access to electronic health information; 

9 ‘‘(9) promoting the use of electronic health 

10 records for quality improvement including through 

11 quality measures reporting; and 

12 ‘‘(10) such other activities as the Secretary may 

13 specify. 

14 ‘‘(e) PLAN.— 

15 ‘‘(1) IN GENERAL.—A plan described in this sub16 section is a plan that describes the activities to be 

17 carried out by a State or by the qualified State-des18 ignated entity within such State to facilitate and ex19 pand the electronic movement and use of health infor20 mation among organizations according to nationally 

21 recognized standards and implementation specifica22 tions. 

23 ‘‘(2) REQUIRED ELEMENTS.—A plan described 

24 in paragraph (1) shall— 

25 ‘‘(A) be pursued in the public interest; 


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1 ‘‘(B) be consistent with the strategic plan 

2 developed by the National Coordinator, (and, as 

3 available) under section 3001; 

4 ‘‘(C) include a description of the ways the 

5 State or qualified State-designated entity will 

6 carry out the activities described in subsection 

7 (b); and 

8 ‘‘(D) contain such elements as the Secretary 

9 may require. 

10 ‘‘(f) QUALIFIED STATE-DESIGNATED ENTITY.—For 

11 purposes of this section, to be a qualified State-designated 

12 entity, with respect to a State, an entity shall— 

13 ‘‘(1) be designated by the State as eligible to re14 ceive awards under this section; 

15 ‘‘(2) be a not-for-profit entity with broad stake16 holder representation on its governing board; 

17 ‘‘(3) demonstrate that one of its principal goals 

18 is to use information technology to improve health 

19 care quality and efficiency through the authorized 

20 and secure electronic exchange and use of health in21 formation; 

22 ‘‘(4) adopt nondiscrimination and conflict of in23 terest policies that demonstrate a commitment to 

24 open, fair, and nondiscriminatory participation by 

25 stakeholders; and 


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1 ‘‘(5) conform to such other requirements as the 

2 Secretary may establish. 

3 ‘‘(g) REQUIRED CONSULTATION.—In carrying out ac4 tivities described in subsections (a)(2) and (a)(3), a State 

5 or qualified State-designated entity shall consult with and 

6 consider the recommendations of— 

7 ‘‘(1) health care providers (including providers 

8 that provide services to low income and underserved 

9 populations); 

10 ‘‘(2) health plans; 

11 ‘‘(3) patient or consumer organizations that rep12 resent the population to be served; 

13 ‘‘(4) health information technology vendors; 

14 ‘‘(5) health care purchasers and employers; 

15 ‘‘(6) public health agencies; 

16 ‘‘(7) health professions schools, universities and 

17 colleges; 

18 ‘‘(8) clinical researchers; 

19 ‘‘(9) other users of health information technology 

20 such as the support and clerical staff of providers and 

21 others involved in the care and care coordination of 

22 patients; and 

23 ‘‘(10) such other entities, as may be determined 

24 appropriate by the Secretary. 


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1 ‘‘(h) CONTINUOUS IMPROVEMENT.—The Secretary 

2 shall annually evaluate the activities conducted under this 

3 section and shall, in awarding grants under this section, 

4 implement the lessons learned from such evaluation in a 

5 manner so that awards made subsequent to each such eval6 uation are made in a manner that, in the determination 

7 of the Secretary, will lead towards the greatest improvement 

8 in quality of care, decrease in costs, and the most effective 

9 authorized and secure electronic exchange of health informa10 tion. 

11 ‘‘(i) REQUIRED MATCH.— 

12 ‘‘(1) IN GENERAL.—For a fiscal year (beginning 

13 with fiscal year 2011), the Secretary may not make 

14 a grant under subsection (a) to a State unless the 

15 State agrees to make available non-Federal contribu16 tions (which may include in-kind contributions) to17 ward the costs of a grant awarded under subsection 

18 (a)(3) in an amount equal to— 

19 ‘‘(A) for fiscal year 2011, not less than $1 

20 for each $10 of Federal funds provided under the 

21 grant; 

22 ‘‘(B) for fiscal year 2012, not less than $1 

23 for each $7 of Federal funds provided under the 

24 grant; and 


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1 ‘‘(C) for fiscal year 2013 and each subse2 quent fiscal year, not less than $1 for each $3 of 

3 Federal funds provided under the grant. 

4 ‘‘(2) AUTHORITY TO REQUIRE STATE MATCH FOR

5 FISCAL YEARS BEFORE FISCAL YEAR 2011.—For any 

6 fiscal year during the grant program under this sec7 tion before fiscal year 2011, the Secretary may deter8 mine the extent to which there shall be required a 

9 non-Federal contribution from a State receiving a 

10 grant under this section. 

11 ‘‘SEC. 3014. COMPETITIVE GRANTS TO STATES AND INDIAN 

12 TRIBES FOR THE DEVELOPMENT OF LOAN 

13 PROGRAMS TO FACILITATE THE WIDESPREAD 

14 ADOPTION OF CERTIFIED EHR TECHNOLOGY. 

15 ‘‘(a) IN GENERAL.—The National Coordinator may 

16 award competitive grants to eligible entities for the estab17 lishment of programs for loans to health care providers to 

18 conduct the activities described in subsection (e). 

19 ‘‘(b) ELIGIBLE ENTITY DEFINED.—For purposes of 

20 this subsection, the term ‘eligible entity’ means a State or 

21 Indian tribe (as defined in the Indian Self-Determination 

22 and Education Assistance Act) that— 

23 ‘‘(1) submits to the National Coordinator an ap24 plication at such time, in such manner, and conVerDate Nov 24 2008 03:18 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00202 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 taining such information as the National Coordinator 

2 may require; 

3 ‘‘(2) submits to the National Coordinator a stra4 tegic plan in accordance with subsection (d) and pro5 vides to the National Coordinator assurances that the 

6 entity will update such plan annually in accordance 

7 with such subsection; 

8 ‘‘(3) provides assurances to the National Coordi9 nator that the entity will establish a Loan Fund in 

10 accordance with subsection (c); 

11 ‘‘(4) provides assurances to the National Coordi12 nator that the entity will not provide a loan from the 

13 Loan Fund to a health care provider unless the pro14 vider agrees to— 

15 ‘‘(A) submit reports on quality measures 

16 adopted by the Federal Government (by not later 

17 than 90 days after the date on which such meas18 ures are adopted), to— 

19 ‘‘(i) the Director of the Centers for 

20 Medicare & Medicaid Services (or his or her 

21 designee), in the case of an entity partici22 pating in the Medicare program under title 

23 XVIII of the Social Security Act or the 

24 Medicaid program under title XIX of such 

25 Act; or 


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1 ‘‘(ii) the Secretary in the case of other 

2 entities; 

3 ‘‘(B) demonstrate to the satisfaction of the 

4 Secretary (through criteria established by the 

5 Secretary) that any certified EHR technology 

6 purchased, improved, or otherwise financially 

7 supported under a loan under this section is 

8 used to exchange health information in a man9 ner that, in accordance with law and standards 

10 (as adopted under section 3005) applicable to the 

11 exchange of information, improves the quality of 

12 health care, such as promoting care coordination; 

13 and 

14 ‘‘(C) comply with such other requirements 

15 as the entity or the Secretary may require; 

16 ‘‘(D) include a plan on how health care pro17 viders involved intend to maintain and support 

18 the certified EHR technology over time; 

19 ‘‘(E) include a plan on how the health care 

20 providers involved intend to maintain and sup21 port the certified EHR technology that would be 

22 purchased with such loan, including the type of 

23 resources expected to be involved and any such 

24 other information as the State or Indian tribe, 

25 respectively, may require; and 


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1 ‘‘(5) agrees to provide matching funds in accord2 ance with subsection (i). 

3 ‘‘(c) ESTABLISHMENT OF FUND.—For purposes of sub4 section (b)(3), an eligible entity shall establish a certified 

5 EHR technology loan fund (referred to in this subsection 

6 as a ‘Loan Fund’) and comply with the other requirements 

7 contained in this section. A grant to an eligible entity under 

8 this section shall be deposited in the Loan Fund established 

9 by the eligible entity. No funds authorized by other provi10 sions of this title to be used for other purposes specified in 

11 this title shall be deposited in any Loan Fund. 

12 ‘‘(d) STRATEGIC PLAN.— 

13 ‘‘(1) IN GENERAL.—For purposes of subsection 

14 (b)(2), a strategic plan of an eligible entity under this 

15 subsection shall identify the intended uses of amounts 

16 available to the Loan Fund of such entity. 

17 ‘‘(2) CONTENTS.—A strategic plan under para18 graph (1), with respect to a Loan Fund of an eligible 

19 entity, shall include for a year the following: 

20 ‘‘(A) A list of the projects to be assisted 

21 through the Loan Fund during such year. 

22 ‘‘(B) A description of the criteria and meth23 ods established for the distribution of funds from 

24 the Loan Fund during the year. 


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1 ‘‘(C) A description of the financial status of 

2 the Loan Fund as of the date of submission of 

3 the plan. 

4 ‘‘(D) The short-term and long-term goals of 

5 the Loan Fund. 

6 ‘‘(e) USE OF FUNDS.—Amounts deposited in a Loan 

7 Fund, including loan repayments and interest earned on 

8 such amounts, shall be used only for awarding loans or loan 

9 guarantees, making reimbursements described in subsection 

10 (g)(4)(A), or as a source of reserve and security for lever11 aged loans, the proceeds of which are deposited in the Loan 

12 Fund established under subsection (a). Loans under this 

13 section may be used by a health care provider to— 

14 ‘‘(1) facilitate the purchase of certified EHR 

15 technology; 

16 ‘‘(2) enhance the utilization of certified EHR 

17 technology; 

18 ‘‘(3) train personnel in the use of such tech19 nology; or 

20 ‘‘(4) improve the secure electronic exchange of 

21 health information. 

22 ‘‘(f) TYPES OF ASSISTANCE.—Except as otherwise lim23 ited by applicable State law, amounts deposited into a 

24 Loan Fund under this subsection may only be used for the 

25 following: 


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1 ‘‘(1) To award loans that comply with the fol2 lowing: 

3 ‘‘(A) The interest rate for each loan shall 

4 not exceed the market interest rate. 

5 ‘‘(B) The principal and interest payments 

6 on each loan shall commence not later than 1 

7 year after the date the loan was awarded, and 

8 each loan shall be fully amortized not later than 

9 10 years after the date of the loan. 

10 ‘‘(C) The Loan Fund shall be credited with 

11 all payments of principal and interest on each 

12 loan awarded from the Loan Fund. 

13 ‘‘(2) To guarantee, or purchase insurance for, a 

14 local obligation (all of the proceeds of which finance 

15 a project eligible for assistance under this subsection) 

16 if the guarantee or purchase would improve credit 

17 market access or reduce the interest rate applicable to 

18 the obligation involved. 

19 ‘‘(3) As a source of revenue or security for the 

20 payment of principal and interest on revenue or gen21 eral obligation bonds issued by the eligible entity if 

22 the proceeds of the sale of the bonds will be deposited 

23 into the Loan Fund. 

24 ‘‘(4) To earn interest on the amounts deposited 

25 into the Loan Fund. 


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1 ‘‘(5) To make reimbursements described in sub2 section (g)(4)(A). 

3 ‘‘(g) ADMINISTRATION OF LOAN FUNDS.— 

4 ‘‘(1) COMBINED FINANCIAL ADMINISTRATION.— 

5 An eligible entity may (as a convenience and to avoid 

6 unnecessary administrative costs) combine, in accord7 ance with applicable State law, the financial admin8 istration of a Loan Fund established under this sub9 section with the financial administration of any other 

10 revolving fund established by the entity if otherwise 

11 not prohibited by the law under which the Loan Fund 

12 was established. 

13 ‘‘(2) COST OF ADMINISTERING FUND.—Each eli14 gible entity may annually use not to exceed 4 percent 

15 of the funds provided to the entity under a grant 

16 under this subsection to pay the reasonable costs of 

17 the administration of the programs under this section, 

18 including the recovery of reasonable costs expended to 

19 establish a Loan Fund which are incurred after the 

20 date of the enactment of this title. 

21 ‘‘(3) GUIDANCE AND REGULATIONS.—The Na22 tional Coordinator shall publish guidance and pro23 mulgate regulations as may be necessary to carry out 

24 the provisions of this section, including— 


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1 ‘‘(A) provisions to ensure that each eligible 

2 entity commits and expends funds allotted to the 

3 entity under this subsection as efficiently as pos4 sible in accordance with this title and applicable 

5 State laws; and 

6 ‘‘(B) guidance to prevent waste, fraud, and 

7 abuse. 

8 ‘‘(4) PRIVATE SECTOR CONTRIBUTIONS.— 

9 ‘‘(A) IN GENERAL.—A Loan Fund estab10 lished under this subsection may accept contribu11 tions from private sector entities, except that 

12 such entities may not specify the recipient or re13 cipients of any loan issued under this subsection. 

14 An eligible entity may agree to reimburse a pri15 vate sector entity for any contribution made 

16 under this subparagraph, except that the amount 

17 of such reimbursement may not be greater than 

18 the principal amount of the contribution made. 

19 ‘‘(B) AVAILABILITY OF INFORMATION.—An 

20 eligible entity shall make publicly available the 

21 identity of, and amount contributed by, any pri22 vate sector entity under subparagraph (A) and 

23 may issue letters of commendation or make other 

24 awards (that have no financial value) to any 

25 such entity. 


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1 ‘‘(h) MATCHING REQUIREMENTS.— 

2 ‘‘(1) IN GENERAL.—The National Coordinator 

3 may not make a grant under subsection (a) to an eli4 gible entity unless the entity agrees to make available 

5 (directly or through donations from public or private 

6 entities) non-Federal contributions in cash to the costs 

7 of carrying out the activities for which the grant is 

8 awarded in an amount equal to not less than $1 for 

9 each $5 of Federal funds provided under the grant. 

10 ‘‘(2) DETERMINATION OF AMOUNT OF NON-FED11 ERAL CONTRIBUTION.—In determining the amount of 

12 non-Federal contributions that an eligible entity has 

13 provided pursuant to subparagraph (A), the National 

14 Coordinator may not include any amounts provided 

15 to the entity by the Federal Government. 

16 ‘‘(i) EFFECTIVE DATE.—The Secretary may not make 

17 an award under this section prior to January 1, 2010. 

18 ‘‘SEC. 3015. DEMONSTRATION PROGRAM TO INTEGRATE IN19 FORMATION TECHNOLOGY INTO CLINICAL 

20 EDUCATION. 

21 ‘‘(a) IN GENERAL.—The Secretary may award grants 

22 under this section to carry out demonstration projects to 

23 develop academic curricula integrating certified EHR tech24 nology in the clinical education of health professionals. 


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1 Such awards shall be made on a competitive basis and pur2 suant to peer review. 

3 ‘‘(b) ELIGIBILITY.—To be eligible to receive a grant 

4 under subsection (a), an entity shall— 

5 ‘‘(1) submit to the Secretary an application at 

6 such time, in such manner, and containing such in7 formation as the Secretary may require; 

8 ‘‘(2) submit to the Secretary a strategic plan for 

9 integrating certified EHR technology in the clinical 

10 education of health professionals to reduce medical er11 rors and enhance health care quality; 

12 ‘‘(3) be— 

13 ‘‘(A) a school of medicine, osteopathic medi14 cine, dentistry, or pharmacy, a graduate pro15 gram in behavioral or mental health, or any 

16 other graduate health professions school; 

17 ‘‘(B) a graduate school of nursing or physi18 cian assistant studies; 

19 ‘‘(C) a consortium of two or more schools 

20 described in subparagraph (A) or (B); or 

21 ‘‘(D) an institution with a graduate med22 ical education program in medicine, osteopathic 

23 medicine, dentistry, pharmacy, nursing, or phy24 sician assistance studies. 


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1 ‘‘(4) provide for the collection of data regarding 

2 the effectiveness of the demonstration project to be 

3 funded under the grant in improving the safety of pa4 tients, the efficiency of health care delivery, and in 

5 increasing the likelihood that graduates of the grantee 

6 will adopt and incorporate certified EHR technology, 

7 in the delivery of health care services; and 

8 ‘‘(5) provide matching funds in accordance with 

9 subsection (d). 

10 ‘‘(c) USE OF FUNDS.— 

11 ‘‘(1) IN GENERAL.—With respect to a grant 

12 under subsection (a), an eligible entity shall— 

13 ‘‘(A) use grant funds in collaboration with 

14 2 or more disciplines; and 

15 ‘‘(B) use grant funds to integrate certified 

16 EHR technology into community-based clinical 

17 education. 

18 ‘‘(2) LIMITATION.—An eligible entity shall not 

19 use amounts received under a grant under subsection 

20 (a) to purchase hardware, software, or services. 

21 ‘‘(d) FINANCIAL SUPPORT.—The Secretary may not 

22 provide more than 50 percent of the costs of any activity 

23 for which assistance is provided under subsection (a), except 

24 in an instance of national economic conditions which would 

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1 rimental to the program and upon notification to Congress 

2 as to the justification to waive the cost-share requirement. 

3 ‘‘(e) EVALUATION.—The Secretary shall take such ac4 tion as may be necessary to evaluate the projects funded 

5 under this section and publish, make available, and dis6 seminate the results of such evaluations on as wide a basis 

7 as is practicable. 

8 ‘‘(f) REPORTS.—Not later than 1 year after the date 

9 of enactment of this title, and annually thereafter, the Sec10 retary shall submit to the Committee on Health, Education, 

11 Labor, and Pensions and the Committee on Finance of the 

12 Senate, and the Committee on Energy and Commerce of 

13 the House of Representatives a report that— 

14 ‘‘(1) describes the specific projects established 

15 under this section; and 

16 ‘‘(2) contains recommendations for Congress 

17 based on the evaluation conducted under subsection 

18 (e). 

19 ‘‘SEC. 3016. INFORMATION TECHNOLOGY PROFESSIONALS 

20 ON HEALTH CARE. 

21 ‘‘(a) IN GENERAL.—The Secretary, in consultation 

22 with the Director of the National Science Foundation, shall 

23 provide assistance to institutions of higher education (or 

24 consortia thereof) to establish or expand medical health 

25 informatics education programs, including certification, 


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1 undergraduate, and masters degree programs, for both 

2 health care and information technology students to ensure 

3 the rapid and effective utilization and development of 

4 health information technologies (in the United States health 

5 care infrastructure). 

6 ‘‘(b) ACTIVITIES.—Activities for which assistance may 

7 be provided under subsection (a) may include the following: 

8 ‘‘(1) Developing and revising curricula in med9 ical health informatics and related disciplines. 

10 ‘‘(2) Recruiting and retaining students to the 

11 program involved. 

12 ‘‘(3) Acquiring equipment necessary for student 

13 instruction in these programs, including the installa14 tion of testbed networks for student use. 

15 ‘‘(4) Establishing or enhancing bridge programs 

16 in the health informatics fields between community 

17 colleges and universities. 

18 ‘‘(c) PRIORITY.—In providing assistance under sub19 section (a), the Secretary shall give preference to the fol20 lowing: 

21 ‘‘(1) Existing education and training programs. 

22 ‘‘(2) Programs designed to be completed in less 

23 than six months. 

24 ‘‘(d) FINANCIAL SUPPORT.—The Secretary may not 

25 provide more than 50 percent of the costs of any activity 


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1 for which assistance is provided under subsection (a), except 

2 in an instance of national economic conditions which would 

3 render the cost-share requirement under this subsection det4 rimental to the program and upon notification to Congress 

5 as to the justification to waive the cost-share requirement. 

6 ‘‘SEC. 3017. GENERAL GRANT AND LOAN PROVISIONS. 

7 ‘‘(a) REPORTS.—The Secretary may require that an 

8 entity receiving assistance under this title shall submit to 

9 the Secretary, not later than the date that is 1 year after 

10 the date of receipt of such assistance, a report that in11 cludes— 

12 ‘‘(1) an analysis of the effectiveness of the activi13 ties for which the entity receives such assistance, as 

14 compared to the goals for such activities; and 

15 ‘‘(2) an analysis of the impact of the project on 

16 health care quality and safety. 

17 ‘‘(b) REQUIREMENT TO IMPROVE QUALITY OF CARE

18 AND DECREASE IN COSTS.—The National Coordinator shall 

19 annually evaluate the activities conducted under this title 

20 and shall, in awarding grants, implement the lessons 

21 learned from such evaluation in a manner so that awards 

22 made subsequent to each such evaluation are made in a 

23 manner that, in the determination of the National Coordi24 nator, will result in the greatest improvement in the quality 

25 and efficiency of health care. 


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1 ‘‘SEC. 3018. AUTHORIZATION FOR APPROPRIATIONS. 

2 ‘‘For the purposes of carrying out this subtitle, there 

3 is authorized to be appropriated such sums as may be nec4 essary for each of the fiscal years 2009 through 2013. 

5 Amounts so appropriated shall remain available until ex6 pended.’’. 

7 PART II—MEDICARE PROGRAM 

8 SEC. 4311. INCENTIVES FOR ELIGIBLE PROFESSIONALS. 

9 (a) INCENTIVE PAYMENTS.—Section 1848 of the Social 

10 Security Act (42 U.S.C. 1395w–4) is amended by adding 

11 at the end the following new subsection: 

12 ‘‘(o) INCENTIVES FOR ADOPTION AND MEANINGFUL

13 USE OF CERTIFIED EHR TECHNOLOGY.— 

14 ‘‘(1) INCENTIVE PAYMENTS.— 

15 ‘‘(A) IN GENERAL.—Subject to the suc16 ceeding subparagraphs of this paragraph, with 

17 respect to covered professional services furnished 

18 by an eligible professional during a payment 

19 year (as defined in subparagraph (E)), if the eli20 gible professional is a meaningful EHR user (as 

21 determined under paragraph (2)) for the report22 ing period with respect to such year, in addition 

23 to the amount otherwise paid under this part, 

24 there also shall be paid to the eligible profes25 sional (or to an employer or facility in the cases 

26 described in clause (A) of section 1842(b)(6)), 


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1 from the Federal Supplementary Medical Insur2 ance Trust Fund established under section 1841 

3 an amount equal to 75 percent of the Secretary’s 

4 estimate (based on claims submitted not later 

5 than 2 months after the end of the payment 

6 year) of the allowed charges under this part for 

7 all such covered professional services furnished 

8 by the eligible professional during such year. 

9 ‘‘(B) LIMITATIONS ON AMOUNTS OF INCEN10 TIVE PAYMENTS.— 

11 ‘‘(i) IN GENERAL.—In no case shall the 

12 amount of the incentive payment provided 

13 under this paragraph for an eligible profes14 sional for a payment year exceed the appli15 cable amount specified under this subpara16 graph with respect to such eligible profes17 sional and such year. 

18 ‘‘(ii) AMOUNT.—Subject to clause (iii), 

19 the applicable amount specified in this sub20 paragraph for an eligible professional is as 

21 follows: 

22 ‘‘(I) For the first payment year 

23 for such professional, $15,000. 

24 ‘‘(II) For the second payment 

25 year for such professional, $12,000. 


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1 ‘‘(III) For the third payment year 

2 for such professional, $8,000. 

3 ‘‘(IV) For the fourth payment 

4 year for such professional, $4,000. 

5 ‘‘(V) For the fifth payment year 

6 for such professional, $2,000. 

7 ‘‘(VI) For any succeeding pay8 ment year for such professional, $0. 

9 ‘‘(iii) PHASE DOWN FOR ELIGIBLE

10 PROFESSIONALS FIRST ADOPTING EHR

11 AFTER 2013.—If the first payment year for 

12 an eligible professional is after 2013, then 

13 the amount specified in this subparagraph 

14 for a payment year for such professional is 

15 the same as the amount specified in clause 

16 (ii) for such payment year for an eligible 

17 professional whose first payment year is 

18 2013. If the first payment year for an eligi19 ble professional is after 2015 then the appli20 cable amount specified in this subparagraph 

21 for such professional for such year and any 

22 subsequent year shall be $0. 

23 ‘‘(C) NON-APPLICATION TO HOSPITAL-BASED

24 ELIGIBLE PROFESSIONALS.— 


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1 ‘‘(i) IN GENERAL.—No incentive pay2 ment may be made under this paragraph in 

3 the case of a hospital-based eligible profes4 sional. 

5 ‘‘(ii) HOSPITAL-BASED ELIGIBLE PRO6 FESSIONAL.—For purposes of clause (i), the 

7 term ‘hospital-based eligible professional’ 

8 means, with respect to covered professional 

9 services furnished by an eligible professional 

10 during the reporting period for a payment 

11 year, an eligible professional, such as a pa12 thologist, anesthesiologist, or emergency 

13 physician, who furnishes substantially all of 

14 such services in a hospital setting (whether 

15 inpatient or outpatient) and through the 

16 use of the facilities and equipment, includ17 ing computer equipment, of the hospital. 

18 ‘‘(D) PAYMENT.— 

19 ‘‘(i) FORM OF PAYMENT.—The pay20 ment under this paragraph may be in the 

21 form of a single consolidated payment or in 

22 the form of such periodic installments as the 

23 Secretary may specify. 

24 ‘‘(ii) COORDINATION OF APPLICATION

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1 FERENT PRACTICES.—In the case of an eli2 gible professional furnishing covered profes3 sional services in more than one practice 

4 (as specified by the Secretary), the Sec5 retary shall establish rules to coordinate the 

6 incentive payments, including the applica7 tion of the limitation on amounts of such 

8 incentive payments under this paragraph, 

9 among such practices. 

10 ‘‘(iii) COORDINATION WITH MED11 ICAID.—The Secretary shall seek, to the 

12 maximum extent practicable, to avoid du13 plicative requirements from Federal and 

14 State Governments to demonstrate meaning15 ful use of certified EHR technology under 

16 this title and title XIX. In doing so, the 

17 Secretary may deem satisfaction of State 

18 requirements for such meaningful use for a 

19 payment year under title XIX to be suffi20 cient to qualify as meaningful use under 

21 this subsection and subsection (a)(7) and 

22 vice versa. The Secretary may also adjust 

23 the reporting periods under such title and 

24 such subsections in order to carry out this 

25 clause. 


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1 ‘‘(E) PAYMENT YEAR DEFINED.— 

2 ‘‘(i) IN GENERAL.—For purposes of 

3 this subsection, the term ‘payment year’ 

4 means a year beginning with 2011. 

5 ‘‘(ii) FIRST, SECOND, ETC. PAYMENT

6 YEAR.—The term ‘first payment year’ 

7 means, with respect to covered professional 

8 services furnished by an eligible profes9 sional, the first year for which an incentive 

10 payment is made for such services under 

11 this subsection. The terms ‘second payment 

12 year’, ‘third payment year’, ‘fourth pay13 ment year’, and ‘fifth payment year’ mean, 

14 with respect to covered professional services 

15 furnished by such eligible professional, each 

16 successive year immediately following the 

17 first payment year for such professional. 

18 ‘‘(2) MEANINGFUL EHR USER.— 

19 ‘‘(A) IN GENERAL.—For purposes of para20 graph (1), an eligible professional shall be treat21 ed as a meaningful EHR user for a reporting 

22 period for a payment year (or, for purposes of 

23 subsection (a)(7), for a reporting period under 

24 such subsection for a year) if each of the fol25 lowing requirements is met: 


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1 ‘‘(i) MEANINGFUL USE OF CERTIFIED

2 EHR TECHNOLOGY.—The eligible profes3 sional demonstrates to the satisfaction of the 

4 Secretary, in accordance with subparagraph 

5 (C)(i), that during such period the profes6 sional is using certified EHR technology in 

7 a meaningful manner, which shall include 

8 the use of electronic prescribing as deter9 mined to be appropriate by the Secretary. 

10 ‘‘(ii) INFORMATION EXCHANGE.—The 

11 eligible professional demonstrates to the sat12 isfaction of the Secretary, in accordance 

13 with subparagraph (C)(i), that during such 

14 period such certified EHR technology is 

15 connected in a manner that provides, in ac16 cordance with law and standards applicable 

17 to the exchange of information, for the elec18 tronic exchange of health information to im19 prove the quality of health care, such as 

20 promoting care coordination. 

21 ‘‘(iii) REPORTING ON MEASURES USING

22 EHR.—Subject to subparagraph (B)(ii) and 

23 using such certified EHR technology, the el24 igible professional submits information for 

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1 fied by the Secretary, on such clinical qual2 ity measures and such other measures as se3 lected by the Secretary under subparagraph 

4 (B)(i). 

5 The Secretary may provide for the use of alter6 native means for meeting the requirements of 

7 clauses (i), (ii), and (iii) in the case of an eligi8 ble professional furnishing covered professional 

9 services in a group practice (as defined by the 

10 Secretary). The Secretary shall seek to improve 

11 the use of electronic health records and health 

12 care quality over time by requiring more strin13 gent measures of meaningful use selected under 

14 this paragraph. 

15 ‘‘(B) REPORTING ON MEASURES.— 

16 ‘‘(i) SELECTION.—The Secretary shall 

17 select measures for purposes of subpara18 graph (A)(iii) but only consistent with the 

19 following: 

20 ‘‘(I) The Secretary shall provide 

21 preference to clinical quality measures 

22 that have been endorsed by the entity 

23 with a contract with the Secretary 

24 under section 1890(a). 


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1 ‘‘(II) Prior to any measure being 

2 selected under this subparagraph, the 

3 Secretary shall publish in the Federal 

4 Register such measure and provide for 

5 a period of public comment on such 

6 measure. 

7 ‘‘(ii) LIMITATION.—The Secretary may 

8 not require the electronic reporting of infor9 mation on clinical quality measures under 

10 subparagraph (A)(iii) unless the Secretary 

11 has the capacity to accept the information 

12 electronically, which may be on a pilot 

13 basis. 

14 ‘‘(iii) COORDINATION OF REPORTING

15 OF INFORMATION.—In selecting such meas16 ures, and in establishing the form and man17 ner for reporting measures under subpara18 graph (A)(iii), the Secretary shall seek to 

19 avoid redundant or duplicative reporting 

20 otherwise required, including reporting 

21 under subsection (k)(2)(C). 

22 ‘‘(C) DEMONSTRATION OF MEANINGFUL USE

23 OF CERTIFIED EHR TECHNOLOGY AND INFORMA24 TION EXCHANGE.— 


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1 ‘‘(i) IN GENERAL.—A professional may 

2 satisfy the demonstration requirement of 

3 clauses (i) and (ii) of subparagraph (A) 

4 through means specified by the Secretary, 

5 which may include— 

6 ‘‘(I) an attestation; 

7 ‘‘(II) the submission of claims 

8 with appropriate coding (such as a 

9 code indicating that a patient encoun10 ter was documented using certified 

11 EHR technology); 

12 ‘‘(III) a survey response; 

13 ‘‘(IV) reporting under subpara14 graph (A)(iii); and 

15 ‘‘(V) other means specified by the 

16 Secretary. 

17 ‘‘(ii) USE OF PART D DATA.—Notwith18 standing sections 1860D–15(d)(2)(B) and 

19 1860D–15(f)(2), the Secretary may use data 

20 regarding drug claims submitted for pur21 poses of section 1860D–15 that are nec22 essary for purposes of subparagraph (A). 

23 ‘‘(3) APPLICATION.— 

24 ‘‘(A) PHYSICIAN REPORTING SYSTEM

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1 section (k) shall apply for purposes of this sub2 section in the same manner as they apply for 

3 purposes of such subsection. 

4 ‘‘(B) COORDINATION WITH OTHER PAY5 MENTS.—The provisions of this subsection shall 

6 not be taken into account in applying the provi7 sions of subsection (m) of this section and of sec8 tion 1833(m) and any payment under such pro9 visions shall not be taken into account in com10 puting allowable charges under this subsection. 

11 ‘‘(C) LIMITATIONS ON REVIEW.—There shall 

12 be no administrative or judicial review under 

13 section 1869, section 1878, or otherwise of the de14 termination of any incentive payment under this 

15 subsection and the payment adjustment under 

16 subsection (a)(7), including the determination of 

17 a meaningful EHR user under paragraph (2), a 

18 limitation under paragraph (1)(B), and the ex19 ception under subsection (a)(7)(B). 

20 ‘‘(D) POSTING ON WEBSITE.—The Secretary 

21 shall post on the Internet website of the Centers 

22 for Medicare & Medicaid Services, in an easily 

23 understandable format, a list of the names, busi24 ness addresses, and business phone numbers of 

25 the eligible professionals who are meaningful 


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1 EHR users and, as determined appropriate by 

2 the Secretary, of group practices receiving incen3 tive payments under paragraph (1). 

4 ‘‘(4) CERTIFIED EHR TECHNOLOGY DEFINED.— 

5 For purposes of this section, the term ‘certified EHR 

6 technology’ means a qualified electronic health record 

7 (as defined in 3000(13) of the Public Health Service 

8 Act) that is certified pursuant to section 3001(c)(5) of 

9 such Act as meeting standards adopted under section 

10 3004 of such Act that are applicable to the type of 

11 record involved (as determined by the Secretary, such 

12 as an ambulatory electronic health record for office13 based physicians or an inpatient hospital electronic 

14 health record for hospitals). 

15 ‘‘(5) DEFINITIONS.—For purposes of this sub16 section: 

17 ‘‘(A) COVERED PROFESSIONAL SERVICES.— 

18 The term ‘covered professional services’ has the 

19 meaning given such term in subsection (k)(3). 

20 ‘‘(B) ELIGIBLE PROFESSIONAL.—The term 

21 ‘eligible professional’ means a physician, as de22 fined in section 1861(r). 

23 ‘‘(C) REPORTING PERIOD.—The term ‘re24 porting period’ means any period (or periods), 


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1 with respect to a payment year, as specified by 

2 the Secretary.’’. 

3 (b) INCENTIVE PAYMENT ADJUSTMENT.—Section 

4 1848(a) of the Social Security Act (42 U.S.C. 1395w–4(a)) 

5 is amended by adding at the end the following new para6 graph: 

7 ‘‘(7) INCENTIVES FOR MEANINGFUL USE OF CER8 TIFIED EHR TECHNOLOGY.— 

9 ‘‘(A) ADJUSTMENT.— 

10 ‘‘(i) IN GENERAL.—Subject to subpara11 graphs (B) and (D), with respect to covered 

12 professional services furnished by an eligible 

13 professional during 2016 or any subsequent 

14 payment year, if the eligible professional is 

15 not a meaningful EHR user (as determined 

16 under subsection (o)(2)) for a reporting pe17 riod for the year, the fee schedule amount 

18 for such services furnished by such profes19 sional during the year (including the fee 

20 schedule amount for purposes of deter21 mining a payment based on such amount) 

22 shall be equal to the applicable percent of 

23 the fee schedule amount that would other24 wise apply to such services under this sub25 section (determined after application of 


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1 paragraph (3) but without regard to this 

2 paragraph). 

3 ‘‘(ii) APPLICABLE PERCENT.—Subject 

4 to clause (iii), for purposes of clause (i), the 

5 term ‘applicable percent’ means— 

6 ‘‘(I) for 2016, 99 percent; 

7 ‘‘(II) for 2017, 98 percent; and 

8 ‘‘(III) for 2018 and each subse9 quent year, 97 percent. 

10 ‘‘(iii) AUTHORITY TO DECREASE AP11 PLICABLE PERCENTAGE FOR 2019 AND SUB12 SEQUENT YEARS.—For 2019 and each sub13 sequent year, if the Secretary finds that the 

14 proportion of eligible professionals who are 

15 meaningful EHR users (as determined 

16 under subsection (o)(2)) is less than 75 per17 cent, the applicable percent shall be de18 creased by 1 percentage point from the ap19 plicable percent in the preceding year, but 

20 in no case shall the applicable percent be 

21 less than 95 percent. 

22 ‘‘(B) SIGNIFICANT HARDSHIP EXCEPTION.— 

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1 graph (A) if the Secretary determines, subject to 

2 annual renewal, that compliance with the re3 quirement for being a meaningful EHR user 

4 would result in a significant hardship, such as 

5 in the case of an eligible professional who prac6 tices in a rural area without sufficient Internet 

7 access. In no case may an eligible professional be 

8 granted an exemption under this subparagraph 

9 for more than 5 years. 

10 ‘‘(C) APPLICATION OF PHYSICIAN REPORT11 ING SYSTEM RULES.—Paragraphs (5), (6), and 

12 (8) of subsection (k) shall apply for purposes of 

13 this paragraph in the same manner as they 

14 apply for purposes of such subsection. 

15 ‘‘(D) NON-APPLICATION TO HOSPITAL16 BASED ELIGIBLE PROFESSIONALS.—No payment 

17 adjustment may be made under subparagraph 

18 (A) in the case of hospital-based eligible profes19 sionals (as defined in subsection (o)(1)(C)(ii)). 

20 ‘‘(E) DEFINITIONS.—For purposes of this 

21 paragraph: 

22 ‘‘(i) COVERED PROFESSIONAL SERV23 ICES.—The term ‘covered professional serv24 ices’ has the meaning given such term in 

25 subsection (k)(3). 


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1 ‘‘(ii) ELIGIBLE PROFESSIONAL.—The 

2 term ‘eligible professional’ means a physi3 cian, as defined in section 1861(r). 

4 ‘‘(iii) REPORTING PERIOD.—The term 

5 ‘reporting period’ means, with respect to a 

6 year, a period specified by the Secretary.’’. 

7 (c) APPLICATION TO CERTAIN HMO-AFFILIATED ELI8 GIBLE PROFESSIONALS.—Section 1853 of the Social Secu9 rity Act (42 U.S.C. 1395w–23) is amended by adding at 

10 the end the following new subsection: 

11 ‘‘(l) APPLICATION OF ELIGIBLE PROFESSIONAL INCEN12 TIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOPTION

13 AND MEANINGFUL USE OF CERTIFIED EHR TECH14 NOLOGY.— 

15 ‘‘(1) IN GENERAL.—Subject to paragraphs (3) 

16 and (4), in the case of a qualifying MA organization, 

17 the provisions of sections 1848(o) and 1848(a)(7) 

18 shall apply with respect to eligible professionals de19 scribed in paragraph (2) of the organization who the 

20 organization attests under paragraph (6) to be mean21 ingful EHR users in a similar manner as they apply 

22 to eligible professionals under such sections. Incentive 

23 payments under paragraph (3) shall be made to and 

24 payment adjustments under paragraph (4) shall 

25 apply to such qualifying organizations. 


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1 ‘‘(2) ELIGIBLE PROFESSIONAL DESCRIBED.— 

2 With respect to a qualifying MA organization, an eli3 gible professional described in this paragraph is an 

4 eligible professional (as defined for purposes of section 

5 1848(o)) who— 

6 ‘‘(A)(i) is employed by the organization; or 

7 ‘‘(ii)(I) is employed by, or is a partner of, 

8 an entity that through contract with the organi9 zation furnishes at least 80 percent of the enti10 ty’s patient care services to enrollees of such or11 ganization; and 

12 ‘‘(II) furnishes at least 75 percent of the 

13 professional services of the eligible professional to 

14 enrollees of the organization; and 

15 ‘‘(B) furnishes, on average, at least 20 hours 

16 per week of patient care services. 

17 ‘‘(3) ELIGIBLE PROFESSIONAL INCENTIVE PAY18 MENTS.— 

19 ‘‘(A) IN GENERAL.—In applying section 

20 1848(o) under paragraph (1), instead of the ad21 ditional payment amount under section 

22 1848(o)(1)(A) and subject to subparagraph (B), 

23 the Secretary may substitute an amount deter24 mined by the Secretary to the extent feasible and 

25 practical to be similar to the estimated amount 


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1 in the aggregate that would be payable if pay2 ment for services furnished by such professionals 

3 was payable under part B instead of this part. 

4 ‘‘(B) AVOIDING DUPLICATION OF PAY5 MENTS.— 

6 ‘‘(i) IN GENERAL.—If an eligible pro7 fessional described in paragraph (2) is eligi8 ble for the maximum incentive payment 

9 under section 1848(o)(1)(A) for the same 

10 payment period, the payment incentive 

11 shall be made only under such section and 

12 not under this subsection. 

13 ‘‘(ii) METHODS.—In the case of an eli14 gible professional described in paragraph 

15 (2) who is eligible for an incentive payment 

16 under section 1848(o)(1)(A) but is not de17 scribed in clause (i) for the same payment 

18 period, the Secretary shall develop a proc19 ess— 

20 ‘‘(I) to ensure that duplicate pay21 ments are not made with respect to an 

22 eligible professional both under this 

23 subsection and under section 

24 1848(o)(1)(A); and 


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1 ‘‘(II) to collect data from Medi2 care Advantage organizations to ensure 

3 against such duplicate payments. 

4 ‘‘(C) FIXED SCHEDULE FOR APPLICATION

5 OF LIMITATION ON INCENTIVE PAYMENTS FOR

6 ALL ELIGIBLE PROFESSIONALS.—In applying 

7 section 1848(o)(1)(B)(ii) under subparagraph 

8 (A), in accordance with rules specified by the 

9 Secretary, a qualifying MA organization shall 

10 specify a year (not earlier than 2011) that shall 

11 be treated as the first payment year for all eligi12 ble professionals with respect to such organiza13 tion. 

14 ‘‘(4) PAYMENT ADJUSTMENT.— 

15 ‘‘(A) IN GENERAL.—In applying section 

16 1848(a)(7) under paragraph (1), instead of the 

17 payment adjustment being an applicable percent 

18 of the fee schedule amount for a year under such 

19 section, subject to subparagraph (D), the pay20 ment adjustment under paragraph (1) shall be 

21 equal to the percent specified in subparagraph 

22 (B) for such year of the payment amount other23 wise provided under this section for such year. 

24 ‘‘(B) SPECIFIED PERCENT.—The percent 

25 specified under this subparagraph for a year is 


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1 100 percent minus a number of percentage 

2 points equal to the product of— 

3 ‘‘(i) the number of percentage points by 

4 which the applicable percent (under section 

5 1848(a)(7)(A)(ii)) for the year is less than 

6 100 percent; and 

7 ‘‘(ii) the Medicare physician expendi8 ture proportion specified in subparagraph 

9 (C) for the year. 

10 ‘‘(C) MEDICARE PHYSICIAN EXPENDITURE

11 PROPORTION.—The Medicare physician expendi12 ture proportion under this subparagraph for a 

13 year is the Secretary’s estimate of the propor14 tion, of the expenditures under parts A and B 

15 that are not attributable to this part, that are 

16 attributable to expenditures for physicians’ serv17 ices. 

18 ‘‘(D) APPLICATION OF PAYMENT ADJUST19 MENT.—In the case that a qualifying MA orga20 nization attests that not all eligible professionals 

21 are meaningful EHR users with respect to a 

22 year, the Secretary shall apply the payment ad23 justment under this paragraph based on the pro24 portion of such eligible professionals that are not 

25 meaningful EHR users for such year. 


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1 ‘‘(5) QUALIFYING MA ORGANIZATION DEFINED.— 

2 In this subsection and subsection (m), the term ‘quali3 fying MA organization’ means a Medicare Advantage 

4 organization that is organized as a health mainte5 nance organization (as defined in section 2791(b)(3) 

6 of the Public Health Service Act). 

7 ‘‘(6) MEANINGFUL EHR USER ATTESTATION.— 

8 For purposes of this subsection and subsection (m), a 

9 qualifying MA organization shall submit an attesta10 tion, in a form and manner specified by the Secretary 

11 which may include the submission of such attestation 

12 as part of submission of the initial bid under section 

13 1854(a)(1)(A)(iv), identifying— 

14 ‘‘(A) whether each eligible professional de15 scribed in paragraph (2), with respect to such 

16 organization is a meaningful EHR user (as de17 fined in section 1848(o)(2)) for a year specified 

18 by the Secretary; and 

19 ‘‘(B) whether each eligible hospital described 

20 in subsection (m)(1), with respect to such organi21 zation, is a meaningful EHR user (as defined in 

22 section 1886(n)(3)) for an applicable period 

23 specified by the Secretary.’’. 

24 (d) CONFORMING AMENDMENTS.—Section 1853 of the 

25 Social Security Act (42 U.S.C. 1395w–23) is amended— 


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1 (1) in subsection (a)(1)(A), by striking ‘‘and (i)’’ 

2 and inserting ‘‘(i), and (l)’’; 

3 (2) in subsection (c)— 

4 (A) in paragraph (1)(D)(i), by striking 

5 ‘‘section 1886(h)’’ and inserting ‘‘sections 

6 1848(o) and 1886(h)’’; and 

7 (B) in paragraph (6)(A), by inserting after 

8 ‘‘under part B,’’ the following: ‘‘excluding ex9 penditures attributable to subsections (a)(7) and 

10 (o) of section 1848,’’; and 

11 (3) in subsection (f), by inserting ‘‘and for pay12 ments under subsection (l)’’ after ‘‘with the organiza13 tion’’. 

14 (e) CONFORMING AMENDMENTS TO E-PRESCRIBING.— 

15 (1) Section 1848(a)(5)(A) of the Social Security 

16 Act (42 U.S.C. 1395w–4(a)(5)(A)) is amended— 

17 (A) in clause (i), by striking ‘‘or any subse18 quent year’’ and inserting ‘‘, 2013, 2014, or 

19 2015’’; and 

20 (B) in clause (ii), by striking ‘‘and each 

21 subsequent year’’ and inserting ‘‘and 2015’’. 

22 (2) Section 1848(m)(2) of such Act (42 U.S.C. 

23 1395w–4(m)(2)) is amended— 


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1 (A) in subparagraph (A), by striking ‘‘For 

2 2009’’ and inserting ‘‘Subject to subparagraph 

3 (D), for 2009’’; and 

4 (B) by adding at the end the following new 

5 subparagraph: 

6 ‘‘(D) LIMITATION WITH RESPECT TO EHR

7 INCENTIVE PAYMENTS.—The provisions of this 

8 paragraph shall not apply to an eligible profes9 sional (or, in the case of a group practice under 

10 paragraph (3)(C), to the group practice) if, for 

11 the reporting period the eligible professional (or 

12 group practice) receives an incentive payment 

13 under subsection (o)(1)(A) with respect to a cer14 tified EHR technology (as defined in subsection 

15 (o)(4)) that has the capability of electronic pre16 scribing.’’. 

17 SEC. 4312. INCENTIVES FOR HOSPITALS. 

18 (a) INCENTIVE PAYMENT.—Section 1886 of the Social 

19 Security Act (42 U.S.C. 1395ww) is amended by adding 

20 at the end the following new subsection: 

21 ‘‘(n) INCENTIVES FOR ADOPTION AND MEANINGFUL

22 USE OF CERTIFIED EHR TECHNOLOGY.— 

23 ‘‘(1) IN GENERAL.—Subject to the succeeding 

24 provisions of this subsection, with respect to inpatient 

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1 ing a payment year (as defined in paragraph 

2 (2)(G)), if the eligible hospital is a meaningful EHR 

3 user (as determined under paragraph (3)) for the re4 porting period with respect to such year, in addition 

5 to the amount otherwise paid under this section, there 

6 also shall be paid to the eligible hospital, from the 

7 Federal Hospital Insurance Trust Fund established 

8 under section 1817, an amount equal to the applica9 ble amount specified in paragraph (2)(A) for the hos10 pital for such payment year. 

11 ‘‘(2) PAYMENT AMOUNT.— 

12 ‘‘(A) IN GENERAL.—Subject to the suc13 ceeding subparagraphs of this paragraph, the ap14 plicable amount specified in this subparagraph 

15 for an eligible hospital for a payment year is 

16 equal to the product of the following: 

17 ‘‘(i) INITIAL AMOUNT.—The sum of— 

18 ‘‘(I) the base amount specified in 

19 subparagraph (B); plus 

20 ‘‘(II) the discharge related amount 

21 specified in subparagraph (C) for a 12- 

22 month period selected by the Secretary 

23 with respect to such payment year. 

24 ‘‘(ii) MEDICARE SHARE.—The Medi25 care share as specified in subparagraph (D) 


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1 for the hospital for a period selected by the 

2 Secretary with respect to such payment 

3 year. 

4 ‘‘(iii) TRANSITION FACTOR.—The tran5 sition factor specified in subparagraph (E) 

6 for the hospital for the payment year. 

7 ‘‘(B) BASE AMOUNT.—The base amount 

8 specified in this subparagraph is $2,000,000. 

9 ‘‘(C) DISCHARGE RELATED AMOUNT.—The 

10 discharge related amount specified in this sub11 paragraph for a 12-month period selected by the 

12 Secretary shall be determined as the sum of the 

13 amount, based upon total discharges (regardless 

14 of any source of payment) for the period, for 

15 each discharge up to the 23,000th discharge as 

16 follows: 

17 ‘‘(i) For the 1,150th through the 

18 9,200th discharge, $200. 

19 ‘‘(ii) For the 9,201st through the 

20 13,800th discharge, 50 percent of the 

21 amount specified in clause (i). 

22 ‘‘(iii) For the 13,801st through the 

23 23,000th discharge, 30 percent of the 

24 amount specified in clause (i). 


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1 ‘‘(D) MEDICARE SHARE.—The Medicare 

2 share specified under this subparagraph for a 

3 hospital for a period selected by the Secretary for 

4 a payment year is equal to the fraction— 

5 ‘‘(i) the numerator of which is the sum 

6 (for such period and with respect to the hos7 pital) of— 

8 ‘‘(I) the number of inpatient-bed9 days (as established by the Secretary) 

10 which are attributable to individuals 

11 with respect to whom payment may be 

12 made under part A; and 

13 ‘‘(II) the number of inpatient-bed14 days (as so established) which are at15 tributable to individuals who are en16 rolled with a Medicare Advantage or17 ganization under part C; and 

18 ‘‘(ii) the denominator of which is the 

19 product of— 

20 ‘‘(I) the total number of inpa21 tient-bed-days with respect to the hos22 pital during such period; and 

23 ‘‘(II) the total amount of the hos24 pital’s charges during such period, not 

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1 utable to charity care (as such term is 

2 used for purposes of hospital cost re3 porting under this title), divided by the 

4 total amount of the hospital’s charges 

5 during such period. 

6 Insofar as the Secretary determines that data are 

7 not available on charity care necessary to cal8 culate the portion of the formula specified in 

9 clause (ii)(II), the Secretary shall use data on 

10 uncompensated care and may adjust such data 

11 so as to be an appropriate proxy for charity care 

12 including a downward adjustment to eliminate 

13 bad debt data from uncompensated care data. In 

14 the absence of the data necessary, with respect to 

15 a hospital, for the Secretary to compute the 

16 amount described in clause (ii)(II), the amount 

17 under such clause shall be deemed to be 1. In the 

18 absence of data, with respect to a hospital, nec19 essary to compute the amount described in clause 

20 (i)(II), the amount under such clause shall be 

21 deemed to be 0. 

22 ‘‘(E) TRANSITION FACTOR SPECIFIED.— 

23 ‘‘(i) IN GENERAL.—Subject to clause 

24 (ii), the transition factor specified in this 


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1 subparagraph for an eligible hospital for a 

2 payment year is as follows: 

3 ‘‘(I) For the first payment year 

4 for such hospital, 1. 

5 ‘‘(II) For the second payment 

year for such hospital, 3 6 ⁄4. 

7 ‘‘(III) For the third payment year 

for such hospital, 1 8 ⁄2. 

9 ‘‘(IV) For the fourth payment 

year for such hospital, 1 10 ⁄4. 

11 ‘‘(V) For any succeeding payment 

12 year for such hospital, 0. 

13 ‘‘(ii) PHASE DOWN FOR ELIGIBLE HOS14 PITALS FIRST ADOPTING EHR AFTER 2013.— 

15 If the first payment year for an eligible hos16 pital is after 2013, then the transition fac17 tor specified in this subparagraph for a 

18 payment year for such hospital is the same 

19 as the amount specified in clause (i) for 

20 such payment year for an eligible hospital 

21 for which the first payment year is 2013. If 

22 the first payment year for an eligible hos23 pital is after 2015 then the transition factor 

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1 pital and for such year and any subsequent 

2 year shall be 0. 

3 ‘‘(F) FORM OF PAYMENT.—The payment 

4 under this subsection for a payment year may be 

5 in the form of a single consolidated payment or 

6 in the form of such periodic installments as the 

7 Secretary may specify. 

8 ‘‘(G) PAYMENT YEAR DEFINED.— 

9 ‘‘(i) IN GENERAL.—For purposes of 

10 this subsection, the term ‘payment year’ 

11 means a fiscal year beginning with fiscal 

12 year 2011. 

13 ‘‘(ii) FIRST, SECOND, ETC. PAYMENT

14 YEAR.—The term ‘first payment year’ 

15 means, with respect to inpatient hospital 

16 services furnished by an eligible hospital, 

17 the first fiscal year for which an incentive 

18 payment is made for such services under 

19 this subsection. The terms ‘second payment 

20 year’, ‘third payment year’, and ‘fourth 

21 payment year’ mean, with respect to an eli22 gible hospital, each successive year imme23 diately following the first payment year for 

24 that hospital. 

25 ‘‘(3) MEANINGFUL EHR USER.— 


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1 ‘‘(A) IN GENERAL.—For purposes of para2 graph (1), an eligible hospital shall be treated as 

3 a meaningful EHR user for a reporting period 

4 for a payment year (or, for purposes of sub5 section (b)(3)(B)(ix), for a reporting period 

6 under such subsection for a fiscal year) if each 

7 of the following requirements are met: 

8 ‘‘(i) MEANINGFUL USE OF CERTIFIED

9 EHR TECHNOLOGY.—The eligible hospital 

10 demonstrates to the satisfaction of the Sec11 retary, in accordance with subparagraph 

12 (C)(i), that during such period the hospital 

13 is using certified EHR technology in a 

14 meaningful manner. 

15 ‘‘(ii) INFORMATION EXCHANGE.—The 

16 eligible hospital demonstrates to the satis17 faction of the Secretary, in accordance with 

18 subparagraph (C)(i), that during such pe19 riod such certified EHR technology is con20 nected in a manner that provides, in ac21 cordance with law and standards applicable 

22 to the exchange of information, for the elec23 tronic exchange of health information to im24 prove the quality of health care, such as 

25 promoting care coordination. 


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1 ‘‘(iii) REPORTING ON MEASURES USING

2 EHR.—Subject to subparagraph (B)(ii) and 

3 using such certified EHR technology, the el4 igible hospital submits information for such 

5 period, in a form and manner specified by 

6 the Secretary, on such clinical quality 

7 measures and such other measures as se8 lected by the Secretary under subparagraph 

9 (B)(i). 

10 The Secretary shall seek to improve the use of 

11 electronic health records and health care quality 

12 over time by requiring more stringent measures 

13 of meaningful use selected under this paragraph. 

14 ‘‘(B) REPORTING ON MEASURES.— 

15 ‘‘(i) SELECTION.—The Secretary shall 

16 select measures for purposes of subpara17 graph (A)(iii) but only consistent with the 

18 following: 

19 ‘‘(I) The Secretary shall provide 

20 preference to clinical quality measures 

21 that have been selected for purposes of 

22 applying subsection (b)(3)(B)(viii) or 

23 that have been endorsed by the entity 

24 with a contract with the Secretary 

25 under section 1890(a). 


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1 ‘‘(II) Prior to any measure (other 

2 than a clinical quality measure that 

3 has been selected for purposes of apply4 ing subsection (b)(3)(B)(viii)) being se5 lected under this subparagraph, the 

6 Secretary shall publish in the Federal 

7 Register such measure and provide for 

8 a period of public comment on such 

9 measure. 

10 ‘‘(ii) LIMITATIONS.—The Secretary 

11 may not require the electronic reporting of 

12 information on clinical quality measures 

13 under subparagraph (A)(iii) unless the Sec14 retary has the capacity to accept the infor15 mation electronically, which may be on a 

16 pilot basis. 

17 ‘‘(iii) COORDINATION OF REPORTING

18 OF INFORMATION.—In selecting such meas19 ures, and in establishing the form and man20 ner for reporting measures under subpara21 graph (A)(iii), the Secretary shall seek to 

22 avoid redundant or duplicative reporting 

23 with reporting otherwise required, including 

24 reporting under subsection (b)(3)(B)(viii). 


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1 ‘‘(C) DEMONSTRATION OF MEANINGFUL USE

2 OF CERTIFIED EHR TECHNOLOGY AND INFORMA3 TION EXCHANGE.— 

4 ‘‘(i) IN GENERAL.—A hospital may 

5 satisfy the demonstration requirement of 

6 clauses (i) and (ii) of subparagraph (A) 

7 through means specified by the Secretary, 

8 which may include— 

9 ‘‘(I) an attestation; 

10 ‘‘(II) the submission of claims 

11 with appropriate coding (such as a 

12 code indicating that inpatient care 

13 was documented using certified EHR 

14 technology); 

15 ‘‘(III) a survey response; 

16 ‘‘(IV) reporting under subpara17 graph (A)(iii); and 

18 ‘‘(V) other means specified by the 

19 Secretary. 

20 ‘‘(ii) USE OF PART D DATA.—Notwith21 standing sections 1860D–15(d)(2)(B) and 

22 1860D–15(f)(2), the Secretary may use data 

23 regarding drug claims submitted for pur24 poses of section 1860D–15 that are nec25 essary for purposes of subparagraph (A). 


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1 ‘‘(4) APPLICATION.— 

2 ‘‘(A) LIMITATIONS ON REVIEW.—There shall 

3 be no administrative or judicial review under 

4 section 1869, section 1878, or otherwise of the de5 termination of any incentive payment under this 

6 subsection and the payment adjustment under 

7 subsection (b)(3)(B)(ix), including the deter8 mination of a meaningful EHR user under 

9 paragraph (3), determination of measures appli10 cable to services furnished by eligible hospitals 

11 under this subsection, and the exception under 

12 subsection (b)(3)(B)(ix)(II). 

13 ‘‘(B) POSTING ON WEBSITE.—The Secretary 

14 shall post on the Internet website of the Centers 

15 for Medicare & Medicaid Services, in an easily 

16 understandable format, a list of the names of the 

17 eligible hospitals that are meaningful EHR users 

18 under this subsection or subsection (b)(3)(B)(ix) 

19 and other relevant data as determined appro20 priate by the Secretary. The Secretary shall en21 sure that a hospital has the opportunity to re22 view the other relevant data that are to be made 

23 public with respect to the hospital prior to such 

24 data being made public. 


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1 ‘‘(5) CERTIFIED EHR TECHNOLOGY DEFINED.— 

2 The term ‘certified EHR technology’ has the meaning 

3 given such term in section 1848(o)(4). 

4 ‘‘(6) DEFINITIONS.—For purposes of this sub5 section: 

6 ‘‘(A) ELIGIBLE HOSPITAL.—The term ‘eligi7 ble hospital’ means a subsection (d) hospital. 

8 ‘‘(B) REPORTING PERIOD.—The term ‘re9 porting period’ means any period (or periods), 

10 with respect to a payment year, as specified by 

11 the Secretary.’’. 

12 (b) INCENTIVE MARKET BASKET ADJUSTMENT.—Sec13 tion 1886(b)(3)(B) of the Social Security Act (42 U.S.C. 

14 1395ww(b)(3)(B)) is amended— 

15 (1) in clause (viii)(I), by inserting ‘‘(or, begin16 ning with fiscal year 2016, by one-quarter)’’ after 

17 ‘‘2.0 percentage points’’; and 

18 (2) by adding at the end the following new 

19 clause: 

20 ‘‘(ix)(I) For purposes of clause (i) for fiscal year 2016 

21 and each subsequent fiscal year, in the case of an eligible 

22 hospital (as defined in subsection (n)(6)(A)) that is not a 

23 meaningful EHR user (as defined in subsection (n)(3)) for 

24 the reporting period for such fiscal year, three-quarters of 

25 the applicable percentage increase otherwise applicable 


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1 under clause (i) for such fiscal year shall be reduced by 

331⁄3 percent for fiscal year 2016, 662 2 ⁄3 percent for fiscal 

3 year 2017, and 100 percent for fiscal year 2018 and each 

4 subsequent fiscal year. Such reduction shall apply only with 

5 respect to the fiscal year involved and the Secretary shall 

6 not take into account such reduction in computing the ap7 plicable percentage increase under clause (i) for a subse8 quent fiscal year. 

9 ‘‘(II) The Secretary may, on a case-by-case basis, ex10 empt a subsection (d) hospital from the application of sub11 clause (I) with respect to a fiscal year if the Secretary deter12 mines, subject to annual renewal, that requiring such hos13 pital to be a meaningful EHR user during such fiscal year 

14 would result in a significant hardship, such as in the case 

15 of a hospital in a rural area without sufficient Internet ac16 cess. In no case may a hospital be granted an exemption 

17 under this subclause for more than 5 years. 

18 ‘‘(III) For fiscal year 2016 and each subsequent fiscal 

19 year, a State in which hospitals are paid for services under 

20 section 1814(b)(3) shall adjust the payments to each sub21 section (d) hospital in the State that is not a meaningful 

22 EHR user (as defined in subsection (n)(3)) in a manner 

23 that is designed to result in an aggregate reduction in pay24 ments to hospitals in the State that is equivalent to the ag25 gregate reduction that would have occurred if payments had 


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1 been reduced to each subsection (d) hospital in the State 

2 in a manner comparable to the reduction under the pre3 vious provisions of this clause. The State shall report to 

4 the Secretary the methodology it will use to make the pay5 ment adjustment under the previous sentence. 

6 ‘‘(IV) For purposes of this clause, the term ‘reporting 

7 period’ means, with respect to a fiscal year, any period (or 

8 periods), with respect to the fiscal year, as specified by the 

9 Secretary.’’. 

10 (c) APPLICATION TO CERTAIN HMO-AFFILIATED ELI11 GIBLE HOSPITALS.—Section 1853 of the Social Security 

12 Act (42 U.S.C. 1395w–23), as amended by section 4311(c), 

13 is further amended by adding at the end the following new 

14 subsection: 

15 ‘‘(m) APPLICATION OF ELIGIBLE HOSPITAL INCEN16 TIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOPTION

17 AND MEANINGFUL USE OF CERTIFIED EHR TECH18 NOLOGY.— 

19 ‘‘(1) APPLICATION.—Subject to paragraphs (3) 

20 and (4), in the case of a qualifying MA organization, 

21 the provisions of sections 1886(n) and 

22 1886(b)(3)(B)(ix) shall apply with respect to eligible 

23 hospitals described in paragraph (2) of the organiza24 tion which the organization attests under subsection 

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1 ner as they apply to eligible hospitals under such sec2 tions. Incentive payments under paragraph (3) shall 

3 be made to and payment adjustments under para4 graph (4) shall apply to such qualifying organiza5 tions. 

6 ‘‘(2) ELIGIBLE HOSPITAL DESCRIBED.—With re7 spect to a qualifying MA organization, an eligible 

8 hospital described in this paragraph is an eligible 

9 hospital that is under common corporate governance 

10 with such organization and serves individuals en11 rolled under an MA plan offered by such organiza12 tion. 

13 ‘‘(3) ELIGIBLE HOSPITAL INCENTIVE PAY14 MENTS.— 

15 ‘‘(A) IN GENERAL.—In applying section 

16 1886(n)(2) under paragraph (1), instead of the 

17 additional payment amount under section 

18 1886(n)(2), there shall be substituted an amount 

19 determined by the Secretary to be similar to the 

20 estimated amount in the aggregate that would be 

21 payable if payment for services furnished by 

22 such hospitals was payable under part A instead 

23 of this part. In implementing the previous sen24 tence, the Secretary— 


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1 ‘‘(i) shall, insofar as data to determine 

2 the discharge related amount under section 

3 1886(n)(2)(C) for an eligible hospital are 

4 not available to the Secretary, use such al5 ternative data and methodology to estimate 

6 such discharge related amount as the Sec7 retary determines appropriate; and 

8 ‘‘(ii) shall, insofar as data to deter9 mine the medicare share described in sec10 tion 1886(n)(2)(D) for an eligible hospital 

11 are not available to the Secretary, use such 

12 alternative data and methodology to esti13 mate such share, which data and method14 ology may include use of the inpatient bed 

15 days (or discharges) with respect to an eli16 gible hospital during the appropriate period 

17 which are attributable to both individuals 

18 for whom payment may be made under 

19 part A or individuals enrolled in an MA 

20 plan under a Medicare Advantage organiza21 tion under this part as a proportion of the 

22 total number of patient-bed-days (or dis23 charges) with respect to such hospital dur24 ing such period. 


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1 ‘‘(B) AVOIDING DUPLICATION OF PAY2 MENTS.— 

3 ‘‘(i) IN GENERAL.—In the case of a 

4 hospital that for a payment year is an eli5 gible hospital described in paragraph (2), is 

6 an eligible hospital under section 1886(n), 

7 and for which at least one-third of their dis8 charges (or bed-days) of Medicare patients 

9 for the year are covered under part A, pay10 ment for the payment year shall be made 

11 only under section 1886(n) and not under 

12 this subsection. 

13 ‘‘(ii) METHODS.—In the case of a hos14 pital that is an eligible hospital described 

15 in paragraph (2) and also is eligible for an 

16 incentive payment under section 1886(n) 

17 but is not described in clause (i) for the 

18 same payment period, the Secretary shall 

19 develop a process— 

20 ‘‘(I) to ensure that duplicate pay21 ments are not made with respect to an 

22 eligible hospital both under this sub23 section and under section 1886(n); and 


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1 ‘‘(II) to collect data from Medi2 care Advantage organizations to ensure 

3 against such duplicate payments. 

4 ‘‘(4) PAYMENT ADJUSTMENT.— 

5 ‘‘(A) Subject to paragraph (3), in the case 

6 of a qualifying MA organization (as defined in 

7 section 1853(l)(5)), if, according to the attesta8 tion of the organization submitted under sub9 section (l)(6) for an applicable period, one or 

10 more eligible hospitals (as defined in section 

11 1886(n)(6)(A)) that are under common corporate 

12 governance with such organization and that 

13 serve individuals enrolled under a plan offered 

14 by such organization are not meaningful EHR 

15 users (as defined in section 1886(n)(3)) with re16 spect to a period, the payment amount payable 

17 under this section for such organization for such 

18 period shall be the percent specified in subpara19 graph (B) for such period of the payment 

20 amount otherwise provided under this section for 

21 such period. 

22 ‘‘(B) SPECIFIED PERCENT.—The percent 

23 specified under this subparagraph for a year is 

24 100 percent minus a number of percentage 

25 points equal to the product of— 


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1 ‘‘(i) the number of the percentage point 

2 reduction effected under section 

3 1886(b)(3)(B)(ix)(I) for the period; and 

4 ‘‘(ii) the Medicare hospital expenditure 

5 proportion specified in subparagraph (C) 

6 for the year. 

7 ‘‘(C) MEDICARE HOSPITAL EXPENDITURE

8 PROPORTION.—The Medicare hospital expendi9 ture proportion under this subparagraph for a 

10 year is the Secretary’s estimate of the propor11 tion, of the expenditures under parts A and B 

12 that are not attributable to this part, that are 

13 attributable to expenditures for inpatient hos14 pital services. 

15 ‘‘(D) APPLICATION OF PAYMENT ADJUST16 MENT.—In the case that a qualifying MA orga17 nization attests that not all eligible hospitals are 

18 meaningful EHR users with respect to an appli19 cable period, the Secretary shall apply the pay20 ment adjustment under this paragraph based on 

21 a methodology specified by the Secretary, taking 

22 into account the proportion of such eligible hos23 pitals, or discharges from such hospitals, that are 

24 not meaningful EHR users for such period.’’. 

25 (d) CONFORMING AMENDMENTS.— 


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1 (1) Section 1814(b) of the Social Security Act 

2 (42 U.S.C. 1395f(b)) is amended— 

3 (A) in paragraph (3), in the matter pre4 ceding subparagraph (A), by inserting ‘‘, subject 

5 to section 1886(d)(3)(B)(ix)(III),’’ after ‘‘then’’; 

6 and 

7 (B) by adding at the end the following: 

8 ‘‘For purposes of applying paragraph (3), there 

9 shall be taken into account incentive payments, 

10 and payment adjustments under subsection 

11 (b)(3)(B)(ix) or (n) of section 1886.’’. 

12 (2) Section 1851(i)(1) of the Social Security Act 

13 (42 U.S.C. 1395w–21(i)(1)) is amended by striking 

14 ‘‘and 1886(h)(3)(D)’’ and inserting ‘‘1886(h)(3)(D), 

15 and 1853(m)’’. 

16 (3) Section 1853 of the Social Security Act (42 

17 U.S.C. 1395w–23), as amended by section 4311(d)(1), 

18 is amended— 

19 (A) in subsection (c)— 

20 (i) in paragraph (1)(D)(i), by striking 

21 ‘‘1848(o)’’ and inserting ‘‘, 1848(o), and 

22 1886(n)’’; and 

23 (ii) in paragraph (6)(A), by inserting 

24 ‘‘and subsections (b)(3)(B)(ix) and (n) of 

25 section 1886’’ after ‘‘section 1848’’; and 


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1 (B) in subsection (f), by inserting ‘‘and sub2 section (m)’’ after ‘‘under subsection (l)’’. 

3 SEC. 4313. TREATMENT OF PAYMENTS AND SAVINGS; IMPLE4 MENTATION FUNDING. 

5 (a) PREMIUM HOLD HARMLESS.— 

6 (1) IN GENERAL.—Section 1839(a)(1) of the So7 cial Security Act (42 U.S.C. 1395r(a)(1)) is amended 

8 by adding at the end the following: ‘‘In applying this 

9 paragraph there shall not be taken into account addi10 tional payments under section 1848(o) and section 

11 1853(l)(3) and the Government contribution under 

12 section 1844(a)(3).’’. 

13 (2) PAYMENT.—Section 1844(a) of such Act (42 

14 U.S.C. 1395w(a)) is amended— 

15 (A) in paragraph (2), by striking the period 

16 at the end and inserting ‘‘; plus’’; and 

17 (B) by adding at the end the following new 

18 paragraph: 

19 ‘‘(3) a Government contribution equal to the 

20 amount of payment incentives payable under sections 

21 1848(o) and 1853(l)(3).’’. 

22 (b) MEDICARE IMPROVEMENT FUND.—Section 1898 of 

23 the Social Security Act (42 U.S.C. 1395iii), as added by 

24 section 7002(a) of the Supplemental Appropriations Act, 

25 2008 (Public Law 110–252) and as amended by section 


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1 188(a)(2) of the Medicare Improvements for Patients and 

2 Providers Act of 2008 (Public Law 110–275; 122 Stat. 

3 2589) and by section 6 of the QI Program Supplemental 

4 Funding Act of 2008, is amended— 

5 (1) in subsection (a)— 

6 (A) by inserting ‘‘medicare’’ before ‘‘fee-for7 service’’; and 

8 (B) by inserting before the period at the end 

9 the following: ‘‘including, but not limited to, an 

10 increase in the conversion factor under section 

11 1848(d) to address, in whole or in part, any pro12 jected shortfall in the conversion factor for 2014 

13 relative to the conversion factor for 2008 and ad14 justments to payments for items and services fur15 nished by providers of services and suppliers 

16 under such original medicare fee-for-service pro17 gram’’; and 

18 (2) in subsection (b)— 

19 (A) in paragraph (1), by striking ‘‘during 

20 fiscal year 2014,’’ and all that follows and in21 serting the following: ‘‘during— 

22 ‘‘(A) fiscal year 2014, $22,290,000,000; and 

23 ‘‘(B) fiscal year 2020 and each subsequent 

24 fiscal year, the Secretary’s estimate, as of July 

25 1 of the fiscal year, of the aggregate reduction in 


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1 expenditures under this title during the pre2 ceding fiscal year directly resulting from the re3 duction in payment amounts under sections 

4 1848(a)(7), 1853(l)(4), 1853(m)(4), and 

5 1886(b)(3)(B)(ix).’’; and 

6 (B) by adding at the end the following new 

7 paragraph: 

8 ‘‘(4) NO EFFECT ON PAYMENTS IN SUBSEQUENT

9 YEARS.—In the case that expenditures from the Fund 

10 are applied to, or otherwise affect, a payment rate for 

11 an item or service under this title for a year, the pay12 ment rate for such item or service shall be computed 

13 for a subsequent year as if such application or effect 

14 had never occurred.’’. 

15 (c) IMPLEMENTATION FUNDING.—In addition to funds 

16 otherwise available, out of any funds in the Treasury not 

17 otherwise appropriated, there are appropriated to the Sec18 retary of Health and Human Services for the Center for 

19 Medicare & Medicaid Services Program Management Ac20 count, $60,000,000 for each of fiscal years 2009 through 

21 2015 and $30,000,000 for each succeeding fiscal year 

22 through fiscal year 2019, which shall be available for pur23 poses of carrying out the provisions of (and amendments 

24 made by) this part. Amounts appropriated under this sub25 section for a fiscal year shall be available until expended. 


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1 SEC. 4314. STUDY ON APPLICATION OF EHR PAYMENT IN2 CENTIVES FOR PROVIDERS NOT RECEIVING 

3 OTHER INCENTIVE PAYMENTS. 

4 (a) STUDY.— 

5 (1) IN GENERAL.—The Secretary of Health and 

6 Human Services shall conduct a study to determine 

7 the extent to which and manner in which payment 

8 incentives (such as under title XVIII or XIX of the 

9 Social Security Act) and other funding for purposes 

10 of implementing and using certified EHR technology 

11 (as defined in section 3000 of the Public Health Serv12 ice Act) should be made available to health care pro13 viders who are receiving minimal or no payment in14 centives or other funding under this Act, under title 

15 XVIII or XIX of the Social Security Act, or otherwise, 

16 for such purposes. 

17 (2) DETAILS OF STUDY.—Such study shall in18 clude an examination of— 

19 (A) the adoption rates of certified EHR 

20 technology by such health care providers; 

21 (B) the clinical utility of such technology by 

22 such health care providers; 

23 (C) whether the services furnished by such 

24 health care providers are appropriate for or 

25 would benefit from the use of such technology; 


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1 (D) the extent to which such health care 

2 providers work in settings that might otherwise 

3 receive an incentive payment or other funding 

4 under this Act, title XVIII or XIX of the Social 

5 Security Act, or otherwise; 

6 (E) the potential costs and the potential 

7 benefits of making payment incentives and other 

8 funding available to such health care providers; 

9 and 

10 (F) any other issues the Secretary deems to 

11 be appropriate. 

12 (b) REPORT.—Not later than June 30, 2010, the Sec13 retary shall submit to Congress a report on the findings 

14 and conclusions of the study conducted under subsection (a). 

15 PART III—MEDICAID FUNDING 

16 SEC. 4321. MEDICAID PROVIDER HIT ADOPTION AND OPER17 ATION PAYMENTS; IMPLEMENTATION FUND18 ING. 

19 (a) IN GENERAL.—Section 1903 of the Social Security 

20 Act (42 U.S.C. 1396b) is amended— 

21 (1) in subsection (a)(3)— 

22 (A) by striking ‘‘and’’ at the end of sub23 paragraph (D); 

24 (B) by striking ‘‘plus’’ at the end of sub25 paragraph (E) and inserting ‘‘and’’; and 


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1 (C) by adding at the end the following new 

2 subparagraph: 

3 ‘‘(F)(i) 100 percent of so much of the sums 

4 expended during such quarter as are attributable 

5 to payments for certified EHR technology (and 

6 support services including maintenance and 

7 training that is for, or is necessary for the adop8 tion and operation of, such technology) by Med9 icaid providers described in subsection (t)(1); 

10 and 

11 ‘‘(ii) 90 percent of so much of the sums ex12 pended during such quarter as are attributable 

13 to payments for reasonable administrative ex14 penses related to the administration of payments 

15 described in clause (i) if the State meets the con16 dition described in subsection (t)(9); plus’’; and 

17 (2) by inserting after subsection (s) the following 

18 new subsection: 

19 ‘‘(t)(1) For purposes of subsection (a)(3)(F), the pay20 ments for certified EHR technology (and support services 

21 including maintenance that is for, or is necessary for the 

22 operation of, such technology) by Medicaid providers de23 scribed in this paragraph are payments made by the State 

24 in accordance with this subsection of 85 percent of the net 


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1 allowable costs of Medicaid providers (as defined in para2 graph (2)) for such technology (and support services). 

3 ‘‘(2) In this subsection and subsection (a)(3)(F), the 

4 term ‘Medicaid provider’ means— 

5 ‘‘(A) an eligible professional (as defined in para6 graph (3)(B)) who is not hospital-based and has at 

7 least 30 percent of the professional’s patient volume 

8 (as estimated in accordance with standards estab9 lished by the Secretary) attributable to individuals 

10 who are receiving medical assistance under this title; 

11 and 

12 ‘‘(B)(i) a children’s hospital, 

13 ‘‘(ii) an acute-care hospital that is not described 

14 in clause (i) and that has at least 10 percent of the 

15 hospital’s patient volume (as estimated in accordance 

16 with standards established by the Secretary) attrib17 utable to individuals who are receiving medical as18 sistance under this title, or 

19 ‘‘(iii) a Federally-qualified health center or rural 

20 health clinic that has at least 30 percent of the cen21 ter’s or clinic’s patient volume (as estimated in ac22 cordance with standards established by the Secretary) 

23 attributable to individuals who are receiving medical 

24 assistance under this title. 


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1 A professional shall not qualify as a Medicaid provider 

2 under this subsection unless the professional has waived, in 

3 a manner specified by the Secretary, any right to payment 

4 under section 1848(o) with respect to the adoption or sup5 port of certified EHR technology by the professional. In ap6 plying clauses (ii) and (iii) of subparagraph (B), the stand7 ards established by the Secretary for patient volume shall 

8 include individuals enrolled in a Medicaid managed care 

9 plan (under section 1903(m) or section 1932). 

10 ‘‘(3) In this subsection and subsection (a)(3)(F): 

11 ‘‘(A) The term ‘certified EHR technology’ means 

12 a qualified electronic health record (as defined in 

13 3000(13) of the Public Health Service Act) that is cer14 tified pursuant to section 3001(c)(5) of such Act as 

15 meeting standards adopted under section 3004 of such 

16 Act that are applicable to the type of record involved 

17 (as determined by the Secretary, such as an ambula18 tory electronic health record for office-based physi19 cians or an inpatient hospital electronic health record 

20 for hospitals). 

21 ‘‘(B) The term ‘eligible professional’ means a 

22 physician as defined in paragraphs (1) and (2) of 

23 section 1861(r), and includes a nurse mid-wife and a 

24 nurse practitioner. 


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1 ‘‘(C) The term ‘hospital-based’ means, with re2 spect to an eligible professional, a professional (such 

3 as a pathologist, anesthesiologist, or emergency physi4 cian) who furnishes substantially all of the individ5 ual’s professional services in a hospital setting 

6 (whether inpatient or outpatient) and through the use 

7 of the facilities and equipment, including computer 

8 equipment, of the hospital. 

9 ‘‘(4)(A) The term ‘allowable costs’ means, with respect 

10 to certified EHR technology of a Medicaid provider, costs 

11 of such technology (and support services including mainte12 nance and training that is for, or is necessary for the adop13 tion and operation of, such technology) as determined by 

14 the Secretary to be reasonable. 

15 ‘‘(B) The term ‘net allowable costs’ means allowable 

16 costs reduced by any payment that is made to the provider 

17 involved from any other source that is directly attributable 

18 to payment for certified EHR technology or services de19 scribed in subparagraph (A). 

20 ‘‘(C) In no case shall— 

21 ‘‘(i) the aggregate allowable costs under this sub22 section (covering one or more years) with respect to 

23 a Medicaid provider described in paragraph (2)(A) 

24 for purchase and initial implementation of certified 

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1 graph (A)) exceed $25,000 or include costs over a pe2 riod of longer than 5 years; 

3 ‘‘(ii) for costs not described in clause (i) relating 

4 to the operation, maintenance, or use of certified 

5 EHR technology, the annual allowable costs under 

6 this subsection with respect to such a Medicaid pro7 vider for costs not described in clause (i) for any year 

8 exceed $10,000; 

9 ‘‘(iii) payment described in paragraph (1) for 

10 costs described in clause (ii) be made with respect to 

11 such a Medicaid provider over a period of more than 

12 5 years; 

13 ‘‘(iv) the aggregate allowable costs under this 

14 subsection with respect to such a Medicaid provider 

15 for all costs exceed $75,000; or 

16 ‘‘(v) the allowable costs, whether for purchase 

17 and initial implementation, maintenance, or other18 wise, for a Medicaid provider described in paragraph 

19 (2)(B) exceed such aggregate or annual limitation as 

20 the Secretary shall establish, based on an amount de21 termined by the Secretary as being adequate to adopt 

22 and maintain certified EHR technology, consistent 

23 with paragraph (6). 


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1 ‘‘(5) Payments described in paragraph (1) are not in 

2 accordance with this subsection unless the following require3 ments are met: 

4 ‘‘(A) The State provides assurances satisfactory 

5 to the Secretary that amounts received under sub6 section (a)(3)(F) with respect to costs of a Medicaid 

7 provider are paid directly to such provider without 

8 any deduction or rebate. 

9 ‘‘(B) Such Medicaid provider is responsible for 

10 payment of the costs described in such paragraph that 

11 are not provided under this title. 

12 ‘‘(C) With respect to payments to such Medicaid 

13 provider for costs other than costs related to the ini14 tial adoption of certified EHR technology, the Med15 icaid provider demonstrates meaningful use of cer16 tified EHR technology through a means that is ap17 proved by the State and acceptable to the Secretary, 

18 and that may be based upon the methodologies ap19 plied under section 1848(o) or 1886(n). 

20 ‘‘(D) To the extent specified by the Secretary, the 

21 certified EHR technology is compatible with State or 

22 Federal administrative management systems. 

23 ‘‘(6)(A) In no case shall the payments described in 

24 paragraph (1), with respect to a hospital, exceed in the ag25 gregate the product of— 


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1 ‘‘(i) the overall hospital HIT amount for the hos2 pital computed under subparagraph (B); and 

3 ‘‘(ii) the Medicaid share for such hospital com4 puted under subparagraph (C). 

5 ‘‘(B) For purposes of this paragraph, the overall hos6 pital HIT amount, with respect to a hospital, is the sum 

7 of the applicable amounts specified in section 1886(n)(2)(A) 

8 for such hospital for the first 4 payment years (as estimated 

9 by the Secretary) determined as if the Medicare share speci10 fied in clause (ii) of such section were 1. The Secretary shall 

11 publish in the Federal Register the overall hospital HIT 

12 amount for each hospital eligible for payments under this 

13 subsection. In computing amounts under clause (ii) for 

14 payment years after the first payment year, the Secretary 

15 shall assume that in subsequent payment years discharges 

16 increase at an annual rate of 2 percent per year. 

17 ‘‘(C) The Medicaid share computed under this sub18 paragraph, for a hospital for a period specified by the Sec19 retary, shall be calculated in the same manner as the Medi20 care share under section 1886(n)(2)(D) for such a hospital 

21 and period, except that there shall be substituted for the nu22 merator under clause (i) of such section the amount that 

23 is equal to the number of inpatient-bed-days (as established 

24 by the Secretary) which are attributable to individuals who 

25 are receiving medical assistance under this title and who 


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1 are not described in section 1886(n)(2)(D)(i). In computing 

2 inpatient-bed-days under the previous sentence, the Sec3 retary shall take into account inpatient-bed-days attrib4 utable to inpatient-bed-days that are paid for individuals 

5 enrolled in a Medicaid managed care plan (under section 

6 1903(m) or section 1932). 

7 ‘‘(7) With respect to health care providers other than 

8 hospitals, the Secretary shall ensure coordination of the dif9 ferent programs for payment of such health care providers 

10 for adoption or use of health information technology (in11 cluding certified EHR technology), as well as payments for 

12 such health care providers provided under this title or title 

13 XVIII, to assure no duplication of funding. 

14 ‘‘(8) In carrying out paragraph (5)(C), the State and 

15 Secretary shall seek, to the maximum extent practicable, to 

16 avoid duplicative requirements from Federal and State 

17 Governments to demonstrate meaningful use of certified 

18 EHR technology under this title and title XVIII. In doing 

19 so, the Secretary may deem satisfaction of requirements for 

20 such meaningful use for a payment year under title XVIII 

21 to be sufficient to qualify as meaningful use under this sub22 section. The Secretary may also specify the reporting peri23 ods under this subsection in order to carry out this para24 graph. 


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1 ‘‘(9) In order to be provided Federal financial partici2 pation under subsection (a)(3)(F)(ii), a State must dem3 onstrate to the satisfaction of the Secretary, that the State— 

4 ‘‘(A) is using the funds provided for the purposes 

5 of administering payments under this subsection, in6 cluding tracking of meaningful use by Medicaid pro7 viders; 

8 ‘‘(B) conducting adequate oversight of the pro9 gram under this subsection, including routine track10 ing of meaningful use attestations and reporting 

11 mechanisms; and 

12 ‘‘(C) be pursuing initiatives to encourage the 

13 adoption of certified EHR technology to promote 

14 health care quality and the exchange of health care 

15 information under this title, subject to applicable 

16 laws and regulations governing such exchange. 

17 ‘‘(10) The Secretary shall periodically submit reports 

18 to the Committee on Energy and Commerce of the House 

19 of Representatives and the Committee on Finance of the 

20 Senate on status, progress, and oversight of payments under 

21 paragraph (1).’’. 

22 (b) IMPLEMENTATION FUNDING.—In addition to funds 

23 otherwise available, out of any funds in the Treasury not 

24 otherwise appropriated, there are appropriated to the Sec25 retary of Health and Human Services for the Center for 


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1 Medicare & Medicaid Services Program Management Ac2 count, $40,000,000 for each of fiscal years 2009 through 

3 2015 and $20,000,000 for each succeeding fiscal year 

4 through fiscal year 2019, which shall be available for pur5 poses of carrying out the provisions of (and the amendments 

6 made by) this part. Amounts appropriated under this sub7 section for a fiscal year shall be available until expended. 

8 Subtitle D—Privacy 

9 SEC. 4400. DEFINITIONS. 

10 In this subtitle, except as specified otherwise: 

11 (1) BREACH.—The term ‘‘breach’’ means the un12 authorized acquisition, access, use, or disclosure of 

13 protected health information which compromises the 

14 security, privacy, or integrity of protected health in15 formation maintained by or on behalf of a person. 

16 Such term does not include any unintentional acqui17 sition, access, use, or disclosure of such information 

18 by an employee or agent of the covered entity or busi19 ness associate involved if such acquisition, access, use, 

20 or disclosure, respectively, was made in good faith 

21 and within the course and scope of the employment 

22 or other contractual relationship of such employee or 

23 agent, respectively, with the covered entity or business 

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1 quired, accessed, used, or disclosed by such employee 

2 or agent. 

3 (2) BUSINESS ASSOCIATE.—The term ‘‘business 

4 associate’’ has the meaning given such term in section 

5 160.103 of title 45, Code of Federal Regulations. 

6 (3) COVERED ENTITY.—The term ‘‘covered enti7 ty’’ has the meaning given such term in section 

8 160.103 of title 45, Code of Federal Regulations. 

9 (4) DISCLOSE.—The terms ‘‘disclose’’ and ‘‘dis10 closure’’ have the meaning given the term ‘‘disclosure’’ 

11 in section 160.103 of title 45, Code of Federal Regula12 tions. 

13 (5) ELECTRONIC HEALTH RECORD.—The term 

14 ‘‘electronic health record’’ means an electronic record 

15 of health-related information on an individual that is 

16 created, gathered, managed, and consulted by author17 ized health care clinicians and staff. 

18 (6) HEALTH CARE OPERATIONS.—The term 

19 ‘‘health care operation’’ has the meaning given such 

20 term in section 164.501 of title 45, Code of Federal 

21 Regulations. 

22 (7) HEALTH CARE PROVIDER.—The term ‘‘health 

23 care provider’’ has the meaning given such term in 

24 section 160.103 of title 45, Code of Federal Regula25 tions. 


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1 (8) HEALTH PLAN.—The term ‘‘health plan’’ has 

2 the meaning given such term in section 1171(5) of the 

3 Social Security Act. 

4 (9) NATIONAL COORDINATOR.—The term ‘‘Na5 tional Coordinator’’ means the head of the Office of 

6 the National Coordinator for Health Information 

7 Technology established under section 3001(a) of the 

8 Public Health Service Act, as added by section 4101. 

9 (10) PAYMENT.—The term ‘‘payment’’ has the 

10 meaning given such term in section 164.501 of title 

11 45, Code of Federal Regulations. 

12 (11) PERSONAL HEALTH RECORD.—The term 

13 ‘‘personal health record’’ means an electronic record of 

14 individually identifiable health information on an in15 dividual that can be drawn from multiple sources and 

16 that is managed, shared, and controlled by or for the 

17 individual. 

18 (12) PROTECTED HEALTH INFORMATION.—The 

19 term ‘‘protected health information’’ has the meaning 

20 given such term in section 160.103 of title 45, Code 

21 of Federal Regulations. 

22 (13) SECRETARY.—The term ‘‘Secretary’’ means 

23 the Secretary of Health and Human Services. 


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1 (14) SECURITY.—The term ‘‘security’’ has the 

2 meaning given such term in section 164.304 of title 

3 45, Code of Federal Regulations. 

4 (15) STATE.—The term ‘‘State’’ means each of 

5 the several States, the District of Columbia, Puerto 

6 Rico, the Virgin Islands, Guam, American Samoa, 

7 and the Northern Mariana Islands. 

8 (16) TREATMENT.—The term ‘‘treatment’’ has 

9 the meaning given such term in section 164.501 of 

10 title 45, Code of Federal Regulations. 

11 (17) USE.—The term ‘‘use’’ has the meaning 

12 given such term in section 160.103 of title 45, Code 

13 of Federal Regulations. 

14 (18) VENDOR OF PERSONAL HEALTH

15 RECORDS.—The term ‘‘vendor of personal health 

16 records’’ means an entity, other than a covered entity 

17 (as defined in paragraph (3)), that offers or main18 tains a personal health record. 


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1 PART I—IMPROVED PRIVACY PROVISIONS AND 

2 SECURITY PROVISIONS 

3 SEC. 4401. APPLICATION OF SECURITY PROVISIONS AND 

4 PENALTIES TO BUSINESS ASSOCIATES OF 

5 COVERED ENTITIES; ANNUAL GUIDANCE ON 

6 SECURITY PROVISIONS. 

7 (a) APPLICATION OF SECURITY PROVISIONS.—Sections 

8 164.308, 164.310, 164.312, and 164.316 of title 45, Code 

9 of Federal Regulations, shall apply to a business associate 

10 of a covered entity in the same manner that such sections 

11 apply to the covered entity. The additional requirements of 

12 this title that relate to security and that are made applica13 ble with respect to covered entities shall also be applicable 

14 to such a business associate and shall be incorporated into 

15 the business associate agreement between the business asso16 ciate and the covered entity. 

17 (b) APPLICATION OF CIVIL AND CRIMINAL PEN18 ALTIES.—In the case of a business associate that violates 

19 any security provision specified in subsection (a), sections 

20 1176 and 1177 of the Social Security Act (42 U.S.C. 

21 1320d–5, 1320d–6) shall apply to the business associate 

22 with respect to such violation in the same manner such sec23 tions apply to a covered entity that violates such security 

24 provision. 

25 (c) ANNUAL GUIDANCE.—For the first year beginning 

26 after the date of the enactment of this Act and annually 


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1 thereafter, the Secretary of Health and Human Services 

2 shall, in consultation with industry stakeholders, annually 

3 issue guidance on the most effective and appropriate tech4 nical safeguards for use in carrying out the sections referred 

5 to in subsection (a) and the security standards in subpart 

6 C of part 164 of title 45, Code of Federal Regulations, as 

7 such provisions are in effect as of the date before the enact8 ment of this Act. 

9 SEC. 4402. NOTIFICATION IN THE CASE OF BREACH. 

10 (a) IN GENERAL.—A covered entity that accesses, 

11 maintains, retains, modifies, records, stores, destroys, or 

12 otherwise holds, uses, or discloses unsecured protected health 

13 information (as defined in subsection (h)(1)) shall, in the 

14 case of a breach of such information that is discovered by 

15 the covered entity, notify each individual whose unsecured 

16 protected health information has been, or is reasonably be17 lieved by the covered entity to have been, accessed, acquired, 

18 or disclosed as a result of such breach. 

19 (b) NOTIFICATION OF COVERED ENTITY BY BUSINESS

20 ASSOCIATE.—A business associate of a covered entity that 

21 accesses, maintains, retains, modifies, records, stores, de22 stroys, or otherwise holds, uses, or discloses unsecured pro23 tected health information shall, following the discovery of 

24 a breach of such information, notify the covered entity of 

25 such breach. Such notice shall include the identification of 


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1 each individual whose unsecured protected health informa2 tion has been, or is reasonably believed by the business asso3 ciate to have been, accessed, acquired, or disclosed during 

4 such breach. 

5 (c) BREACHES TREATED AS DISCOVERED.—For pur6 poses of this section, a breach shall be treated as discovered 

7 by a covered entity or by a business associate as of the first 

8 day on which such breach is known to such entity or asso9 ciate, respectively, (including any person, other than the in10 dividual committing the breach, that is an employee, officer, 

11 or other agent of such entity or associate, respectively) or 

12 should reasonably have been known to such entity or asso13 ciate (or person) to have occurred. 

14 (d) TIMELINESS OF NOTIFICATION.— 

15 (1) IN GENERAL.—Subject to subsection (g), all 

16 notifications required under this section shall be made 

17 without unreasonable delay and in no case later than 

18 60 calendar days after the discovery of a breach by 

19 the covered entity involved (or business associate in20 volved in the case of a notification required under 

21 subsection (b)). 

22 (2) BURDEN OF PROOF.—The covered entity in23 volved (or business associate involved in the case of a 

24 notification required under subsection (b)), shall have 

25 the burden of demonstrating that all notifications 


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1 were made as required under this part, including evi2 dence demonstrating the necessity of any delay. 

3 (e) METHODS OF NOTICE.— 

4 (1) INDIVIDUAL NOTICE.—Notice required under 

5 this section to be provided to an individual, with re6 spect to a breach, shall be provided promptly and in 

7 the following form: 

8 (A) Written notification by first-class mail 

9 to the individual (or the next of kin of the indi10 vidual if the individual is deceased) at the last 

11 known address of the individual or the next of 

12 kin, respectively, or, if specified as a preference 

13 by the individual, by electronic mail. The notifi14 cation may be provided in one or more mailings 

15 as information is available. 

16 (B) In the case in which there is insuffi17 cient, or out-of-date contact information (includ18 ing a phone number, e-mail address, or any 

19 other form of appropriate communication) that 

20 precludes direct written (or, if specified by the 

21 individual under subparagraph (A), electronic) 

22 notification to the individual, a substitute form 

23 of notice shall be provided, including, in the case 

24 that there are 10 or more individuals for which 

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1 mation, a conspicuous posting for a period deter2 mined by the Secretary on the home page of the 

3 website of the covered entity involved or notice in 

4 major print or broadcast media, including major 

5 media in geographic areas where the individuals 

6 affected by the breach likely reside. Such a notice 

7 in media or web posting will include a toll-free 

8 phone number where an individual can learn 

9 whether or not the individual’s unsecured pro10 tected health information is possibly included in 

11 the breach. 

12 (C) In any case deemed by the covered enti13 ty involved to require urgency because of possible 

14 imminent misuse of unsecured protected health 

15 information, the covered entity, in addition to 

16 notice provided under subparagraph (A), may 

17 provide information to individuals by telephone 

18 or other means, as appropriate. 

19 (2) MEDIA NOTICE.—Notice shall be provided to 

20 prominent media outlets serving a State or jurisdic21 tion, following the discovery of a breach described in 

22 subsection (a), if the unsecured protected health infor23 mation of more than 500 residents of such State or 

24 jurisdiction is, or is reasonably believed to have been, 

25 accessed, acquired, or disclosed during such breach. 


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1 (3) NOTICE TO SECRETARY.—Notice shall be pro2 vided to the Secretary by covered entities of unsecured 

3 protected health information that has been acquired 

4 or disclosed in a breach. If the breach was with re5 spect to 500 or more individuals than such notice 

6 must be provided immediately. If the breach was with 

7 respect to less than 500 individuals, the covered entity 

8 involved may maintain a log of any such breach oc9 curring and annually submit such a log to the Sec10 retary documenting such breaches occuring during the 

11 year involved. 

12 (4) POSTING ON HHS PUBLIC WEBSITE.—The 

13 Secretary shall make available to the public on the 

14 Internet website of the Department of Health and 

15 Human Services a list that identifies each covered en16 tity involved in a breach described in subsection (a) 

17 in which the unsecured protected health information 

18 of more than 500 individuals is acquired or disclosed. 

19 (f) CONTENT OF NOTIFICATION.—Regardless of the 

20 method by which notice is provided to individuals under 

21 this section, notice of a breach shall include, to the extent 

22 possible, the following: 

23 (1) A brief description of what happened, includ24 ing the date of the breach and the date of the dis25 covery of the breach, if known. 


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1 (2) A description of the types of unsecured pro2 tected health information that were involved in the 

3 breach (such as full name, Social Security number, 

4 date of birth, home address, account number, or dis5 ability code). 

6 (3) The steps individuals should take to protect 

7 themselves from potential harm resulting from the 

8 breach. 

9 (4) A brief description of what the covered entity 

10 involved is doing to investigate the breach, to mitigate 

11 losses, and to protect against any further breaches. 

12 (5) Contact procedures for individuals to ask 

13 questions or learn additional information, which shall 

14 include a toll-free telephone number, an e-mail ad15 dress, website, or postal address. 

16 (g) DELAY OF NOTIFICATION AUTHORIZED FOR LAW

17 ENFORCEMENT PURPOSES.—If a law enforcement official 

18 determines that a notification, notice, or posting required 

19 under this section would impede a criminal investigation 

20 or cause damage to national security, such notification, no21 tice, or posting shall be delayed in the same manner as pro22 vided under section 164.528(a)(2) of title 45, Code of Fed23 eral Regulations, in the case of a disclosure covered under 

24 such section. 


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1 (h) UNSECURED PROTECTED HEALTH INFORMA2 TION.— 

3 (1) DEFINITION.— 

4 (A) IN GENERAL.—Subject to subparagraph 

5 (B), for purposes of this section, the term ‘‘unse6 cured protected health information’’ means pro7 tected health information that is not secured 

8 through the use of a technology or methodology 

9 specified by the Secretary in the guidance issued 

10 under paragraph (2). 

11 (B) EXCEPTION IN CASE TIMELY GUIDANCE

12 NOT ISSUED.—In the case that the Secretary does 

13 not issue guidance under paragraph (2) by the 

14 date specified in such paragraph, for purposes of 

15 this section, the term ‘‘unsecured protected health 

16 information’’ shall mean protected health infor17 mation that is not secured by a technology 

18 standard that renders protected health informa19 tion unusable, unreadable, or indecipherable to 

20 unauthorized individuals and is developed or en21 dorsed by a standards developing organization 

22 that is accredited by the American National 

23 Standards Institute. 

24 (2) GUIDANCE.—For purposes of paragraph (1) 

25 and section 407(f)(3), not later than the date that is 


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1 60 days after the date of the enactment of this Act, 

2 the Secretary shall, after consultation with stake3 holders, issue (and annually update) guidance speci4 fying the technologies and methodologies that render 

5 protected health information unusable, unreadable, or 

6 indecipherable to unauthorized individuals. 

7 (i) REPORT TO CONGRESS ON BREACHES.— 

8 (1) IN GENERAL.—Not later than 12 months 

9 after the date of the enactment of this Act and annu10 ally thereafter, the Secretary shall prepare and sub11 mit to the Committee on Finance and the Committee 

12 on Health, Education, Labor, and Pensions of the 

13 Senate and the Committee on Ways and Means and 

14 the Committee on Energy and Commerce of the House 

15 of Representatives a report containing the informa16 tion described in paragraph (2) regarding breaches 

17 for which notice was provided to the Secretary under 

18 subsection (e)(3). 

19 (2) INFORMATION.—The information described 

20 in this paragraph regarding breaches specified in 

21 paragraph (1) shall include— 

22 (A) the number and nature of such breaches; 

23 and 

24 (B) actions taken in response to such 

25 breaches. 


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1 (j) REGULATIONS; EFFECTIVE DATE.—To carry out 

2 this section, the Secretary of Health and Human Services 

3 shall promulgate interim final regulations by not later than 

4 the date that is 180 days after the date of the enactment 

5 of this title. The provisions of this section shall apply to 

6 breaches that are discovered on or after the date that is 30 

7 days after the date of publication of such interim final regu8 lations. 

9 SEC. 4403. EDUCATION ON HEALTH INFORMATION PRIVACY. 

10 (a) REGIONAL OFFICE PRIVACY ADVISORS.—Not later 

11 than 6 months after the date of the enactment of this Act, 

12 the Secretary shall designate an individual in each regional 

13 office of the Department of Health and Human Services to 

14 offer guidance and education to covered entities, business 

15 associates, and individuals on their rights and responsibil16 ities related to Federal privacy and security requirements 

17 for protected health information. 

18 (b) EDUCATION INITIATIVE ON USES OF HEALTH IN19 FORMATION.—Not later than 12 months after the date of 

20 the enactment of this Act, the Office for Civil Rights within 

21 the Department of Health and Human Services shall de22 velop and maintain a multi-faceted national education ini23 tiative to enhance public transparency regarding the uses 

24 of protected health information, including programs to edu25 cate individuals about the potential uses of their protected 


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1 health information, the effects of such uses, and the rights 

2 of individuals with respect to such uses. Such programs 

3 shall be conducted in a variety of languages and present 

4 information in a clear and understandable manner. 

5 SEC. 4404. APPLICATION OF PRIVACY PROVISIONS AND 

6 PENALTIES TO BUSINESS ASSOCIATES OF 

7 COVERED ENTITIES. 

8 (a) APPLICATION OF CONTRACT REQUIREMENTS.—In 

9 the case of a business associate of a covered entity that ob10 tains or creates protected health information pursuant to 

11 a written contract (or other written arrangement) described 

12 in section 164.502(e)(2) of title 45, Code of Federal Regula13 tions, with such covered entity, the business associate may 

14 use and disclose such protected health information only if 

15 such use or disclosure, respectively, is in compliance with 

16 each applicable requirement of section 164.504(e) of such 

17 title. The additional requirements of this subtitle that relate 

18 to privacy and that are made applicable with respect to 

19 covered entities shall also be applicable to such a business 

20 associate and shall be incorporated into the business asso21 ciate agreement between the business associate and the cov22 ered entity. 

23 (b) APPLICATION OF KNOWLEDGE ELEMENTS ASSOCI24 ATED WITH CONTRACTS.—Section 164.504(e)(1)(ii) of title 

25 45, Code of Federal Regulations, shall apply to a business 


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1 associate described in subsection (a), with respect to compli2 ance with such subsection, in the same manner that such 

3 section applies to a covered entity, with respect to compli4 ance with the standards in sections 164.502(e) and 

5 164.504(e) of such title, except that in applying such section 

6 164.504(e)(1)(ii) each reference to the business associate, 

7 with respect to a contract, shall be treated as a reference 

8 to the covered entity involved in such contract. 

9 (c) APPLICATION OF CIVIL AND CRIMINAL PEN10 ALTIES.—In the case of a business associate that violates 

11 any provision of subsection (a) or (b), the provisions of sec12 tions 1176 and 1177 of the Social Security Act (42 U.S.C. 

13 1320d–5, 1320d–6) shall apply to the business associate 

14 with respect to such violation in the same manner as such 

15 provisions apply to a person who violates a provision of 

16 part C of title XI of such Act. 

17 SEC. 4405. RESTRICTIONS ON CERTAIN DISCLOSURES AND 

18 SALES OF HEALTH INFORMATION; ACCOUNT19 ING OF CERTAIN PROTECTED HEALTH INFOR20 MATION DISCLOSURES; ACCESS TO CERTAIN 

21 INFORMATION IN ELECTRONIC FORMAT. 

22 (a) REQUESTED RESTRICTIONS ON CERTAIN DISCLO23 SURES OF HEALTH INFORMATION.—In the case that an in24 dividual requests under paragraph (a)(1)(i)(A) of section 

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1 ered entity restrict the disclosure of the protected health in2 formation of the individual, notwithstanding paragraph 

3 (a)(1)(ii) of such section, the covered entity must comply 

4 with the requested restriction if— 

5 (1) except as otherwise required by law, the dis6 closure is to a health plan for purposes of carrying 

7 out payment or health care operations (and is not for 

8 purposes of carrying out treatment); and 

9 (2) the protected health information pertains 

10 solely to a health care item or service for which the 

11 health care provider involved has been paid out of 

12 pocket in full. 

13 (b) DISCLOSURES REQUIRED TO BE LIMITED TO THE

14 LIMITED DATA SET OR THE MINIMUM NECESSARY.— 

15 (1) IN GENERAL.— 

16 (A) IN GENERAL.—Subject to subparagraph 

17 (B), a covered entity shall be treated as being in 

18 compliance with section 164.502(b)(1) of title 45, 

19 Code of Federal Regulations, with respect to the 

20 use, disclosure, or request of protected health in21 formation described in such section, only if the 

22 covered entity limits such protected health infor23 mation, to the extent practicable, to the limited 

24 data set (as defined in section 164.514(e)(2) of 

25 such title) or, if needed by such entity, to the 


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1 minimum necessary to accomplish the intended 

2 purpose of such use, disclosure, or request, re3 spectively. 

4 (B) GUIDANCE.—Not later than 18 months 

5 after the date of the enactment of this section, the 

6 Secretary shall issue guidance on what con7 stitutes ‘‘minimum necessary’’ for purposes of 

8 subpart E of part 164 of title 45, Code of Fed9 eral Regulation. In issuing such guidance the 

10 Secretary shall take into consideration the guid11 ance under section 4424(c). 

12 (C) SUNSET.—Subparagraph (A) shall not 

13 apply on and after the effective date on which 

14 the Secretary issues the guidance under subpara15 graph (B). 

16 (2) DETERMINATION OF MINIMUM NECESSARY.— 

17 For purposes of paragraph (1), in the case of the dis18 closure of protected health information, the covered 

19 entity or business associate disclosing such informa20 tion shall determine what constitutes the minimum 

21 necessary to accomplish the intended purpose of such 

22 disclosure. 

23 (3) APPLICATION OF EXCEPTIONS.—The excep24 tions described in section 164.502(b)(2) of title 45, 

25 Code of Federal Regulations, shall apply to the reVerDate Nov 24 2008 03:18 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00290 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 quirement under paragraph (1) as of the effective date 

2 described in section 4423 in the same manner that 

3 such exceptions apply to section 164.502(b)(1) of such 

4 title before such date. 

5 (4) RULE OF CONSTRUCTION.—Nothing in this 

6 subsection shall be construed as affecting the use, dis7 closure, or request of protected health information 

8 that has been de-identified. 

9 (c) ACCOUNTING OF CERTAIN PROTECTED HEALTH IN10 FORMATION DISCLOSURES REQUIRED IF COVERED ENTITY

11 USES ELECTRONIC HEALTH RECORD.— 

12 (1) IN GENERAL.—In applying section 164.528 

13 of title 45, Code of Federal Regulations, in the case 

14 that a covered entity uses or maintains an electronic 

15 health record with respect to protected health informa16 tion— 

17 (A) the exception under paragraph (a)(1)(i) 

18 of such section shall not apply to disclosures 

19 through an electronic health record made by such 

20 entity of such information; and 

21 (B) an individual shall have a right to re22 ceive an accounting of disclosures described in 

23 such paragraph of such information made by 

24 such covered entity during only the three years 


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1 prior to the date on which the accounting is re2 quested. 

3 (2) REGULATIONS.—The Secretary shall promul4 gate regulations on what information shall be col5 lected about each disclosure referred to in paragraph 

6 (1)(A) not later than 18 months after the date on 

7 which the Secretary adopts standards on accounting 

8 for disclosure described in the section 

9 3002(b)(2)(B)(iv) of the Public Health Service Act, as 

10 added by section 4101. Such regulations shall only re11 quire such information to be collected through an elec12 tronic health record in a manner that takes into ac13 count the interests of individuals in learning the cir14 cumstances under which their protected health infor15 mation is being disclosed and takes into account the 

16 administrative burden of accounting for such disclo17 sures. 

18 (3) CONSTRUCTION.—Nothing in this subsection 

19 shall be construed as requiring a covered entity to ac20 count for disclosures of protected health information 

21 that are not made by such covered entity or by a 

22 business associate acting on behalf of the covered enti23 ty. 

24 (4) EFFECTIVE DATE.— 


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1 (A) CURRENT USERS OF ELECTRONIC

2 RECORDS.—In the case of a covered entity inso3 far as it acquired an electronic health record as 

4 of January 1, 2009, paragraph (1) shall apply 

5 to disclosures, with respect to protected health in6 formation, made by the covered entity from such 

7 a record on and after January 1, 2014. 

8 (B) OTHERS.—In the case of a covered enti9 ty insofar as it acquires an electronic health 

10 record after January 1, 2009, paragraph (1) 

11 shall apply to disclosures, with respect to pro12 tected health information, made by the covered 

13 entity from such record on and after the later of 

14 the following: 

15 (i) January 1, 2011; or 

16 (ii) the date that it acquires an elec17 tronic health record. 

18 (d) REVIEW OF HEALTH CARE OPERATIONS.—Not 

19 later than 18 months after the date of the enactment of this 

20 title, the Secretary shall promulgate regulations to elimi21 nate from the definition of health care operations under sec22 tion 164.501 of title 45, Code of Federal Regulations, those 

23 activities that can reasonably and efficiently be conducted 

24 through the use of information that is de-identified (in ac25 cordance with the requirements of section 164.514(b) of such 


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1 title) or that should require a valid authorization for use 

2 or disclosure. In promulgating such regulations, the Sec3 retary may choose to narrow or clarify activities that the 

4 Secretary chooses to retain in the definition of health care 

5 operations and the Secretary shall take into account the re6 port under section 424(d). In such regulations the Secretary 

7 shall specify the date on which such regulations shall apply 

8 to disclosures made by a covered entity, but in no case 

9 would such date be sooner than the date that is 24 months 

10 after the date of the enactment of this section. 

11 (e) PROHIBITION ON SALE OF ELECTRONIC HEALTH

12 RECORDS OR PROTECTED HEALTH INFORMATION OB13 TAINED FROM ELECTRONIC HEALTH RECORDS.— 

14 (1) IN GENERAL.—Except as provided in para15 graph (2), a covered entity or business associate shall 

16 not directly or indirectly receive remuneration in ex17 change for any protected health information of an in18 dividual unless the covered entity obtained from the 

19 individual, in accordance with section 164.508 of title 

20 45, Code of Federal Regulations, a valid authoriza21 tion that includes, in accordance with such section, a 

22 specification of whether the protected health informa23 tion can be further exchanged for remuneration by the 

24 entity receiving protected health information of that 

25 individual. 


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1 (2) EXCEPTIONS.—Paragraph (1) shall not 

2 apply in the following cases: 

3 (A) The purpose of the exchange is for re4 search or public health activities (as described in 

5 sections 164.501, 164.512(i), and 164.512(b) of 

6 title 45, Code of Federal Regulations) and the 

7 price charged reflects the costs of preparation 

8 and transmittal of the data for such purpose. 

9 (B) The purpose of the exchange is for the 

10 treatment of the individual and the price charges 

11 reflects not more than the costs of preparation 

12 and transmittal of the data for such purpose. 

13 (C) The purpose of the exchange is the 

14 health care operation specifically described in 

15 subparagraph (iv) of paragraph (6) of the defini16 tion of health care operations in section 164.501 

17 of title 45, Code of Federal Regulations. 

18 (D) The purpose of the exchange is for re19 muneration that is provided by a covered entity 

20 to a business associate for activities involving the 

21 exchange of protected health information that the 

22 business associate undertakes on behalf of and at 

23 the specific request of the covered entity pursuant 

24 to a business associate agreement. 


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1 (E) The purpose of the exchange is to pro2 vide an individual with a copy of the individ3 ual’s protected health information pursuant to 

4 section 164.524 of title 45, Code of Federal Regu5 lations. 

6 (F) The purpose of the exchange is otherwise 

7 determined by the Secretary in regulations to be 

8 similarly necessary and appropriate as the ex9 ceptions provided in subparagraphs (A) through 

10 (E). 

11 (3) REGULATIONS.—The Secretary shall promul12 gate regulations to carry out paragraph (this sub13 section, including exceptions described in paragraph 

14 (2), not later than 18 months after the date of the en15 actment of this title. 

16 (4) EFFECTIVE DATE.—Paragraph (1) shall 

17 apply to exchanges occurring on or after the date that 

18 is 6 months after the date of the promulgation of final 

19 regulations implementing this subsection. 

20 (f) ACCESS TO CERTAIN INFORMATION IN ELECTRONIC

21 FORMAT.—In applying section 164.524 of title 45, Code of 

22 Federal Regulations, in the case that a covered entity uses 

23 or maintains an electronic health record with respect to 

24 protected health information of an individual— 


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1 (1) the individual shall have a right to obtain 

2 from such covered entity a copy of such information 

3 in an electronic format; and 

4 (2) notwithstanding paragraph (c)(4) of such 

5 section, any fee that the covered entity may impose 

6 for providing such individual with a copy of such in7 formation (or a summary or explanation of such in8 formation) if such copy (or summary or explanation) 

9 is in an electronic form shall not be greater than the 

10 entity’s labor costs in responding to the request for the 

11 copy (or summary or explanation). 

12 SEC. 4406. CONDITIONS ON CERTAIN CONTACTS AS PART 

13 OF HEALTH CARE OPERATIONS. 

14 (a) MARKETING.— 

15 (1) IN GENERAL.—A communication by a cov16 ered entity or business associate that is about a prod17 uct or service and that encourages recipients of the 

18 communication to purchase or use the product or 

19 service shall not be considered a health care operation 

20 for purposes of subpart E of part 164 of title 45, Code 

21 of Federal Regulations, unless the communication is 

22 made as described in subparagraph (i), (ii), or (iii) 

23 of paragraph (1) of the definition of marketing in sec24 tion 164.501 of such title. 


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1 (2) PAYMENT FOR CERTAIN COMMUNICATIONS.— 

2 A covered entity or business associate may not receive 

3 direct or indirect payment in exchange for making 

4 any communication described in subparagraph (i), 

5 (ii), or (iii) of paragraph (1) of the definition of mar6 keting in section 164.501 of title 45, Code of Federal 

7 Regulations, except— 

8 (A) a business associate of a covered entity 

9 may receive payment from the covered entity for 

10 making any such communication on behalf of the 

11 covered entity that is consistent with the written 

12 contract (or other written arrangement) de13 scribed in section 164.502(e)(2) of such title be14 tween such business associate and covered entity; 

15 and 

16 (B) a covered entity may receive payment 

17 in exchange for making any such communication 

18 if the entity obtains from the recipient of the 

19 communication, in accordance with section 

20 164.508 of title 45, Code of Federal Regulations, 

21 a valid authorization (as described in paragraph 

22 (b) of such section) with respect to such commu23 nication. 

24 (b) FUNDRAISING.—Fundraising for the benefit of a 

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1 ation for purposes of section 164.501 of title 45, Code of 

2 Federal Regulations. 

3 (c) EFFECTIVE DATE.—This section shall apply to 

4 contracting occurring on or after the effective date specified 

5 under section 4423. 

6 SEC. 4407. TEMPORARY BREACH NOTIFICATION REQUIRE7 MENT FOR VENDORS OF PERSONAL HEALTH 

8 RECORDS AND OTHER NON-HIPAA COVERED 

9 ENTITIES. 

10 (a) IN GENERAL.—In accordance with subsection (c), 

11 each vendor of personal health records, following the dis12 covery of a breach of security of unsecured PHR identifiable 

13 health information that is in a personal health record 

14 maintained or offered by such vendor, and each entity de15 scribed in clause (ii) or (iii) of section 4424(b)(1)(A), fol16 lowing the discovery of a breach of security of such informa17 tion that is obtained through a product or service provided 

18 by such entity, shall— 

19 (1) notify each individual who is a citizen or 

20 resident of the United States whose unsecured PHR 

21 identifiable health information was acquired by an 

22 unauthorized person as a result of such a breach of 

23 security; and 

24 (2) notify the Federal Trade Commission. 


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1 (b) NOTIFICATION BY THIRD PARTY SERVICE PRO2 VIDERS.—A third party service provider that provides serv3 ices to a vendor of personal health records or to an entity 

4 described in clause (ii) or (iii) of section 4424(b)(1)(A) in 

5 connection with the offering or maintenance of a personal 

6 health record or a related product or service and that ac7 cesses, maintains, retains, modifies, records, stores, destroys, 

8 or otherwise holds, uses, or discloses unsecured PHR identi9 fiable health information in such a record as a result of 

10 such services shall, following the discovery of a breach of 

11 security of such information, notify such vendor or entity, 

12 respectively, of such breach. Such notice shall include the 

13 identification of each individual whose unsecured PHR 

14 identifiable health information has been, or is reasonably 

15 believed to have been, accessed, acquired, or disclosed during 

16 such breach. 

17 (c) APPLICATION OF REQUIREMENTS FOR TIMELINESS, 

18 METHOD, AND CONTENT OF NOTIFICATIONS.—Subsections 

19 (c), (d), (e), and (f) of section 402 shall apply to a notifica20 tion required under subsection (a) and a vendor of personal 

21 health records, an entity described in subsection (a) and 

22 a third party service provider described in subsection (b), 

23 with respect to a breach of security under subsection (a) 

24 of unsecured PHR identifiable health information in such 


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1 records maintained or offered by such vendor, in a manner 

2 specified by the Federal Trade Commission. 

3 (d) NOTIFICATION OF THE SECRETARY.—Upon receipt 

4 of a notification of a breach of security under subsection 

5 (a)(2), the Federal Trade Commission shall notify the Sec6 retary of such breach. 

7 (e) ENFORCEMENT.—A violation of subsection (a) or 

8 (b) shall be treated as an unfair and deceptive act or prac9 tice in violation of a regulation under section 18(a)(1)(B) 

10 of the Federal Trade Commission Act (15 U.S.C. 

11 57a(a)(1)(B)) regarding unfair or deceptive acts or prac12 tices. 

13 (f) DEFINITIONS.—For purposes of this section: 

14 (1) BREACH OF SECURITY.—The term ‘‘breach of 

15 security’’ means, with respect to unsecured PHR 

16 identifiable health information of an individual in a 

17 personal health record, acquisition of such informa18 tion without the authorization of the individual. 

19 (2) PHR IDENTIFIABLE HEALTH INFORMA20 TION.—The term ‘‘PHR identifiable health informa21 tion’’ means individually identifiable health informa22 tion, as defined in section 1171(6) of the Social Secu23 rity Act (42 U.S.C. 1320d(6)), and includes, with re24 spect to an individual, information— 


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1 (A) that is provided by or on behalf of the 

2 individual; and 

3 (B) that identifies the individual or with 

4 respect to which there is a reasonable basis to be5 lieve that the information can be used to identify 

6 the individual. 

7 (3) UNSECURED PHR IDENTIFIABLE HEALTH IN8 FORMATION.— 

9 (A) IN GENERAL.—Subject to subparagraph 

10 (B), the term ‘‘unsecured PHR identifiable 

11 health information’’ means PHR identifiable 

12 health information that is not protected through 

13 the use of a technology or methodology specified 

14 by the Secretary in the guidance issued under 

15 section 4402(h)(2). 

16 (B) EXCEPTION IN CASE TIMELY GUIDANCE

17 NOT ISSUED.—In the case that the Secretary does 

18 not issue guidance under section 4402(h)(2) by 

19 the date specified in such section, for purposes of 

20 this section, the term ‘‘unsecured PHR identifi21 able health information’’ shall mean PHR iden22 tifiable health information that is not secured by 

23 a technology standard that renders protected 

24 health information unusable, unreadable, or in25 decipherable to unauthorized individuals and 


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1 that is developed or endorsed by a standards de2 veloping organization that is accredited by the 

3 American National Standards Institute. 

4 (g) REGULATIONS; EFFECTIVE DATE; SUNSET.— 

5 (1) REGULATIONS; EFFECTIVE DATE.—To carry 

6 out this section, the Secretary of Health and Human 

7 Services shall promulgate interim final regulations by 

8 not later than the date that is 180 days after the date 

9 of the enactment of this section. The provisions of this 

10 section shall apply to breaches of security that are 

11 discovered on or after the date that is 30 days after 

12 the date of publication of such interim final regula13 tions. 

14 (2) SUNSET.—The provisions of this section shall 

15 not apply to breaches of security occurring on or after 

16 the earlier of the following the dates: 

17 (A) The date on which a standard relating 

18 to requirements for entities that are not covered 

19 entities that includes requirements relating to 

20 breach notification has been promulgated by the 

21 Secretary. 

22 (B) The date on which a standard relating 

23 to requirements for entities that are not covered 

24 entities that includes requirements relating to 


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1 breach notification has been promulgated by the 

2 Federal Trade Commission and has taken effect. 

3 SEC. 4408. BUSINESS ASSOCIATE CONTRACTS REQUIRED 

4 FOR CERTAIN ENTITIES. 

5 Each organization, with respect to a covered entity, 

6 that provides data transmission of protected health infor7 mation to such entity (or its business associate) and that 

8 requires access on a routine basis to such protected health 

9 information, such as a Health Information Exchange Orga10 nization, Regional Health Information Organization, E11 prescribing Gateway, or each vendor that contracts with a 

12 covered entity to allow that covered entity to offer a per13 sonal health record to patients as part of its electronic 

14 health record, is required to enter into a written contract 

15 (or other written arrangement) described in section 

16 164.502(e)(2) of title 45, Code of Federal Regulations and 

17 a written contract (or other arrangement) described in sec18 tion 164.308(b) of such title, with such entity and shall be 

19 treated as a business associate of the covered entity for pur20 poses of the provisions of this subtitle and subparts C and 

21 E of part 164 of title 45, Code of Federal Regulations, as 

22 such provisions are in effect as of the date of enactment 

23 of this title. 


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1 SEC. 4409. CLARIFICATION OF APPLICATION OF WRONGFUL 

2 DISCLOSURES CRIMINAL PENALTIES. 

3 Section 1177(a) of the Social Security Act (42 U.S.C. 

4 1320d–6(a)) is amended by adding at the end the following 

5 new sentence: ‘‘For purposes of the previous sentence, a per6 son (including an employee or other individual) shall be 

7 considered to have obtained or disclosed individually identi8 fiable health information in violation of this part if the in9 formation is maintained by a covered entity (as defined in 

10 the HIPAA privacy regulation described in section 

11 1180(b)(3)) and the individual obtained or disclosed such 

12 information without authorization.’’. 

13 SEC. 4410. IMPROVED ENFORCEMENT. 

14 (a) IN GENERAL.—Section 1176 of the Social Security 

15 Act (42 U.S.C. 1320d-5) is amended— 

16 (1) in subsection (b)(1), by striking ‘‘the act con17 stitutes an offense punishable under section 1177’’ 

18 and inserting ‘‘a penalty has been imposed under sec19 tion 1177 with respect to such act’’; and 

20 (2) by adding at the end the following new sub21 section: 

22 ‘‘(c) NONCOMPLIANCE DUE TO WILLFUL NEGLECT.— 

23 ‘‘(1) IN GENERAL.—A violation of a provision of 

24 this part due to willful neglect is a violation for 

25 which the Secretary is required to impose a penalty 

26 under subsection (a)(1). 


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1 ‘‘(2) REQUIRED INVESTIGATION.—For purposes 

2 of paragraph (1), the Secretary shall formally inves3 tigate any complaint of a violation of a provision of 

4 this part if a preliminary investigation of the facts 

5 of the complaint indicate such a possible violation 

6 due to willful neglect.’’. 

7 (b) EFFECTIVE DATE; REGULATIONS.— 

8 (1) The amendments made by subsection (a) 

9 shall apply to penalties imposed on or after the date 

10 that is 24 months after the date of the enactment of 

11 this title. 

12 (2) Not later than 18 months after the date of the 

13 enactment of this title, the Secretary of Health and 

14 Human Services shall promulgate regulations to im15 plement such amendments. 

16 (c) DISTRIBUTION OF CERTAIN CIVIL MONETARY PEN17 ALTIES COLLECTED.— 

18 (1) IN GENERAL.—Subject to the regulation pro19 mulgated pursuant to paragraph (3), any civil mone20 tary penalty or monetary settlement collected with re21 spect to an offense punishable under this subtitle or 

22 section 1176 of the Social Security Act (42 U.S.C. 

23 1320d–5) insofar as such section relates to privacy or 

24 security shall be transferred to the Office of Civil 

25 Rights of the Department of Health and Human 


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1 Services to be used for purposes of enforcing the pro2 visions of this subtitle and subparts C and E of part 

3 164 of title 45, Code of Federal Regulations, as such 

4 provisions are in effect as of the date of enactment of 

5 this Act. 

6 (2) GAO REPORT.—Not later than 18 months 

7 after the date of the enactment of this title, the Comp8 troller General shall submit to the Secretary a report 

9 including recommendations for a methodology under 

10 which an individual who is harmed by an act that 

11 constitutes an offense referred to in paragraph (1) 

12 may receive a percentage of any civil monetary pen13 alty or monetary settlement collected with respect to 

14 such offense. 

15 (3) ESTABLISHMENT OF METHODOLOGY TO DIS16 TRIBUTE PERCENTAGE OF CMPS COLLECTED TO

17 HARMED INDIVIDUALS.—Not later than 3 years after 

18 the date of the enactment of this title, the Secretary 

19 shall establish by regulation and based on the rec20 ommendations submitted under paragraph (2), a 

21 methodology under which an individual who is 

22 harmed by an act that constitutes an offense referred 

23 to in paragraph (1) may receive a percentage of any 

24 civil monetary penalty or monetary settlement col25 lected with respect to such offense. 


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1 (4) APPLICATION OF METHODOLOGY.—The meth2 odology under paragraph (3) shall be applied with re3 spect to civil monetary penalties or monetary settle4 ments imposed on or after the effective date of the reg5 ulation. 

6 (d) TIERED INCREASE IN AMOUNT OF CIVIL MONE7 TARY PENALTIES.— 

8 (1) IN GENERAL.—Section 1176(a)(1) of the So9 cial Security Act (42 U.S.C. 1320d–5(a)(1)) is 

10 amended by striking ‘‘who violates a provision of this 

11 part a penalty of not more than’’ and all that follows 

12 and inserting the following: ‘‘who violates a provision 

13 of this part— 

14 ‘‘(A) in the case of a violation of such pro15 vision in which it is established that the person 

16 did not know (and by exercising reasonable dili17 gence would not have known) that such person 

18 violated such provision, a penalty for each such 

19 violation of an amount that is at least the 

20 amount described in paragraph (3)(A) but not to 

21 exceed the amount described in paragraph 

22 (3)(D); 

23 ‘‘(B) in the case of a violation of such pro24 vision in which it is established that the viola25 tion was due to reasonable cause and not to willVerDate Nov 24 2008 03:18 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00308 Fmt 6652 Sfmt 6203 E:\BILLS\H598.RH H598

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1 ful neglect, a penalty for each such violation of 

2 an amount that is at least the amount described 

3 in paragraph (3)(B) but not to exceed the 

4 amount described in paragraph (3)(D); and 

5 ‘‘(C) in the case of a violation of such provi6 sion in which it is established that the violation 

7 was due to willful neglect— 

8 ‘‘(i) if the violation is corrected as de9 scribed in subsection (b)(3)(A), a penalty in 

10 an amount that is at least the amount de11 scribed in paragraph (3)(C) but not to ex12 ceed the amount described in paragraph 

13 (3)(D); and 

14 ‘‘(ii) if the violation is not corrected as 

15 described in such subsection, a penalty in 

16 an amount that is at least the amount de17 scribed in paragraph (3)(D). 

18 In determining the amount of a penalty under 

19 this section for a violation, the Secretary shall 

20 base such determination on the nature and ex21 tent of the violation and the nature and extent 

22 of the harm resulting from such violation.’’. 

23 (2) TIERS OF PENALTIES DESCRIBED.—Section 

24 1176(a) of such Act (42 U.S.C. 1320d–5(a)) is further 


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1 amended by adding at the end the following new 

2 paragraph: 

3 ‘‘(3) TIERS OF PENALTIES DESCRIBED.—For 

4 purposes of paragraph (1), with respect to a violation 

5 by a person of a provision of this part— 

6 ‘‘(A) the amount described in this subpara7 graph is $100 for each such violation, except that 

8 the total amount imposed on the person for all 

9 such violations of an identical requirement or 

10 prohibition during a calendar year may not ex11 ceed $25,000; 

12 ‘‘(B) the amount described in this subpara13 graph is $1,000 for each such violation, except 

14 that the total amount imposed on the person for 

15 all such violations of an identical requirement or 

16 prohibition during a calendar year may not ex17 ceed $100,000; 

18 ‘‘(C) the amount described in this subpara19 graph is $10,000 for each such violation, except 

20 that the total amount imposed on the person for 

21 all such violations of an identical requirement or 

22 prohibition during a calendar year may not ex23 ceed $250,000; and 

24 ‘‘(D) the amount described in this subpara25 graph is $50,000 for each such violation, except 


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1 that the total amount imposed on the person for 

2 all such violations of an identical requirement or 

3 prohibition during a calendar year may not ex4 ceed $1,500,000.’’. 

5 (3) CONFORMING AMENDMENTS.—Section 

6 1176(b) of such Act (42 U.S.C. 1320d–5(b)) is amend7 ed— 

8 (A) by striking paragraph (2) and redesig9 nating paragraphs (3) and (4) as paragraphs 

10 (2) and (3), respectively; and 

11 (B) in paragraph (2), as so redesignated— 

12 (i) in subparagraph (A), by striking 

13 ‘‘in subparagraph (B), a penalty may not 

14 be imposed under subsection (a) if’’ and all 

15 that follows through ‘‘the failure to comply 

16 is corrected’’ and inserting ‘‘in subpara17 graph (B) or subsection (a)(1)(C), a penalty 

18 may not be imposed under subsection (a) if 

19 the failure to comply is corrected’’; and 

20 (ii) in subparagraph (B), by striking 

21 ‘‘(A)(ii)’’ and inserting ‘‘(A)’’ each place it 

22 appears. 

23 (4) EFFECTIVE DATE.—The amendments made 

24 by this subsection shall apply to violations occurring 

25 after the date of the enactment of this title. 


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1 (e) ENFORCEMENT THROUGH STATE ATTORNEYS GEN2 ERAL.— 

3 (1) IN GENERAL.—Section 1176 of the Social Se4 curity Act (42 U.S.C. 1320d–5) is amended by add5 ing at the end the following new subsection: 

6 ‘‘(c) ENFORCEMENT BY STATE ATTORNEYS GEN7 ERAL.— 

8 ‘‘(1) CIVIL ACTION.—Except as provided in sub9 section (b), in any case in which the attorney general 

10 of a State has reason to believe that an interest of one 

11 or more of the residents of that State has been or is 

12 threatened or adversely affected by any person who 

13 violates a provision of this part, the attorney general 

14 of the State, as parens patriae, may bring a civil ac15 tion on behalf of such residents of the State in a dis16 trict court of the United States of appropriate juris17 diction— 

18 ‘‘(A) to enjoin further such violation by the 

19 defendant; or 

20 ‘‘(B) to obtain damages on behalf of such 

21 residents of the State, in an amount equal to the 

22 amount determined under paragraph (2). 

23 ‘‘(2) STATUTORY DAMAGES.— 

24 ‘‘(A) IN GENERAL.—For purposes of para25 graph (1)(B), the amount determined under this 


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1 paragraph is the amount calculated by multi2 plying the number of violations by up to $100. 

3 For purposes of the preceding sentence, in the 

4 case of a continuing violation, the number of vio5 lations shall be determined consistent with the 

6 HIPAA privacy regulations (as defined in sec7 tion 1180(b)(3)) for violations of subsection (a). 

8 ‘‘(B) LIMITATION.—The total amount of 

9 damages imposed on the person for all violations 

10 of an identical requirement or prohibition dur11 ing a calendar year may not exceed $25,000. 

12 ‘‘(C) REDUCTION OF DAMAGES.—In assess13 ing damages under subparagraph (A), the court 

14 may consider the factors the Secretary may con15 sider in determining the amount of a civil 

16 money penalty under subsection (a) under the 

17 HIPAA privacy regulations. 

18 ‘‘(3) ATTORNEY FEES.—In the case of any suc19 cessful action under paragraph (1), the court, in its 

20 discretion, may award the costs of the action and rea21 sonable attorney fees to the State. 

22 ‘‘(4) NOTICE TO SECRETARY.—The State shall 

23 serve prior written notice of any action under para24 graph (1) upon the Secretary and provide the Sec25 retary with a copy of its complaint, except in any 


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1 case in which such prior notice is not feasible, in 

2 which case the State shall serve such notice imme3 diately upon instituting such action. The Secretary 

4 shall have the right— 

5 ‘‘(A) to intervene in the action; 

6 ‘‘(B) upon so intervening, to be heard on all 

7 matters arising therein; and 

8 ‘‘(C) to file petitions for appeal. 

9 ‘‘(5) CONSTRUCTION.—For purposes of bringing 

10 any civil action under paragraph (1), nothing in this 

11 section shall be construed to prevent an attorney gen12 eral of a State from exercising the powers conferred 

13 on the attorney general by the laws of that State. 

14 ‘‘(6) VENUE; SERVICE OF PROCESS.— 

15 ‘‘(A) VENUE.—Any action brought under 

16 paragraph (1) may be brought in the district 

17 court of the United States that meets applicable 

18 requirements relating to venue under section 

19 1391 of title 28, United States Code. 

20 ‘‘(B) SERVICE OF PROCESS.—In an action 

21 brought under paragraph (1), process may be 

22 served in any district in which the defendant— 

23 ‘‘(i) is an inhabitant; or 

24 ‘‘(ii) maintains a physical place of 

25 business. 


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1 ‘‘(7) LIMITATION ON STATE ACTION WHILE FED2 ERAL ACTION IS PENDING.—If the Secretary has insti3 tuted an action against a person under subsection (a) 

4 with respect to a specific violation of this part, no 

5 State attorney general may bring an action under 

6 this subsection against the person with respect to such 

7 violation during the pendency of that action. 

8 ‘‘(8) APPLICATION OF CMP STATUTE OF LIMITA9 TION.—A civil action may not be instituted with re10 spect to a violation of this part unless an action to 

11 impose a civil money penalty may be instituted 

12 under subsection (a) with respect to such violation 

13 consistent with the second sentence of section 

14 1128A(c)(1).’’. 

15 (2) CONFORMING AMENDMENTS.—Subsection (b) 

16 of such section, as amended by subsection (d)(3), is 

17 amended— 

18 (A) in paragraph (1), by striking ‘‘A pen19 alty may not be imposed under subsection (a)’’ 

20 and inserting ‘‘No penalty may be imposed 

21 under subsection (a) and no damages obtained 

22 under subsection (c)’’; 

23 (B) in paragraph (2)(A)— 

24 (i) in the matter before clause (i), by 

25 striking ‘‘a penalty may not be imposed 


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1 under subsection (a)’’ and inserting ‘‘no 

2 penalty may be imposed under subsection 

3 (a) and no damages obtained under sub4 section (c)’’; and 

5 (ii) in clause (ii), by inserting ‘‘or 

6 damages’’ after ‘‘the penalty’’; 

7 (C) in paragraph (2)(B)(i), by striking 

8 ‘‘The period’’ and inserting ‘‘With respect to the 

9 imposition of a penalty by the Secretary under 

10 subsection (a), the period’’; and 

11 (D) in paragraph (3), by inserting ‘‘and 

12 any damages under subsection (c)’’ after ‘‘any 

13 penalty under subsection (a)’’. 

14 (3) EFFECTIVE DATE.—The amendments made 

15 by this subsection shall apply to violations occurring 

16 after the date of the enactment of this Act. 

17 (f) ALLOWING CONTINUED USE OF CORRECTIVE AC18 TION.—Such section is further amended by adding at the 

19 end the following new subsection: 

20 ‘‘(d) ALLOWING CONTINUED USE OF CORRECTIVE AC21 TION.—Nothing in this section shall be construed as pre22 venting the Office of Civil Rights of the Department of 

23 Health and Human Services from continuing, in its discre24 tion, to use corrective action without a penalty in cases 

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1 able diligence would not have known) of the violation in2 volved.’’. 

3 SEC. 4411. AUDITS. 

4 The Secretary shall provide for periodic audits to en5 sure that covered entities and business associates that are 

6 subject to the requirements of this subtitle and subparts C 

7 and E of part 164 of title 45, Code of Federal Regulations, 

8 as such provisions are in effect as of the date of enactment 

9 of this Act, comply with such requirements. 

10 PART II—RELATIONSHIP TO OTHER LAWS; REGU11 LATORY REFERENCES; EFFECTIVE DATE; RE12 PORTS 

13 SEC. 4421. RELATIONSHIP TO OTHER LAWS. 

14 (a) APPLICATION OF HIPAA STATE PREEMPTION.— 

15 Section 1178 of the Social Security Act (42 U.S.C. 1320d– 

16 7) shall apply to a provision or requirement under this sub17 title in the same manner that such section applies to a pro18 vision or requirement under part C of title XI of such Act 

19 or a standard or implementation specification adopted or 

20 established under sections 1172 through 1174 of such Act. 

21 (b) HEALTH INSURANCE PORTABILITY AND ACCOUNT22 ABILITY ACT.—The standards governing the privacy and 

23 security of individually identifiable health information pro24 mulgated by the Secretary under sections 262(a) and 264 

25 of the Health Insurance Portability and Accountability Act 


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1 of 1996 shall remain in effect to the extent that they are 

2 consistent with this subtitle. The Secretary shall by rule 

3 amend such Federal regulations as required to make such 

4 regulations consistent with this subtitle. 

5 SEC. 4422. REGULATORY REFERENCES. 

6 Each reference in this subtitle to a provision of the 

7 Code of Federal Regulations refers to such provision as in 

8 effect on the date of the enactment of this title (or to the 

9 most recent update of such provision). 

10 SEC. 4423. EFFECTIVE DATE. 

11 Except as otherwise specifically provided, the provi12 sions of part I shall take effect on the date that is 12 months 

13 after the date of the enactment of this title. 

14 SEC. 4424. STUDIES, REPORTS, GUIDANCE. 

15 (a) REPORT ON COMPLIANCE.— 

16 (1) IN GENERAL.—For the first year beginning 

17 after the date of the enactment of this Act and annu18 ally thereafter, the Secretary shall prepare and sub19 mit to the Committee on Health, Education, Labor, 

20 and Pensions of the Senate and the Committee on 

21 Ways and Means and the Committee on Energy and 

22 Commerce of the House of Representatives a report 

23 concerning complaints of alleged violations of law, in24 cluding the provisions of this subtitle as well as the 

25 provisions of subparts C and E of part 164 of title 


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1 45, Code of Federal Regulations, (as such provisions 

2 are in effect as of the date of enactment of this Act) 

3 relating to privacy and security of health information 

4 that are received by the Secretary during the year for 

5 which the report is being prepared. Each such report 

6 shall include, with respect to such complaints received 

7 during the year— 

8 (A) the number of such complaints; 

9 (B) the number of such complaints resolved 

10 informally, a summary of the types of such com11 plaints so resolved, and the number of covered 

12 entities that received technical assistance from 

13 the Secretary during such year in order to 

14 achieve compliance with such provisions and the 

15 types of such technical assistance provided; 

16 (C) the number of such complaints that 

17 have resulted in the imposition of civil monetary 

18 penalties or have been resolved through monetary 

19 settlements, including the nature of the com20 plaints involved and the amount paid in each 

21 penalty or settlement; 

22 (D) the number of compliance reviews con23 ducted and the outcome of each such review; 

24 (E) the number of subpoenas or inquiries 

25 issued; 


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1 (F) the Secretary’s plan for improving com2 pliance with and enforcement of such provisions 

3 for the following year; and 

4 (G) the number of audits performed and a 

5 summary of audit findings pursuant to section 

6 4411. 

7 (2) AVAILABILITY TO PUBLIC.—Each report 

8 under paragraph (1) shall be made available to the 

9 public on the Internet website of the Department of 

10 Health and Human Services. 

11 (b) STUDY AND REPORT ON APPLICATION OF PRIVACY

12 AND SECURITY REQUIREMENTS TO NON-HIPAA COVERED

13 ENTITIES.— 

14 (1) STUDY.—Not later than one year after the 

15 date of the enactment of this title, the Secretary, in 

16 consultation with the Federal Trade Commission, 

17 shall conduct a study, and submit a report under 

18 paragraph (2), on privacy and security requirements 

19 for entities that are not covered entities or business 

20 associates as of the date of the enactment of this title, 

21 including— 

22 (A) requirements relating to security, pri23 vacy, and notification in the case of a breach of 

24 security or privacy (including the applicability 

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1 dividually identifiable health information that 

2 has been rendered unusable, unreadable, or inde3 cipherable through technologies or methodologies 

4 recognized by appropriate professional organiza5 tion or standard setting bodies to provide effec6 tive security for the information) that should be 

7 applied to— 

8 (i) vendors of personal health records; 

9 (ii) entities that offer products or serv10 ices through the website of a vendor of per11 sonal health records; 

12 (iii) entities that are not covered enti13 ties and that offer products or services 

14 through the websites of covered entities that 

15 offer individuals personal health records; 

16 (iv) entities that are not covered enti17 ties and that access information in a per18 sonal health record or send information to 

19 a personal health record; and 

20 (v) third party service providers used 

21 by a vendor or entity described in clause 

22 (i), (ii), (iii), or (iv) to assist in providing 

23 personal health record products or services; 

24 (B) a determination of which Federal Gov25 ernment agency is best equipped to enforce such 


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1 requirements recommended to be applied to such 

2 vendors, entities, and service providers under 

3 subparagraph (A); and 

4 (C) a timeframe for implementing regula5 tions based on such findings. 

6 (2) REPORT.—The Secretary shall submit to the 

7 Committee on Finance, the Committee on Health, 

8 Education, Labor, and Pensions, and the Committee 

9 on Commerce of the Senate and the Committee on 

10 Ways and Means and the Committee on Energy and 

11 Commerce of the House of Representatives a report on 

12 the findings of the study under paragraph (1) and 

13 shall include in such report recommendations on the 

14 privacy and security requirements described in such 

15 paragraph. 

16 (c) GUIDANCE ON IMPLEMENTATION SPECIFICATION

17 TO DE-IDENTIFY PROTECTED HEALTH INFORMATION.— 

18 Not later than 12 months after the date of the enactment 

19 of this title, the Secretary shall, in consultation with stake20 holders, issue guidance on how best to implement the re21 quirements for the de-identification of protected health in22 formation under section 164.514(b) of title 45, Code of Fed23 eral Regulations. 

24 (d) GAO REPORT ON TREATMENT DISCLOSURES.— 

25 Not later than one year after the date of the enactment of 


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1 this title, the Comptroller General of the United States shall 

2 submit to the Committee on Health, Education, Labor, and 

3 Pensions of the Senate and the Committee on Ways and 

4 Means and the Committee on Energy and Commerce of the 

5 House of Representatives a report on the best practices re6 lated to the disclosure among health care providers of pro7 tected health information of an individual for purposes of 

8 treatment of such individual. Such report shall include an 

9 examination of the best practices implemented by States 

10 and by other entities, such as health information exchanges 

11 and regional health information organizations, an exam12 ination of the extent to which such best practices are suc13 cessful with respect to the quality of the resulting health 

14 care provided to the individual and with respect to the abil15 ity of the health care provider to manage such best prac16 tices, and an examination of the use of electronic informed 

17 consent for disclosing protected health information for treat18 ment, payment, and health care operations. 

19 Subtitle E—Miscellaneous Medicare 

20 Provisions 

21 SEC. 4501. MORATORIA ON CERTAIN MEDICARE REGULA22 TIONS. 

23 (a) DELAY IN PHASE OUT OF MEDICARE HOSPICE

24 BUDGET NEUTRALITY ADJUSTMENT FACTOR DURING FIS25 CAL YEAR 2009.—Notwithstanding any other provision of 


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1 law, including the final rule published on August 8, 2008, 

2 73 Federal Register 46464 et seq., relating to Medicare Pro3 gram; Hospice Wage Index for Fiscal Year 2009, the Sec4 retary of Health and Human Services shall not phase out 

5 or eliminate the budget neutrality adjustment factor in the 

6 Medicare hospice wage index before October 1, 2009, and 

7 the Secretary shall recompute and apply the final Medicare 

8 hospice wage index for fiscal year 2009 as if there had been 

9 no reduction in the budget neutrality adjustment factor. 

10 (b) NON-APPLICATION OF PHASED-OUT INDIRECT

11 MEDICAL EDUCATION (IME) ADJUSTMENT FACTOR FOR

12 FISCAL YEAR 2009.— 

13 (1) IN GENERAL.—Section 412.322 of title 42, 

14 Code of Federal Regulations, shall be applied without 

15 regard to paragraph (c) of such section, and the Sec16 retary of Health and Human Services shall recom17 pute payments for discharges occurring on or after 

18 October 1, 2008, as if such paragraph had never been 

19 in effect. 

20 (2) NO EFFECT ON SUBSEQUENT YEARS.—Noth21 ing in paragraph (1) shall be construed as having 

22 any effect on the application of paragraph (d) of sec23 tion 412.322 of title 42, Code of Federal Regulations. 

24 (c) FUNDING FOR IMPLEMENTATION.—In addition to 

25 funds otherwise available, for purposes of implementing the 


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1 provisions of subsections (a) and (b), including costs in2 curred in reprocessing claims in carrying out such provi3 sions, the Secretary of Health and Human Services shall 

4 provide for the transfer from the Federal Hospital Insur5 ance Trust Fund established under section 1817 of the So6 cial Security Act (42 U.S.C. 1395i) to the Centers for Medi7 care & Medicaid Services Program Management Account 

8 of $2,000,000 for fiscal year 2009. 

9 SEC. 4502. LONG-TERM CARE HOSPITAL TECHNICAL COR10 RECTIONS. 

11 (a) PAYMENT.—Subsection (c) of section 114 of the 

12 Medicare, Medicaid, and SCHIP Extension Act of 2007 

13 (Public Law 110–173) is amended— 

14 (1) in paragraph (1)— 

15 (A) by amending the heading to read as fol16 lows: ‘‘DELAY IN APPLICATION OF 25 PERCENT

17 PATIENT THRESHOLD PAYMENT ADJUSTMENT’’; 

18 (B) by striking ‘‘the date of the enactment 

19 of this Act’’ and inserting ‘‘July 1, 2007,’’; and 

20 (C) in subparagraph (A), by inserting ‘‘or 

21 to a long-term care hospital, or satellite facility, 

22 that as of December 29, 2007, was co-located 

23 with an entity that is a provider-based, off-cam24 pus location of a subsection (d) hospital which 

25 did not provide services payable under section 


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•HR 598 RH

1 1886(d) of the Social Security Act at the off2 campus location’’ after ‘‘freestanding long-term 

3 care hospitals’’; and 

4 (2) in paragraph (2)— 

5 (A) in subparagraph (B)(ii), by inserting 

6 ‘‘or that is described in section 412.22(h)(3)(i) of 

7 such title’’ before the period; and 

8 (B) in subparagraph (C), by striking ‘‘the 

9 date of the enactment of this Act’’ and inserting 

10 ‘‘October 1, 2007 (or July 1, 2007, in the case 

11 of a satellite facility described in section 

12 412.22(h)(3)(i) of title 42, Code of Federal Regu13 lations)’’. 

14 (b) MORATORIUM.—Subsection (d)(3)(A) of such sec15 tion is amended by striking ‘‘if the hospital or facility’’ and 

16 inserting ‘‘if the hospital or facility obtained a certificate 

17 of need for an increase in beds that is in a State for which 

18 such certificate of need is required and that was issued on 

19 or after April 1, 2005, and before December 29, 2007, or 

20 if the hospital or facility’’. 

21 (c) EFFECTIVE DATE.—The amendments made by this 

22 section shall be effective and apply as if included in the 

23 enactment of the Medicare, Medicaid, and SCHIP Exten24 sion Act of 2007 (Public Law 110–173). 


SMARTINEZ on PROD1PC64 with BILLS

SMARTINEZ on PROD1PC64 with BILLS
Union Calendar No. 2 

111TH CONGRESS 

1ST SESSION H. R. 598 

[Report No. 111–8, Part I] 

A BILL 

To provide for a portion of the economic recovery 

ment, and health. package relating to revenue measures, unemployJANUARY 27, 2009 

Reported from the Committee on Ways and Means with 

an amendment 

JANUARY 27, 2009 

Committees on Energy and Commerce, Science and Techprinted House on the State of the Union and ordered to be discharged; committed to the Committee of the Whole nology, Education and Labor, and Financial Services 


SMARTINEZ on PROD1PC64 with BILLS