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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 598 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 598

 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

_______________________________________________________________________

                                 A BILL

 
 To provide for a portion of the economic recovery package relating to 
              revenue measures, unemployment, and health.

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

                        TITLE I--TAX PROVISIONS

SECTION 1000. SHORT TITLE, ETC.

    (a) Short Title.--This title may be cited as the ``American 
Recovery and Reinvestment Tax Act of 2009''.
    (b) Reference.--Except as otherwise expressly provided, whenever in 
this title an amendment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of the Internal 
Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for 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. Temporary increase in earned income tax credit.
Sec. 1102. Temporary 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.
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.
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 on issuance 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.

                      Subtitle A--Making Work Pay

SEC. 1001. MAKING WORK PAY CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
is amended by inserting after section 36 the following new section:

``SEC. 36A. MAKING WORK PAY CREDIT.

    ``(a) Allowance of Credit.--In the case of an eligible individual, 
there shall be allowed as a credit against the tax imposed by this 
subtitle for the taxable year an amount equal to the lesser of--
            ``(1) 6.2 percent of earned income of the taxpayer, or
            ``(2) $500 ($1,000 in the case of a joint return).
    ``(b) Limitation Based on Modified Adjusted Gross Income.--
            ``(1) In general.--The amount allowable as a credit under 
        subsection (a) (determined without regard to this paragraph) 
        for the taxable year shall be reduced (but not below zero) by 2 
        percent of so much of the taxpayer's modified adjusted gross 
        income as exceeds $75,000 ($150,000 in the case of a joint 
        return).
            ``(2) Modified adjusted gross income.--For purposes of 
        subparagraph (A), the term `modified adjusted gross income' 
        means the adjusted gross income of the taxpayer for the taxable 
        year increased by any amount excluded from gross income under 
        section 911, 931, or 933.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible individual.--The term `eligible individual' 
        means any individual other than--
                    ``(A) any nonresident alien individual,
                    ``(B) any individual with respect to whom a 
                deduction under section 151 is allowable to another 
                taxpayer for a taxable year beginning in the calendar 
                year in which the individual's taxable year begins, and
                    ``(C) an estate or trust.
            ``(2) Earned income.--The term `earned income' has the 
        meaning given such term by section 32(c)(2), except that such 
        term shall not include net earnings from self-employment which 
        are not taken into account in computing taxable income. For 
        purposes of the preceding sentence, any amount excluded from 
        gross income by reason of section 112 shall be treated as 
        earned income which is taken into account in computing taxable 
        income for the taxable year.
    ``(d) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2010.''.
    (b)  Treatment of Possessions.--
            (1) Payments to possessions.--
                    (A) Mirror code possession.--The Secretary of the 
                Treasury shall pay to each possession of the United 
                States with a mirror code tax system amounts equal to 
                the loss to that possession by reason of the amendments 
                made by this section with respect to taxable years 
                beginning in 2009 and 2010. Such amounts shall be 
                determined by the Secretary of the Treasury based on 
                information provided by the government of the 
                respective possession.
                    (B) Other possessions.--The Secretary of the 
                Treasury shall pay to each possession of the United 
                States which does not have a mirror code tax system 
                amounts estimated by the Secretary of the Treasury as 
                being equal to the aggregate benefits that would have 
                been provided to residents of such possession by reason 
                of the amendments made by this section for taxable 
                years beginning in 2009 and 2010 if a mirror code tax 
                system had been in effect in such possession. The 
                preceding sentence shall not apply with respect to any 
                possession of the United States unless such possession 
                has a plan, which has been approved by the Secretary of 
                the Treasury, under which such possession will promptly 
                distribute such payments to the residents of such 
                possession.
            (2) Coordination with credit allowed against united states 
        income taxes.--No credit shall be allowed against United States 
        income taxes for any taxable year under section 36A of the 
        Internal Revenue Code of 1986 (as added by this section) to any 
        person--
                    (A) to whom a credit is allowed against taxes 
                imposed by the possession by reason of the amendments 
                made by this section for such taxable year, or
                    (B) who is eligible for a payment under a plan 
                described in paragraph (1)(B) with respect to such 
                taxable year.
            (3) Definitions and special rules.--
                    (A) Possession of the united states.--For purposes 
                of this subsection, the term ``possession of the United 
                States'' includes the Commonwealth of Puerto Rico and 
                the Commonwealth of the Northern Mariana Islands.
                    (B) Mirror code tax system.--For purposes of this 
                subsection, the term ``mirror code tax system'' means, 
                with respect to any possession of the United States, 
                the income tax system of such possession if the income 
                tax liability of the residents of such possession under 
                such system is determined by reference to the income 
                tax laws of the United States as if such possession 
                were the United States.
                    (C) Treatment of payments.--For purposes of section 
                1324(b)(2) of title 31, United States Code, the 
                payments under this subsection shall be treated in the 
                same manner as a refund due from the credit allowed 
                under section 36A of the Internal Revenue Code of 1986 
                (as added by this section).
    (c) Refunds Disregarded in the Administration of Federal Programs 
and Federally Assisted Programs.--Any credit or refund allowed or made 
to any individual by reason of section 36A of the Internal Revenue Code 
of 1986 (as added by this section) or by reason of subsection (b) of 
this section shall not be taken into account as income and shall not be 
taken into account as resources for the month of receipt and the 
following 2 months, for purposes of determining the eligibility of such 
individual or any other individual for benefits or assistance, or the 
amount or extent of benefits or assistance, under any Federal program 
or under any State or local program financed in whole or in part with 
Federal funds.
    (d) Conforming Amendments.--
            (1) Section 6211(b)(4)(A) is amended by inserting ``36A,'' 
        after ``36,''.
            (2) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting ``36A,'' after ``36,''.
            (3) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 36 the following new item:

``Sec. 36A. Making work pay credit.''.
    (e) Effective Date.--This section shall apply to taxable years 
beginning after December 31, 2008.

      Subtitle B--Additional Tax Relief for Families With Children

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

    (a) In General.--Subsection (b) of section 32 is amended by adding 
at the end the following new paragraph:
            ``(3) Temporary increase.--In the case of any taxable year 
        beginning in 2009 or 2010--
                    ``(A) Increased credit percentage for 3 or more 
                qualifying children.--In the case of a taxpayer with 3 
                or more qualifying children, the credit percentage is 
                45 percent.
                    ``(B) Reduction of marriage penalty.--
                            ``(i) In general.--The dollar amount in 
                        effect under paragraph (2)(B) shall be $5,000.
                            ``(ii) Inflation adjustment.--In the case 
                        of any taxable year beginning in 2010, the 
                        $5,000 amount in clause (i) shall be increased 
                        by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost of living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins determined by 
                                substituting `calendar year 2008' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(iii) Rounding.--Subparagraph (A) of 
                        subsection (j)(2) shall apply after taking into 
                        account any increase under clause (ii).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

SEC. 1102. TEMPORARY INCREASE OF REFUNDABLE PORTION OF CHILD CREDIT.

    (a) In General.--Paragraph (4) of section 24(d) is amended to read 
as follows:
            ``(4) Special rule for 2009 and 2010.--Notwithstanding 
        paragraph (3), in the case of any taxable year beginning in 
        2009 or 2010, the dollar amount in effect for such taxable year 
        under paragraph (1)(B)(i) shall be zero.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

              Subtitle C--American Opportunity Tax Credit

SEC. 1201. AMERICAN OPPORTUNITY TAX CREDIT.

    (a) In General.--Section 25A (relating to Hope scholarship credit) 
is amended by redesignating subsection (i) as subsection (j) and by 
inserting after subsection (h) the following new subsection:
    ``(i) American Opportunity Tax Credit.--In the case of any taxable 
year beginning in 2009 or 2010--
            ``(1) Increase in credit.--The Hope Scholarship Credit 
        shall be an amount equal to the sum of--
                    ``(A) 100 percent of so much of the qualified 
                tuition and related expenses paid by the taxpayer 
                during the taxable year (for education furnished to the 
                eligible student during any academic period beginning 
                in such taxable year) as does not exceed $2,000, plus
                    ``(B) 25 percent of such expenses so paid as 
                exceeds $2,000 but does not exceed $4,000.
            ``(2) Credit allowed for first 4 years of post-secondary 
        education.--Subparagraphs (A) and (C) of subsection (b)(2) 
        shall be applied by substituting `4' for `2'.
            ``(3) Qualified tuition and related expenses to include 
        required course materials.--Subsection (f)(1)(A) shall be 
        applied by substituting `tuition, fees, and course materials' 
        for `tuition and fees'.
            ``(4) Increase in agi limits for hope scholarship credit.--
        In lieu of applying subsection (d) with respect to the Hope 
        Scholarship Credit, such credit (determined without regard to 
        this paragraph) shall be reduced (but not below zero) by the 
        amount which bears the same ratio to such credit (as so 
        determined) as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income (as defined in subsection (d)(3)) 
                        for such taxable year, over
                            ``(ii) $80,000 ($160,000 in the case of a 
                        joint return), bears to
                    ``(B) $10,000 ($20,000 in the case of a joint 
                return).
            ``(5) Credit allowed against alternative minimum tax.--In 
        the case of a taxable year to which section 26(a)(2) does not 
        apply, so much of the credit allowed under subsection (a) as is 
        attributable to the Hope Scholarship Credit shall not exceed 
        the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this section and sections 23, 25D, 
                and 30D) and section 27 for the taxable year.
        Any reference in section 24, 25, 26, 25B, 904, or 1400C to a 
        credit allowed under this subsection shall be treated as a 
        reference to so much of the credit allowed under subsection (a) 
        as is attributable to the Hope Scholarship Credit.
            ``(6) Portion of credit made refundable.--40 percent of so 
        much of the credit allowed under subsection (a) as is 
        attributable to the Hope Scholarship Credit (determined after 
        application of paragraph (4) and without regard to this 
        paragraph and section 26(a)(2) or paragraph (5), as the case 
        may be) shall be treated as a credit allowable under subpart C 
        (and not allowed under subsection (a)). The preceding sentence 
        shall not apply to any taxpayer for any taxable year if such 
        taxpayer is a child to whom subsection (g) of section 1 applies 
        for such taxable year.''.
    (b) Conforming Amendments.--
            (1) Section 24(b)(3)(B) is amended by inserting ``25A(i),'' 
        after ``23,''.
            (2) Section 25(e)(1)(C)(ii) is amended by inserting 
        ``25A(i),'' after ``24,''.
            (3) Section 26(a)(1) is amended by inserting ``25A(i),'' 
        after ``24,''.
            (4) Section 25B(g)(2) is amended by inserting ``25A(i),'' 
        after ``23,''.
            (5) Section 904(i) is amended by inserting ``25A(i),'' 
        after ``24,''.
            (6) Section 1400C(d)(2) is amended by inserting ``25A(i),'' 
        after ``24,''.
            (7) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting ``25A,'' before ``35''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.
    (d) Application of EGTRRA Sunset.--The amendment made by subsection 
(b)(1) shall be subject to title IX of the Economic Growth and Tax 
Relief Reconciliation Act of 2001 in the same manner as the provision 
of such Act to which such amendment relates.
    (e) Treasury Studies Regarding Education Incentives.--
            (1) Study regarding coordination with non-tax educational 
        incentives.--The Secretary of the Treasury, or the Secretary's 
        delegate, shall study how to coordinate the credit allowed 
        under section 25A of the Internal Revenue Code of 1986 with the 
        Federal Pell Grant program under section 401 of the Higher 
        Education Act of 1965.
            (2) Study regarding imposition of community service 
        requirements.--The Secretary of the Treasury, or the 
        Secretary's delegate, shall study the feasibility of requiring 
        students to perform community service as a condition of taking 
        their tuition and related expenses into account under section 
        25A of the Internal Revenue Code of 1986.
            (3) Report.--Not later than 1 year after the date of the 
        enactment of this Act, the Secretary of the Treasury, or the 
        Secretary's delegate, shall report to Congress on the results 
        of the studies conducted under this paragraph.

                     Subtitle D--Housing Incentives

SEC. 1301. WAIVER OF REQUIREMENT TO REPAY FIRST-TIME HOMEBUYER CREDIT.

    (a) In General.--Paragraph (4) of section 36(f) is amended by 
adding at the end the following new subparagraph:
                    ``(D) Waiver of recapture for purchases in 2009.--
                In the case of any credit allowed with respect to the 
                purchase of a principal residence after December 31, 
                2008, and before July 1, 2009--
                            ``(i) paragraph (1) shall not apply, and
                            ``(ii) paragraph (2) shall apply only if 
                        the disposition or cessation described in 
                        paragraph (2) with respect to such residence 
                        occurs during the 36-month period beginning on 
                        the date of the purchase of such residence by 
                        the taxpayer.''.
    (b) Conforming Amendment.--Subsection (g) of section 36 is amended 
by striking ``subsection (c)'' and inserting ``subsections (c) and 
(f)(4)(D)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to residences purchased after December 31, 2008.

SEC. 1302. COORDINATION OF LOW-INCOME HOUSING CREDIT AND LOW-INCOME 
              HOUSING GRANTS.

    Subsection (i) of section 42 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new paragraph:
            ``(9) Coordination with low-income housing grants.--
                    ``(A) Reduction in state housing credit ceiling for 
                low-income housing grants received in 2009.--For 
                purposes of this section, the amounts described in 
                clauses (i) through (iv) of subsection (h)(3)(C) with 
                respect to any State for 2009 shall each be reduced by 
                so much of such amount as is taken into account in 
                determining the amount of any grant to such State under 
                section 1711 of the American Recovery and Reinvestment 
                Tax Act of 2009.
                    ``(B) Special rule for basis.--Basis of a qualified 
                low-income building shall not be reduced by the amount 
                of any grant described in subparagraph (A).''.

                Subtitle E--Tax Incentives for Business

                PART I--TEMPORARY INVESTMENT INCENTIVES

SEC. 1401. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED DURING 2009.

    (a) In General.--Paragraph (2) of section 168(k) is amended--
            (1) by striking ``January 1, 2010'' and inserting ``January 
        1, 2011'', and
            (2) by striking ``January 1, 2009'' each place it appears 
        and inserting ``January 1, 2010''.
    (b) Conforming Amendments.--
            (1) The heading for subsection (k) of section 168 is 
        amended by striking ``January 1, 2009'' and inserting ``January 
        1, 2010''.
            (2) The heading for clause (ii) of section 168(k)(2)(B) is 
        amended by striking ``pre-january 1, 2009'' and inserting 
        ``pre-january 1, 2010''.
            (3) Subparagraph (D) of section 168(k)(4) is amended--
                    (A) by striking ``and'' at the end of clause (i),
                    (B) by redesignating clause (ii) as clause (v), and
                    (C) by inserting after clause (i) the following new 
                clauses:
                            ``(ii) `April 1, 2008' shall be substituted 
                        for `January 1, 2008' in subparagraph 
                        (A)(iii)(I) thereof,
                            ``(iii) `January 1, 2009' shall be 
                        substituted for `January 1, 2010' each place it 
                        appears,
                            ``(iv) `January 1, 2010' shall be 
                        substituted for `January 1, 2011' in 
                        subparagraph (A)(iv) thereof, and''.
            (4) Subparagraph (B) of section 168(l)(5) is amended by 
        striking ``January 1, 2009'' and inserting ``January 1, 2010''.
            (5) Subparagraph (B) of section 1400N(d)(3) is amended by 
        striking ``January 1, 2009'' and inserting ``January 1, 2010''.
    (c) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to property placed 
        in service after December 31, 2008, in taxable years ending 
        after such date.
            (2) Technical amendment.--Section 168(k)(4)(D)(ii) of the 
        Internal Revenue Code of 1986, as added by subsection 
        (b)(3)(C), shall apply to taxable years ending after March 31, 
        2008.

SEC. 1402. TEMPORARY INCREASE IN LIMITATIONS ON EXPENSING OF CERTAIN 
              DEPRECIABLE BUSINESS ASSETS.

    (a) In General.--Paragraph (7) of section 179(b) is amended--
            (1) by striking ``2008'' and inserting ``2008, or 2009'', 
        and
            (2) by striking ``2008'' in the heading thereof and 
        inserting ``2008, and 2009''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

             PART II--5-YEAR CARRYBACK OF OPERATING LOSSES

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

    (a) In General.--Subparagraph (H) of section 172(b)(1) is amended 
to read as follows:
                    ``(H) Carryback for 2008 and 2009 net operating 
                losses.--In the case of a net operating loss for any 
                taxable year ending during 2008 or 2009--
                            ``(i) subparagraph (A)(i) shall be applied 
                        by substituting `5' for `2',
                            ``(ii) subparagraph (E)(ii) shall be 
                        applied by substituting `4' for `2', and
                            ``(iii) subparagraph (F) shall not 
                        apply.''.
    (b) Alternative Tax Net Operating Loss Deduction.--Subclause (I) of 
section 56(d)(1)(A)(ii) is amended to read as follows:
                                    ``(I) the amount of such deduction 
                                attributable to the sum of carrybacks 
                                of net operating losses from taxable 
                                years ending during 2001, 2002, 2008, 
                                or 2009 and carryovers of net operating 
                                losses to taxable years ending during 
                                such calendar years, or''.
    (c) Election To Carry Back a Fewer Number of Years.--Subsection (k) 
of section 172 is amended by inserting ``or may elect to apply such 
subsection by substituting a whole number less than 5 for `5' in such 
subsection'' before the period at the end of the first sentence.
    (d) Loss From Operations of Life Insurance Companies.--Subsection 
(b) of section 810 is amended by adding at the end the following new 
paragraph:
            ``(4) Carryback for 2008 and 2009 loss years.--In the case 
        of a loss from operations for any taxable year ending during 
        2008 or 2009, the taxpayer may elect to apply paragraph (1)(A) 
        by substituting any whole number less than 6 for `3'. Such 
        election shall be made in such manner as may be prescribed by 
        the Secretary and shall be made by the due date (including 
        extensions of time) for filing the taxpayer's return for the 
        taxable year of the loss from operations. Such election, once 
        made for any taxable year, shall be irrevocable for such 
        taxable year.''.
    (e) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        net operating losses arising in taxable years ending after 
        December 31, 2007.
            (2) Alternative tax net operating loss deduction.--The 
        amendment made by subsection (b) shall apply to taxable years 
        ending after 1997.
            (3) Loss from operations of life insurance companies.--The 
        amendment made by subsection (d) shall apply to losses from 
        operations arising in taxable years ending after December 31, 
        2007.
            (4) Transitional rule.--In the case of a net operating loss 
        (or, in the case of a life insurance company, a loss from 
        operations) for a taxable year ending during 2008--
                    (A) any election made under section 172(b)(3) or 
                810(b)(3) of the Internal Revenue Code of 1986 with 
                respect to such loss may (notwithstanding such section) 
                be revoked before the applicable date,
                    (B) any election made under section 172(k) or 
                810(b)(4) of such Code with respect to such loss shall 
                (notwithstanding such section) be treated as timely 
                made if made before the applicable date, and
                    (C) any application under section 6411(a) of such 
                Code with respect to such loss shall be treated as 
                timely filed if filed before the applicable date.
        For purposes of this paragraph, the term ``applicable date'' 
        means the date which is 60 days after the date of the enactment 
        of this Act.

SEC. 1412. EXCEPTION FOR TARP RECIPIENTS.

    The amendments made by this part shall not apply to--
            (1) any taxpayer if--
                    (A) the Federal Government acquires, at any time, 
                an equity interest in the taxpayer pursuant to the 
                Emergency Economic Stabilization Act of 2008, or
                    (B) the Federal Government acquires, at any time, 
                any warrant (or other right) to acquire any equity 
                interest with respect to the taxpayer pursuant to such 
                Act,
            (2) the Federal National Mortgage Association and the 
        Federal Home Loan Mortgage Corporation, and
            (3) any taxpayer which at any time in 2008 or 2009 is a 
        member of the same affiliated group (as defined in section 1504 
        of the Internal Revenue Code of 1986, determined without regard 
        to subsection (b) thereof) as a taxpayer described in paragraph 
        (1) or (2).

                   PART III--INCENTIVES FOR NEW JOBS

SEC. 1421. INCENTIVES TO HIRE UNEMPLOYED VETERANS AND DISCONNECTED 
              YOUTH.

    (a) In General.--Subsection (d) of section 51 is amended by adding 
at the end the following new paragraph:
            ``(14) Credit allowed for unemployed veterans and 
        disconnected youth hired in 2009 or 2010.--
                    ``(A) In general.--Any unemployed veteran or 
                disconnected youth who begins work for the employer 
                during 2009 or 2010 shall be treated as a member of a 
                targeted group for purposes of this subpart.
                    ``(B) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Unemployed veteran.--The term 
                        `unemployed veteran' means any veteran (as 
                        defined in paragraph (3)(B), determined without 
                        regard to clause (ii) thereof) who is certified 
                        by the designated local agency as--
                                    ``(I) having been discharged or 
                                released from active duty in the Armed 
                                Forces during 2008, 2009, or 2010, and
                                    ``(II) being in receipt of 
                                unemployment compensation under State 
                                or Federal law for not less than 4 
                                weeks during the 1-year period ending 
                                on the hiring date.
                            ``(ii) Disconnected youth.--The term 
                        `disconnected youth' means any individual who 
                        is certified by the designated local agency--
                                    ``(I) as having attained age 16 but 
                                not age 25 on the hiring date,
                                    ``(II) as not regularly attending 
                                any secondary, technical, or post-
                                secondary school during the 6-month 
                                period preceding the hiring date,
                                    ``(III) as not regularly employed 
                                during such 6-month period, and
                                    ``(IV) as not readily employable by 
                                reason of lacking a sufficient number 
                                of basic skills.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer after December 31, 
2008.

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.

    (a) Findings.--Congress finds as follows:
            (1) The delegation of authority to the Secretary of the 
        Treasury under section 382(m) of the Internal Revenue Code of 
        1986 does not authorize the Secretary to provide exemptions or 
        special rules that are restricted to particular industries or 
        classes of taxpayers.
            (2) Internal Revenue Service Notice 2008-83 is inconsistent 
        with the congressional intent in enacting such section 382(m).
            (3) The legal authority to prescribe Internal Revenue 
        Service Notice 2008-83 is doubtful.
            (4) However, as taxpayers should generally be able to rely 
        on guidance issued by the Secretary of the Treasury legislation 
        is necessary to clarify the force and effect of Internal 
        Revenue Service Notice 2008-83 and restore the proper 
        application under the Internal Revenue Code of 1986 of the 
        limitation on built-in losses following an ownership change of 
        a bank.
    (b) Determination of Force and Effect of Internal Revenue Service 
Notice 2008-83 Exempting Banks From Limitation on Certain Built-In 
Losses Following Ownership Change.--
            (1) In general.--Internal Revenue Service Notice 2008-83--
                    (A) shall be deemed to have the force and effect of 
                law with respect to any ownership change (as defined in 
                section 382(g) of the Internal Revenue Code of 1986) 
                occurring on or before January 16, 2009, and
                    (B) shall have no force or effect with respect to 
                any ownership change after such date.
            (2) Binding contracts.--Notwithstanding paragraph (1), 
        Internal Revenue Service Notice 2008-83 shall have the force 
        and effect of law with respect to any ownership change (as so 
        defined) which occurs after January 16, 2009 if such change--
                    (A) is pursuant to a written binding contract 
                entered into on or before such date, or
                    (B) was described on or before such date in a 
                public announcement or in a filing with the Securities 
                and Exchange Commision required by reason of such 
                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.

    (a) In General.--Subsection (b) of section 265 is amended by adding 
at the end the following new paragraph:
            ``(7) De minimis exception for bonds issued during 2009 or 
        2010.--
                    ``(A) In general.--In applying paragraph (2)(A), 
                there shall not be taken into account tax-exempt 
                obligations issued during 2009 or 2010.
                    ``(B) Limitation.--The amount of tax-exempt 
                obligations not taken into account by reason of 
                subparagraph (A) shall not exceed 2 percent of the 
                amount determined under paragraph (2)(B).
                    ``(C) Refundings.--For purposes of this paragraph, 
                a refunding bond (whether a current or advance 
                refunding) shall be treated as issued on the date of 
                the issuance of the refunded bond (or in the case of a 
                series of refundings, the original bond).''.
    (b) Treatment as Financial Institution Preference Item.--Clause 
(iv) of section 291(e)(1)(B) is amended by adding at the end the 
following: ``That portion of any obligation not taken into account 
under paragraph (2)(A) of section 265(b) by reason of paragraph (7) of 
such section shall be treated for purposes of this section as having 
been acquired on August 7, 1986.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2008.

SEC. 1502. MODIFICATION OF SMALL ISSUER EXCEPTION TO TAX-EXEMPT 
              INTEREST EXPENSE ALLOCATION RULES FOR FINANCIAL 
              INSTITUTIONS.

    (a) In General.--Paragraph (3) of section 265(b) (relating to 
exception for certain tax-exempt obligations) is amended by adding at 
the end the following new subparagraph:
                    ``(G) Special rules for obligations issued during 
                2009 and 2010.--
                            ``(i) Increase in limitation.--In the case 
                        of obligations issued during 2009 or 2010, 
                        subparagraphs (C)(i), (D)(i), and (D)(iii)(II) 
                        shall each be applied by substituting 
                        `$30,000,000' for `$10,000,000'.
                            ``(ii) Special rule for pooled 
                        financings.--In the case of a pooled financing 
                        issue issued during 2009 or 2010--
                                    ``(I) subparagraph (F) shall not 
                                apply, and
                                    ``(II) any obligation issued as a 
                                part of such issue shall be treated as 
                                a qualified tax-exempt obligation if 
                                the requirements of this paragraph are 
                                met with respect to each qualified 
                                portion of the issue (determined by 
                                treating each qualified portion as a 
                                separate issue).
                            ``(iii) Pooled financing issue.--For 
                        purposes of this subparagraph, the term `pooled 
                        financing issue' means any issue the proceeds 
                        of which are used directly or indirectly to 
                        make or finance loans to 2 or more ultimate 
                        borrowers all of whom are qualified borrowers.
                            ``(iv) Qualified portion.--For purposes of 
                        this subparagraph, the term `qualified portion' 
                        means that portion of the proceeds which are 
                        used with respect to each qualified borrower 
                        under the issue.
                            ``(v) Qualified borrower.--For purposes of 
                        this subparagraph, the term `qualified 
                        borrower' means a borrower which is a State or 
                        political subdivision thereof or an 
                        organization described in section 501(c)(3) and 
                        exempt from taxation under section 501(a).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2008.

SEC. 1503. TEMPORARY MODIFICATION OF ALTERNATIVE MINIMUM TAX 
              LIMITATIONS ON TAX-EXEMPT BONDS.

    (a) Interest on Private Activity Bonds Issued During 2009 and 2010 
Not Treated as Tax Preference Item.--Subparagraph (C) of section 
57(a)(5) is amended by adding at the end a new clause:
                            ``(vi) Exception for bonds issued in 2009 
                        and 2010.--For purposes of clause (i), the term 
                        `private activity bond' shall not include any 
                        bond issued after December 31, 2008, and before 
                        January 1, 2011. For purposes of the preceding 
                        sentence, a refunding bond (whether a current 
                        or advance refunding) shall be treated as 
                        issued on the date of the issuance of the 
                        refunded bond (or in the case of a series of 
                        refundings, the original bond).''.
    (b) No Adjustment to Adjusted Current Earnings for Interest on Tax-
Exempt Bonds Issued After 2008.--Subparagraph (B) of section 56(g)(4) 
is amended by adding at the end the following new clause:
                            ``(iv) Tax exempt interest on bonds issued 
                        in 2009 and 2010.--Clause (i) shall not apply 
                        in the case of any interest on a bond issued 
                        after December 31, 2008, and before January 1, 
                        2011. For purposes of the preceding sentence, a 
                        refunding bond (whether a current or advance 
                        refunding) shall be treated as issued on the 
                        date of the issuance of the refunded bond (or 
                        in the case of a series of refundings, the 
                        original bond).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2008.

                 PART II--TAX CREDIT BONDS FOR SCHOOLS

SEC. 1511. QUALIFIED SCHOOL CONSTRUCTION BONDS.

    (a) In General.--Subpart I of part IV of subchapter A of chapter 1 
is amended by adding at the end the following new section:

``SEC. 54F. QUALIFIED SCHOOL CONSTRUCTION BONDS.

    ``(a) Qualified School Construction Bond.--For purposes of this 
subchapter, the term `qualified school construction bond' means any 
bond issued as part of an issue if--
            ``(1) 100 percent of the available project proceeds of such 
        issue are to be used for the construction, rehabilitation, or 
        repair of a public school facility or for the acquisition of 
        land on which such a facility is to be constructed with part of 
        the proceeds of such issue,
            ``(2) the bond is issued by a State or local government 
        within the jurisdiction of which such school is located, and
            ``(3) the issuer designates such bond for purposes of this 
        section.
    ``(b) Limitation on Amount of Bonds Designated.--The maximum 
aggregate face amount of bonds issued during any calendar year which 
may be designated under subsection (a) by any issuer shall not exceed 
the sum of--
            ``(1) the limitation amount allocated under subsection (d) 
        for such calendar year to such issuer, and
            ``(2) if such issuer is a large local educational agency 
        (as defined in subsection (e)(4)) or is issuing on behalf of 
        such an agency, the limitation amount allocated under 
        subsection (e) for such calendar year to such agency.
    ``(c) National Limitation on Amount of Bonds Designated.--There is 
a national qualified school construction bond limitation for each 
calendar year. Such limitation is--
            ``(1) $10,000,000,000 for 2009,
            ``(2) $10,000,000,000 for 2010, and
            ``(3) except as provided in subsection (f), zero after 
        2010.
    ``(d) 60 Percent of Limitation Allocated Among States.--
            ``(1) In general.--60 percent of the limitation applicable 
        under subsection (c) for any calendar year shall be allocated 
        by the Secretary among the States in proportion to the 
        respective numbers of children in each State who have attained 
        age 5 but not age 18 for the most recent fiscal year ending 
        before such calendar year. The limitation amount allocated to a 
        State under the preceding sentence shall be allocated by the 
        State to issuers within such State.
            ``(2) Minimum allocations to states.--
                    ``(A) In general.--The Secretary shall adjust the 
                allocations under this subsection for any calendar year 
                for each State to the extent necessary to ensure that 
                the sum of--
                            ``(i) the amount allocated to such State 
                        under this subsection for such year, and
                            ``(ii) the aggregate amounts allocated 
                        under subsection (e) to large local educational 
                        agencies in such State for such year,
                is not less than an amount equal to such State's 
                adjusted minimum percentage of the amount to be 
                allocated under paragraph (1) for the calendar year.
                    ``(B) Adjusted minimum percentage.--A State's 
                adjusted minimum percentage for any calendar year is 
                the product of--
                            ``(i) the minimum percentage described in 
                        section 1124(d) of the Elementary and Secondary 
                        Education Act of 1965 (20 U.S.C. 6334(d)) for 
                        such State for the most recent fiscal year 
                        ending before such calendar year, multiplied by
                            ``(ii) 1.68.
            ``(3) Allocations to certain possessions.--The amount to be 
        allocated under paragraph (1) to any possession of the United 
        States other than Puerto Rico shall be the amount which would 
        have been allocated if all allocations under paragraph (1) were 
        made on the basis of respective populations of individuals 
        below the poverty line (as defined by the Office of Management 
        and Budget). In making other allocations, the amount to be 
        allocated under paragraph (1) shall be reduced by the aggregate 
        amount allocated under this paragraph to possessions of the 
        United States.
            ``(4) Allocations for indian schools.--In addition to the 
        amounts otherwise allocated under this subsection, $200,000,000 
        for calendar year 2009, and $200,000,000 for calendar year 
        2010, shall be allocated by the Secretary of the Interior for 
        purposes of the construction, rehabilitation, and repair of 
        schools funded by the Bureau of Indian Affairs. In the case of 
        amounts allocated under the preceding sentence, Indian tribal 
        governments (as defined in section 7701(a)(40)) shall be 
        treated as qualified issuers for purposes of this subchapter.
    ``(e) 40 Percent of Limitation Allocated Among Largest School 
Districts.--
            ``(1) In general.--40 percent of the limitation applicable 
        under subsection (c) for any calendar year shall be allocated 
        under paragraph (2) by the Secretary among local educational 
        agencies which are large local educational agencies for such 
        year.
            ``(2) Allocation formula.--The amount to be allocated under 
        paragraph (1) for any calendar year shall be allocated among 
        large local educational agencies in proportion to the 
        respective amounts each such agency received for Basic Grants 
        under subpart 2 of part A of title I of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 6331 et seq.) for 
        the most recent fiscal year ending before such calendar year.
            ``(3) Allocation of unused limitation to state.--The amount 
        allocated under this subsection to a large local educational 
        agency for any calendar year may be reallocated by such agency 
        to the State in which such agency is located for such calendar 
        year. Any amount reallocated to a State under the preceding 
        sentence may be allocated as provided in subsection (d)(1).
            ``(4) Large local educational agency.--For purposes of this 
        section, the term `large local educational agency' means, with 
        respect to a calendar year, any local educational agency if 
        such agency is--
                    ``(A) among the 100 local educational agencies with 
                the largest numbers of children aged 5 through 17 from 
                families living below the poverty level, as determined 
                by the Secretary using the most recent data available 
                from the Department of Commerce that are satisfactory 
                to the Secretary, or
                    ``(B) 1 of not more than 25 local educational 
                agencies (other than those described in subparagraph 
                (A)) that the Secretary of Education determines (based 
                on the most recent data available satisfactory to the 
                Secretary) are in particular need of assistance, based 
                on a low level of resources for school construction, a 
                high level of enrollment growth, or such other factors 
                as the Secretary deems appropriate.
    ``(f) Carryover of Unused Limitation.--If for any calendar year--
            ``(1) the amount allocated under subsection (d) to any 
        State, exceeds
            ``(2) the amount of bonds issued during such year which are 
        designated under subsection (a) pursuant to such allocation,
the limitation amount under such subsection for such State for the 
following calendar year shall be increased by the amount of such 
excess. A similar rule shall apply to the amounts allocated under 
subsection (d)(4) or (e).''.
    (b) Conforming Amendments.--
            (1) Paragraph (1) of section 54A(d) is amended by striking 
        ``or'' at the end of subparagraph (C), by inserting ``or'' at 
        the end of subparagraph (D), and by inserting after 
        subparagraph (D) the following new subparagraph:
                    ``(E) a qualified school construction bond,''.
            (2) Subparagraph (C) of section 54A(d)(2) is amended by 
        striking ``and'' at the end of clause (iii), by striking the 
        period at the end of clause (iv) and inserting ``, and'', and 
        by adding at the end the following new clause:
                            ``(v) in the case of a qualified school 
                        construction bond, a purpose specified in 
                        section 54F(a)(1).''.
            (3) The table of sections for subpart I of part IV of 
        subchapter A of chapter 1 is amended by adding at the end the 
        following new item:

``Sec. 54F. Qualified school construction bonds.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2008.

SEC. 1512. EXTENSION AND EXPANSION OF QUALIFIED ZONE ACADEMY BONDS.

    (a) In General.--Section 54E(c)(1) is amended by striking ``and 
2009'' and inserting ``and $1,400,000,000 for 2009 and 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to obligations issued after December 31, 2008.

          PART III--TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS

SEC. 1521. TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS.

    (a) In General.--Part IV of subchapter A of chapter 1 is amended by 
adding at the end the following new subpart:

        ``Subpart J--Taxable Bond Option for Governmental Bonds

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

``SEC. 54AA. TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS.

    ``(a) In General.--If a taxpayer holds a taxable governmental bond 
on one or more interest payment dates of the bond during any taxable 
year, there shall be allowed as a credit against the tax imposed by 
this chapter for the taxable year an amount equal to the sum of the 
credits determined under subsection (b) with respect to such dates.
    ``(b) Amount of Credit.--The amount of the credit determined under 
this subsection with respect to any interest payment date for a taxable 
governmental bond is 35 percent of the amount of interest payable by 
the issuer with respect to such date.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                part (other than subpart C and this subpart).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year 
        (determined before the application of paragraph (1) for such 
        succeeding taxable year).
    ``(d) Taxable Governmental Bond.--
            ``(1) In general.--For purposes of this section, the term 
        `taxable governmental bond' means any obligation (other than a 
        private activity bond) if--
                    ``(A) the interest on such obligation would (but 
                for this section) be excludable from gross income under 
                section 103, and
                    ``(B) the issuer makes an irrevocable election to 
                have this section apply.
            ``(2) Applicable rules.--For purposes of applying paragraph 
        (1)--
                    ``(A) a taxable governmental bond shall not be 
                treated as federally guaranteed by reason of the credit 
                allowed under subsection (a) or section 6431,
                    ``(B) the yield on a taxable governmental bond 
                shall be determined without regard to the credit 
                allowed under subsection (a), and
                    ``(C) a bond shall not be treated as a taxable 
                governmental bond if the issue price has more than a de 
                minimis amount (determined under rules similar to the 
                rules of section 1273(a)(3)) of premium over the stated 
                principal amount of the bond.
    ``(e) Interest Payment Date.--For purposes of this section, the 
term `interest payment date' means any date on which the holder of 
record of the taxable governmental bond is entitled to a payment of 
interest under such bond.
    ``(f) Special Rules.--
            ``(1) Interest on taxable governmental bonds includible in 
        gross income for federal income tax purposes.--For purposes of 
        this title, interest on any taxable governmental bond shall be 
        includible in gross income.
            ``(2) Application of certain rules.--Rules similar to the 
        rules of subsections (f), (g), (h), and (i) of section 54A 
        shall apply for purposes of the credit allowed under subsection 
        (a).
    ``(g) Special Rule for Qualified Bonds Issued Before 2011.--In the 
case of a qualified bond issued before January 1, 2011--
            ``(1) Issuer allowed refundable credit.--In lieu of any 
        credit allowed under this section with respect to such bond, 
        the issuer of such bond shall be allowed a credit as provided 
        in section 6431.
            ``(2) Qualified bond.--For purposes of this subsection, the 
        term `qualified bond' means any taxable governmental bond 
        issued as part of an issue if--
                    ``(A) 100 percent of the available project proceeds 
                (as defined in section 54A) of such issue are to be 
                used for capital expenditures, and
                    ``(B) the issuer makes an irrevocable election to 
                have this subsection apply.''.
    (b) Credit for Qualified Bonds Issued Before 2011.--Subchapter B of 
chapter 65 is amended by adding at the end the following new section:

``SEC. 6431. CREDIT FOR QUALIFIED BONDS ALLOWED TO ISSUER.

    ``(a) In General.--In the case of a qualified bond issued before 
January 1, 2011, the issuer of such bond shall be allowed a credit with 
respect to each interest payment under such bond which shall be payable 
by the Secretary as provided in subsection (b).
    ``(b) Payment of Credit.--The Secretary shall pay 
(contemporaneously with each interest payment date under such bond) to 
the issuer of such bond (or to any person who makes such interest 
payments on behalf of the issuer) 35 percent of the interest payable 
under such bond on such date.
    ``(c) Application of Arbitrage Rules.--For purposes of section 148, 
the yield on a qualified bond shall be reduced by the credit allowed 
under this section.
    ``(d) Interest Payment Date.--For purposes of this subsection, the 
term `interest payment date' means each date on which interest is 
payable by the issuer under the terms of the bond.
    ``(e) Qualified Bond.--For purposes of this subsection, the term 
`qualified bond' has the meaning given such term in section 54AA(h).''.
    (c) Conforming Amendments.--
            (1) Section 1324(b)(2) of title 31, United States Code, is 
        amended by striking ``or 6428'' and inserting ``6428, or 
        6431,''.
            (2) Section 54A(c)(1)(B) is amended by striking ``subpart 
        C'' and inserting ``subparts C and J''.
            (3) Sections 54(c)(2), 1397E(c)(2), and 1400N(l)(3)(B) are 
        each amended by striking ``and I'' and inserting ``, I, and 
        J''.
            (4) Section 6401(b)(1) is amended by striking ``and I'' and 
        inserting ``I, and J''.
            (5) The table of subparts for part IV of subchapter A of 
        chapter 1 is amended by adding at the end the following new 
        item:

``Subpart J. Taxable bond option for governmental bonds.''.
            (6) The table of section for subchapter B of chapter 65 is 
        amended by adding at the end the following new item:

``Sec. 6431. Credit for qualified bonds allowed to issuer on advance 
                            basis.''.
    (d) Transitional Coordination With State Law.--Except as otherwise 
provided by a State after the date of the enactment of this Act, the 
interest on any taxable governmental bond (as defined in section 54AA 
of the Internal Revenue Code of 1986, as added by this section) and the 
amount of any credit determined under such section with respect to such 
bond shall be treated for purposes of the income tax laws of such State 
as being exempt from Federal income tax.
    (e) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

                      PART IV--RECOVERY ZONE BONDS

SEC. 1531. RECOVERY ZONE BONDS.

    (a) In General.--Subchapter Y of chapter 1 is amended by adding at 
the end the following new part:

                    ``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.

``SEC. 1400U-1. ALLOCATION OF RECOVERY ZONE BONDS.

    ``(a) Allocations.--
            ``(1) In general.--The Secretary shall allocate the 
        national recovery zone economic development bond limitation and 
        the national recovery zone facility bond limitation among the 
        States in the proportion that each such State's 2008 State 
        employment decline bears to the aggregate of the 2008 State 
        employment declines for all of the States.
            ``(2) 2008 state employment decline.--For purposes of this 
        subsection, the term `2008 State employment decline' means, 
        with respect to any State, the excess (if any) of--
                    ``(A) the number of individuals employed in such 
                State determined for December 2007, over
                    ``(B) the number of individuals employed in such 
                State determined for December 2008.
            ``(3) Allocations by states.--
                    ``(A) In general.--Each State with respect to which 
                an allocation is made under paragraph (1) shall 
                reallocate such allocation among the counties and large 
                municipalities in such State in the proportion the each 
                such county's or municipality's 2008 employment decline 
                bears to the aggregate of the 2008 employment declines 
                for all the counties and municipalities in such State.
                    ``(B) Large municipalities.--For purposes of 
                subparagraph (A), the term `large municipality' means a 
                municipality with a population of more than 100,000.
                    ``(C) Determination of local employment declines.--
                For purposes of this paragraph, the employment decline 
                of any municipality or county shall be determined in 
                the same manner as determining the State employment 
                decline under paragraph (2), except that in the case of 
                a municipality any portion of which is in a county, 
                such portion shall be treated as part of such 
                municipality and not part of such county.
            ``(4) National limitations.--
                    ``(A) Recovery zone economic development bonds.--
                There is a national recovery zone economic development 
                bond limitation of $10,000,000,000.
                    ``(B) Recovery zone facility bonds.--There is a 
                national recovery zone facility bond limitation of 
                $15,000,000,000.
    ``(b) Recovery Zone.--For purposes of this part, the term `recovery 
zone' means--
            ``(1) any area designated by the issuer as having 
        significant poverty, unemployment, or rate of home 
        foreclosures, and
            ``(2) any area for which a designation as an empowerment 
        zone or renewal community is in effect.

``SEC. 1400U-2. RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS.

    ``(a) In General.--In the case of a recovery zone economic 
development bond--
            ``(1) such bond shall be treated as a qualified bond for 
        purposes of section 6431, and
            ``(2) subsection (b) of such section shall be applied by 
        substituting `40 percent' for `35 percent'.
    ``(b) Recovery Zone Economic Development Bond.--
            ``(1) In general.--For purposes of this section, the term 
        `recovery zone economic development bond' means any taxable 
        governmental bond (as defined in section 54AA(d)) issued before 
        January 1, 2011, as part of issue if--
                    ``(A) 100 percent of the available project proceeds 
                (as defined in section 54A) of such issue are to be 
                used for one or more qualified economic development 
                purposes, and
                    ``(B) the issuer designates such bond for purposes 
                of this section.
            ``(2) Limitation on amount of bonds designated.--The 
        maximum aggregate face amount of bonds which may be designated 
        by any issuer under paragraph (1) shall not exceed the amount 
        of the recovery zone economic development bond limitation 
        allocated to such issuer under section 1400U-1.
    ``(c) Qualified Economic Development Purpose.--For purposes of this 
section, the term `qualified economic development purpose' means 
expenditures for purposes of promoting development or other economic 
activity in a recovery zone, including--
            ``(1) capital expenditures paid or incurred with respect to 
        property located in such zone,
            ``(2) expenditures for public infrastructure and 
        construction of public facilities, and
            ``(3) expenditures for job training and educational 
        programs.

``SEC. 1400U-3. RECOVERY ZONE FACILITY BONDS.

    ``(a) In General.--For purposes of part IV of subchapter B 
(relating to tax exemption requirements for State and local bonds), the 
term `exempt facility bond' includes any recovery zone facility bond.
    ``(b) Recovery Zone Facility Bond.--
            ``(1) In general.--For purposes of this section, the term 
        `recovery zone facility bond' means any bond issued as part of 
        an issue if--
                    ``(A) 95 percent or more of the net proceeds (as 
                defined in section 150(a)(3)) of such issue are to be 
                used for recovery zone property,
                    ``(B) such bond is issued before January 1, 2011, 
                and
                    ``(C) the issuer designates such bond for purposes 
                of this section.
            ``(2) Limitation on amount of bonds designated.--The 
        maximum aggregate face amount of bonds which may be designated 
        by any issuer under paragraph (1) shall not exceed the amount 
        of recovery zone facility bond limitation allocated to such 
        issuer under section 1400U-1.
    ``(c) Recovery Zone Property.--For purposes of this section--
            ``(1) In general.--The term `recovery zone property' means 
        any property to which section 168 applies (or would apply but 
        for section 179) if--
                    ``(A) such property was acquired by the taxpayer by 
                purchase (as defined in section 179(d)(2)) after the 
                date on which the designation of the recovery zone took 
                effect,
                    ``(B) the original use of which in the recovery 
                zone commences with the taxpayer, and
                    ``(C) substantially all of the use of which is in 
                the recovery zone and is in the active conduct of a 
                qualified business by the taxpayer in such zone.
            ``(2) Qualified business.--The term `qualified business' 
        means any trade or business except that--
                    ``(A) the rental to others of real property located 
                in a recovery zone shall be treated as a qualified 
                business only if the property is not residential rental 
                property (as defined in section 168(e)(2)), and
                    ``(B) such term shall not include any trade or 
                business consisting of the operation of any facility 
                described in section 144(c)(6)(B).
            ``(3) Special rules for substantial renovations and sale-
        leaseback.--Rules similar to the rules of subsections (a)(2) 
        and (b) of section 1397D shall apply for purposes of this 
        subsection.
    ``(d) Nonapplication of Certain Rules.--Sections 146 (relating to 
volume cap) and 147(d) (relating to acquisition of existing property 
not permitted) shall not apply to any recovery zone facility bond.''.
    (b) Clerical Amendment.--The table of parts for subchapter Y of 
chapter 1 of such Code is amended by adding at the end the following 
new item:

                  ``Part III. Recovery Zone Bonds.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 1532. TRIBAL ECONOMIC DEVELOPMENT BONDS.

    (a) In General.--Section 7871 is amended by adding at the end the 
following new subsection:
    ``(f) Tribal Economic Development Bonds.--
            ``(1) Allocation of limitation.--
                    ``(A) In general.--The Secretary shall allocate the 
                national tribal economic development bond limitation 
                among the Indian tribal governments in such manner as 
                the Secretary, in consultation with the Secretary of 
                the Interior, determines appropriate.
                    ``(B) National limitation.--There is a national 
                tribal economic development bond limitation of 
                $2,000,000,000.
            ``(2) Bonds treated as exempt from tax.--In the case of a 
        tribal economic development bond--
                    ``(A) notwithstanding subsection (c), such bond 
                shall be treated for purposes of this title in the same 
                manner as if such bond were issued by a State, and
                    ``(B) section 146 shall not apply.
            ``(3) Tribal economic development bond.--
                    ``(A) In general.--For purposes of this section, 
                the term `tribal economic development bond' means any 
                bond issued by an Indian tribal government--
                            ``(i) the interest on which is not exempt 
                        from tax under section 103 by reason of 
                        subsection (c) (determined without regard to 
                        this subsection) but would be so exempt if 
                        issued by a State or local government, and
                            ``(ii) which is designated by the Indian 
                        tribal government as a tribal economic 
                        development bond for purposes of this 
                        subsection.
                    ``(B) Exceptions.--The term tribal economic 
                development bond shall not include any bond issued as 
                part of an issue if any portion of the proceeds of such 
                issue are used to finance--
                            ``(i) any portion of a building in which 
                        class II or class III gaming (as defined in 
                        section 4 of the Indian Gaming Regulatory Act) 
                        is conducted or housed or any other property 
                        actually used in the conduct of such gaming, or
                            ``(ii) any facility located outside the 
                        Indian reservation (as defined in section 
                        168(j)(6)).
                    ``(C) Limitation on amount of bonds designated.--
                The maximum aggregate face amount of bonds which may be 
                designated by any Indian tribal government under 
                subparagraph (A) shall not exceed the amount of 
                national tribal economic development bond limitation 
                allocated to such government under paragraph (1).''.
    (b) Study.--The Secretary of the Treasury, or the Secretary's 
delegate, shall conduct a study of the effects of the amendment made by 
subsection (a). Not later than 1 year after the date of the enactment 
of this Act, the Secretary of the Treasury, or the Secretary's 
delegate, shall report to Congress on the results of the studies 
conducted under this paragraph, including the Secretary's 
recommendations regarding such amendment.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to obligations issued after the date of the enactment of this 
Act.

      PART V--REPEAL OF WITHHOLDING TAX ON GOVERNMENT CONTRACTORS

SEC. 1541. REPEAL OF WITHHOLDING TAX ON GOVERNMENT CONTRACTORS.

    Section 3402 is amended by striking subsection (t).

                     Subtitle G--Energy Incentives

                  PART I--RENEWABLE ENERGY INCENTIVES

SEC. 1601. EXTENSION OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN 
              RENEWABLE RESOURCES.

    (a) In General.--Subsection (d) of section 45 is amended--
            (1) by striking ``2010'' in paragraph (1) and inserting 
        ``2013'',
            (2) by striking ``2011'' each place it appears in 
        paragraphs (2), (3), (4), (6), (7), and (9) and inserting 
        ``2014'', and
            (3) by striking ``2012'' in paragraph (11)(B) and inserting 
        ``2014''.
    (b) Technical Amendment.--Paragraph (5) of section 45(d) is amended 
by striking ``and before'' and all that follows and inserting ``and 
before October 3, 2008.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by subsection (a) 
        shall apply to property placed in service after the date of the 
        enactment of this Act.
            (2) Technical amendment.--The amendment made by subsection 
        (b) shall take effect as if included in section 102 of the 
        Energy Improvement and Extension Act of 2008.

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

    (a) In General.--Subsection (a) of section 48 is amended by adding 
at the end the following new paragraph:
            ``(5) Election to treat qualified facilities as energy 
        property.--
                    ``(A) In general.--In the case of any qualified 
                investment credit facility placed in service in 2009 or 
                2010--
                            ``(i) such facility shall be treated as 
                        energy property for purposes of this section, 
                        and
                            ``(ii) the energy percentage with respect 
                        to such property shall be 30 percent.
                    ``(B) Denial of production credit.--No credit shall 
                be allowed under section 45 for any taxable year with 
                respect to any qualified investment credit facility.
                    ``(C) Qualified investment credit facility.--For 
                purposes of this paragraph, the term `qualified 
                investment credit facility' means any facility 
                described in paragraph (1), (2), (3), (4), (6), (7), 
                (9), or (11) of section 45(d) if no credit has been 
                allowed under section 45 with respect to such facility 
                and the taxpayer makes an irrevocable election to have 
                this paragraph apply to such facility.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to facilities placed in service after December 31, 2008.

SEC. 1603. REPEAL OF CERTAIN LIMITATIONS ON CREDIT FOR RENEWABLE ENERGY 
              PROPERTY.

    (a) Repeal of Limitation on Credit for Qualified Small Wind Energy 
Property.--Paragraph (4) of section 48(c) is amended by striking 
subparagraph (B) and by redesignating subparagraphs (C) and (D) as 
subparagraphs (B) and (C).
    (b) Repeal of Limitation on Property Financed by Subsidized Energy 
Financing.--
            (1) In general.--Subsection (a) of section 48 is amended by 
        striking paragraph (4).
            (2) Conforming amendments.--
                    (A) Section 25C(e)(1) is amended by striking ``(8), 
                and (9)'' and inserting ``and (8)''.
                    (B) Section 25D(e) is amended by striking paragraph 
                (9).
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2),the 
        amendment made by this section shall apply to periods after 
        December 31, 2008, under rules similar to the rules of section 
        48(m) of the Internal Revenue Code of 1986 (as in effect on the 
        day before the date of the enactment of the Revenue 
        Reconciliation Act of 1990).
            (2) Conforming amendments.--The amendments made by 
        subsection (b)(2) shall apply to taxable years beginning after 
        December 31, 2008.

SEC. 1604. COORDINATION WITH RENEWABLE ENERGY GRANTS.

    Section 48 is amended by adding at the end the following new 
subsection:
    ``(d) Coordination With Department of Energy Grants.--In the case 
of any property with respect to which the Secretary of Energy makes a 
grant under section 1721 of the American Recovery and Reinvestment Tax 
Act of 2009--
            ``(1) Denial of production and investment credits.--No 
        credit shall be determined under this section or section 45 
        with respect to such property for the taxable year in which 
        such grant is made or any subsequent taxable year.
            ``(2) Recapture of credits for progress expenditures made 
        before grant.--If a credit was determined under this section 
        with respect to such property for any taxable year ending 
        before such grant is made--
                    ``(A) the tax imposed under subtitle A on the 
                taxpayer for the taxable year in which such grant is 
                made shall be increased by so much of such credit as 
                was allowed under section 38,
                    ``(B) the general business carryforwards under 
                section 39 shall be adjusted so as to recapture the 
                portion of such credit which was not so allowed, and
                    ``(C) the amount of such grant shall be determined 
                without regard to any reduction in the basis of such 
                property by reason of such credit.
            ``(3) Treatment of grants.--Any such grant shall--
                    ``(A) not be includible in the gross income of the 
                taxpayer, but
                    ``(B) shall be taken into account in determining 
                the basis of the property to which such grant relates, 
                except that the basis of such property shall be reduced 
                under section 50(c) in the same manner as a credit 
                allowed under subsection (a).''.

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.

    Subsection (c) of section 54C is amended by adding at the end the 
following new paragraph:
            ``(4) Additional limitation.--The national new clean 
        renewable energy bond limitation shall be increased by 
        $1,600,000,000. Such increase shall be allocated by the 
        Secretary consistent with the rules of paragraphs (2) and 
        (3).''.

SEC. 1612. INCREASED LIMITATION ON ISSUANCE OF QUALIFIED ENERGY 
              CONSERVATION BONDS.

    Subsection (e) of section 54D is amended by adding at the end the 
following new paragraph:
            ``(4) Additional limitation.--The national qualified energy 
        conservation bond limitation shall be increased by 
        $2,400,000,000. Such increase shall be allocated by the 
        Secretary consistent with the rules of paragraphs (1), (2), and 
        (3).''.

                PART III--ENERGY CONSERVATION INCENTIVES

SEC. 1621. EXTENSION AND MODIFICATION OF CREDIT FOR NONBUSINESS ENERGY 
              PROPERTY.

    (a) In General.--Section 25C is amended by striking subsections (a) 
and (b) and inserting the following new subsections:
    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to 30 percent of the sum of--
            ``(1) the amount paid or incurred by the taxpayer during 
        such taxable year for qualified energy efficiency improvements, 
        and
            ``(2) the amount of the residential energy property 
        expenditures paid or incurred by the taxpayer during such 
        taxable year.
    ``(b) Limitation.--The aggregate amount of the credits allowed 
under this section for taxable years beginning in 2009 and 2010 with 
respect to any taxpayer shall not exceed $1,500.''.
    (b) Extension.--Section 25C(g)(2) is amended by striking ``December 
31, 2009'' and inserting ``December 31, 2010''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

SEC. 1622. MODIFICATION OF CREDIT FOR RESIDENTIAL ENERGY EFFICIENT 
              PROPERTY.

    (a) Removal of Credit Limitation for Property Placed in Service.--
            (1) In general.--Paragraph (1) of section 25D(b) is amended 
        to read as follows:
            ``(1) Maximum credit for fuel cells.--In the case of any 
        qualified fuel cell property expenditure, the credit allowed 
        under subsection (a) (determined without regard to subsection 
        (c)) for any taxable year shall not exceed $500 with respect to 
        each half kilowatt of capacity of the qualified fuel cell 
        property (as defined in section 48(c)(1)) to which such 
        expenditure relates.''.
            (2) Conforming amendment.--Paragraph (4) of section 25D(e) 
        is amended--
                    (A) by striking all that precedes subparagraph (B) 
                and inserting the following:
            ``(4) Fuel cell expenditure limitations in case of joint 
        occupancy.--In the case of any dwelling unit with respect to 
        which qualified fuel cell property expenditures are made and 
        which is jointly occupied and used during any calendar year as 
        a residence by two or more individuals the following rules 
        shall apply:
                    ``(A) Maximum expenditures for fuel cells.--The 
                maximum amount of such expenditures which may be taken 
                into account under subsection (a) by all such 
                individuals with respect to such dwelling unit during 
                such calendar year shall be $1,667 in the case of each 
                half kilowatt of capacity of qualified fuel cell 
                property (as defined in section 48(c)(1)) with respect 
                to which such expenditures relate.'', and
                    (B) by striking subparagraph (C).
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

SEC. 1623. TEMPORARY INCREASE IN CREDIT FOR ALTERNATIVE FUEL VEHICLE 
              REFUELING PROPERTY.

    (a) In General.--Section 30C(e) is amended by adding at the end the 
following new paragraph:
            ``(6) Special rule for property placed in service during 
        2009 and 2010.--In the case of property placed in service in 
        taxable years beginning after December 31, 2008, and before 
        January 1, 2011--
                    ``(A) in the case of any such property which does 
                not relate to hydrogen--
                            ``(i) subsection (a) shall be applied by 
                        substituting `50 percent' for `30 percent',
                            ``(ii) subsection (b)(1) shall be applied 
                        by substituting `$50,000' for `$30,000', and
                            ``(iii) subsection (b)(2) shall be applied 
                        by substituting `$2,000' for `$1,000', and
                    ``(B) in the case of any such property which 
                relates to hydrogen, subsection (b) shall be applied by 
                substituting `$200,000' for `$30,000'.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2008.

                  PART IV--ENERGY RESEARCH INCENTIVES

SEC. 1631. INCREASED RESEARCH CREDIT FOR ENERGY RESEARCH.

    (a) In General.--Section 41 is amended by redesignating subsection 
(h) as subsection (i) and by inserting after subsection (g) the 
following new subsection:
    ``(h) Energy Research Credit.--In the case of any taxable year 
beginning in 2009 or 2010--
            ``(1) In general.--The credit determined under subsection 
        (a)(1) shall be increased by 20 percent of the qualified energy 
        research expenses for the taxable year.
            ``(2) Qualified energy research expenses.--For purposes of 
        this subsection, the term `qualified energy research expenses' 
        means so much of the taxpayer's qualified research expenses as 
        are related to the fields of fuel cells and battery technology, 
        renewable energy, energy conservation technology, efficient 
        transmission and distribution of electricity, and carbon 
        capture and sequestration.
            ``(3) Coordination with other research credits.--
                    ``(A) Incremental credit.--The amount of qualified 
                energy research expenses taken into account under 
                subsection (a)(1)(A) shall not exceed the base amount.
                    ``(B) Alternative simplified credit.--For purposes 
                of subsection (c)(5), the amount of qualified energy 
                research expenses taken into account for the taxable 
                year for which the credit is being determined shall not 
                exceed--
                            ``(i) in the case of subsection (c)(5)(A), 
                        50 percent of the average qualified research 
                        expenses for the 3 taxable years preceding the 
                        taxable year for which the credit is being 
                        determined, and
                            ``(ii) in the case of subsection 
                        (c)(5)(B)(ii), zero.
                    ``(C) Basic research and energy research consortium 
                payments.--Any amount taken into account under 
                paragraph (1) shall not be taken into account under 
                paragraph (2) or (3) of subsection (a).''.
    (b) Conforming Amendment.--Subparagraph (B) of section 41(i)(1)(B), 
as redesignated by subsection (a), is amended by inserting ``(in the 
case of the increase in the credit determined under subsection (h), 
December 31, 2010)'' after ``December 31, 2009''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

                      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.

    Subchapter IV of chapter 31 of the title 40, United States Code, 
shall apply to projects financed with the proceeds of--
            (1) any qualified clean renewable energy bond (as defined 
        in section 54C of the Internal Revenue Code of 1986) issued 
        after the date of the enactment of this Act,
            (2) any qualified energy conservation bond (as defined in 
        section 54D of the Internal Revenue Code of 1986) issued after 
        the date of the enactment of this Act,
            (3) any qualified zone academy bond (as defined in section 
        54E of the Internal Revenue Code of 1986) issued after the date 
        of the enactment of this Act,
            (4) any qualified school construction bond (as defined in 
        section 54F of the Internal Revenue Code of 1986), and
            (5) any recovery zone economic development bond (as defined 
        in section 1400U-2 of the Internal Revenue Code of 1986).

      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.

    (a) In General.--The Secretary of the Treasury shall make a grant 
to the housing credit agency of each State in an amount equal to such 
State's low-income housing grant election amount.
    (b) Low-Income Housing Grant Election Amount.--For purposes of this 
section, the term ``low-income housing grant election amount'' means, 
with respect to any State, such amount as the State may elect which 
does not exceed 85 percent of the product of--
            (1) the sum of--
                    (A) 100 percent of the State housing credit ceiling 
                for 2009 which is attributable to amounts described in 
                clauses (i) and (iii) of section 42(h)(3)(C) of the 
                Internal Revenue Code of 1986, and
                    (B) 40 percent of the State housing credit ceiling 
                for 2009 which is attributable to amounts described in 
                clauses (ii) and (iv) of such section, multiplied by
            (2) 10.
    (c) Subawards for Low-Income Buildings.--
            (1) In general.--A State housing credit agency receiving a 
        grant under this section shall use such grant to make subawards 
        to finance the construction or acquisition and rehabilitation 
        of qualified low-income buildings. A subaward under this 
        section may be made to finance a qualified low-income building 
        with or without an allocation under section 42 of the Internal 
        Revenue Code of 1986, except that a State housing credit agency 
        may make subawards to finance qualified low-income buildings 
        without an allocation only if it makes a determination that 
        such use will increase the total funds available to the State 
        to build and rehabilitate affordable housing. In complying with 
        such determination requirement, a State housing credit agency 
        shall establish a process in which applicants that are 
        allocated credits are required to demonstrate good faith 
        efforts to obtain investment commitments for such credits 
        before the agency makes such subawards.
            (2) Subawards subject to same requirements as low-income 
        housing credit allocations.--Any such subaward with respect to 
        any qualified low-income building shall be made in the same 
        manner and shall be subject to the same limitations (including 
        rent, income, and use restrictions on such building) as an 
        allocation of housing credit dollar amount allocated by such 
        State housing credit agency under section 42 of the Internal 
        Revenue Code of 1986, except that such subawards shall not be 
        limited by, or otherwise affect (except as provided in 
        subsection (h)(3)(J) of such section), the State housing credit 
        ceiling applicable to such agency.
            (3) Compliance and asset management.--The State housing 
        credit agency shall perform asset management functions to 
        ensure compliance with section 42 of the Internal Revenue Code 
        of 1986 and the long-term viability of buildings funded by any 
        subaward under this section. The State housing credit agency 
        may collect reasonable fees from a subaward recipient to cover 
        expenses associated with the performance of its duties under 
        this paragraph. The State housing credit agency may retain an 
        agent or other private contractor to satisfy the requirements 
        of this paragraph.
            (4) Recapture.--The State housing credit agency shall 
        impose conditions or restrictions, including a requirement 
        providing for recapture, on any subaward under this section so 
        as to assure that the building with respect to which such 
        subaward is made remains a qualified low-income building during 
        the compliance period. Any such recapture shall be payable to 
        the Secretary of the Treasury for deposit in the general fund 
        of the Treasury and may be enforced by means of liens or such 
        other methods as the Secretary of the Treasury determines 
        appropriate.
    (d) Return of Unused Grant Funds.--Any grant funds not used to make 
subawards under this section before January 1, 2011, shall be returned 
to the Secretary of the Treasury on such date. Any subawards returned 
to the State housing credit agency on or after such date shall be 
promptly returned to the Secretary of the Treasury. Any amounts 
returned to the Secretary of the Treasury under this subsection shall 
be deposited in the general fund of the Treasury.
    (e) Definitions.--Any term used in this section which is also used 
in section 42 of the Internal Revenue Code of 1986 shall have the same 
meaning for purposes of this section as when used in such section 42. 
Any reference in this section to the Secretary of the Treasury shall be 
treated as including the Secretary's delegate.
    (f) Appropriations.--There is hereby appropriated to the Secretary 
of the Treasury such sums as may be necessary to carry out this 
section.

 PART III--GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX CREDITS

SEC. 1721. GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX CREDITS.

    (a) In General.--Upon application, the Secretary of Energy shall, 
within 60 days of the application and subject to the requirements of 
this section, provide a grant to each person who places in service 
specified energy property during 2009 or 2010 to reimburse such person 
for a portion of the expense of such facility as provided in subsection 
(b).
    (b) Grant Amount.--
            (1) In general.--The amount of the grant under subsection 
        (a) with respect to any specified energy property shall be the 
        applicable percentage of the basis of such facility.
            (2) Applicable percentage.--For purposes of paragraph (1), 
        the term ``applicable percentage'' means--
                    (A) 30 percent in the case of any property 
                described in paragraphs (1) through (4) of subsection 
                (c), and
                    (B) 10 percent in the case of any other property.
            (3) Dollar limitations.--In the case of property described 
        in paragraph (2), (6), or (7) of subsection (c), the amount of 
        any grant under this section with respect to such property 
        shall not exceed the limitation described in section 
        48(c)(1)(B), 48(c)(2)(B), or 48(c)(3)(B) of the Internal 
        Revenue Code of 1986, respectively, with respect to such 
        property.
    (c) Specified Energy Property.--For purposes of this section, the 
term ``specified energy property'' means any of the following:
            (1) Qualified facilities.--Any facility described in 
        paragraph (1), (2), (3), (4), (6), (7), (9), or (11) of section 
        45(d) of the Internal Revenue Code of 1986.
            (2) Qualified fuel cell property.--Any qualified fuel cell 
        property (as defined in section 48(c)(1) of such Code).
            (3) Solar property.--Any property described in clause (i) 
        or (ii) of section 48(a)(3)(A) of such Code.
            (4) Qualified small wind energy property.--Any qualified 
        small wind energy property (as defined in section 48(c)(4) of 
        such Code).
            (5) Geothermal property.--Any property described in clause 
        (iii) of section 48(a)(3)(A) of such Code.
            (6) Qualified microturbine property.--Any qualified 
        microturbine property (as defined in section 48(c)(2) of such 
        Code).
            (7) Combined heat and power system property.--Any combined 
        heat and power system property (as defined in section 48(c)(3) 
        of such Code).
            (8) Geothermal heatpump property.--Any property described 
        in clause (vii) of section 48(a)(3)(A) of such Code.
    (d) Application of Certain Rules.--In making grants under this 
section, the Secretary of Energy shall apply rules similar to the rules 
of section 50 of the Internal Revenue Code of 1986. In applying such 
rules, if the facility is disposed of, or otherwise ceases to be a 
qualified renewable energy facility, the Secretary of Energy shall 
provide for the recapture of the appropriate percentage of the grant 
amount in such manner as the Secretary of Energy determines 
appropriate.
    (e) Exception for Certain Non-Taxpayers.--The Secretary of Energy 
shall not make any grant under this section to any Federal, State, or 
local government (or any political subdivision, agency, or 
instrumentality thereof) or any organization described in section 
501(c) of the Internal Revenue Code of 1986 and exempt from tax under 
section 501(a) of such Code.
    (f) Definitions.--Terms used in this section which are also used in 
section 45 or 48 of the Internal Revenue Code of 1986 shall have the 
same meaning for purposes of this section as when used in such section 
45 or 48. Any reference in this section to the Secretary of the 
Treasury shall be treated as including the Secretary's delegate.
    (g) Coordination Between Departments of Treasury and Energy.--The 
Secretary of the Treasury shall provide the Secretary of Energy with 
such technical assistance as the Secretary of Energy may require in 
carrying out this section. The Secretary of Energy shall provide the 
Secretary of the Treasury with such information as the Secretary of the 
Treasury may require in carrying out the amendment made by section 
1604.
    (h) Appropriations.--There is hereby appropriated to the Secretary 
of Energy such sums as may be necessary to carry out this section.
    (i) Termination.--The Secretary of Energy shall not make any grant 
to any person under this section unless the application of such person 
for such grant is received before October 1, 2011.

  TITLE II--ASSISTANCE FOR UNEMPLOYED WORKERS AND STRUGGLING FAMILIES

SEC. 2000. SHORT TITLE, ETC.

    (a) Short Title.--This title may be cited as the ``Assistance for 
Unemployed Workers and Struggling Families Act''.
    (b) Table of Contents.--The table of contents for 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 SSI payment.
Sec. 2103. Temporary resumption of prior child support law.

                   Subtitle A--Unemployment Insurance

SEC. 2001. EXTENSION OF EMERGENCY UNEMPLOYMENT COMPENSATION PROGRAM.

    (a) In General.--Section 4007 of the Supplemental Appropriations 
Act, 2008 (Public Law 110-252; 26 U.S.C. 3304 note), as amended by 
section 4 of the Unemployment Compensation Extension Act of 2008 
(Public Law 110-449; 122 Stat. 5015), is amended--
            (1) by striking ``March 31, 2009'' each place it appears 
        and inserting ``December 31, 2009'';
            (2) in the heading for subsection (b)(2), by striking 
        ``march 31, 2009'' and inserting ``december 31, 2009''; and
            (3) in subsection (b)(3), by striking ``August 27, 2009'' 
        and inserting ``May 31, 2010''.
    (b) Financing Provisions.--Section 4004 of such Act is amended by 
adding at the end the following:
    ``(e) Transfer of Funds.--Notwithstanding any other provision of 
law, the Secretary of the Treasury shall transfer from the general fund 
of the Treasury (from funds not otherwise appropriated)--
            ``(1) to the extended unemployment compensation account (as 
        established by section 905 of the Social Security Act) such 
        sums as the Secretary of Labor estimates to be necessary to 
        make payments to States under this title by reason of the 
        amendments made by section 2001(a) of the Assistance for 
        Unemployed Workers and Struggling Families Act; and
            ``(2) to the employment security administration account (as 
        established by section 901 of the Social Security Act) such 
        sums as the Secretary of Labor estimates to be necessary for 
        purposes of assisting States in meeting administrative costs by 
        reason of the amendments referred to in paragraph (1).
There are appropriated from the general fund of the Treasury, without 
fiscal year limitation, the sums referred to in the preceding sentence 
and such sums shall not be required to be repaid.''.

SEC. 2002. INCREASE IN UNEMPLOYMENT COMPENSATION BENEFITS.

    (a) Federal-State Agreements.--Any State which desires to do so may 
enter into and participate in an agreement under this section with the 
Secretary of Labor (hereinafter in this section referred to as the 
``Secretary''). Any State which is a party to an agreement under this 
section may, upon providing 30 days' written notice to the Secretary, 
terminate such agreement.
    (b) Provisions of Agreement.--
            (1) Additional compensation.--Any agreement under this 
        section shall provide that the State agency of the State will 
        make payments of regular compensation to individuals in amounts 
        and to the extent that they would be determined if the State 
        law of the State were applied, with respect to any week for 
        which the individual is (disregarding this section) otherwise 
        entitled under the State law to receive regular compensation, 
        as if such State law had been modified in a manner such that 
        the amount of regular compensation (including dependents' 
        allowances) payable for any week shall be equal to the amount 
        determined under the State law (before the application of this 
        paragraph) plus an additional $25.
            (2) Allowable methods of payment.--Any additional 
        compensation provided for in accordance with paragraph (1) 
        shall be payable either--
                    (A) as an amount which is paid at the same time and 
                in the same manner as any regular compensation 
                otherwise payable for the week involved; or
                    (B) at the option of the State, by payments which 
                are made separately from, but on the same weekly basis 
                as, any regular compensation otherwise payable.
    (c) Nonreduction Rule.--An agreement under this section shall not 
apply (or shall cease to apply) with respect to a State upon a 
determination by the Secretary that the method governing the 
computation of regular compensation under the State law of that State 
has been modified in a manner such that--
            (1) the average weekly benefit amount of regular 
        compensation which will be payable during the period of the 
        agreement (determined disregarding any additional amounts 
        attributable to the modification described in subsection 
        (b)(1)) will be less than
            (2) the average weekly benefit amount of regular 
        compensation which would otherwise have been payable during 
        such period under the State law, as in effect on December 31, 
        2008.
    (d) Payments to States.--
            (1) In general.--
                    (A) Full reimbursement.--There shall be paid to 
                each State which has entered into an agreement under 
                this section an amount equal to 100 percent of--
                            (i) the total amount of additional 
                        compensation (as described in subsection 
                        (b)(1)) paid to individuals by the State 
                        pursuant to such agreement; and
                            (ii) any additional administrative expenses 
                        incurred by the State by reason of such 
                        agreement (as determined by the Secretary).
                    (B) Terms of payments.--Sums payable to any State 
                by reason of such State's having an agreement under 
                this section shall be payable, either in advance or by 
                way of reimbursement (as determined by the Secretary), 
                in such amounts as the Secretary estimates the State 
                will be entitled to receive under this section for each 
                calendar month, reduced or increased, as the case may 
                be, by any amount by which the Secretary finds that his 
                estimates for any prior calendar month were greater or 
                less than the amounts which should have been paid to 
                the State. Such estimates may be made on the basis of 
                such statistical, sampling, or other method as may be 
                agreed upon by the Secretary and the State agency of 
                the State involved.
            (2) Certifications.--The Secretary shall from time to time 
        certify to the Secretary of the Treasury for payment to each 
        State the sums payable to such State under this section.
            (3) Appropriation.--There are appropriated from the general 
        fund of the Treasury, without fiscal year limitation, such sums 
        as may be necessary for purposes of this subsection.
    (e) Applicability.--
            (1) In general.--An agreement entered into under this 
        section shall apply to weeks of unemployment--
                    (A) beginning after the date on which such 
                agreement is entered into; and
                    (B) ending before January 1, 2010.
            (2) Transition rule for individuals remaining entitled to 
        regular compensation as of january 1, 2010.--In the case of any 
        individual who, as of the date specified in paragraph (1)(B), 
        has not yet exhausted all rights to regular compensation under 
        the State law of a State with respect to a benefit year that 
        began before such date, additional compensation (as described 
        in subsection (b)(1)) shall continue to be payable to such 
        individual for any week beginning on or after such date for 
        which the individual is otherwise eligible for regular 
        compensation with respect to such benefit year.
            (3) Termination.--Notwithstanding any other provision of 
        this subsection, no additional compensation (as described in 
        subsection (b)(1)) shall be payable for any week beginning 
        after June 30, 2010.
    (f) Fraud and Overpayments.--The provisions of section 4005 of the 
Supplemental Appropriations Act, 2008 (Public Law 110-252; 122 Stat. 
2356) shall apply with respect to additional compensation (as described 
in subsection (b)(1)) to the same extent and in the same manner as in 
the case of emergency unemployment compensation.
    (g) Application to Other Unemployment Benefits.--
            (1) In general.--Each agreement under this section shall 
        include provisions to provide that the purposes of the 
        preceding provisions of this section shall be applied with 
        respect to unemployment benefits described in subsection (h)(3) 
        to the same extent and in the same manner as if those benefits 
        were regular compensation.
            (2) Eligibility and termination rules.--Additional 
        compensation (as described in subsection (b)(1))--
                    (A) shall not be payable, pursuant to this 
                subsection, with respect to any unemployment benefits 
                described in subsection (h)(3) for any week beginning 
                on or after the date specified in subsection (e)(1)(B), 
                except in the case of an individual who was eligible to 
                receive additional compensation (as so described) in 
                connection with any regular compensation or any 
                unemployment benefits described in subsection (h)(3) 
                for any period of unemployment ending before such date; 
                and
                    (B) shall in no event be payable for any week 
                beginning after the date specified in subsection 
                (e)(3).
    (h) Definitions.--For purposes of this section--
            (1) the terms ``compensation'', ``regular compensation'', 
        ``benefit year'', ``State'', ``State agency'', ``State law'', 
        and ``week'' have the respective meanings given such terms 
        under section 205 of the Federal-State Extended Unemployment 
        Compensation Act of 1970 (26 U.S.C. 3304 note);
            (2) the term ``emergency unemployment compensation'' means 
        emergency unemployment compensation under title IV of the 
        Supplemental Appropriations Act, 2008 (Public Law 110-252; 122 
        Stat. 2353); and
            (3) any reference to unemployment benefits described in 
        this paragraph shall be considered to refer to--
                    (A) extended compensation (as defined by section 
                205 of the Federal-State Extended Unemployment 
                Compensation Act of 1970); and
                    (B) unemployment compensation (as defined by 
                section 85(b) of the Internal Revenue Code of 1986) 
                provided under any program administered by a State 
                under an agreement with the Secretary.

SEC. 2003. SPECIAL TRANSFERS FOR UNEMPLOYMENT COMPENSATION 
              MODERNIZATION.

    (a) In General.--Section 903 of the Social Security Act (42 U.S.C. 
1103) is amended by adding at the end the following:

     ``Special Transfers in Fiscal Years 2009, 2010, and 2011 for 
                             Modernization

    ``(f)(1)(A) In addition to any other amounts, the Secretary of 
Labor shall provide for the making of unemployment compensation 
modernization incentive payments (hereinafter `incentive payments') to 
the accounts of the States in the Unemployment Trust Fund, by transfer 
from amounts reserved for that purpose in the Federal unemployment 
account, in accordance with succeeding provisions of this subsection.
    ``(B) The maximum incentive payment allowable under this subsection 
with respect to any State shall, as determined by the Secretary of 
Labor, be equal to the amount obtained by multiplying $7,000,000,000 by 
the same ratio as would apply under subsection (a)(2)(B) for purposes 
of determining such State's share of any excess amount (as described in 
subsection (a)(1)) that would have been subject to transfer to State 
accounts, as of October 1, 2008, under the provisions of subsection 
(a).
    ``(C) Of the maximum incentive payment determined under 
subparagraph (B) with respect to a State--
            ``(i) one-third shall be transferred to the account of such 
        State upon a certification under paragraph (4)(B) that the 
        State law of such State meets the requirements of paragraph 
        (2); and
            ``(ii) the remainder shall be transferred to the account of 
        such State upon a certification under paragraph (4)(B) that the 
        State law of such State meets the requirements of paragraph 
        (3).
    ``(2) The State law of a State meets the requirements of this 
paragraph if such State law--
            ``(A) uses a base period that includes the most recently 
        completed calendar quarter before the start of the benefit year 
        for purposes of determining eligibility for unemployment 
        compensation; or
            ``(B) provides that, in the case of an individual who would 
        not otherwise be eligible for unemployment compensation under 
        the State law because of the use of a base period that does not 
        include the most recently completed calendar quarter before the 
        start of the benefit year, eligibility shall be determined 
        using a base period that includes such calendar quarter.
    ``(3) The State law of a State meets the requirements of this 
paragraph if such State law includes provisions to carry out at least 2 
of the following subparagraphs:
            ``(A) An individual shall not be denied regular 
        unemployment compensation under any State law provisions 
        relating to availability for work, active search for work, or 
        refusal to accept work, solely because such individual is 
        seeking only part-time (and not full-time) work, except that 
        the State law provisions carrying out this subparagraph may 
        exclude an individual if a majority of the weeks of work in 
        such individual's base period do not include part-time work.
            ``(B) An individual shall not be disqualified from regular 
        unemployment compensation for separating from employment if 
        that separation is for any compelling family reason. For 
        purposes of this subparagraph, the term `compelling family 
        reason' means the following:
                    ``(i) Domestic violence, verified by such 
                reasonable and confidential documentation as the State 
                law may require, which causes the individual reasonably 
                to believe that such individual's continued employment 
                would jeopardize the safety of the individual or of any 
                member of the individual's immediate family (as defined 
                by the Secretary of Labor).
                    ``(ii) The illness or disability of a member of the 
                individual's immediate family (as defined by the 
                Secretary of Labor).
                    ``(iii) The need for the individual to accompany 
                such individual's spouse--
                            ``(I) to a place from which it is 
                        impractical for such individual to commute; and
                            ``(II) due to a change in location of the 
                        spouse's employment.
            ``(C) Weekly unemployment compensation is payable under 
        this subparagraph to any individual who is unemployed (as 
        determined under the State unemployment compensation law), has 
        exhausted all rights to regular unemployment compensation under 
        the State law, and is enrolled and making satisfactory progress 
        in a State-approved training program or in a job training 
        program authorized under the Workforce Investment Act of 1998. 
        Such programs shall prepare individuals who have been separated 
        from a declining occupation, or who have been involuntarily and 
        indefinitely separated from employment as a result of a 
        permanent reduction of operations at the individual's place of 
        employment, for entry into a high-demand occupation. The amount 
        of unemployment compensation payable under this subparagraph to 
        an individual for a week of unemployment shall be equal to the 
        individual's average weekly benefit amount (including 
        dependents' allowances) for the most recent benefit year, and 
        the total amount of unemployment compensation payable under 
        this subparagraph to any individual shall be equal to at least 
        26 times the individual's average weekly benefit amount 
        (including dependents' allowances) for the most recent benefit 
        year.
            ``(D) Dependents' allowances are provided, in the case of 
        any individual who is entitled to receive regular unemployment 
        compensation and who has any dependents (as defined by State 
        law), in an amount equal to at least $15 per dependent per 
        week, subject to any aggregate limitation on such allowances 
        which the State law may establish (but which aggregate 
        limitation on the total allowance for dependents paid to an 
        individual may not be less than $50 for each week of 
        unemployment or 50 percent of the individual's weekly benefit 
        amount for the benefit year, whichever is less).
    ``(4)(A) Any State seeking an incentive payment under this 
subsection shall submit an application therefor at such time, in such 
manner, and complete with such information as the Secretary of Labor 
may within 60 days after the date of the enactment of this subsection 
prescribe (whether by regulation or otherwise), including information 
relating to compliance with the requirements of paragraph (2) or (3), 
as well as how the State intends to use the incentive payment to 
improve or strengthen the State's unemployment compensation program. 
The Secretary of Labor shall, within 30 days after receiving a complete 
application, notify the State agency of the State of the Secretary's 
findings with respect to the requirements of paragraph (2) or (3) (or 
both).
    ``(B)(i) If the Secretary of Labor finds that the State law 
provisions (disregarding any State law provisions which are not then 
currently in effect as permanent law or which are subject to 
discontinuation) meet the requirements of paragraph (2) or (3), as the 
case may be, the Secretary of Labor shall thereupon make a 
certification to that effect to the Secretary of the Treasury, together 
with a certification as to the amount of the incentive payment to be 
transferred to the State account pursuant to that finding. The 
Secretary of the Treasury shall make the appropriate transfer within 7 
days after receiving such certification.
    ``(ii) For purposes of clause (i), State law provisions which are 
to take effect within 12 months after the date of their certification 
under this subparagraph shall be considered to be in effect as of the 
date of such certification.
    ``(C)(i) No certification of compliance with the requirements of 
paragraph (2) or (3) may be made with respect to any State whose State 
law is not otherwise eligible for certification under section 303 or 
approvable under section 3304 of the Federal Unemployment Tax Act.
    ``(ii) No certification of compliance with the requirements of 
paragraph (3) may be made with respect to any State whose State law is 
not in compliance with the requirements of paragraph (2).
    ``(iii) No application under subparagraph (A) may be considered if 
submitted before the date of the enactment of this subsection or after 
the latest date necessary (as specified by the Secretary of Labor) to 
ensure that all incentive payments under this subsection are made 
before October 1, 2011.
    ``(5)(A) Except as provided in subparagraph (B), any amount 
transferred to the account of a State under this subsection may be used 
by such State only in the payment of cash benefits to individuals with 
respect to their unemployment (including for dependents' allowances and 
for unemployment compensation under paragraph (3)(C)), exclusive of 
expenses of administration.
    ``(B) A State may, subject to the same conditions as set forth in 
subsection (c)(2) (excluding subparagraph (B) thereof, and deeming the 
reference to `subsections (a) and (b)' in subparagraph (D) thereof to 
include this subsection), use any amount transferred to the account of 
such State under this subsection for the administration of its 
unemployment compensation law and public employment offices.
    ``(6) Out of any money in the Federal unemployment account not 
otherwise appropriated, the Secretary of the Treasury shall reserve 
$7,000,000,000 for incentive payments under this subsection. Any amount 
so reserved shall not be taken into account for purposes of any 
determination under section 902, 910, or 1203 of the amount in the 
Federal unemployment account as of any given time. Any amount so 
reserved for which the Secretary of the Treasury has not received a 
certification under paragraph (4)(B) by the deadline described in 
paragraph (4)(C)(iii) shall, upon the close of fiscal year 2011, become 
unrestricted as to use as part of the Federal unemployment account.
    ``(7) For purposes of this subsection, the terms `benefit year', 
`base period', and `week' have the respective meanings given such terms 
under section 205 of the Federal-State Extended Unemployment 
Compensation Act of 1970 (26 U.S.C. 3304 note).

       ``Special Transfer in Fiscal Year 2009 for Administration

    ``(g)(1) In addition to any other amounts, the Secretary of the 
Treasury shall transfer from the employment security administration 
account to the account of each State in the Unemployment Trust Fund, 
within 30 days after the date of the enactment of this subsection, the 
amount determined with respect to such State under paragraph (2).
    ``(2) The amount to be transferred under this subsection to a State 
account shall (as determined by the Secretary of Labor and certified by 
such Secretary to the Secretary of the Treasury) be equal to the amount 
obtained by multiplying $500,000,000 by the same ratio as determined 
under subsection (f)(1)(B) with respect to such State.
    ``(3) Any amount transferred to the account of a State as a result 
of the enactment of this subsection may be used by the State agency of 
such State only in the payment of expenses incurred by it for--
            ``(A) the administration of the provisions of its State law 
        carrying out the purposes of subsection (f)(2) or any 
        subparagraph of subsection (f)(3);
            ``(B) improved outreach to individuals who might be 
        eligible for regular unemployment compensation by virtue of any 
        provisions of the State law which are described in subparagraph 
        (A);
            ``(C) the improvement of unemployment benefit and 
        unemployment tax operations, including responding to increased 
        demand for unemployment compensation; and
            ``(D) staff-assisted reemployment services for unemployment 
        compensation claimants.''.
    (b) Regulations.--The Secretary of Labor may prescribe any 
regulations, operating instructions, or other guidance necessary to 
carry out the amendment made by subsection (a).

           Subtitle B--Assistance for Vulnerable Individuals

SEC. 2101. EMERGENCY FUND FOR TANF PROGRAM.

    (a) In General.--Section 403 of the Social Security Act (42 U.S.C. 
603) is amended by adding at the end the following:
    ``(c) Emergency Fund.--
            ``(1) Establishment.--There is established in the Treasury 
        of the United States a fund which shall be known as the 
        `Emergency Contingency Fund for State Temporary Assistance for 
        Needy Families Programs' (in this subsection referred to as the 
        `Emergency Fund').
            ``(2) Deposits into fund.--Out of any money in the Treasury 
        of the United States not otherwise appropriated, there are 
        appropriated such sums as are necessary for payment to the 
        Emergency Fund.
            ``(3) Grants.--
                    ``(A) Grant related to caseload increases.--
                            ``(i) In general.--For each calendar 
                        quarter in fiscal year 2009 or 2010, the 
                        Secretary shall make a grant from the Emergency 
                        Fund to each State that--
                                    ``(I) requests a grant under this 
                                subparagraph for the quarter; and
                                    ``(II) meets the requirement of 
                                clause (ii) for the quarter.
                            ``(ii) Caseload increase requirement.--A 
                        State meets the requirement of this clause for 
                        a quarter if the average monthly assistance 
                        caseload of the State for the quarter exceeds 
                        the average monthly assistance caseload of the 
                        State for the corresponding quarter in the 
                        emergency fund base year of the State.
                            ``(iii) Amount of grant.--Subject to 
                        paragraph (5), the amount of the grant to be 
                        made to a State under this subparagraph for a 
                        quarter shall be 80 percent of the amount (if 
                        any) by which the total expenditures of the 
                        State for basic assistance (as defined by the 
                        Secretary) in the quarter, whether under the 
                        State program funded under this part or as 
                        qualified State expenditures, exceeds the total 
                        expenditures of the State for such assistance 
                        for the corresponding quarter in the emergency 
                        fund base year of the State.
                    ``(B) Grant related to increased expenditures for 
                non-recurrent short-term benefits.--
                            ``(i) In general.--For each calendar 
                        quarter in fiscal year 2009 or 2010, the 
                        Secretary shall make a grant from the Emergency 
                        Fund to each State that--
                                    ``(I) requests a grant under this 
                                subparagraph for the quarter; and
                                    ``(II) meets the requirement of 
                                clause (ii) for the quarter.
                            ``(ii) Non-recurrent short-term expenditure 
                        requirement.--A State meets the requirement of 
                        this clause for a quarter if the total 
                        expenditures of the State for non-recurrent 
                        short-term benefits in the quarter, whether 
                        under the State program funded under this part 
                        or as qualified State expenditures, exceeds the 
                        total such expenditures of the State for non-
                        recurrent short-term benefits in the 
                        corresponding quarter in the emergency fund 
                        base year of the State.
                            ``(iii) Amount of grant.--Subject to 
                        paragraph (5), the amount of the grant to be 
                        made to a State under this subparagraph for a 
                        quarter shall be an amount equal to 80 percent 
                        of the excess described in clause (ii).
                    ``(C) Grant related to increased expenditures for 
                subsidized employment.--
                            ``(i) In general.--For each calendar 
                        quarter in fiscal year 2009 or 2010, the 
                        Secretary shall make a grant from the Emergency 
                        Fund to each State that--
                                    ``(I) requests a grant under this 
                                subparagraph for the quarter; and
                                    ``(II) meets the requirement of 
                                clause (ii) for the quarter.
                            ``(ii) Subsidized employment expenditure 
                        requirement.--A State meets the requirement of 
                        this clause for a quarter if the total 
                        expenditures of the State for subsidized 
                        employment in the quarter, whether under the 
                        State program funded under this part or as 
                        qualified State expenditures, exceeds the total 
                        of such expenditures of the State in the 
                        corresponding quarter in the emergency fund 
                        base year of the State.
                            ``(iii) Amount of grant.--Subject to 
                        paragraph (5), the amount of the grant to be 
                        made to a State under this subparagraph for a 
                        quarter shall be an amount equal to 80 percent 
                        of the excess described in clause (ii).
            ``(4) Authority to make necessary adjustments to data and 
        collect needed data.--In determining the size of the caseload 
        of a State and the expenditures of a State for basic 
        assistance, non-recurrent short-term benefits, and subsidized 
        employment, during any period for which the State requests 
        funds under this subsection, and during the emergency fund base 
        year of the State, the Secretary may make appropriate 
        adjustments to the data to ensure that the data reflect 
        expenditures under the State program funded under this part and 
        qualified State expenditures. The Secretary may develop a 
        mechanism for collecting expenditure data, including procedures 
        which allow States to make reasonable estimates, and may set 
        deadlines for making revisions to the data.
            ``(5) Limitation.--The total amount payable to a single 
        State under subsection (b) and this subsection for a fiscal 
        year shall not exceed 25 percent of the State family assistance 
        grant.
            ``(6) Limitations on use of funds.--A State to which an 
        amount is paid under this subsection may use the amount only as 
        authorized by section 404.
            ``(7) Timing of implementation.--The Secretary shall 
        implement this subsection as quickly as reasonably possible, 
        pursuant to appropriate guidance to States.
            ``(8) Definitions.--In this subsection:
                    ``(A) Average monthly assistance caseload.--The 
                term `average monthly assistance caseload' means, with 
                respect to a State and a quarter, the number of 
                families receiving assistance during the quarter under 
                the State program funded under this part or as 
                qualified State expenditures, subject to adjustment 
                under paragraph (4).
                    ``(B) Emergency fund base year.--
                            ``(i) In general.--The term `emergency fund 
                        base year' means, with respect to a State and a 
                        category described in clause (ii), whichever of 
                        fiscal year 2007 or 2008 is the fiscal year in 
                        which the amount described by the category with 
                        respect to the State is the lesser.
                            ``(ii) Categories described.--The 
                        categories described in this clause are the 
                        following:
                                    ``(I) The average monthly 
                                assistance caseload of the State.
                                    ``(II) The total expenditures of 
                                the State for non-recurrent short-term 
                                benefits, whether under the State 
                                program funded under this part or as 
                                qualified State expenditures.
                                    ``(III) The total expenditures of 
                                the State for subsidized employment, 
                                whether under the State program funded 
                                under this part or as qualified State 
                                expenditures.
                    ``(C) Qualified state expenditures.--The term 
                `qualified State expenditures' has the meaning given 
                the term in section 409(a)(7).''.
    (b) Temporary Modification of Caseload Reduction Credit.--Section 
407(b)(3)(A)(i) of such Act (42 U.S.C. 607(b)(3)(A)(i)) is amended by 
inserting ``(or if the immediately preceding fiscal year is fiscal year 
2009 or 2010, then, at State option, during the emergency fund base 
year of the State with respect to the average monthly assistance 
caseload of the State (within the meaning of section 403(c)(8)(B)))'' 
before ``under the State''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 2102. ONE-TIME EMERGENCY SSI PAYMENT.

    (a) Payment Authority.--
            (1) In general.--At the earliest practicable date in 
        calendar year 2009 but not later than 90 days after the date of 
        the enactment of this section, the Commissioner of Social 
        Security shall make a one-time payment, subject to subsection 
        (b)(2) of this section, to each individual who is determined by 
        the Commissioner in calendar year 2009 to be an individual 
        who--
                    (A) is entitled to a cash benefit under the 
                supplemental security income program under title XVI of 
                the Social Security Act (other than pursuant to section 
                1611(e)(1)(B) of such Act) for at least 1 day in the 
                calendar month in which the first payment under this 
                section is to be made; or
                    (B)(i) was entitled to such a cash benefit (other 
                than pursuant to section 1611(e)(1)(B) of such Act) for 
                at least 1 day in the 2-month period preceding that 
                calendar month; and
                    (ii) whose entitlement to that benefit ceased in 
                that 2-month period solely because the income of the 
                individual (and the income of the spouse, if any, of 
                the individual) exceeded the applicable income limit 
                described in paragraph (1)(A) or (2)(A) of section 
                1611(a) of such Act.
            (2) Amount of payment.--Subject to subsection (b)(1) of 
        this section, the amount of the payment shall be--
                    (A) in the case of an individual eligible for a 
                payment under this section who does not have a spouse 
                eligible for such a payment, an amount equal to the 
                average of the cash benefits payable in the aggregate 
                under section 1611 or 1619(a) of the Social Security 
                Act to eligible individuals who do not have an eligible 
                spouse, for the most recent month for which data on 
                payment of the benefits are available, as determined by 
                the Commissioner of Social Security; or
                    (B) in the case of an individual eligible for a 
                payment under this section who has a spouse eligible 
                for such a payment, an amount equal to the average of 
                the cash benefits payable in the aggregate under 
                section 1611 or 1619(a) of the Social Security Act to 
                eligible individuals who have an eligible spouse, for 
                the most recent month for which data on payment of the 
                benefits are available, as so determined.
    (b) Administrative Provisions.--
            (1) Authority to withhold payment to recover prior 
        overpayment of ssi benefits.--The Commissioner of Social 
        Security may withhold part or all of a payment otherwise 
        required to be made under subsection (a) of this section to an 
        individual, in order to recover a prior overpayment of benefits 
        to the individual under the supplemental security income 
        program under title XVI of the Social Security Act, subject to 
        the limitations of section 1631(b) of such Act.
            (2) Authority to make payments over the course of 2 
        months.--The Commissioner of Social Security may provide for 
        payments under this section to be made over the course of 2 
        calendar months as may be necessary for the effective and 
        efficient administration of this section.
            (3) Payment to be disregarded in determining underpayments 
        under the ssi program.--A payment under subsection (a) shall be 
        disregarded in determining whether there has been an 
        underpayment of benefits under the supplemental security income 
        program under title XVI of the Social Security Act.
            (4) Nonassignment.--The provisions of section 207 of the 
        Social Security Act shall apply with respect to payments under 
        this section to the same extent as they apply in the case of 
        title II of such Act.
    (c) Payments To Be Disregarded for Purposes of All Federal and 
Federally Assisted Programs.--A payment under subsection (a) shall not 
be regarded as income to the recipient, and shall not be regarded as a 
resource of the recipient for the month of receipt and the following 6 
months, for purposes of determining the eligibility of any individual 
for benefits or assistance, or the amount or extent of benefits or 
assistance, under any Federal program or under any State or local 
program financed in whole or in part with Federal funds.
    (d) Appropriation.--Out of any sums in the Treasury of the United 
States not otherwise appropriated, there are appropriated such sums as 
may be necessary to carry out this section.

SEC. 2103. TEMPORARY RESUMPTION OF PRIOR CHILD SUPPORT LAW.

    During the period that begins with October 1, 2008, and ends with 
September 30, 2010, section 455(a)(1) of the Social Security Act shall 
be applied and administered as if the phrase ``from amounts paid to the 
State under section 458 or'' did not appear in such section.

       TITLE III--HEALTH INSURANCE ASSISTANCE FOR THE UNEMPLOYED

SEC. 3001. SHORT TITLE AND TABLE OF CONTENTS OF TITLE.

    (a) Short Title of Title.--This title may be cited as the ``Health 
Insurance Assistance for the Unemployed Act of 2009''.
    (b) Table of Contents of Title.--The table of contents of this 
title is as follows:

Sec. 3001. Short title and table of contents of title.
Sec. 3002. Premium assistance for COBRA benefits and extension of COBRA 
                            benefits for older or long-term employees.
Sec. 3003. Temporary optional Medicaid coverage for the unemployed.

SEC. 3002. PREMIUM ASSISTANCE FOR COBRA BENEFITS AND EXTENSION OF COBRA 
              BENEFITS FOR OLDER OR LONG-TERM EMPLOYEES.

    (a) Premium Assistance for COBRA Continuation Coverage for 
Individuals and Their Families.--
            (1) Provision of premium assistance.--
                    (A) Reduction of premiums payable.--In the case of 
                any premium for a period of coverage beginning on or 
                after the date of the enactment of this Act for COBRA 
                continuation coverage with respect to any assistance 
                eligible individual, such individual shall be treated 
                for purposes of any COBRA continuation provision as 
                having paid the amount of such premium if such 
                individual pays 35 percent of the amount of such 
                premium (as determined without regard to this 
                subsection).
                    (B) Premium reimbursement.--For provisions 
                providing the balance of such premium, see section 6431 
                of the Internal Revenue Code of 1986, as added by 
                paragraph (12).
            (2) Limitation of period of premium assistance.--
                    (A) In general.--Paragraph (1)(A) shall not apply 
                with respect to any assistance eligible individual for 
                months of coverage beginning on or after the earlier 
                of--
                            (i) the first date that such individual is 
                        eligible for coverage under any other group 
                        health plan (other than coverage consisting of 
                        only dental, vision, counseling, or referral 
                        services (or a combination thereof), coverage 
                        under a health reimbursement arrangement or a 
                        health flexible spending arrangement, or 
                        coverage of treatment that is furnished in an 
                        on-site medical facility maintained by the 
                        employer and that consists primarily of first-
                        aid services, prevention and wellness care, or 
                        similar care (or a combination thereof)) or is 
                        eligible for benefits under title XVIII of the 
                        Social Security Act.
                            (ii) the earliest of--
                                    (I) the date which is 12 months 
                                after the first day of first month that 
                                paragraph (1)(A) applies with respect 
                                to such individual,
                                    (II) the date following the 
                                expiration of the maximum period of 
                                continuation coverage required under 
                                the applicable COBRA continuation 
                                coverage provision, or
                                    (III) the date following the 
                                expiration of the period of 
                                continuation coverage allowed under 
                                paragraph (4)(B)(ii).
                    (B) Timing of eligibility for additional 
                coverage.--For purposes of subparagraph (A)(i), an 
                individual shall not be treated as eligible for 
                coverage under a group health plan before the first 
                date on which such individual could be covered under 
                such plan.
                    (C) Notification requirement.--An assistance 
                eligible individual shall notify in writing the group 
                health plan with respect to which paragraph (1)(A) 
                applies if such paragraph ceases to apply by reason of 
                subparagraph (A)(i). Such notice shall be provided to 
                the group health plan in such time and manner as may be 
                specified by the Secretary of Labor.
            (3) Assistance eligible individual.--For purposes of this 
        section, the term ``assistance eligible individual'' means any 
        qualified beneficiary if--
                    (A) at any time during the period that begins with 
                September 1, 2008, and ends with December 31, 2009, 
                such qualified beneficiary is eligible for COBRA 
                continuation coverage,
                    (B) such qualified beneficiary elects such 
                coverage, and
                    (C) the qualifying event with respect to the COBRA 
                continuation coverage consists of the involuntary 
                termination of the covered employee's employment and 
                occurred during such period.
            (4) Extension of election period and effect on coverage.--
                    (A) In general.--Notwithstanding section 605(a) of 
                the Employee Retirement Income Security Act of 1974, 
                section 4980B(f)(5)(A) of the Internal Revenue Code of 
                1986, section 2205(a) of the Public Health Service Act, 
                and section 8905a(c)(2) of title 5, United States Code, 
                in the case of an individual who is a qualified 
                beneficiary described in paragraph (3)(A) as of the 
                date of the enactment of this Act and has not made the 
                election referred to in paragraph (3)(B) as of such 
                date, such individual may elect the COBRA continuation 
                coverage under the COBRA continuation coverage 
                provisions containing such sections during the 60-day 
                period commencing with the date on which the 
                notification required under paragraph (7)(C) is 
                provided to such individual.
                    (B) Commencement of coverage; no reach-back.--Any 
                COBRA continuation coverage elected by a qualified 
                beneficiary during an extended election period under 
                subparagraph (A)--
                            (i) shall commence on the date of the 
                        enactment of this Act, and
                            (ii) shall not extend beyond the period of 
                        COBRA continuation coverage that would have 
                        been required under the applicable COBRA 
                        continuation coverage provision if the coverage 
                        had been elected as required under such 
                        provision.
                    (C) Preexisting conditions.--With respect to a 
                qualified beneficiary who elects COBRA continuation 
                coverage pursuant to subparagraph (A), the period--
                            (i) beginning on the date of the qualifying 
                        event, and
                            (ii) ending with the day before the date of 
                        the enactment of this Act,
                shall be disregarded for purposes of determining the 
                63-day periods referred to in section 701)(2) of the 
                Employee Retirement Income Security Act of 1974, 
                section 9801(c)(2) of the Internal Revenue Code of 
                1986, and section 2701(c)(2) of the Public Health 
                Service Act.
            (5) Expedited review of denials of premium assistance.--In 
        any case in which an individual requests treatment as an 
        assistance eligible individual and is denied such treatment by 
        the group health plan by reason of such individual's 
        ineligibility for COBRA continuation coverage, the Secretary of 
        Labor (or the Secretary of Health and Human services in 
        connection with COBRA continuation coverage which is provided 
        other than pursuant to part 6 of subtitle B of title I of the 
        Employee Retirement Income Security Act of 1974), in 
        consultation with the Secretary of the Treasury, shall provide 
        for expedited review of such denial. An individual shall be 
        entitled to such review upon application to such Secretary in 
        such form and manner as shall be provided by such Secretary. 
        Such Secretary shall make a determination regarding such 
        individual's eligibility within 10 business days after receipt 
        of such individual's application for review under this 
        paragraph.
            (6) Disregard of subsidies for purposes of federal and 
        state programs.--Notwithstanding any other provision of law, 
        any premium reduction with respect to an assistance eligible 
        individual under this subsection shall not be considered income 
        or resources in determining eligibility for, or the amount of 
        assistance or benefits provided under, any other public benefit 
        provided under Federal law or the law of any State or political 
        subdivision thereof.
            (7) Notices to individuals.--
                    (A) General notice.--
                            (i) In general.--In the case of notices 
                        provided under section 606(4) of the Employee 
                        Retirement Income Security Act of 1974 (29 
                        U.S.C. 1166(4)), section 4980B(f)(6)(D) of the 
                        Internal Revenue Code of 1986, section 2206(4) 
                        of the Public Health Service Act (42 U.S.C. 
                        300bb-6(4)), or section 8905a(f)(2)(A) of title 
                        5, United States Code, with respect to 
                        individuals who, during the period described in 
                        paragraph (3)(A), become entitled to elect 
                        COBRA continuation coverage, such notices shall 
                        include an additional notification to the 
                        recipient of the availability of premium 
                        reduction with respect to such coverage under 
                        this subsection.
                            (ii) Alternative notice.--In the case of 
                        COBRA continuation coverage to which the notice 
                        provision under such sections does not apply, 
                        the Secretary of Labor, in consultation with 
                        the Secretary of the Treasury and the Secretary 
                        of Health and Human Services, shall, in 
                        coordination with administrators of the group 
                        health plans (or other entities) that provide 
                        or administer the COBRA continuation coverage 
                        involved, provide rules requiring the provision 
                        of such notice.
                            (iii) Form.--The requirement of the 
                        additional notification under this subparagraph 
                        may be met by amendment of existing notice 
                        forms or by inclusion of a separate document 
                        with the notice otherwise required.
                    (B) Specific requirements.--Each additional 
                notification under subparagraph (A) shall include--
                            (i) the forms necessary for establishing 
                        eligibility for premium reduction under this 
                        subsection,
                            (ii) the name, address, and telephone 
                        number necessary to contact the plan 
                        administrator and any other person maintaining 
                        relevant information in connection with such 
                        premium reduction,
                            (iii) a description of the extended 
                        election period provided for in paragraph 
                        (4)(A),
                            (iv) a description of the obligation of the 
                        qualified beneficiary under paragraph (2)(C) to 
                        notify the plan providing continuation coverage 
                        of eligibility for subsequent coverage under 
                        another group health plan or eligibility for 
                        benefits under title XVIII of the Social 
                        Security Act and the penalty provided for 
                        failure to so notify the plan, and
                            (v) a description, displayed in a prominent 
                        manner, of the qualified beneficiary's right to 
                        a reduced premium and any conditions on 
                        entitlement to the reduced premium.
                    (C) Notice relating to retroactive coverage.--In 
                the case of an individual described in paragraph (3)(A) 
                who has elected COBRA continuation coverage as of the 
                date of enactment of this Act or an individual 
                described in paragraph (4)(A), the administrator of the 
                group health plan (or other entity) involved shall 
                provide (within 60 days after the date of enactment of 
                this Act) for the additional notification required to 
                be provided under subparagraph (A).
                    (D) Model notices.--Not later than 30 days after 
                the date of enactment of this Act, the Secretary of the 
                Labor, in consultation with the Secretary of the 
                Treasury and the Secretary of Health and Human 
                Services, shall prescribe models for the additional 
                notification required under this paragraph.
            (8) Safeguards.--The Secretary of the Treasury shall 
        provide such rules, procedures, regulations, and other guidance 
        as may be necessary and appropriate to prevent fraud and abuse 
        under this subsection.
            (9) Outreach.--The Secretary of Labor, in consultation with 
        the Secretary of the Treasury and the Secretary of Health and 
        Human Services, shall provide outreach consisting of public 
        education and enrollment assistance relating to premium 
        reduction provided under this subsection. Such outreach shall 
        target employers, group health plan administrators, public 
        assistance programs, States, insurers, and other entities as 
        determined appropriate by such Secretaries. Such outreach shall 
        include an initial focus on those individuals electing 
        continuation coverage who are referred to in paragraph (7)(C). 
        Information on such premium reduction, including enrollment, 
        shall also be made available on website of the Departments of 
        Labor, Treasury, and Health and Human Services.
            (10) Definitions.--For purposes of this subsection--
                    (A) Administrator.--The term ``administrator'' has 
                the meaning given such term in section 3(16) of the 
                Employee Retirement Income Security Act of 1974.
                    (B) COBRA continuation coverage.--The term ``COBRA 
                continuation coverage'' means continuation coverage 
                provided pursuant to part 6 of subtitle B of title I of 
                the Employee Retirement Income Security Act of 1974 
                (other than under section 609), title XXII of the 
                Public Health Service Act, section 4980B of the 
                Internal Revenue Code of 1986 (other than subsection 
                (f)(1) of such section insofar as it relates to 
                pediatric vaccines), or section 8905a of title 5, 
                United States Code, or under a State program that 
                provides continuation coverage comparable to such 
                continuation coverage. Such term does not include 
                coverage under a health flexible spending arrangement.
                    (C) COBRA continuation provision.--The term ``COBRA 
                continuation provision'' means the provisions of law 
                described in subparagraph (B).
                    (D) Covered employee.--The term ``covered 
                employee'' has the meaning given such term in section 
                607(2) of the Employee Retirement Income Security Act 
                of 1974.
                    (E) Qualified beneficiary.--The term ``qualified 
                beneficiary'' has the meaning given such term in 
                section 607(3) of the Employee Retirement Income 
                Security Act of 1974.
                    (F) Group health plan.--The term ``group health 
                plan'' has the meaning given such term in section 
                607(1) of the Employee Retirement Income Security Act 
                of 1974.
                    (G) State.--The term ``State'' includes the 
                District of Columbia, the Commonwealth of Puerto Rico, 
                the Virgin Islands, Guam, American Samoa, and the 
                Commonwealth of the Northern Mariana Islands.
            (11) Reports.--
                    (A) Interim report.--The Secretary of the Treasury 
                shall submit an interim report to the Committee on 
                Education and Labor, the Committee on Ways and Means, 
                and the Committee on Energy and Commerce of the House 
                of Representatives and the Committee on Health, 
                Education, Labor, and Pensions and the Committee on 
                Finance of the Senate regarding the premium reduction 
                provided under this subsection that includes--
                            (i) the number of individuals provided such 
                        assistance as of the date of the report; and
                            (ii) the total amount of expenditures 
                        incurred (with administrative expenditures 
                        noted separately) in connection with such 
                        assistance as of the date of the report.
                    (B) Final report.--As soon as practicable after the 
                last period of COBRA continuation coverage for which 
                premium reduction is provided under this section, the 
                Secretary of the Treasury shall submit a final report 
                to each Committee referred to in subparagraph (A) that 
                includes--
                            (i) the number of individuals provided 
                        premium reduction under this section;
                            (ii) the average dollar amount (monthly and 
                        annually) of premium reductions provided to 
                        such individuals; and
                            (iii) the total amount of expenditures 
                        incurred (with administrative expenditures 
                        noted separately) in connection with premium 
                        reduction under this section.
            (12) COBRA premium assistance.--
                    (A) In general.--Subchapter B of chapter 65 of the 
                Internal Revenue Code of 1986 is amended by adding at 
                the end the following new section:

``SEC. 6431. COBRA PREMIUM ASSISTANCE.

    ``(a) In General.--The entity to whom premiums are payable under 
COBRA continuation coverage shall be reimbursed for the amount of 
premiums not paid by plan beneficiaries by reason of section 3002(a) of 
the Health Insurance Assistance for the Unemployed Act of 2009. Such 
amount shall be treated as a credit against the requirement of such 
entity to make deposits of payroll taxes. To the extent that such 
amount exceeds the amount of such taxes, the Secretary shall pay to 
such entity the amount of such excess. No payment may be made under 
this subsection to an entity with respect to any assistance eligible 
individual until after such entity has received the reduced premium 
from such individual required under section 3002(a)(1)(A) of such Act.
    ``(b) Payroll Taxes.--For purposes of this section, the term 
`payroll taxes' means--
            ``(1) amounts required to be deducted and withheld for the 
        payroll period under section 3401 (relating to wage 
        withholding),
            ``(2) amounts required to be deducted for the payroll 
        period under section 3102 (relating to FICA employee taxes), 
        and
            ``(3) amounts of the taxes imposed for the payroll period 
        under section 3111 (relating to FICA employer taxes).
    ``(c) Treatment of Credit.--Except as otherwise provided by the 
Secretary, the credit described in subsection (a) shall be applied as 
though the employer had paid to the Secretary, on the day that the 
qualified beneficiary's premium payment is received, an amount equal to 
such credit.
    ``(d) Treatment of Payment.--For purposes of section 1324(b)(2) of 
title 31, United States Code, any payment under this subsection shall 
be treated in the same manner as a refund of the credit under section 
35.
    ``(e) Reporting.--
            ``(1) In general.--Each entity entitled to reimbursement 
        under subsection (a) for any period shall submit such reports 
        as the Secretary may require, including--
                    ``(A) an attestation of involuntary termination of 
                employment for each covered employee on the basis of 
                whose termination entitlement to reimbursement is 
                claimed under subsection (a), and
                    ``(B) a report of the amount of payroll taxes 
                offset under subsection (a) for the reporting period 
                and the estimated offsets of such taxes for the 
                subsequent reporting period in connection with 
                reimbursements under subsection (a).
            ``(2) Timing of reports relating to amount of payroll 
        taxes.--Reports required under paragraph (1)(B) shall be 
        submitted at the same time as deposits of taxes imposed by 
        chapters 21, 22, and 24 or at such time as is specified by the 
        Secretary.
    ``(f) Regulations.--The Secretary may issue such regulations or 
other guidance as may be necessary or appropriate to carry out this 
section, including the requirement to report information or the 
establishment of other methods for verifying the correct amounts of 
payments and credits under this section.''.
                    (B) Social security trust funds held harmless.--In 
                determining any amount transferred or appropriated to 
                any fund under the Social Security Act, section 6431 of 
                the Internal Revenue Code of 1986 shall not be taken 
                into account.
                    (C) Clerical amendment.--The table of sections for 
                subchapter B of chapter 65 of the Internal Revenue Code 
                of 1986 is amended by adding at the end the following 
                new item:

``Sec. 6431. COBRA premium assistance.''.
                    (D) Effective date.--The amendments made by this 
                paragraph shall apply to premiums to which subsection 
                (a)(1)(A) applies.
            (13) Penalty for failure to notify health plan of cessation 
        of eligibility for premium assistance.--
                    (A) In general.--Part I of subchapter B of chapter 
                68 of the Internal Revenue Code of 1986 is amended by 
                adding at the end the following new section:

``SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH PLAN OF CESSATION OF 
              ELIGIBILITY FOR COBRA PREMIUM ASSISTANCE.

    ``(a) In General.--Any person required to notify a group health 
plan under section 3002(a)(2)(C)) of the Health Insurance Assistance 
for the Unemployed Act of 2009 who fails to make such a notification at 
such time and in such manner as the Secretary of Labor may require 
shall pay a penalty of 110 percent of the premium reduction provided 
under such section after termination of eligibility under such 
subsection.
    ``(b) Reasonable Cause Exception.--No penalty shall be imposed 
under subsection (a) with respect to any failure if it is shown that 
such failure is due to reasonable cause and not to willful neglect.''.
                    (B) Clerical amendment.--The table of sections of 
                part I of subchapter B of chapter 68 of such Code is 
                amended by adding at the end the following new item:

``Sec. 6720C. Penalty for failure to notify health plan of cessation of 
                            eligibility for COBRA premium 
                            assistance.''.
                    (C) Effective date.--The amendments made by this 
                paragraph shall apply to failures occurring after the 
                date of the enactment of this Act.
            (14) Coordination with hctc.--
                    (A) In general.--Subsection (g) of section 35 of 
                the Internal Revenue Code of 1986 is amended by 
                redesignating paragraph (9) as paragraph (10) and 
                inserting after paragraph (8) the following new 
                paragraph:
            ``(9) COBRA premium assistance.--In the case of an 
        assistance eligible individual who receives premium reduction 
        for COBRA continuation coverage under section 3002(a) of the 
        Health Insurance Assistance for the Unemployed Act of 2009 for 
        any month during the taxable year, such individual shall not be 
        treated as an eligible individual, a certified individual, or a 
        qualifying family member for purposes of this section or 
        section 7527 with respect to such month.''.
                    (B) Effective date.--The amendment made by 
                subparagraph (A) shall apply to taxable years ending 
                after the date of the enactment of this Act.
            (15) Exclusion of cobra premium assistance from gross 
        income.--
                    (A) In general.--Part III of subchapter B of 
                chapter 1 of the Internal Revenue Code of 1986 is 
                amended by inserting after section 139B the following 
                new section:

``SEC. 139C. COBRA PREMIUM ASSISTANCE.

    ``In the case of an assistance eligible individual (as defined in 
section 3002 of the Health Insurance Assistance for the Unemployed Act 
of 2009), gross income does not include any premium reduction provided 
under subsection (a) of such section.''.
                    (B) Clerical amendment.--The table of sections for 
                part III of subchapter B of chapter 1 of such Code is 
                amended by inserting after the item relating to section 
                139B the following new item:

``Sec. 139C. COBRA premium assistance.''.
                    (C) Effective date.--The amendments made by this 
                paragraph shall apply to taxable years ending after the 
                date of the enactment of this Act.
    (b) Extension of COBRA Benefits for Older or Long-Term Employees.--
            (1) ERISA amendment.--Section 602(2)(A) of the Employee 
        Retirement Income Security Act of 1974 is amended by adding at 
        the end the following new clauses:
                            ``(x) Special rule for older or long-term 
                        employees generally.--In the case of a 
                        qualifying event described in section 603(2) 
                        with respect to a covered employee who (as of 
                        such qualifying event) has attained age 55 or 
                        has completed 10 or more years of service with 
                        the entity that is the employer at the time of 
                        the qualifying event, clauses (i) and (ii) 
                        shall not apply.
                            ``(xi) Year of service.--For purposes of 
                        this subparagraph, the term `year of service' 
                        shall have the meaning provided in section 
                        202(a)(3).''.
            (2) IRC amendment.--Clause (i) of section 4980B(f)(2)(B) of 
        the Internal Revenue Code of 1986 is amended by adding at the 
        end the following new subclauses:
                                    ``(X) Special rule for older or 
                                long-term employees generally.--In the 
                                case of a qualifying event described in 
                                paragraph (3)(B) with respect to a 
                                covered employee who (as of such 
                                qualifying event) has attained age 55 
                                or has completed 10 or more years of 
                                service with the entity that is the 
                                employer at the time of the qualifying 
                                event, subclauses (I) and (II) shall 
                                not apply.
                                    ``(XI) Year of service.--For 
                                purposes of this clause, the term `year 
                                of service' shall have the meaning 
                                provided in section 202(a)(3) of the 
                                Employee Retirement Income Security Act 
                                of 1974.''.
            (3) PHSA amendment.--Section 2202(2)(A) of the Public 
        Health Service Act is amended by adding at the end the 
        following new clauses:
                            ``(viii) Special rule for older or long-
                        term employees generally.--In the case of a 
                        qualifying event described in section 2203(2) 
                        with respect to a covered employee who (as of 
                        such qualifying event) has attained age 55 or 
                        has completed 10 or more years of service with 
                        the entity that is the employer at the time of 
                        the qualifying event, clauses (i) and (ii) 
                        shall not apply.
                            ``(ix) Year of service.--For purposes of 
                        this subparagraph, the term `year of service' 
                        shall have the meaning provided in section 
                        202(a)(3) of the Employee Retirement Income 
                        Security Act of 1974.''.
            (4) Effective date of amendments.--The amendments made by 
        this subsection shall apply to periods of coverage which would 
        (without regard to the amendments made by this section) end on 
        or after the date of the enactment of this Act.

SEC. 3003. TEMPORARY OPTIONAL MEDICAID COVERAGE FOR THE UNEMPLOYED.

    (a) In General.--Section 1902 of the Social Security Act (42 U.S.C. 
1396b) is amended--
            (1) in subsection (a)(10)(A)(ii)--
                    (A) by striking ``or'' at the end of subclause 
                (XVIII);
                    (B) by adding ``or'' at the end of subclause (XIX); 
                and
                    (C) by adding at the end the following new 
                subclause
                                    ``(XX) who are described in 
                                subsection (dd)(1) (relating to certain 
                                unemployed individuals and their 
                                families);''; and
            (2) by adding at the end the following new subsection:
    ``(dd)(1) Individuals described in this paragraph are--
            ``(A) individuals who--
                    ``(i) are within one or more of the categories 
                described in paragraph (2), as elected under the State 
                plan; and
                    ``(ii) meet the applicable requirements of 
                paragraph (3); and
            ``(B) individuals who--
                    ``(i) are the spouse, or dependent child under 19 
                years of age, of an individual described in 
                subparagraph (A); and
                    ``(ii) meet the requirement of paragraph (3)(B).
    ``(2) The categories of individuals described in this paragraph are 
each of the following:
            ``(A) Individuals who are receiving unemployment 
        compensation benefits.
            ``(B) Individuals who were receiving, but have exhausted, 
        unemployment compensation benefits on or after July 1, 2008.
            ``(C) Individuals who are involuntarily unemployed and were 
        involuntarily separated from employment on or after September 
        1, 2008, and before January 1, 2011, whose family gross income 
        does not exceed a percentage specified by the State (not to 
        exceed 200 percent) of the income official poverty line (as 
        defined by the Office of Management and Budget, and revised 
        annually in accordance with section 673(2) of the Omnibus 
        Budget Reconciliation Act of 1981) applicable to a family of 
        the size involved, and who, but for subsection 
        (a)(10)(A)(ii)(XX), are not eligible for medical assistance 
        under this title or health assistance under title XXI.
            ``(D) Individuals who are involuntarily unemployed and were 
        involuntarily separated from employment on or after September 
        1, 2008, and before January 1, 2011, who are members of 
        households participating in the supplemental nutrition 
        assistance program established under the Food and Nutrition Act 
        of 2008 (7 U.S.C. 2011 et seq), and who, but for subsection 
        (a)(10)(A)(ii)(XX), are not eligible for medical assistance 
        under this title or health assistance under title XXI.
A State plan may elect one or more of the categories described in this 
paragraph but may not elect the category described in subparagraph (B) 
unless the State plan also elects the category described in 
subparagraph (A).
    ``(3) The requirements of this paragraph with respect to an 
individual are the following:
            ``(A) In the case of individuals within a category 
        described in subparagraph (A) or (B) of paragraph (2), the 
        individual was involuntarily separated from employment on or 
        after September 1, 2008, and before January 1, 2011, or meets 
        such comparable requirement as the Secretary specifies through 
        rule, guidance, or otherwise in the case of an individual who 
        was an independent contractor.
            ``(B) The individual is not otherwise covered under 
        creditable coverage, as defined in section 2701(c) of the 
        Public Health Service Act (42 U.S.C. 300gg(c)), but applied 
        without regard to paragraph (1)(F) of such section and without 
        regard to coverage provided by reason of the application of 
        subsection (a)(10)(A)(ii)(XX).
    ``(4)(A) No income or resources test shall be applied with respect 
to any category of individuals described in subparagraph (A), (B), or 
(D) of paragraph (2) who are eligible for medical assistance only by 
reason of the application of subsection (a)(10)(A)(ii)(XX).
    ``(B) Nothing in this subsection shall be construed to prevent a 
State from imposing a resource test for the category of individuals 
described in paragraph (2)(C)).
    ``(C) In the case of individuals provided medical assistance by 
reason of the application of subsection (a)(10)(A)(ii)(XX), the 
requirements of subsections (i)(22) and (x) shall not apply.''.
    (b) 100 Percent Federal Matching Rate.--
            (1) FMAP for time-limited period.--The third sentence of 
        section 1905(b) of such Act (42 U.S.C. 1396d(b)) is amended by 
        inserting before the period at the end the following: ``and for 
        items and services furnished on or after the date of enactment 
        of this Act and before January 1, 2011, to individuals who are 
        eligible for medical assistance only by reason of the 
        application of section 1902(a)(10)(A)(ii)(XX)''.
            (2) Certain enrollment-related administrative costs.--
        Notwithstanding any other provision of law, for purposes of 
        applying section 1903(a) of the Social Security Act (42 U.S.C. 
        1396b(a)), with respect to expenditures incurred on or after 
        the date of the enactment of this Act and before January 1, 
        2011, for costs of administration (including outreach and the 
        modification and operation of eligibility information systems) 
        attributable to eligibility determination and enrollment of 
        individuals who are eligible for medical assistance only by 
        reason of the application of section 1902(a)(10)(A)(ii)(XX) of 
        such Act, as added by subsection (a)(1), the Federal matching 
        percentage shall be 100 percent instead of the matching 
        percentage otherwise applicable.
    (c) Conforming Amendments.--(1) Section 1903(f)(4) of such Act (42 
U.S.C. 1396c(f)(4)) is amended by inserting ``1902(a)(10)(A)(ii)(XX), 
or'' after ``1902(a)(10)(A)(ii)(XIX),''.
    (2) Section 1905(a) of such Act (42 U.S.C. 1396d(a)) is amended, in 
the matter preceding paragraph (1)--
            (A) by striking ``or'' at the end of clause (xii);
            (B) by adding ``or'' at the end of clause (xiii); and
            (C) by inserting after clause (xiii) the following new 
        clause:
                            ``(xiv) individuals described in section 
                        1902(dd)(1),''.

                TITLE IV--HEALTH INFORMATION TECHNOLOGY

SEC. 4001. SHORT TITLE; TABLE OF CONTENTS OF TITLE.

    (a) Short Title.--This title may be cited as the ``Health 
Information Technology for Economic and Clinical Health Act'' or the 
``HITECH Act''.
    (b) Table of Contents of Title.--The table of contents of this 
title is as follows:

Sec. 4001. Short title; table of contents of title.
         Subtitle A--Promotion of Health Information Technology

     Part I--Improving Health Care Quality, Safety, and Efficiency

Sec. 4101. ONCHIT; standards development and adoption.
         ``TITLE XXX--HEALTH INFORMATION TECHNOLOGY AND QUALITY

        ``Sec. 3000. Definitions.
        ``Subtitle A--Promotion of Health Information Technology

        ``Sec. 3001. Office of the National Coordinator for Health 
                            Information Technology.
        ``Sec. 3002. HIT Policy Committee.
        ``Sec. 3003. HIT Standards Committee.
        ``Sec. 3004. Process for adoption of endorsed recommendations; 
                            adoption of initial set of standards, 
                            implementation specifications, and 
                            certification criteria.
        ``Sec. 3005. Application and use of adopted standards and 
                            implementation specifications by Federal 
                            agencies.
        ``Sec. 3006. Voluntary application and use of adopted standards 
                            and implementation specifications by 
                            private entities.
        ``Sec. 3007. Federal health information technology.
        ``Sec. 3008. Transitions.
        ``Sec. 3009. Relation to HIPAA privacy and security law.
        ``Sec. 3010. Authorization for appropriations.
Sec. 4102. Technical amendment.
 Part II--Application and Use of Adopted Health Information Technology 
                           Standards; Reports

Sec. 4111. Coordination of Federal activities with adopted standards 
                            and implementation specifications.
Sec. 4112. Application to private entities.
Sec. 4113. Study and reports.
          Subtitle B--Testing of Health Information Technology

Sec. 4201. National Institute for Standards and Technology testing.
Sec. 4202. Research and development programs.
  Subtitle C--Incentives for the Use of Health Information Technology

                    Part I--Grants and Loans Funding

Sec. 4301. Grant, loan, and demonstration programs.
 ``Subtitle B--Incentives for the Use of Health Information Technology

        ``Sec. 3011. Immediate funding to strengthen the health 
                            information technology infrastructure.
        ``Sec. 3012. Health information technology implementation 
                            assistance.
        ``Sec. 3013. State grants to promote health information 
                            technology.
        ``Sec. 3014. Competitive grants to States and Indian tribes for 
                            the development of loan programs to 
                            facilitate the widespread adoption of 
                            certified EHR technology.
        ``Sec. 3015. Demonstration program to integrate information 
                            technology into clinical education.
        ``Sec. 3016. Information technology professionals on health 
                            care.
        ``Sec. 3017. General grant and loan provisions.
        ``Sec. 3018. Authorization for appropriations.
                       Part II--Medicare Program

Sec. 4311. Incentives for eligible professionals.
Sec. 4312. Incentives for hospitals.
Sec. 4313. Treatment of payments and savings; implementation funding.
Sec. 4314. Study on application of HIT 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.

         Subtitle A--Promotion of Health Information Technology

     PART I--IMPROVING HEALTH CARE QUALITY, SAFETY, AND EFFICIENCY

SEC. 4101. ONCHIT; STANDARDS DEVELOPMENT AND ADOPTION.

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

         ``TITLE XXX--HEALTH INFORMATION TECHNOLOGY AND QUALITY

``SEC. 3000. DEFINITIONS.

    ``In this title:
            ``(1) Certified ehr technology.--The term `certified EHR 
        technology' means a qualified electronic health record that is 
        certified pursuant to section 3001(c)(5) as meeting standards 
        adopted under section 3004 that are applicable to the type of 
        record involved (as determined by the Secretary, such as an 
        ambulatory electronic health record for office-based physicians 
        or an inpatient hospital electronic health record for 
        hospitals).
            ``(2) Enterprise integration.--The term `enterprise 
        integration' means the electronic linkage of health care 
        providers, health plans, the government, and other interested 
        parties, to enable the electronic exchange and use of health 
        information among all the components in the health care 
        infrastructure in accordance with applicable law, and such term 
        includes related application protocols and other related 
        standards.
            ``(3) Health care provider.--The term `health care 
        provider' means a hospital, skilled nursing facility, nursing 
        facility, home health entity or other long-term care facility, 
        health care clinic, Federally qualified health center, group 
        practice (as defined in section 1877(h)(4) of the Social 
        Security Act), a pharmacist, a pharmacy, a laboratory, a 
        physician (as defined in section 1861(r) of the Social Security 
        Act), a practitioner (as described in section 1842(b)(18)(C) of 
        the Social Security Act), a provider operated by, or under 
        contract with, the Indian Health Service or by an Indian tribe 
        (as defined in the Indian Self-Determination and Education 
        Assistance Act), tribal organization, or urban Indian 
        organization (as defined in section 4 of the Indian Health Care 
        Improvement Act), a rural health clinic, a covered entity under 
        section 340B, and any other category of facility or clinician 
        determined appropriate by the Secretary.
            ``(4) Health information.--The term `health information' 
        has the meaning given such term in section 1171(4) of the 
        Social Security Act.
            ``(5) Health information technology.--The term `health 
        information technology' means hardware, software, integrated 
        technologies and related licenses, intellectual property, 
        upgrades, and packaged solutions sold as services that are 
        specifically designed for use by health care entities for the 
        electronic creation, maintenance, or exchange of health 
        information.
            ``(6) Health plan.--The term `health plan' has the meaning 
        given such term in section 1171(5) of the Social Security Act.
            ``(7) HIT policy committee.--The term `HIT Policy 
        Committee' means such Committee established under section 
        3002(a).
            ``(8) HIT standards committee.--The term `HIT Standards 
        Committee' means such Committee established under section 
        3003(a).
            ``(9) Individually identifiable health information.--The 
        term `individually identifiable health information' has the 
        meaning given such term in section 1171(6) of the Social 
        Security Act.
            ``(10) Laboratory.--The term `laboratory' has the meaning 
        given such term in section 353(a).
            ``(11) National coordinator.--The term `National 
        Coordinator' means the head of the Office of the National 
        Coordinator for Health Information Technology established under 
        section 3001(a).
            ``(12) Pharmacist.--The term `pharmacist' has the meaning 
        given such term in section 804(2) of the Federal Food, Drug, 
        and Cosmetic Act.
            ``(13) Qualified electronic health record.--The term 
        `qualified electronic health record' means an electronic record 
        of health-related information on an individual that--
                    ``(A) includes patient demographic and clinical 
                health information, such as medical history and problem 
                lists; and
                    ``(B) has the capacity--
                            ``(i) to provide clinical decision support;
                            ``(ii) to support physician order entry;
                            ``(iii) to capture and query information 
                        relevant to health care quality; and
                            ``(iv) to exchange electronic health 
                        information with, and integrate such 
                        information from other sources.
            ``(14) State.--The term `State' means each of the several 
        States, the District of Columbia, Puerto Rico, the Virgin 
        Islands, Guam, American Samoa, and the Northern Mariana 
        Islands.

        ``Subtitle A--Promotion of Health Information Technology

``SEC. 3001. OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH INFORMATION 
              TECHNOLOGY.

    ``(a) Establishment.--There is established within the Department of 
Health and Human Services an Office of the National Coordinator for 
Health Information Technology (referred to in this section as the 
`Office'). The Office shall be headed by a National Coordinator who 
shall be appointed by the Secretary and shall report directly to the 
Secretary.
    ``(b) Purpose.--The National Coordinator shall perform the duties 
under subsection (c) in a manner consistent with the development of a 
nationwide health information technology infrastructure that allows for 
the electronic use and exchange of information and that--
            ``(1) ensures that each patient's health information is 
        secure and protected, in accordance with applicable law;
            ``(2) improves health care quality, reduces medical errors, 
        and advances the delivery of patient-centered medical care;
            ``(3) reduces health care costs resulting from 
        inefficiency, medical errors, inappropriate care, duplicative 
        care, and incomplete information;
            ``(4) provides appropriate information to help guide 
        medical decisions at the time and place of care;
            ``(5) ensures the inclusion of meaningful public input in 
        such development of such infrastructure;
            ``(6) improves the coordination of care and information 
        among hospitals, laboratories, physician offices, and other 
        entities through an effective infrastructure for the secure and 
        authorized exchange of health care information;
            ``(7) improves public health activities and facilitates the 
        early identification and rapid response to public health 
        threats and emergencies, including bioterror events and 
        infectious disease outbreaks;
            ``(8) facilitates health and clinical research and health 
        care quality;
            ``(9) promotes prevention of chronic diseases;
            ``(10) promotes a more effective marketplace, greater 
        competition, greater systems analysis, increased consumer 
        choice, and improved outcomes in health care services; and
            ``(11) improves efforts to reduce health disparities.
    ``(c) Duties of the National Coordinator.--
            ``(1) Standards.--The National Coordinator shall review and 
        determine whether to endorse each standard, implementation 
        specification, and certification criterion for the electronic 
        exchange and use of health information that is recommended by 
        the HIT Standards Committee under section 3003 for purposes of 
        adoption under section 3004. The Coordinator shall make such 
        determination, and report to the Secretary such determination, 
        not later than 45 days after the date the recommendation is 
        received by the Coordinator.
            ``(2) HIT policy coordination.--
                    ``(A) In general.--The National Coordinator shall 
                coordinate health information technology policy and 
                programs of the Department with those of other relevant 
                executive branch agencies with a goal of avoiding 
                duplication of efforts and of helping to ensure that 
                each agency undertakes health information technology 
                activities primarily within the areas of its greatest 
                expertise and technical capability and in a manner 
                towards a coordinated national goal.
                    ``(B) HIT policy and standards committees.--The 
                National Coordinator shall be a leading member in the 
                establishment and operations of the HIT Policy 
                Committee and the HIT Standards Committee and shall 
                serve as a liaison among those two Committees and the 
                Federal Government.
            ``(3) Strategic plan.--
                    ``(A) In general.--The National Coordinator shall, 
                in consultation with other appropriate Federal agencies 
                (including the National Institute of Standards and 
                Technology), update the Federal Health IT Strategic 
                Plan (developed as of June 3, 2008) to include specific 
                objectives, milestones, and metrics with respect to the 
                following:
                            ``(i) The electronic exchange and use of 
                        health information and the enterprise 
                        integration of such information.
                            ``(ii) The utilization of an electronic 
                        health record for each person in the United 
                        States by 2014.
                            ``(iii) The incorporation of privacy and 
                        security protections for the electronic 
                        exchange of an individual's individually 
                        identifiable health information.
                            ``(iv) Ensuring security methods to ensure 
                        appropriate authorization and electronic 
                        authentication of health information and 
                        specifying technologies or methodologies for 
                        rendering health information unusable, 
                        unreadable, or indecipherable.
                            ``(v) Specifying a framework for 
                        coordination and flow of recommendations and 
                        policies under this subtitle among the 
                        Secretary, the National Coordinator, the HIT 
                        Policy Committee, the HIT Standards Committee, 
                        and other health information exchanges and 
                        other relevant entities.
                            ``(vi) Methods to foster the public 
                        understanding of health information technology.
                            ``(vii) Strategies to enhance the use of 
                        health information technology in improving the 
                        quality of health care, reducing medical 
                        errors, reducing health disparities, improving 
                        public health, and improving the continuity of 
                        care among health care settings.
                    ``(B) Collaboration.--The strategic plan shall be 
                updated through collaboration of public and private 
                entities.
                    ``(C) Measurable outcome goals.--The strategic plan 
                update shall include measurable outcome goals.
                    ``(D) Publication.--The National Coordinator shall 
                republish the strategic plan, including all updates.
            ``(4) Website.--The National Coordinator shall maintain and 
        frequently update an Internet website on which there is posted 
        information on the work, schedules, reports, recommendations, 
        and other information to ensure transparency in promotion of a 
        nationwide health information technology infrastructure.
            ``(5) Certification.--
                    ``(A) In general.--The National Coordinator, in 
                consultation with the Director of the National 
                Institute of Standards and Technology, shall develop a 
                program (either directly or by contract) for the 
                voluntary certification of health information 
                technology as being in compliance with applicable 
                certification criteria adopted under this subtitle. 
                Such program shall include testing of the technology in 
                accordance with section 4201(b) of the HITECH Act.
                    ``(B) Certification criteria described.--In this 
                title, the term `certification criteria' means, with 
                respect to standards and implementation specifications 
                for health information technology, criteria to 
                establish that the technology meets such standards and 
                implementation specifications.
            ``(6) Reports and publications.--
                    ``(A) Report on additional funding or authority 
                needed.--Not later than 12 months after the date of the 
                enactment of this title, the National Coordinator shall 
                submit to the appropriate committees of jurisdiction of 
                the House of Representatives and the Senate a report on 
                any additional funding or authority the Coordinator or 
                the HIT Policy Committee or HIT Standards Committee 
                requires to evaluate and develop standards, 
                implementation specifications, and certification 
                criteria, or to achieve full participation of 
                stakeholders in the adoption of a nationwide health 
                information technology infrastructure that allows for 
                the electronic use and exchange of health information.
                    ``(B) Implementation report.--The National 
                Coordinator shall prepare a report that identifies 
                lessons learned from major public and private health 
                care systems in their implementation of health 
                information technology, including information on 
                whether the technologies and practices developed by 
                such systems may be applicable to and usable in whole 
                or in part by other health care providers.
                    ``(C) Assessment of impact of hit on communities 
                with health disparities and uninsured, underinsured, 
                and medically underserved areas.--The National 
                Coordinator shall assess and publish the impact of 
                health information technology in communities with 
                health disparities and in areas with a high proportion 
                of individuals who are uninsured, underinsured, and 
                medically underserved individuals (including urban and 
                rural areas) and identify practices to increase the 
                adoption of such technology by health care providers in 
                such communities.
                    ``(D) Evaluation of benefits and costs of the 
                electronic use and exchange of health information.--The 
                National Coordinator shall evaluate and publish 
                evidence on the benefits and costs of the electronic 
                use and exchange of health information and assess to 
                whom these benefits and costs accrue.
                    ``(E) Resource requirements.--The National 
                Coordinator shall estimate and publish resources 
                required annually to reach the goal of utilization of 
                an electronic health record for each person in the 
                United States by 2014, including the required level of 
                Federal funding, expectations for regional, State, and 
                private investment, and the expected contributions by 
                volunteers to activities for the utilization of such 
                records.
            ``(7) Assistance.--The National Coordinator may provide 
        financial assistance to consumer advocacy groups and not-for-
        profit entities that work in the public interest for purposes 
        of defraying the cost to such groups and entities to 
        participate under, whether in whole or in part, the National 
        Technology Transfer Act of 1995 (15 U.S.C. 272 note).
            ``(8) Governance for nationwide health information 
        network.--The National Coordinator shall establish a governance 
        mechanism for the nationwide health information network.
    ``(d) Detail of Federal Employees.--
            ``(1) In general.--Upon the request of the National 
        Coordinator, the head of any Federal agency is authorized to 
        detail, with or without reimbursement from the Office, any of 
        the personnel of such agency to the Office to assist it in 
        carrying out its duties under this section.
            ``(2) Effect of detail.--Any detail of personnel under 
        paragraph (1) shall--
                    ``(A) not interrupt or otherwise affect the civil 
                service status or privileges of the Federal employee; 
                and
                    ``(B) be in addition to any other staff of the 
                Department employed by the National Coordinator.
            ``(3) Acceptance of detailees.--Notwithstanding any other 
        provision of law, the Office may accept detailed personnel from 
        other Federal agencies without regard to whether the agency 
        described under paragraph (1) is reimbursed.
    ``(e) Chief Privacy Officer of the Office of the National 
Coordinator.--Not later than 12 months after the date of the enactment 
of this title, the Secretary shall appoint a Chief Privacy Officer of 
the Office of the National Coordinator, whose duty it shall be to 
advise the National Coordinator on privacy, security, and data 
stewardship of electronic health information and to coordinate with 
other Federal agencies (and similar privacy officers in such agencies), 
with State and regional efforts, and with foreign countries with regard 
to the privacy, security, and data stewardship of electronic 
individually identifiable health information.

``SEC. 3002. HIT POLICY COMMITTEE.

    ``(a) Establishment.--There is established a HIT Policy Committee 
to make policy recommendations to the National Coordinator relating to 
the implementation of a nationwide health information technology 
infrastructure, including implementation of the strategic plan 
described in section 3001(c)(3).
    ``(b) Duties.--
            ``(1) Recommendations on health information technology 
        infrastructure.--The HIT Policy Committee shall recommend a 
        policy framework for the development and adoption of a 
        nationwide health information technology infrastructure that 
        permits the electronic exchange and use of health information 
        as is consistent with the strategic plan under section 
        3001(c)(3) and that includes the recommendations under 
        paragraph (2). The Committee shall update such recommendations 
        and make new recommendations as appropriate.
            ``(2) Specific areas of standard development.--
                    ``(A) In general.--The HIT Policy Committee shall 
                recommend the areas in which standards, implementation 
                specifications, and certification criteria are needed 
                for the electronic exchange and use of health 
                information for purposes of adoption under section 3004 
                and shall recommend an order of priority for the 
                development, harmonization, and recognition of such 
                standards, specifications, and certification criteria 
                among the areas so recommended. Such standards and 
                implementation specifications shall include named 
                standards, architectures, and software schemes for the 
                authentication and security of individually 
                identifiable health information and other information 
                as needed to ensure the reproducible development of 
                common solutions across disparate entities.
                    ``(B) Areas required for consideration.--For 
                purposes of subparagraph (A), the HIT Policy Committee 
                shall make recommendations for at least the following 
                areas:
                            ``(i) Technologies that protect the privacy 
                        of health information and promote security in a 
                        qualified electronic health record, including 
                        for the segmentation and protection from 
                        disclosure of specific and sensitive 
                        individually identifiable health information 
                        with the goal of minimizing the reluctance of 
                        patients to seek care (or disclose information 
                        about a condition) because of privacy concerns, 
                        in accordance with applicable law, and for the 
                        use and disclosure of limited data sets of such 
                        information.
                            ``(ii) A nationwide health information 
                        technology infrastructure that allows for the 
                        electronic use and accurate exchange of health 
                        information.
                            ``(iii) The utilization of a certified 
                        electronic health record for each person in the 
                        United States by 2014.
                            ``(iv) Technologies that as a part of a 
                        qualified electronic health record allow for an 
                        accounting of disclosures made by a covered 
                        entity (as defined for purposes of regulations 
                        promulgated under section 264(c) of the Health 
                        Insurance Portability and Accountability Act of 
                        1996) for purposes of treatment, payment, and 
                        health care operations (as such terms are 
                        defined for purposes of such regulations).
                            ``(v) The use of certified electronic 
                        health records to improve the quality of health 
                        care, such as by promoting the coordination of 
                        health care and improving continuity of health 
                        care among health care providers, by reducing 
                        medical errors, by improving population health, 
                        and by advancing research and education.
                    ``(C) Other areas for consideration.--In making 
                recommendations under subparagraph (A), the HIT Policy 
                Committee may consider the following additional areas:
                            ``(i) The appropriate uses of a nationwide 
                        health information infrastructure, including 
                        for purposes of--
                                    ``(I) the collection of quality 
                                data and public reporting;
                                    ``(II) biosurveillance and public 
                                health;
                                    ``(III) medical and clinical 
                                research; and
                                    ``(IV) drug safety.
                            ``(ii) Self-service technologies that 
                        facilitate the use and exchange of patient 
                        information and reduce wait times.
                            ``(iii) Telemedicine technologies, in order 
                        to reduce travel requirements for patients in 
                        remote areas.
                            ``(iv) Technologies that facilitate home 
                        health care and the monitoring of patients 
                        recuperating at home.
                            ``(v) Technologies that help reduce medical 
                        errors.
                            ``(vi) Technologies that facilitate the 
                        continuity of care among health settings.
                            ``(vii) Technologies that meet the needs of 
                        diverse populations.
                            ``(viii) Any other technology that the HIT 
                        Policy Committee finds to be among the 
                        technologies with the greatest potential to 
                        improve the quality and efficiency of health 
                        care.
            ``(3) Forum.--The HIT Policy Committee shall serve as a 
        forum for broad stakeholder input with specific expertise in 
        policies relating to the matters described in paragraphs (1) 
        and (2).
    ``(c) Membership and Operations.--
            ``(1) In general.--The National Coordinator shall provide 
        leadership in the establishment and operations of the HIT 
        Policy Committee.
            ``(2) Membership.--The membership of the HIT Policy 
        Committee shall at least reflect providers, ancillary 
        healthcare workers, consumers, purchasers, health plans, 
        technology vendors, researchers, relevant Federal agencies, and 
        individuals with technical expertise on health care quality, 
        privacy and security, and on the electronic exchange and use of 
        health information.
            ``(3) Consideration.--The National Coordinator shall ensure 
        that the relevant recommendations and comments from the 
        National Committee on Vital and Health Statistics are 
        considered in the development of policies.
    ``(d) Application of FACA.--The Federal Advisory Committee Act (5 
U.S.C. App.), other than section 14 of such Act, shall apply to the HIT 
Policy Committee.
    ``(e) Publication.--The Secretary shall provide for publication in 
the Federal Register and the posting on the Internet website of the 
Office of the National Coordinator for Health Information Technology of 
all policy recommendations made by the HIT Policy Committee under this 
section.

``SEC. 3003. HIT STANDARDS COMMITTEE.

    ``(a) Establishment.--There is established a committee to be known 
as the HIT Standards Committee to recommend to the National Coordinator 
standards, implementation specifications, and certification criteria 
for the electronic exchange and use of health information for purposes 
of adoption under section 3004, consistent with the implementation of 
the strategic plan described in section 3001(c)(3) and beginning with 
the areas listed in section 3002(b)(2)(B) in accordance with policies 
developed by the HIT Policy Committee.
    ``(b) Duties.--
            ``(1) Standard development.--
                    ``(A) In general.--The HIT Standards Committee 
                shall recommend to the National Coordinator standards, 
                implementation specifications, and certification 
                criteria described in subsection (a) that have been 
                developed, harmonized, or recognized by the HIT 
                Standards Committee. The HIT Standards Committee shall 
                update such recommendations and make new 
                recommendations as appropriate, including in response 
                to a notification sent under section 3004(b)(2). Such 
                recommendations shall be consistent with the latest 
                recommendations made by the HIT Policy Committee.
                    ``(B) Pilot testing of standards and implementation 
                specifications.--In the development, harmonization, or 
                recognition of standards and implementation 
                specifications, the HIT Standards Committee shall, as 
                appropriate, provide for the testing of such standards 
                and specifications by the National Institute for 
                Standards and Technology under section 4201 of the 
                HITECH Act.
                    ``(C) Consistency.--The standards, implementation 
                specifications, and certification criteria recommended 
                under this subsection shall be consistent with the 
                standards for information transactions and data 
                elements adopted pursuant to section 1173 of the Social 
                Security Act.
            ``(2) Forum.--The HIT Standards Committee shall serve as a 
        forum for the participation of a broad range of stakeholders to 
        provide input on the development, harmonization, and 
        recognition of standards, implementation specifications, and 
        certification criteria necessary for the development and 
        adoption of a nationwide health information technology 
        infrastructure that allows for the electronic use and exchange 
        of health information.
            ``(3) Schedule.--Not later than 90 days after the date of 
        the enactment of this title, the HIT Standards Committee shall 
        develop a schedule for the assessment of policy recommendations 
        developed by the HIT Policy Committee under section 3002. The 
        HIT Standards Committee shall update such schedule annually. 
        The Secretary shall publish such schedule in the Federal 
        Register.
            ``(4) Public input.--The HIT Standards Committee shall 
        conduct open public meetings and develop a process to allow for 
        public comment on the schedule described in paragraph (3) and 
        recommendations described in this subsection. Under such 
        process comments shall be submitted in a timely manner after 
        the date of publication of a recommendation under this 
        subsection.
    ``(c) Membership and Operations.--
            ``(1) In general.--The National Coordinator shall provide 
        leadership in the establishment and operations of the HIT 
        Standards Committee.
            ``(2) Membership.--The membership of the HIT Standards 
        Committee shall at least reflect providers, ancillary 
        healthcare workers, consumers, purchasers, health plans, 
        technology vendors, researchers, relevant Federal agencies, and 
        individuals with technical expertise on health care quality, 
        privacy and security, and on the electronic exchange and use of 
        health information.
            ``(3) Consideration.--The National Coordinator shall ensure 
        that the relevant recommendations and comments from the 
        National Committee on Vital and Health Statistics are 
        considered in the development of standards.
            ``(4) Assistance.--For the purposes of carrying out this 
        section, the Secretary may provide or ensure that financial 
        assistance is provided by the HIT Standards Committee to defray 
        in whole or in part any membership fees or dues charged by such 
        Committee to those consumer advocacy groups and not for profit 
        entities that work in the public interest as a part of their 
        mission.
    ``(d) Application of FACA.--The Federal Advisory Committee Act (5 
U.S.C. App.), other than section 14, shall apply to the HIT Standards 
Committee.
    ``(e) Publication.--The Secretary shall provide for publication in 
the Federal Register and the posting on the Internet website of the 
Office of the National Coordinator for Health Information Technology of 
all recommendations made by the HIT Standards Committee under this 
section.

``SEC. 3004. PROCESS FOR ADOPTION OF ENDORSED RECOMMENDATIONS; ADOPTION 
              OF INITIAL SET OF STANDARDS, IMPLEMENTATION 
              SPECIFICATIONS, AND CERTIFICATION CRITERIA.

    ``(a) Process for Adoption of Endorsed Recommendations.--
            ``(1) Review of endorsed standards, implementation 
        specifications, and certification criteria.--Not later than 90 
        days after the date of receipt of standards, implementation 
        specifications, or certification criteria endorsed under 
        section 3001(c), the Secretary, in consultation with 
        representatives of other relevant Federal agencies, shall 
        jointly review such standards, implementation specifications, 
        or certification criteria and shall determine whether or not to 
        propose adoption of such standards, implementation 
        specifications, or certification criteria.
            ``(2) Determination to adopt standards, implementation 
        specifications, and certification criteria.--If the Secretary 
        determines--
                    ``(A) to propose adoption of any grouping of such 
                standards, implementation specifications, or 
                certification criteria, the Secretary shall, by 
                regulation, determine whether or not to adopt such 
                grouping of standards, implementation specifications, 
                or certification criteria; or
                    ``(B) not to propose adoption of any grouping of 
                standards, implementation specifications, or 
                certification criteria, the Secretary shall notify the 
                National Coordinator and the HIT Standards Committee in 
                writing of such determination and the reasons for not 
                proposing the adoption of such recommendation.
            ``(3) Publication.--The Secretary shall provide for 
        publication in the Federal Register of all determinations made 
        by the Secretary under paragraph (1).
    ``(b) Adoption of Initial Set of Standards, Implementation 
Specifications, and Certification Criteria.--
            ``(1) In general.--Not later than December 31, 2009, the 
        Secretary shall, through the rulemaking process described in 
        section 3003, adopt an initial set of standards, implementation 
        specifications, and certification criteria for the areas 
        required for consideration under section 3002(b)(2)(B).
            ``(2) Application of current standards, implementation 
        specifications, and certification criteria.--The standards, 
        implementation specifications, and certification criteria 
        adopted before the date of the enactment of this title through 
        the process existing through the Office of the National 
        Coordinator for Health Information Technology may be applied 
        towards meeting the requirement of paragraph (1).

``SEC. 3005. APPLICATION AND USE OF ADOPTED STANDARDS AND 
              IMPLEMENTATION SPECIFICATIONS BY FEDERAL AGENCIES.

    ``For requirements relating to the application and use by Federal 
agencies of the standards and implementation specifications adopted 
under section 3004, see section 4111 of the HITECH Act.

``SEC. 3006. VOLUNTARY APPLICATION AND USE OF ADOPTED STANDARDS AND 
              IMPLEMENTATION SPECIFICATIONS BY PRIVATE ENTITIES.

    ``(a) In General.--Except as provided under section 4112 of the 
HITECH Act, any standard or implementation specification adopted under 
section 3004 shall be voluntary with respect to private entities.
    ``(b) Rule of Construction.--Nothing in this subtitle shall be 
construed to require that a private entity that enters into a contract 
with the Federal Government apply or use the standards and 
implementation specifications adopted under section 3004 with respect 
to activities not related to the contract.

``SEC. 3007. FEDERAL HEALTH INFORMATION TECHNOLOGY.

    ``(a) In General.--The National Coordinator shall support the 
development, routine updating and provision of qualified EHR technology 
(as defined in section 3000) consistent with subsections (b) and (c) 
unless the Secretary determines that the needs and demands of providers 
are being substantially and adequately met through the marketplace.
    ``(b) Certification.--In making such EHR technology publicly 
available, the National Coordinator shall ensure that the qualified EHR 
technology described in subsection (a) is certified under the program 
developed under section 3001(c)(3) to be in compliance with applicable 
standards adopted under section 3003(a).
    ``(c) Authorization to Charge a Nominal Fee.--The National 
Coordinator may impose a nominal fee for the adoption by a health care 
provider of the health information technology system developed or 
approved under subsection (a) and (b). Such fee shall take into account 
the financial circumstances of smaller providers, low income providers, 
and providers located in rural or other medically underserved areas.
    ``(d) Rule of Construction.--Nothing in this section shall be 
construed to require that a private or government entity adopt or use 
the technology provided under this section.

``SEC. 3008. TRANSITIONS.

    ``(a) ONCHIT.--To the extent consistent with section 3001, all 
functions, personnel, assets, liabilities, and administrative actions 
applicable to the National Coordinator for Health Information 
Technology appointed under Executive Order 13335 or the Office of such 
National Coordinator on the date before the date of the enactment of 
this title shall be transferred to the National Coordinator appointed 
under section 3001(a) and the Office of such National Coordinator as of 
the date of the enactment of this title.
    ``(b) AHIC.--
            ``(1) To the extent consistent with sections 3002 and 3003, 
        all functions, personnel, assets, and liabilities applicable to 
        the AHIC Successor, Inc. doing business as the National eHealth 
        Collaborative as of the day before the date of the enactment of 
        this title shall be transferred to the HIT Policy Committee or 
        the HIT Standards Committee, established under section 3002(a) 
        or 3003(a), as appropriate, as of the date of the enactment of 
        this title.
            ``(2) In carrying out section 3003(b)(1)(A), until 
        recommendations are made by the HIT Policy Committee, 
        recommendations of the HIT Standards Committee shall be 
        consistent with the most recent recommendations made by such 
        AHIC Successor, Inc.
    ``(c) Rules of Construction.--
            ``(1) ONCHIT.--Nothing in section 3001 or subsection (a) 
        shall be construed as requiring the creation of a new entity to 
        the extent that the Office of the National Coordinator for 
        Health Information Technology established pursuant to Executive 
        Order 13335 is consistent with the provisions of section 3001.
            ``(2) AHIC.--Nothing in sections 3002 or 3003 or subsection 
        (b) shall be construed as prohibiting the AHIC Successor, Inc. 
        doing business as the National eHealth Collaborative from 
        modifying its charter, duties, membership, and any other 
        structure or function required to be consistent with section 
        3002 and 3003 in a manner that would permit the Secretary to 
        choose to recognize such Community as the HIT Policy Committee 
        or the HIT Standards Committee.

``SEC. 3009. RELATION TO HIPAA PRIVACY AND SECURITY LAW.

    ``(a) In General.--With respect to the relation of this title to 
HIPAA privacy and security law:
            ``(1) This title may not be construed as having any effect 
        on the authorities of the Secretary under HIPAA privacy and 
        security law.
            ``(2) The purposes of this title include ensuring that the 
        health information technology standards and implementation 
        specifications adopted under section 3004 take into account the 
        requirements of HIPAA privacy and security law.
    ``(b) Definition.--For purposes of this section, the term `HIPAA 
privacy and security law' means--
            ``(1) the provisions of part C of title XI of the Social 
        Security Act, section 264 of the Health Insurance Portability 
        and Accountability Act of 1996, and subtitle D of title IV of 
        the HITECH Act; and
            ``(2) regulations under such provisions.

``SEC. 3010. AUTHORIZATION FOR APPROPRIATIONS.

    ``There is authorized to be appropriated to the Office of the 
National Coordinator for Health Information Technology to carry out 
this subtitle $250,000,000 for fiscal year 2009.''.

SEC. 4102. TECHNICAL AMENDMENT.

    Section 1171(5) of the Social Security Act (42 U.S.C. 1320d) is 
amended by striking ``or C'' and inserting ``C, or D''.

 PART II--APPLICATION AND USE OF ADOPTED HEALTH INFORMATION TECHNOLOGY 
                           STANDARDS; REPORTS

SEC. 4111. COORDINATION OF FEDERAL ACTIVITIES WITH ADOPTED STANDARDS 
              AND IMPLEMENTATION SPECIFICATIONS.

    (a) Spending on Health Information Technology Systems.--As each 
agency (as defined in the Executive Order issued on August 22, 2006, 
relating to promoting quality and efficient health care in Federal 
Government administered or sponsored health care programs) implements, 
acquires, or upgrades health information technology systems used for 
the direct exchange of individually identifiable health information 
between agencies and with non-Federal entities, it shall utilize, where 
available, health information technology systems and products that meet 
standards and implementation specifications adopted under section 
3004(b) of the Public Health Service Act, as added by section 4101.
    (b) Federal Information Collection Activities.--With respect to a 
standard or implementation specification adopted under section 3004(b) 
of the Public Health Service Act, as added by section 4101, the 
President shall take measures to ensure that Federal activities 
involving the broad collection and submission of health information are 
consistent with such standard or implementation specification, 
respectively, within three years after the date of such adoption.
    (c) Application of Definitions.--The definitions contained in 
section 3000 of the Public Health Service Act, as added by section 
4101, shall apply for purposes of this part.

SEC. 4112. APPLICATION TO PRIVATE ENTITIES.

    Each agency (as defined in such Executive Order issued on August 
22, 2006, relating to promoting quality and efficient health care in 
Federal Government administered or sponsored health care programs) 
shall require in contracts or agreements with health care providers, 
health plans, or health insurance issuers that as each provider, plan, 
or issuer implements, acquires, or upgrades health information 
technology systems, it shall utilize, where available, health 
information technology systems and products that meet standards and 
implementation specifications adopted under section 3004(b) of the 
Public Health Service Act, as added by section 4101.

SEC. 4113. STUDY AND REPORTS.

    (a) Report on Adoption of Nationwide System.--Not later than 2 
years after the date of the enactment of this Act and annually 
thereafter, the Secretary of Health and Human Services shall submit to 
the appropriate committees of jurisdiction of the House of 
Representatives and the Senate a report that--
            (1) describes the specific actions that have been taken by 
        the Federal Government and private entities to facilitate the 
        adoption of a nationwide system for the electronic use and 
        exchange of health information;
            (2) describes barriers to the adoption of such a nationwide 
        system; and
            (3) contains recommendations to achieve full implementation 
        of such a nationwide system.
    (b) Reimbursement Incentive Study and Report.--
            (1) Study.--The Secretary of Health and Human Services 
        shall carry out, or contract with a private entity to carry 
        out, a study that examines methods to create efficient 
        reimbursement incentives for improving health care quality in 
        federally qualified health centers, rural health clinics, and 
        free clinics.
            (2) Report.--Not later than 2 years after the date of the 
        enactment of this Act, the Secretary of Health and Human 
        Services shall submit to the appropriate committees of 
        jurisdiction of the House of Representatives and the Senate a 
        report on the study carried out under paragraph (1).
    (c) Aging Services Technology Study and Report.--
            (1) In general.--The Secretary of Health and Human Services 
        shall carry out, or contract with a private entity to carry 
        out, a study of matters relating to the potential use of new 
        aging services technology to assist seniors, individuals with 
        disabilities, and their caregivers throughout the aging 
        process.
            (2) Matters to be studied.--The study under paragraph (1) 
        shall include--
                    (A) an evaluation of--
                            (i) methods for identifying current, 
                        emerging, and future health technology that can 
                        be used to meet the needs of seniors and 
                        individuals with disabilities and their 
                        caregivers across all aging services settings, 
                        as specified by the Secretary;
                            (ii) methods for fostering scientific 
                        innovation with respect to aging services 
                        technology within the business and academic 
                        communities; and
                            (iii) developments in aging services 
                        technology in other countries that may be 
                        applied in the United States; and
                    (B) identification of--
                            (i) barriers to innovation in aging 
                        services technology and devising strategies for 
                        removing such barriers; and
                            (ii) barriers to the adoption of aging 
                        services technology by health care providers 
                        and consumers and devising strategies to 
                        removing such barriers.
            (3) Report.--Not later than 24 months after the date of the 
        enactment of this Act, the Secretary shall submit to the 
        appropriate committees of jurisdiction of the House of 
        Representatives and of the Senate a report on the study carried 
        out under paragraph (1).
            (4) Definitions.--For purposes of this subsection:
                    (A) Aging services technology.--The term ``aging 
                services technology'' means health technology that 
                meets the health care needs of seniors, individuals 
                with disabilities, and the caregivers of such seniors 
                and individuals.
                    (B) Senior.--The term ``senior'' has such meaning 
                as specified by the Secretary.

          Subtitle B--Testing of Health Information Technology

SEC. 4201. NATIONAL INSTITUTE FOR STANDARDS AND TECHNOLOGY TESTING.

    (a) Pilot Testing of Standards and Implementation Specifications.--
In coordination with the HIT Standards Committee established under 
section 3003 of the Public Health Service Act, as added by section 
4101, with respect to the development of standards and implementation 
specifications under such section, the Director of the National 
Institute for Standards and Technology shall test such standards and 
implementation specifications, as appropriate, in order to assure the 
efficient implementation and use of such standards and implementation 
specifications.
    (b) Voluntary Testing Program.--In coordination with the HIT 
Standards Committee established under section 3003 of the Public Health 
Service Act, as added by section 4101, with respect to the development 
of standards and implementation specifications under such section, the 
Director of the National Institute of Standards and Technology shall 
support the establishment of a conformance testing infrastructure, 
including the development of technical test beds. The development of 
this conformance testing infrastructure may include a program to 
accredit independent, non-Federal laboratories to perform testing.

SEC. 4202. RESEARCH AND DEVELOPMENT PROGRAMS.

    (a) Health Care Information Enterprise Integration Research 
Centers.--
            (1) In general.--The Director of the National Institute of 
        Standards and Technology, in consultation with the Director of 
        the National Science Foundation and other appropriate Federal 
        agencies, shall establish a program of assistance to 
        institutions of higher education (or consortia thereof which 
        may include nonprofit entities and Federal Government 
        laboratories) to establish multidisciplinary Centers for Health 
        Care Information Enterprise Integration.
            (2) Review; competition.--Grants shall be awarded under 
        this subsection on a merit-reviewed, competitive basis.
            (3) Purpose.--The purposes of the Centers described in 
        paragraph (1) shall be--
                    (A) to generate innovative approaches to health 
                care information enterprise integration by conducting 
                cutting-edge, multidisciplinary research on the systems 
                challenges to health care delivery; and
                    (B) the development and use of health information 
                technologies and other complementary fields.
            (4) Research areas.--Research areas may include--
                    (A) interfaces between human information and 
                communications technology systems;
                    (B) voice-recognition systems;
                    (C) software that improves interoperability and 
                connectivity among health information systems;
                    (D) software dependability in systems critical to 
                health care delivery;
                    (E) measurement of the impact of information 
                technologies on the quality and productivity of health 
                care;
                    (F) health information enterprise management;
                    (G) health information technology security and 
                integrity; and
                    (H) relevant health information technology to 
                reduce medical errors.
            (5) Applications.--An institution of higher education (or a 
        consortium thereof) seeking funding under this subsection shall 
        submit an application to the Director of the National Institute 
        of Standards and Technology at such time, in such manner, and 
        containing such information as the Director may require. The 
        application shall include, at a minimum, a description of--
                    (A) the research projects that will be undertaken 
                by the Center established pursuant to assistance under 
                paragraph (1) and the respective contributions of the 
                participating entities;
                    (B) how the Center will promote active 
                collaboration among scientists and engineers from 
                different disciplines, such as information technology, 
                biologic sciences, management, social sciences, and 
                other appropriate disciplines;
                    (C) technology transfer activities to demonstrate 
                and diffuse the research results, technologies, and 
                knowledge; and
                    (D) how the Center will contribute to the education 
                and training of researchers and other professionals in 
                fields relevant to health information enterprise 
                integration.
    (b) National Information Technology Research and Development 
Program.--The National High-Performance Computing Program established 
by section 101 of the High-Performance Computing Act of 1991 (15 U.S.C. 
5511) shall coordinate Federal research and development programs 
related to the development and deployment of health information 
technology, including activities related to--
            (1) computer infrastructure;
            (2) data security;
            (3) development of large-scale, distributed, reliable 
        computing systems;
            (4) wired, wireless, and hybrid high-speed networking;
            (5) development of software and software-intensive systems;
            (6) human-computer interaction and information management 
        technologies; and
            (7) the social and economic implications of information 
        technology.

  Subtitle C--Incentives for the Use of Health Information Technology

                    PART I--GRANTS AND LOANS FUNDING

SEC. 4301. GRANT, LOAN, AND DEMONSTRATION PROGRAMS.

    Title XXX of the Public Health Service Act, as added by section 
4101, is amended by adding at the end the following new subtitle:

 ``Subtitle B--Incentives for the Use of Health Information Technology

``SEC. 3011. IMMEDIATE FUNDING TO STRENGTHEN THE HEALTH INFORMATION 
              TECHNOLOGY INFRASTRUCTURE.

    ``(a) In General.--The Secretary of Health and Human Services 
shall, using amounts appropriated under section 3018, invest in the 
infrastructure necessary to allow for and promote the electronic 
exchange and use of health information for each individual in the 
United States consistent with the goals outlined in the strategic plan 
developed by the National Coordinator (and as available) under section 
3001. To the greatest extent practicable, the Secretary shall ensure 
that any funds so appropriated shall be used for the acquisition of 
health information technology that meets standards and certification 
criteria adopted before the date of the enactment of this title until 
such date as the standards are adopted under section 3004. The 
Secretary shall invest funds through the different agencies with 
expertise in such goals, such as the Office of the National Coordinator 
for Health Information Technology, the Health Resources and Services 
Administration, the Agency for Healthcare Research and Quality, the 
Centers of Medicare & Medicaid Services, the Centers for Disease 
Control and Prevention, and the Indian Health Service to support the 
following:
            ``(1) Health information technology architecture that will 
        support the nationwide electronic exchange and use of health 
        information in a secure, private, and accurate manner, 
        including connecting health information exchanges, and which 
        may include updating and implementing the infrastructure 
        necessary within different agencies of the Department of Health 
        and Human Services to support the electronic use and exchange 
        of health information.
            ``(2) Development and adoption of appropriate certified 
        electronic health records for categories of providers not 
        eligible for support under title XVIII or XIX of the Social 
        Security Act for the adoption of such records.
            ``(3) Training on and dissemination of information on best 
        practices to integrate health information technology, including 
        electronic health records, into a provider's delivery of care, 
        consistent with best practices learned from the Health 
        Information Technology Research Center developed under section 
        302, including community health centers receiving assistance 
        under section 330 of the Public Health Service Act, covered 
        entities under section 340B of such Act, and providers 
        participating in one or more of the programs under titles 
        XVIII, XIX, and XXI of the Social Security Act (relating to 
        Medicare, Medicaid, and the State Children's Health Insurance 
        Program).
            ``(4) Infrastructure and tools for the promotion of 
        telemedicine, including coordination among Federal agencies in 
        the promotion of telemedicine.
            ``(5) Promotion of the interoperability of clinical data 
        repositories or registries.
            ``(6) Promotion of technologies and best practices that 
        enhance the protection of health information by all holders of 
        individually identifiable health information.
            ``(7) Improve and expand the use of health information 
        technology by public health departments.
            ``(8) Provide $300 million to support regional or sub-
        national efforts towards health information exchange.
    ``(b) Coordination.--The Secretary shall ensure funds under this 
section are used in a coordinated manner with other health information 
promotion activities.
    ``(c) Additional Use of Funds.--In addition to using funds as 
provided in subsection (a), the Secretary may use amounts appropriated 
under section 3018 to carry out activities that are provided for under 
laws in effect on the date of the enactment of this title.

``SEC. 3012. HEALTH INFORMATION TECHNOLOGY IMPLEMENTATION ASSISTANCE.

    ``(a) Health Information Technology Extension Program.--To assist 
health care providers to adopt, implement, and effectively use 
certified EHR technology that allows for the electronic exchange and 
use of health information, the Secretary, acting through the Office of 
the National Coordinator, shall establish a health information 
technology extension program to provide health information technology 
assistance services to be carried out through the Department of Health 
and Human Services. The National Coordinator shall consult with other 
Federal agencies with demonstrated experience and expertise in 
information technology services, such as the National Institute of 
Standards and Technology, in developing and implementing this program.
    ``(b) Health Information Technology Research Center.--
            ``(1) In general.--The Secretary shall create a Health 
        Information Technology Research Center (in this section 
        referred to as the `Center') to provide technical assistance 
        and develop or recognize best practices to support and 
        accelerate efforts to adopt, implement, and effectively utilize 
        health information technology that allows for the electronic 
        exchange and use of information in compliance with standards, 
        implementation specifications, and certification criteria 
        adopted under section 3004(b).
            ``(2) Input.--The Center shall incorporate input from--
                    ``(A) other Federal agencies with demonstrated 
                experience and expertise in information technology 
                services such as the National Institute of Standards 
                and Technology;
                    ``(B) users of health information technology, such 
                as providers and their support and clerical staff and 
                others involved in the care and care coordination of 
                patients, from the health care and health information 
                technology industry; and
                    ``(C) others as appropriate.
            ``(3) Purposes.--The purposes of the Center are to--
                    ``(A) provide a forum for the exchange of knowledge 
                and experience;
                    ``(B) accelerate the transfer of lessons learned 
                from existing public and private sector initiatives, 
                including those currently receiving Federal financial 
                support;
                    ``(C) assemble, analyze, and widely disseminate 
                evidence and experience related to the adoption, 
                implementation, and effective use of health information 
                technology that allows for the electronic exchange and 
                use of information including through the regional 
                centers described in subsection (c);
                    ``(D) provide technical assistance for the 
                establishment and evaluation of regional and local 
                health information networks to facilitate the 
                electronic exchange of information across health care 
                settings and improve the quality of health care;
                    ``(E) provide technical assistance for the 
                development and dissemination of solutions to barriers 
                to the exchange of electronic health information; and
                    ``(F) learn about effective strategies to adopt and 
                utilize health information technology in medically 
                underserved communities.
    ``(c) Health Information Technology Regional Extension Centers.--
            ``(1) In general.--The Secretary shall provide assistance 
        for the creation and support of regional centers (in this 
        subsection referred to as `regional centers') to provide 
        technical assistance and disseminate best practices and other 
        information learned from the Center to support and accelerate 
        efforts to adopt, implement, and effectively utilize health 
        information technology that allows for the electronic exchange 
        and use of information in compliance with standards, 
        implementation specifications, and certification criteria 
        adopted under section 3004. Activities conducted under this 
        subsection shall be consistent with the strategic plan 
        developed by the National Coordinator, (and, as available) 
        under section 3001.
            ``(2) Affiliation.--Regional centers shall be affiliated 
        with any U.S.-based nonprofit institution or organization, or 
        group thereof, that applies and is awarded financial assistance 
        under this section. Individual awards shall be decided on the 
        basis of merit.
            ``(3) Objective.--The objective of the regional centers is 
        to enhance and promote the adoption of health information 
        technology through--
                    ``(A) assistance with the implementation, effective 
                use, upgrading, and ongoing maintenance of health 
                information technology, including electronic health 
                records, to healthcare providers nationwide;
                    ``(B) broad participation of individuals from 
                industry, universities, and State governments;
                    ``(C) active dissemination of best practices and 
                research on the implementation, effective use, 
                upgrading, and ongoing maintenance of health 
                information technology, including electronic health 
                records, to health care providers in order to improve 
                the quality of healthcare and protect the privacy and 
                security of health information;
                    ``(D) participation, to the extent practicable, in 
                health information exchanges; and
                    ``(E) utilization, when appropriate, of the 
                expertise and capability that exists in Federal 
                agencies other than the Department; and
                    ``(F) integration of health information technology, 
                including electronic health records, into the initial 
                and ongoing training of health professionals and others 
                in the healthcare industry that would be instrumental 
                to improving the quality of healthcare through the 
                smooth and accurate electronic use and exchange of 
                health information.
            ``(4) Regional assistance.--Each regional center shall aim 
        to provide assistance and education to all providers in a 
        region, but shall prioritize any direct assistance first to the 
        following:
                    ``(A) Public or not-for-profit hospitals or 
                critical access hospitals.
                    ``(B) Federally qualified health centers (as 
                defined in section 1861(aa)(4) of the Social Security 
                Act).
                    ``(C) Entities that are located in rural and other 
                areas that serve uninsured, underinsured, and medically 
                underserved individuals (regardless of whether such 
                area is urban or rural).
                    ``(D) Individual or small group practices (or a 
                consortium thereof) that are primarily focused on 
                primary care.
            ``(5) Financial support.--The Secretary may provide 
        financial support to any regional center created under this 
        subsection for a period not to exceed four years. The Secretary 
        may not provide more than 50 percent of the capital and annual 
        operating and maintenance funds required to create and maintain 
        such a center, except in an instance of national economic 
        conditions which would render this cost-share requirement 
        detrimental to the program and upon notification to Congress as 
        to the justification to waive the cost-share requirement.
            ``(6) Notice of program description and availability of 
        funds.--The Secretary shall publish in the Federal Register, 
        not later than 90 days after the date of the enactment of this 
        Act, a draft description of the program for establishing 
        regional centers under this subsection. Such description shall 
        include the following:
                    ``(A) A detailed explanation of the program and the 
                programs goals.
                    ``(B) Procedures to be followed by the applicants.
                    ``(C) Criteria for determining qualified 
                applicants.
                    ``(D) Maximum support levels expected to be 
                available to centers under the program.
            ``(7) Application review.--The Secretary shall subject each 
        application under this subsection to merit review. In making a 
        decision whether to approve such application and provide 
        financial support, the Secretary shall consider at a minimum 
        the merits of the application, including those portions of the 
        application regarding--
                    ``(A) the ability of the applicant to provide 
                assistance under this subsection and utilization of 
                health information technology appropriate to the needs 
                of particular categories of health care providers;
                    ``(B) the types of service to be provided to health 
                care providers;
                    ``(C) geographical diversity and extent of service 
                area; and
                    ``(D) the percentage of funding and amount of in-
                kind commitment from other sources.
            ``(8) Biennial evaluation.--Each regional center which 
        receives financial assistance under this subsection shall be 
        evaluated biennially by an evaluation panel appointed by the 
        Secretary. Each evaluation panel shall be composed of private 
        experts, none of whom shall be connected with the center 
        involved, and of Federal officials. Each evaluation panel shall 
        measure the involved center's performance against the objective 
        specified in paragraph (3). The Secretary shall not continue to 
        provide funding to a regional center unless its evaluation is 
        overall positive.
            ``(9) Continuing support.--After the second year of 
        assistance under this subsection a regional center may receive 
        additional support under this subsection if it has received 
        positive evaluations and a finding by the Secretary that 
        continuation of Federal funding to the center was in the best 
        interest of provision of health information technology 
        extension services.

``SEC. 3013. STATE GRANTS TO PROMOTE HEALTH INFORMATION TECHNOLOGY.

    ``(a) In General.--The Secretary, acting through the National 
Coordinator, shall establish a program in accordance with this section 
to facilitate and expand the electronic movement and use of health 
information among organizations according to nationally recognized 
standards.
    ``(b) Planning Grants.--The Secretary may award a grant to a State 
or qualified State-designated entity (as described in subsection (d)) 
that submits an application to the Secretary at such time, in such 
manner, and containing such information as the Secretary may specify, 
for the purpose of planning activities described in subsection (b).
    ``(c) Implementation Grants.--The Secretary may award a grant to a 
State or qualified State-designated entity that--
            ``(1) has submitted, and the Secretary has approved, a plan 
        described in subsection (c) (regardless of whether such plan 
        was prepared using amounts awarded under paragraph (1)); and
            ``(2) submits an application at such time, in such manner, 
        and containing such information as the Secretary may specify.
    ``(d) Use of Funds.--Amounts received under a grant under 
subsection (a)(3) shall be used to conduct activities to facilitate and 
expand the electronic movement and use of health information among 
organizations according to nationally recognized standards through 
activities that include--
            ``(1) enhancing broad and varied participation in the 
        authorized and secure nationwide electronic use and exchange of 
        health information;
            ``(2) identifying State or local resources available 
        towards a nationwide effort to promote health information 
        technology;
            ``(3) complementing other Federal grants, programs, and 
        efforts towards the promotion of health information technology;
            ``(4) providing technical assistance for the development 
        and dissemination of solutions to barriers to the exchange of 
        electronic health information;
            ``(5) promoting effective strategies to adopt and utilize 
        health information technology in medically underserved 
        communities;
            ``(6) assisting patients in utilizing health information 
        technology;
            ``(7) encouraging clinicians to work with Health 
        Information Technology Regional Extension Centers as described 
        in section 3012, to the extent they are available and valuable;
            ``(8) supporting public health agencies' authorized use of 
        and access to electronic health information;
            ``(9) promoting the use of electronic health records for 
        quality improvement including through quality measures 
        reporting; and
            ``(10) such other activities as the Secretary may specify.
    ``(e) Plan.--
            ``(1) In general.--A plan described in this subsection is a 
        plan that describes the activities to be carried out by a State 
        or by the qualified State-designated entity within such State 
        to facilitate and expand the electronic movement and use of 
        health information among organizations according to nationally 
        recognized standards and implementation specifications.
            ``(2) Required elements.--A plan described in paragraph (1) 
        shall--
                    ``(A) be pursued in the public interest;
                    ``(B) be consistent with the strategic plan 
                developed by the National Coordinator, (and, as 
                available) under section 3001;
                    ``(C) include a description of the ways the State 
                or qualified State-designated entity will carry out the 
                activities described in subsection (b); and
                    ``(D) contain such elements as the Secretary may 
                require.
    ``(f) Qualified State-Designated Entity.--For purposes of this 
section, to be a qualified State-designated entity, with respect to a 
State, an entity shall--
            ``(1) be designated by the State as eligible to receive 
        awards under this section;
            ``(2) be a not-for-profit entity with broad stakeholder 
        representation on its governing board;
            ``(3) demonstrate that one of its principal goals is to use 
        information technology to improve health care quality and 
        efficiency through the authorized and secure electronic 
        exchange and use of health information;
            ``(4) adopt nondiscrimination and conflict of interest 
        policies that demonstrate a commitment to open, fair, and 
        nondiscriminatory participation by stakeholders; and
            ``(5) conform to such other requirements as the Secretary 
        may establish.
    ``(g) Required Consultation.--In carrying out activities described 
in subsections (a)(2) and (a)(3), a State or qualified State-designated 
entity shall consult with and consider the recommendations of--
            ``(1) health care providers (including providers that 
        provide services to low income and underserved populations);
            ``(2) health plans;
            ``(3) patient or consumer organizations that represent the 
        population to be served;
            ``(4) health information technology vendors;
            ``(5) health care purchasers and employers;
            ``(6) public health agencies;
            ``(7) health professions schools, universities and 
        colleges;
            ``(8) clinical researchers;
            ``(9) other users of health information technology such as 
        the support and clerical staff of providers and others involved 
        in the care and care coordination of patients; and
            ``(10) such other entities, as may be determined 
        appropriate by the Secretary.
    ``(h) Continuous Improvement.--The Secretary shall annually 
evaluate the activities conducted under this section and shall, in 
awarding grants under this section, implement the lessons learned from 
such evaluation in a manner so that awards made subsequent to each such 
evaluation are made in a manner that, in the determination of the 
Secretary, will lead towards the greatest improvement in quality of 
care, decrease in costs, and the most effective authorized and secure 
electronic exchange of health information.
    ``(i) Required Match.--
            ``(1) In general.--For a fiscal year (beginning with fiscal 
        year 2011), the Secretary may not make a grant under subsection 
        (a) to a State unless the State agrees to make available non-
        Federal contributions (which may include in-kind contributions) 
        toward the costs of a grant awarded under subsection (a)(3) in 
        an amount equal to--
                    ``(A) for fiscal year 2011, not less than $1 for 
                each $10 of Federal funds provided under the grant;
                    ``(B) for fiscal year 2012, not less than $1 for 
                each $7 of Federal funds provided under the grant; and
                    ``(C) for fiscal year 2013 and each subsequent 
                fiscal year, not less than $1 for each $3 of Federal 
                funds provided under the grant.
            ``(2) Authority to require state match for fiscal years 
        before fiscal year 2011.--For any fiscal year during the grant 
        program under this section before fiscal year 2011, the 
        Secretary may determine the extent to which there shall be 
        required a non-Federal contribution from a State receiving a 
        grant under this section.

``SEC. 3014. COMPETITIVE GRANTS TO STATES AND INDIAN TRIBES FOR THE 
              DEVELOPMENT OF LOAN PROGRAMS TO FACILITATE THE WIDESPREAD 
              ADOPTION OF CERTIFIED EHR TECHNOLOGY.

    ``(a) In General.--The National Coordinator may award competitive 
grants to eligible entities for the establishment of programs for loans 
to health care providers to conduct the activities described in 
subsection (e).
    ``(b) Eligible Entity Defined.--For purposes of this subsection, 
the term `eligible entity' means a State or Indian tribe (as defined in 
the Indian Self-Determination and Education Assistance Act) that--
            ``(1) submits to the National Coordinator an application at 
        such time, in such manner, and containing such information as 
        the National Coordinator may require;
            ``(2) submits to the National Coordinator a strategic plan 
        in accordance with subsection (d) and provides to the National 
        Coordinator assurances that the entity will update such plan 
        annually in accordance with such subsection;
            ``(3) provides assurances to the National Coordinator that 
        the entity will establish a Loan Fund in accordance with 
        subsection (c);
            ``(4) provides assurances to the National Coordinator that 
        the entity will not provide a loan from the Loan Fund to a 
        health care provider unless the provider agrees to--
                    ``(A) submit reports on quality measures adopted by 
                the Federal Government (by not later than 90 days after 
                the date on which such measures are adopted), to--
                            ``(i) the Director of the Centers for 
                        Medicare & Medicaid Services (or his or her 
                        designee), in the case of an entity 
                        participating in the Medicare program under 
                        title XVIII of the Social Security Act or the 
                        Medicaid program under title XIX of such Act; 
                        or
                            ``(ii) the Secretary in the case of other 
                        entities;
                    ``(B) demonstrate to the satisfaction of the 
                Secretary (through criteria established by the 
                Secretary) that any certified EHR technology purchased, 
                improved, or otherwise financially supported under a 
                loan under this section is used to exchange health 
                information in a manner that, in accordance with law 
                and standards (as adopted under section 3005) 
                applicable to the exchange of information, improves the 
                quality of health care, such as promoting care 
                coordination; and
                    ``(C) comply with such other requirements as the 
                entity or the Secretary may require;
                    ``(D) include a plan on how health care providers 
                involved intend to maintain and support the certified 
                EHR technology over time;
                    ``(E) include a plan on how the health care 
                providers involved intend to maintain and support the 
                certified EHR technology that would be purchased with 
                such loan, including the type of resources expected to 
                be involved and any such other information as the State 
                or Indian tribe, respectively, may require; and
            ``(5) agrees to provide matching funds in accordance with 
        subsection (i).
    ``(c) Establishment of Fund.--For purposes of subsection (b)(3), an 
eligible entity shall establish a certified EHR technology loan fund 
(referred to in this subsection as a `Loan Fund') and comply with the 
other requirements contained in this section. A grant to an eligible 
entity under this section shall be deposited in the Loan Fund 
established by the eligible entity. No funds authorized by other 
provisions of this title to be used for other purposes specified in 
this title shall be deposited in any Loan Fund.
    ``(d) Strategic Plan.--
            ``(1) In general.--For purposes of subsection (b)(2), a 
        strategic plan of an eligible entity under this subsection 
        shall identify the intended uses of amounts available to the 
        Loan Fund of such entity.
            ``(2) Contents.--A strategic plan under paragraph (1), with 
        respect to a Loan Fund of an eligible entity, shall include for 
        a year the following:
                    ``(A) A list of the projects to be assisted through 
                the Loan Fund during such year.
                    ``(B) A description of the criteria and methods 
                established for the distribution of funds from the Loan 
                Fund during the year.
                    ``(C) A description of the financial status of the 
                Loan Fund as of the date of submission of the plan.
                    ``(D) The short-term and long-term goals of the 
                Loan Fund.
    ``(e) Use of Funds.--Amounts deposited in a Loan Fund, including 
loan repayments and interest earned on such amounts, shall be used only 
for awarding loans or loan guarantees, making reimbursements described 
in subsection (g)(4)(A), or as a source of reserve and security for 
leveraged loans, the proceeds of which are deposited in the Loan Fund 
established under subsection (a). Loans under this section may be used 
by a health care provider to--
            ``(1) facilitate the purchase of certified EHR technology;
            ``(2) enhance the utilization of certified EHR technology;
            ``(3) train personnel in the use of such technology; or
            ``(4) improve the secure electronic exchange of health 
        information.
    ``(f) Types of Assistance.--Except as otherwise limited by 
applicable State law, amounts deposited into a Loan Fund under this 
subsection may only be used for the following:
            ``(1) To award loans that comply with the following:
                    ``(A) The interest rate for each loan shall not 
                exceed the market interest rate.
                    ``(B) The principal and interest payments on each 
                loan shall commence not later than 1 year after the 
                date the loan was awarded, and each loan shall be fully 
                amortized not later than 10 years after the date of the 
                loan.
                    ``(C) The Loan Fund shall be credited with all 
                payments of principal and interest on each loan awarded 
                from the Loan Fund.
            ``(2) To guarantee, or purchase insurance for, a local 
        obligation (all of the proceeds of which finance a project 
        eligible for assistance under this subsection) if the guarantee 
        or purchase would improve credit market access or reduce the 
        interest rate applicable to the obligation involved.
            ``(3) As a source of revenue or security for the payment of 
        principal and interest on revenue or general obligation bonds 
        issued by the eligible entity if the proceeds of the sale of 
        the bonds will be deposited into the Loan Fund.
            ``(4) To earn interest on the amounts deposited into the 
        Loan Fund.
            ``(5) To make reimbursements described in subsection 
        (g)(4)(A).
    ``(g) Administration of Loan Funds.--
            ``(1) Combined financial administration.--An eligible 
        entity may (as a convenience and to avoid unnecessary 
        administrative costs) combine, in accordance with applicable 
        State law, the financial administration of a Loan Fund 
        established under this subsection with the financial 
        administration of any other revolving fund established by the 
        entity if otherwise not prohibited by the law under which the 
        Loan Fund was established.
            ``(2) Cost of administering fund.--Each eligible entity may 
        annually use not to exceed 4 percent of the funds provided to 
        the entity under a grant under this subsection to pay the 
        reasonable costs of the administration of the programs under 
        this section, including the recovery of reasonable costs 
        expended to establish a Loan Fund which are incurred after the 
        date of the enactment of this title.
            ``(3) Guidance and regulations.--The National Coordinator 
        shall publish guidance and promulgate regulations as may be 
        necessary to carry out the provisions of this section, 
        including--
                    ``(A) provisions to ensure that each eligible 
                entity commits and expends funds allotted to the entity 
                under this subsection as efficiently as possible in 
                accordance with this title and applicable State laws; 
                and
                    ``(B) guidance to prevent waste, fraud, and abuse.
            ``(4) Private sector contributions.--
                    ``(A) In general.--A Loan Fund established under 
                this subsection may accept contributions from private 
                sector entities, except that such entities may not 
                specify the recipient or recipients of any loan issued 
                under this subsection. An eligible entity may agree to 
                reimburse a private sector entity for any contribution 
                made under this subparagraph, except that the amount of 
                such reimbursement may not be greater than the 
                principal amount of the contribution made.
                    ``(B) Availability of information.--An eligible 
                entity shall make publicly available the identity of, 
                and amount contributed by, any private sector entity 
                under subparagraph (A) and may issue letters of 
                commendation or make other awards (that have no 
                financial value) to any such entity.
    ``(h) Matching Requirements.--
            ``(1) In general.--The National Coordinator may not make a 
        grant under subsection (a) to an eligible entity unless the 
        entity agrees to make available (directly or through donations 
        from public or private entities) non-Federal contributions in 
        cash to the costs of carrying out the activities for which the 
        grant is awarded in an amount equal to not less than $1 for 
        each $5 of Federal funds provided under the grant.
            ``(2) Determination of amount of non-federal 
        contribution.--In determining the amount of non-Federal 
        contributions that an eligible entity has provided pursuant to 
        subparagraph (A), the National Coordinator may not include any 
        amounts provided to the entity by the Federal Government.
    ``(i) Effective Date.--The Secretary may not make an award under 
this section prior to January 1, 2010.

``SEC. 3015. DEMONSTRATION PROGRAM TO INTEGRATE INFORMATION TECHNOLOGY 
              INTO CLINICAL EDUCATION.

    ``(a) In General.--The Secretary may award grants under this 
section to carry out demonstration projects to develop academic 
curricula integrating certified EHR technology in the clinical 
education of health professionals. Such awards shall be made on a 
competitive basis and pursuant to peer review.
    ``(b) Eligibility.--To be eligible to receive a grant under 
subsection (a), an entity shall--
            ``(1) submit to the Secretary an application at such time, 
        in such manner, and containing such information as the 
        Secretary may require;
            ``(2) submit to the Secretary a strategic plan for 
        integrating certified EHR technology in the clinical education 
        of health professionals to reduce medical errors and enhance 
        health care quality;
            ``(3) be--
                    ``(A) a school of medicine, osteopathic medicine, 
                dentistry, or pharmacy, a graduate program in 
                behavioral or mental health, or any other graduate 
                health professions school;
                    ``(B) a graduate school of nursing or physician 
                assistant studies;
                    ``(C) a consortium of two or more schools described 
                in subparagraph (A) or (B); or
                    ``(D) an institution with a graduate medical 
                education program in medicine, osteopathic medicine, 
                dentistry, pharmacy, nursing, or physician assistance 
                studies.
            ``(4) provide for the collection of data regarding the 
        effectiveness of the demonstration project to be funded under 
        the grant in improving the safety of patients, the efficiency 
        of health care delivery, and in increasing the likelihood that 
        graduates of the grantee will adopt and incorporate certified 
        EHR technology, in the delivery of health care services; and
            ``(5) provide matching funds in accordance with subsection 
        (d).
    ``(c) Use of Funds.--
            ``(1) In general.--With respect to a grant under subsection 
        (a), an eligible entity shall--
                    ``(A) use grant funds in collaboration with 2 or 
                more disciplines; and
                    ``(B) use grant funds to integrate certified EHR 
                technology into community-based clinical education.
            ``(2) Limitation.--An eligible entity shall not use amounts 
        received under a grant under subsection (a) to purchase 
        hardware, software, or services.
    ``(d) Financial Support.--The Secretary may not provide more than 
50 percent of the costs of any activity for which assistance is 
provided under subsection (a), except in an instance of national 
economic conditions which would render the cost-share requirement under 
this subsection detrimental to the program and upon notification to 
Congress as to the justification to waive the cost-share requirement.
    ``(e) Evaluation.--The Secretary shall take such action as may be 
necessary to evaluate the projects funded under this section and 
publish, make available, and disseminate the results of such 
evaluations on as wide a basis as is practicable.
    ``(f) Reports.--Not later than 1 year after the date of enactment 
of this title, and annually thereafter, the Secretary shall submit to 
the Committee on Health, Education, Labor, and Pensions and the 
Committee on Finance of the Senate, and the Committee on Energy and 
Commerce of the House of Representatives a report that--
            ``(1) describes the specific projects established under 
        this section; and
            ``(2) contains recommendations for Congress based on the 
        evaluation conducted under subsection (e).

``SEC. 3016. INFORMATION TECHNOLOGY PROFESSIONALS ON HEALTH CARE.

    ``(a) In General.--The Secretary, in consultation with the Director 
of the National Science Foundation, shall provide assistance to 
institutions of higher education (or consortia thereof) to establish or 
expand medical health informatics education programs, including 
certification, undergraduate, and masters degree programs, for both 
health care and information technology students to ensure the rapid and 
effective utilization and development of health information 
technologies (in the United States health care infrastructure).
    ``(b) Activities.--Activities for which assistance may be provided 
under subsection (a) may include the following:
            ``(1) Developing and revising curricula in medical health 
        informatics and related disciplines.
            ``(2) Recruiting and retaining students to the program 
        involved.
            ``(3) Acquiring equipment necessary for student instruction 
        in these programs, including the installation of testbed 
        networks for student use.
            ``(4) Establishing or enhancing bridge programs in the 
        health informatics fields between community colleges and 
        universities.
    ``(c) Priority.--In providing assistance under subsection (a), the 
Secretary shall give preference to the following:
            ``(1) Existing education and training programs.
            ``(2) Programs designed to be completed in less than six 
        months.
    ``(d) Financial Support.--The Secretary may not provide more than 
50 percent of the costs of any activity for which assistance is 
provided under subsection (a), except in an instance of national 
economic conditions which would render the cost-share requirement under 
this subsection detrimental to the program and upon notification to 
Congress as to the justification to waive the cost-share requirement.

``SEC. 3017. GENERAL GRANT AND LOAN PROVISIONS.

    ``(a) Reports.--The Secretary may require that an entity receiving 
assistance under this title shall submit to the Secretary, not later 
than the date that is 1 year after the date of receipt of such 
assistance, a report that includes--
            ``(1) an analysis of the effectiveness of the activities 
        for which the entity receives such assistance, as compared to 
        the goals for such activities; and
            ``(2) an analysis of the impact of the project on health 
        care quality and safety.
    ``(b) Requirement To Improve Quality of Care and Decrease in 
Costs.--The National Coordinator shall annually evaluate the activities 
conducted under this title and shall, in awarding grants, implement the 
lessons learned from such evaluation in a manner so that awards made 
subsequent to each such evaluation are made in a manner that, in the 
determination of the National Coordinator, will result in the greatest 
improvement in the quality and efficiency of health care.

``SEC. 3018. AUTHORIZATION FOR APPROPRIATIONS.

    ``For the purposes of carrying out this subtitle, there is 
authorized to be appropriated such sums as may be necessary for each of 
the fiscal years 2009 through 2013. Amounts so appropriated shall 
remain available until expended.''.

                       PART II--MEDICARE PROGRAM

SEC. 4311. INCENTIVES FOR ELIGIBLE PROFESSIONALS.

    (a) Incentive Payments.--Section 1848 of the Social Security Act 
(42 U.S.C. 1395w-4) is amended by adding at the end the following new 
subsection:
    ``(o) Incentives for Adoption and Meaningful Use of Certified EHR 
Technology.--
            ``(1) Incentive payments.--
                    ``(A) In general.--Subject to the succeeding 
                subparagraphs of this paragraph, with respect to 
                covered professional services furnished by an eligible 
                professional during a payment year (as defined in 
                subparagraph (E)), if the eligible professional is a 
                meaningful EHR user (as determined under paragraph (2)) 
                for the reporting period with respect to such year, in 
                addition to the amount otherwise paid under this part, 
                there also shall be paid to the eligible professional 
                (or to an employer or facility in the cases described 
                in clause (A) of section 1842(b)(6)), from the Federal 
                Supplementary Medical Insurance Trust Fund established 
                under section 1841 an amount equal to 75 percent of the 
                Secretary's estimate (based on claims submitted not 
                later than 2 months after the end of the payment year) 
                of the allowed charges under this part for all such 
                covered professional services furnished by the eligible 
                professional during such year.
                    ``(B) Limitations on amounts of incentive 
                payments.--
                            ``(i) In general.--In no case shall the 
                        amount of the incentive payment provided under 
                        this paragraph for an eligible professional for 
                        a payment year exceed the applicable amount 
                        specified under this subparagraph with respect 
                        to such eligible professional and such year.
                            ``(ii) Amount.--Subject to clause (iii), 
                        the applicable amount specified in this 
                        subparagraph for an eligible professional is as 
                        follows:
                                    ``(I) For the first payment year 
                                for such professional, $15,000.
                                    ``(II) For the second payment year 
                                for such professional, $12,000.
                                    ``(III) For the third payment year 
                                for such professional, $8,000.
                                    ``(IV) For the fourth payment year 
                                for such professional, $4,000.
                                    ``(V) For the fifth payment year 
                                for such professional, $2,000.
                                    ``(VI) For any succeeding payment 
                                year for such professional, $0.
                            ``(iii) Phase down for eligible 
                        professionals first adopting ehr after 2013.--
                        If the first payment year for an eligible 
                        professional is after 2013, then the amount 
                        specified in this subparagraph for a payment 
                        year for such professional is the same as the 
                        amount specified in clause (ii) for such 
                        payment year for an eligible professional whose 
                        first payment year is 2013. If the first 
                        payment year for an eligible professional is 
                        after 2015 then the applicable amount specified 
                        in this subparagraph for such professional for 
                        such year and any subsequent year shall be $0.
                    ``(C) Non-application to hospital-based eligible 
                professionals.--
                            ``(i) In general.--No incentive payment may 
                        be made under this paragraph in the case of a 
                        hospital-based eligible professional.
                            ``(ii) Hospital-based eligible 
                        professional.--For purposes of clause (i), the 
                        term `hospital-based eligible professional' 
                        means, with respect to covered professional 
                        services furnished by an eligible professional 
                        during the reporting period for a payment year, 
                        an eligible professional, such as a 
                        pathologist, anesthesiologist, or emergency 
                        physician, who furnishes substantially all of 
                        such services in a hospital setting (whether 
                        inpatient or outpatient) and through the use of 
                        the facilities and equipment, including 
                        computer equipment, of the hospital.
                    ``(D) Payment.--
                            ``(i) Form of payment.--The payment under 
                        this paragraph may be in the form of a single 
                        consolidated payment or in the form of such 
                        periodic installments as the Secretary may 
                        specify.
                            ``(ii) Coordination of application of 
                        limitation for professionals in different 
                        practices.--In the case of an eligible 
                        professional furnishing covered professional 
                        services in more than one practice (as 
                        specified by the Secretary), the Secretary 
                        shall establish rules to coordinate the 
                        incentive payments, including the application 
                        of the limitation on amounts of such incentive 
                        payments under this paragraph, among such 
                        practices.
                            ``(iii) Coordination with medicaid.--The 
                        Secretary shall seek, to the maximum extent 
                        practicable, to avoid duplicative requirements 
                        from Federal and State Governments to 
                        demonstrate meaningful use of certified EHR 
                        technology under this title and title XIX. In 
                        doing so, the Secretary may deem satisfaction 
                        of State requirements for such meaningful use 
                        for a payment year under title XIX to be 
                        sufficient to qualify as meaningful use under 
                        this subsection and subsection (a)(7) and vice 
                        versa. The Secretary may also adjust the 
                        reporting periods under such title and such 
                        subsections in order to carry out this clause.
                    ``(E) Payment year defined.--
                            ``(i) In general.--For purposes of this 
                        subsection, the term `payment year' means a 
                        year beginning with 2011.
                            ``(ii) First, second, etc. payment year.--
                        The term `first payment year' means, with 
                        respect to covered professional services 
                        furnished by an eligible professional, the 
                        first year for which an incentive payment is 
                        made for such services under this subsection. 
                        The terms `second payment year', `third payment 
                        year', `fourth payment year', and `fifth 
                        payment year' mean, with respect to covered 
                        professional services furnished by such 
                        eligible professional, each successive year 
                        immediately following the first payment year 
                        for such professional.
            ``(2) Meaningful ehr user.--
                    ``(A) In general.--For purposes of paragraph (1), 
                an eligible professional shall be treated as a 
                meaningful EHR user for a reporting period for a 
                payment year (or, for purposes of subsection (a)(7), 
                for a reporting period under such subsection for a 
                year) if each of the following requirements is met:
                            ``(i) Meaningful use of certified ehr 
                        technology.--The eligible professional 
                        demonstrates to the satisfaction of the 
                        Secretary, in accordance with subparagraph 
                        (C)(i), that during such period the 
                        professional is using certified EHR technology 
                        in a meaningful manner, which shall include the 
                        use of electronic prescribing as determined to 
                        be appropriate by the Secretary.
                            ``(ii) Information exchange.--The eligible 
                        professional demonstrates to the satisfaction 
                        of the Secretary, in accordance with 
                        subparagraph (C)(i), that during such period 
                        such certified EHR technology is connected in a 
                        manner that provides, in accordance with law 
                        and standards applicable to the exchange of 
                        information, for the electronic exchange of 
                        health information to improve the quality of 
                        health care, such as promoting care 
                        coordination.
                            ``(iii) Reporting on measures using ehr.--
                        Subject to subparagraph (B)(ii) and using such 
                        certified EHR technology, the eligible 
                        professional submits information for such 
                        period, in a form and manner specified by the 
                        Secretary, on such clinical quality measures 
                        and such other measures as selected by the 
                        Secretary under subparagraph (B)(i).
                The Secretary may provide for the use of alternative 
                means for meeting the requirements of clauses (i), 
                (ii), and (iii) in the case of an eligible professional 
                furnishing covered professional services in a group 
                practice (as defined by the Secretary). The Secretary 
                shall seek to improve the use of electronic health 
                records and health care quality over time by requiring 
                more stringent measures of meaningful use selected 
                under this paragraph.
                    ``(B) Reporting on measures.--
                            ``(i) Selection.--The Secretary shall 
                        select measures for purposes of subparagraph 
                        (A)(iii) but only consistent with the 
                        following:
                                    ``(I) The Secretary shall provide 
                                preference to clinical quality measures 
                                that have been endorsed by the entity 
                                with a contract with the Secretary 
                                under section 1890(a).
                                    ``(II) Prior to any measure being 
                                selected under this subparagraph, the 
                                Secretary shall publish in the Federal 
                                Register such measure and provide for a 
                                period of public comment on such 
                                measure.
                                    ``(III) The Secretary shall, to the 
                                extent practicable, select the same 
                                measures for purposes of subparagraph 
                                (A)(iii) as are selected for quality 
                                purposes under title XIX.
                            ``(ii) Limitation.--The Secretary may not 
                        require the electronic reporting of information 
                        on clinical quality measures under subparagraph 
                        (A)(iii) unless the Secretary has the capacity 
                        to accept the information electronically, which 
                        may be on a pilot basis.
                            ``(iii) Coordination of reporting of 
                        information.--In selecting such measures, and 
                        in establishing the form and manner for 
                        reporting measures under subparagraph (A)(iii), 
                        the Secretary shall seek to avoid redundant or 
                        duplicative reporting otherwise required, 
                        including reporting under subsection (k)(2)(C).
                    ``(C) Demonstration of meaningful use of certified 
                ehr technology and information exchange.--
                            ``(i) In general.--A professional may 
                        satisfy the demonstration requirement of 
                        clauses (i) and (ii) of subparagraph (A) 
                        through means specified by the Secretary, which 
                        may include--
                                    ``(I) an attestation;
                                    ``(II) the submission of claims 
                                with appropriate coding (such as a code 
                                indicating that a patient encounter was 
                                documented using certified EHR 
                                technology);
                                    ``(III) a survey response;
                                    ``(IV) reporting under subparagraph 
                                (A)(iii); and
                                    ``(V) other means specified by the 
                                Secretary.
                            ``(ii) Use of part d data.--Notwithstanding 
                        sections 1860D-15(d)(2)(B) and 1860D-15(f)(2), 
                        the Secretary may use data regarding drug 
                        claims submitted for purposes of section 1860D-
                        15 that are necessary for purposes of 
                        subparagraph (A).
            ``(3) Application.--
                    ``(A) Physician reporting system rules.--Paragraphs 
                (5), (6), and (8) of subsection (k) shall apply for 
                purposes of this subsection in the same manner as they 
                apply for purposes of such subsection.
                    ``(B) Coordination with other payments.--The 
                provisions of this subsection shall not be taken into 
                account in applying the provisions of subsection (m) of 
                this section and of section 1833(m) and any payment 
                under such provisions shall not be taken into account 
                in computing allowable charges under this subsection.
                    ``(C) Limitations on review.--There shall be no 
                administrative or judicial review under section 1869, 
                section 1878, or otherwise of the determination of any 
                incentive payment under this subsection and the payment 
                adjustment under subsection (a)(7), including the 
                determination of a meaningful EHR user under paragraph 
                (2), a limitation under paragraph (1)(B), and the 
                exception under subsection (a)(7)(B).
                    ``(D) Posting on website.--The Secretary shall post 
                on the Internet website of the Centers for Medicare & 
                Medicaid Services, in an easily understandable format, 
                a list of the names, business addresses, and business 
                phone numbers of the eligible professionals who are 
                meaningful EHR users and, as determined appropriate by 
                the Secretary, of group practices receiving incentive 
                payments under paragraph (1).
            ``(4) Certified ehr technology defined.--For purposes of 
        this section, the term `certified EHR technology' means a 
        qualified electronic health record (as defined in 3000(13) of 
        the Public Health Service Act) that is certified pursuant to 
        section 3001(c)(5) of such Act as meeting standards adopted 
        under section 3004 of such Act that are applicable to the type 
        of record involved (as determined by the Secretary, such as an 
        ambulatory electronic health record for office-based physicians 
        or an inpatient hospital electronic health record for 
        hospitals).
            ``(5) Definitions.--For purposes of this subsection:
                    ``(A) Covered professional services.--The term 
                `covered professional services' has the meaning given 
                such term in subsection (k)(3).
                    ``(B) Eligible professional.--The term `eligible 
                professional' means a physician, as defined in section 
                1861(r).
                    ``(C) Reporting period.--The term `reporting 
                period' means any period (or periods), with respect to 
                a payment year, as specified by the Secretary.''.
    (b) Incentive Payment Adjustment.--Section 1848(a) of the Social 
Security Act (42 U.S.C. 1395w-4(a)) is amended by adding at the end the 
following new paragraph:
            ``(7) Incentives for meaningful use of certified ehr 
        technology.--
                    ``(A) Adjustment.--
                            ``(i) In general.--Subject to subparagraphs 
                        (B) and (D), with respect to covered 
                        professional services furnished by an eligible 
                        professional during 2016 or any subsequent 
                        payment year, if the eligible professional is 
                        not a meaningful EHR user (as determined under 
                        subsection (o)(2)) for a reporting period for 
                        the year, the fee schedule amount for such 
                        services furnished by such professional during 
                        the year (including the fee schedule amount for 
                        purposes of determining a payment based on such 
                        amount) shall be equal to the applicable 
                        percent of the fee schedule amount that would 
                        otherwise apply to such services under this 
                        subsection (determined after application of 
                        paragraph (3) but without regard to this 
                        paragraph).
                            ``(ii) Applicable percent.--Subject to 
                        clause (iii), for purposes of clause (i), the 
                        term `applicable percent' means--
                                    ``(I) for 2016, 99 percent;
                                    ``(II) for 2017, 98 percent; and
                                    ``(III) for 2018 and each 
                                subsequent year, 97 percent.
                            ``(iii) Authority to decrease applicable 
                        percentage for 2019 and subsequent years.--For 
                        2019 and each subsequent year, if the Secretary 
                        finds that the proportion of eligible 
                        professionals who are meaningful EHR users (as 
                        determined under subsection (o)(2)) is less 
                        than 75 percent, the applicable percent shall 
                        be decreased by 1 percentage point from the 
                        applicable percent in the preceding year, but 
                        in no case shall the applicable percent be less 
                        than 95 percent.
                    ``(B) Significant hardship exception.--The 
                Secretary may, on a case-by-case basis, exempt an 
                eligible professional from the application of the 
                payment adjustment under subparagraph (A) if the 
                Secretary determines, subject to annual renewal, that 
                compliance with the requirement for being a meaningful 
                EHR user would result in a significant hardship, such 
                as in the case of an eligible professional who 
                practices in a rural area without sufficient Internet 
                access. In no case may an eligible professional be 
                granted an exemption under this subparagraph for more 
                than 5 years.
                    ``(C) Application of physician reporting system 
                rules.--Paragraphs (5), (6), and (8) of subsection (k) 
                shall apply for purposes of this paragraph in the same 
                manner as they apply for purposes of such subsection.
                    ``(D) Non-application to hospital-based eligible 
                professionals.--No payment adjustment may be made under 
                subparagraph (A) in the case of hospital-based eligible 
                professionals (as defined in subsection (o)(1)(C)(ii)).
                    ``(E) Definitions.--For purposes of this paragraph:
                            ``(i) Covered professional services.--The 
                        term `covered professional services' has the 
                        meaning given such term in subsection (k)(3).
                            ``(ii) Eligible professional.--The term 
                        `eligible professional' means a physician, as 
                        defined in section 1861(r).
                            ``(iii) Reporting period.--The term 
                        `reporting period' means, with respect to a 
                        year, a period specified by the Secretary.''.
    (c) Application to Certain HMO-Affiliated Eligible Professionals.--
Section 1853 of the Social Security Act (42 U.S.C. 1395w-23) is amended 
by adding at the end the following new subsection:
    ``(l) Application of Eligible Professional Incentives for Certain 
MA Organizations for Adoption and Meaningful Use of Certified EHR 
Technology.--
            ``(1) In general.--Subject to paragraphs (3) and (4), in 
        the case of a qualifying MA organization, the provisions of 
        sections 1848(o) and 1848(a)(7) shall apply with respect to 
        eligible professionals described in paragraph (2) of the 
        organization who the organization attests under paragraph (6) 
        to be meaningful EHR users in a similar manner as they apply to 
        eligible professionals under such sections. Incentive payments 
        under paragraph (3) shall be made to and payment adjustments 
        under paragraph (4) shall apply to such qualifying 
        organizations.
            ``(2) Eligible professional described.--With respect to a 
        qualifying MA organization, an eligible professional described 
        in this paragraph is an eligible professional (as defined for 
        purposes of section 1848(o)) who--
                    ``(A)(i) is employed by the organization, or
                    ``(ii)(I) is employed by, or is a partner of, an 
                entity that through contract with the organization 
                furnishes at least 80 percent of the entity's patient 
                care services to enrollees of such organization; and
                    ``(II) furnishes at least 75 percent of the 
                professional services of the eligible professional to 
                enrollees of the organization; and
                    ``(B) furnishes, on average, at least 20 hours per 
                week of patient care services.
            ``(3) Eligible professional incentive payments.--
                    ``(A) In general.--In applying section 1848(o) 
                under paragraph (1), instead of the additional payment 
                amount under section 1848(o)(1)(A) and subject to 
                subparagraph (B), the Secretary may substitute an 
                amount determined by the Secretary to the extent 
                feasible and practical to be similar to the estimated 
                amount in the aggregate that would be payable if 
                payment for services furnished by such professionals 
                was payable under part B instead of this part.
                    ``(B) Avoiding duplication of payments.--
                            ``(i) In general.--If an individual is an 
                        eligible professional described in paragraph 
                        (2) and also is eligible for the maximum 
                        incentive payment under section 1848(o)(1)(A) 
                        for the same payment period, the payment 
                        incentive shall be made only under such section 
                        and not under this subsection.
                            ``(ii) Methods.--In the case of an 
                        individual who is an eligible professional 
                        described in paragraph (2) and also is eligible 
                        for an incentive payment under section 
                        1848(o)(1)(A) but is not described in clause 
                        (i) for the same payment period, the Secretary 
                        shall develop a process--
                                    ``(I) to ensure that duplicate 
                                payments are not made with respect to 
                                an eligible professional both under 
                                this subsection and under section 
                                1848(o)(1)(A); and
                                    ``(II) to collect data from 
                                Medicare Advantage organizations to 
                                ensure against such duplicate payments.
                    ``(C) Fixed schedule for application of limitation 
                on incentive payments for all eligible professionals.--
                In applying section 1848(o)(1)(B)(ii) under 
                subparagraph (A), in accordance with rules specified by 
                the Secretary, a qualifying MA organization shall 
                specify a year (not earlier than 2011) that shall be 
                treated as the first payment year for all eligible 
                professionals with respect to such organization.
            ``(4) Payment adjustment.--
                    ``(A) In general.--In applying section 1848(a)(7) 
                under paragraph (1), instead of the payment adjustment 
                being an applicable percent of the fee schedule amount 
                for a year under such section, subject to subparagraph 
                (D), the payment adjustment under paragraph (1) shall 
                be equal to the percent specified in subparagraph (B) 
                for such year of the payment amount otherwise provided 
                under this section for such year.
                    ``(B) Specified percent.--The percent specified 
                under this subparagraph for a year is 100 percent minus 
                a number of percentage points equal to the product of--
                            ``(i) the number of percentage points by 
                        which the applicable percent (under section 
                        1848(a)(7)(A)(ii)) for the year is less than 
                        100 percent; and
                            ``(ii) the Medicare physician expenditure 
                        proportion specified in subparagraph (C) for 
                        the year.
                    ``(C) Medicare physician expenditure proportion.--
                The Medicare physician expenditure proportion under 
                this subparagraph for a year is the Secretary's 
                estimate of the proportion, of the expenditures under 
                parts A and B that are not attributable to this part, 
                that are attributable to expenditures for physicians' 
                services.
                    ``(D) Application of payment adjustment.--In the 
                case that a qualifying MA organization attests that not 
                all eligible professionals are meaningful EHR users 
                with respect to a year, the Secretary shall apply the 
                payment adjustment under this paragraph based on the 
                proportion of such eligible professionals that are not 
                meaningful EHR users for such year.
            ``(5) Qualifying ma organization defined.--In this 
        subsection and subsection (m), the term `qualifying MA 
        organization' means a Medicare Advantage organization that is 
        organized as a health maintenance organization (as defined in 
        section 2791(b)(3) of the Public Health Service Act).
            ``(6) Meaningful ehr user attestation.--For purposes of 
        this subsection and subsection (m), a qualifying MA 
        organization shall submit an attestation, in a form and manner 
        specified by the Secretary which may include the submission of 
        such attestation as part of submission of the initial bid under 
        section 1854(a)(1)(A)(iv), identifying--
                    ``(A) whether each eligible professional described 
                in paragraph (2), with respect to such organization is 
                a meaningful EHR user (as defined in section 
                1848(o)(3)) for a year specified by the Secretary; and
                    ``(B) whether each eligible hospital described in 
                subsection (m)(1), with respect to such organization, 
                is a meaningful EHR user (as defined in section 
                1886(n)(3)) for an applicable period specified by the 
                Secretary.''.
    (d) Conforming Amendments.--Section 1853 of the Social Security Act 
(42 U.S.C. 1395w-23) is amended--
            (1) in subsection (a)(1)(A), by striking ``and (i)'' and 
        inserting ``(i), and (l)'';
            (2) in subsection (c)--
                    (A) in paragraph (1)(D)(i), by striking ``section 
                1886(h)'' and inserting ``sections 1848(o) and 
                1886(h)''; and
                    (B) in paragraph (6)(A), by inserting after ``under 
                part B,'' the following: ``excluding expenditures 
                attributable to subsections (a)(7) and (o) of section 
                1848,''; and
            (3) in subsection (f), by inserting ``and for payments 
        under subsection (l)'' after ``with the organization''.
    (e) Conforming Amendments to e-Prescribing.--
            (1) Section 1848(a)(5)(A) of the Social Security Act (42 
        U.S.C. 1395w-4(a)(5)(A)) is amended--
                    (A) in clause (i), by striking ``or any subsequent 
                year'' and inserting ``, 2013, 2014, or 2015''; and
                    (B) in clause (ii), by striking ``and each 
                subsequent year'' and inserting ``and 2015''.
            (2) Section 1848(m)(2) of such Act (42 U.S.C. 1395w-
        4(m)(2)) is amended--
                    (A) in subparagraph (A), by striking ``For 2009'' 
                and inserting ``Subject to subparagraph (D), for 
                2009''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(D) Limitation with respect to ehr incentive 
                payments.--The provisions of this paragraph shall not 
                apply to an eligible professional (or, in the case of a 
                group practice under paragraph (3)(C), to the group 
                practice) if, for the reporting period the eligible 
                professional (or group practice) receives an incentive 
                payment under subsection (o)(1)(A) with respect to a 
                certified EHR technology (as defined in subsection 
                (o)(6)(A)) that has the capability of electronic 
                prescribing.''.

SEC. 4312. INCENTIVES FOR HOSPITALS.

    (a) Incentive Payment.--Section 1886 of the Social Security Act (42 
U.S.C. 1395ww) is amended by adding at the end the following new 
subsection:
    ``(n) Incentives for Adoption and Meaningful Use of Certified EHR 
Technology.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, with respect to inpatient hospital services 
        furnished by an eligible hospital during a payment year (as 
        defined in paragraph (2)(G)), if the eligible hospital is a 
        meaningful EHR user (as determined under paragraph (3)) for the 
        reporting period with respect to such year, in addition to the 
        amount otherwise paid under this section, there also shall be 
        paid to the eligible hospital, from the Federal Hospital 
        Insurance Trust Fund established under section 1817, an amount 
        equal to the applicable amount specified in paragraph (2)(A) 
        for the hospital for such payment year.
            ``(2) Payment amount.--
                    ``(A) In general.--Subject to the succeeding 
                subparagraphs of this paragraph, the applicable amount 
                specified in this subparagraph for an eligible hospital 
                for a payment year is equal to the product of the 
                following:
                            ``(i) Initial amount.--The sum of--
                                    ``(I) the base amount specified in 
                                subparagraph (B); plus
                                    ``(II) the discharge related amount 
                                specified in subparagraph (C) for a 12-
                                month period selected by the Secretary 
                                with respect to such payment year.
                            ``(ii) Medicare share.--The Medicare share 
                        as specified in subparagraph (D) for the 
                        hospital for a period selected by the Secretary 
                        with respect to such payment year.
                            ``(iii) Transition factor.--The transition 
                        factor specified in subparagraph (E) for the 
                        hospital for the payment year.
                    ``(B) Base amount.--The base amount specified in 
                this subparagraph is $2,000,000.
                    ``(C) Discharge related amount.--The discharge 
                related amount specified in this subparagraph for a 12-
                month period selected by the Secretary shall be 
                determined as the sum of the amount, based upon total 
                discharges (regardless of any source of payment) for 
                the period, for each discharge up to the 23,000th 
                discharge as follows:
                            ``(i) For the 1,150th through the 9,200th 
                        discharge, $200.
                            ``(ii) For the 9,201st through the 13,800th 
                        discharge, 50 percent of the amount specified 
                        in clause (i).
                            ``(iii) For the 13,801st through the 
                        23,000th discharge, 30 percent of the amount 
                        specified in clause (i).
                    ``(D) Medicare share.--The Medicare share specified 
                under this subparagraph for a hospital for a period 
                selected by the Secretary for a payment year is equal 
                to the fraction--
                            ``(i) the numerator of which is the sum 
                        (for such period and with respect to the 
                        hospital) of--
                                    ``(I) the number of inpatient-bed-
                                days (as established by the Secretary) 
                                which are attributable to individuals 
                                with respect to whom payment may be 
                                made under part A; and
                                    ``(II) the number of inpatient-bed-
                                days (as so established) which are 
                                attributable to individuals who are 
                                enrolled with a Medicare Advantage 
                                organization under part C; and
                            ``(ii) the denominator of which is the 
                        product of--
                                    ``(I) the total number of 
                                inpatient-bed-days with respect to the 
                                hospital during such period; and
                                    ``(II) the total amount of the 
                                hospital's charges during such period, 
                                not including any charges that are 
                                attributable to charity care (as such 
                                term is used for purposes of hospital 
                                cost reporting under this title), 
                                divided by the total amount of the 
                                hospital's charges during such period.
                Insofar as the Secretary determines that data are not 
                available on charity care necessary to calculate the 
                portion of the formula specified in clause (ii)(II), 
                the Secretary shall use data on uncompensated care and 
                may adjust such data so as to be an appropriate proxy 
                for charity care including a downward adjustment to 
                eliminate bad debt data from uncompensated care data. 
                In the absence of the data necessary, with respect to a 
                hospital, for the Secretary to compute the amount 
                described in clause (ii)(II), the amount under such 
                clause shall be deemed to be 1. In the absence of data, 
                with respect to a hospital, necessary to compute the 
                amount described in clause (i)(II), the amount under 
                such clause shall be deemed to be 0.
                    ``(E) Transition factor specified.--
                            ``(i) In general.--Subject to clause (ii), 
                        the transition factor specified in this 
                        subparagraph for an eligible hospital for a 
                        payment year is as follows:
                                    ``(I) For the first payment year 
                                for such hospital, 1.
                                    ``(II) For the second payment year 
                                for such hospital, \3/4\.
                                    ``(III) For the third payment year 
                                for such hospital, \1/2\.
                                    ``(IV) For the fourth payment year 
                                for such hospital, \1/4\.
                                    ``(V) For any succeeding payment 
                                year for such hospital, 0.
                            ``(ii) Phase down for eligible hospitals 
                        first adopting ehr after 2013.--If the first 
                        payment year for an eligible hospital is after 
                        2013, then the transition factor specified in 
                        this subparagraph for a payment year for such 
                        hospital is the same as the amount specified in 
                        clause (i) for such payment year for an 
                        eligible hospital for which the first payment 
                        year is 2013. If the first payment year for an 
                        eligible hospital is after 2015 then the 
                        transition factor specified in this 
                        subparagraph for such hospital and for such 
                        year and any subsequent year shall be 0.
                    ``(F) Form of payment.--The payment under this 
                subsection for a payment year may be in the form of a 
                single consolidated payment or in the form of such 
                periodic installments as the Secretary may specify.
                    ``(G) Payment year defined.--
                            ``(i) In general.--For purposes of this 
                        subsection, the term `payment year' means a 
                        fiscal year beginning with fiscal year 2011.
                            ``(ii) First, second, etc. payment year.--
                        The term `first payment year' means, with 
                        respect to inpatient hospital services 
                        furnished by an eligible hospital, the first 
                        fiscal year for which an incentive payment is 
                        made for such services under this subsection. 
                        The terms `second payment year', `third payment 
                        year', and `fourth payment year' mean, with 
                        respect to an eligible hospital, each 
                        successive year immediately following the first 
                        payment year for that hospital.
            ``(3) Meaningful ehr user.--
                    ``(A) In general.--For purposes of paragraph (1), 
                an eligible hospital shall be treated as a meaningful 
                EHR user for a reporting period for a payment year (or, 
                for purposes of subsection (b)(3)(B)(ix), for a 
                reporting period under such subsection for a fiscal 
                year) if the following requirements are met:
                            ``(i) Meaningful use of certified ehr 
                        technology.--The eligible hospital demonstrates 
                        to the satisfaction of the Secretary, in 
                        accordance with subparagraph (C)(i), that 
                        during such period the hospital is using 
                        certified EHR technology in a meaningful 
                        manner.
                            ``(ii) Information exchange.--The eligible 
                        hospital demonstrates to the satisfaction of 
                        the Secretary, in accordance with subparagraph 
                        (C)(i), that during such period such certified 
                        EHR technology is connected in a manner that 
                        provides, in accordance with law and standards 
                        applicable to the exchange of information, for 
                        the electronic exchange of health information 
                        to improve the quality of health care, such as 
                        promoting care coordination.
                            ``(iii) Reporting on measures using ehr.--
                        Subject to subparagraph (B)(ii) and using such 
                        certified EHR technology, the eligible hospital 
                        submits information for such period, in a form 
                        and manner specified by the Secretary, on such 
                        clinical quality measures and such other 
                        measures as selected by the Secretary under 
                        subparagraph (B)(i).
                The Secretary shall seek to improve the use of 
                electronic health records and health care quality over 
                time by requiring more stringent measures of meaningful 
                use selected under this paragraph.
                    ``(B) Reporting on measures.--
                            ``(i) Selection.--The Secretary may select 
                        measures for purposes of subparagraph (A)(iii) 
                        but only consistent with the following:
                                    ``(I) The Secretary shall provide 
                                preference to clinical quality measures 
                                that have been selected for purposes of 
                                applying subsection (b)(3)(B)(viii) or 
                                that have been endorsed by the entity 
                                with a contract with the Secretary 
                                under section 1890(a).
                                    ``(II) Prior to any measure (other 
                                than a clinical quality measure that 
                                has been selected for purposes of 
                                applying subsection (b)(3)(B)(viii)) 
                                being selected under this subparagraph, 
                                the Secretary shall publish in the 
                                Federal Register such measure and 
                                provide for a period of public comment 
                                on such measure.
                            ``(ii) Limitations.--The Secretary may not 
                        require the electronic reporting of information 
                        on clinical quality measures under subparagraph 
                        (A)(iii) unless the Secretary has the capacity 
                        to accept the information electronically, which 
                        may be on a pilot basis.
                            ``(iii) Coordination of reporting of 
                        information.--In selecting such measures, and 
                        in establishing the form and manner for 
                        reporting measures under subparagraph (A)(iii), 
                        the Secretary shall seek to avoid redundant or 
                        duplicative reporting with reporting otherwise 
                        required, including reporting under subsection 
                        (b)(3)(B)(viii).
                    ``(C) Demonstration of meaningful use of certified 
                ehr technology and information exchange.--
                            ``(i) In general.--A hospital may satisfy 
                        the demonstration requirement of clauses (i) 
                        and (ii) of subparagraph (A) through means 
                        specified by the Secretary, which may include--
                                    ``(I) an attestation;
                                    ``(II) the submission of claims 
                                with appropriate coding (such as a code 
                                indicating that inpatient care was 
                                documented using certified EHR 
                                technology);
                                    ``(III) a survey response;
                                    ``(IV) reporting under subparagraph 
                                (A)(iii); and
                                    ``(V) other means specified by the 
                                Secretary.
                            ``(ii) Use of part d data.--Notwithstanding 
                        sections 1860D-15(d)(2)(B) and 1860D-15(f)(2), 
                        the Secretary may use data regarding drug 
                        claims submitted for purposes of section 1860D-
                        15 that are necessary for purposes of 
                        subparagraph (A).
            ``(4) Application.--
                    ``(A) Limitations on review.--There shall be no 
                administrative or judicial review under section 1869, 
                section 1878, or otherwise of the determination of any 
                incentive payment under this subsection and the payment 
                adjustment under subsection (b)(3)(B)(ix), including 
                the determination of a meaningful EHR user under 
                paragraph (3), determination of measures applicable to 
                services furnished by eligible hospitals under this 
                subsection, and the exception under subsection 
                (b)(3)(B)(ix)(II).
                    ``(B) Posting on website.--The Secretary shall post 
                on the Internet website of the Centers for Medicare & 
                Medicaid Services, in an easily understandable format, 
                a list of the names of the eligible hospitals that are 
                meaningful EHR users under this subsection or 
                subsection (b)(3)(B)(ix) and other relevant data as 
                determined appropriate by the Secretary. The Secretary 
                shall ensure that a hospital has the opportunity to 
                review the other relevant data that are to be made 
                public with respect to the hospital prior to such data 
                being made public.
            ``(5) Certified ehr technology defined.--The term 
        `certified EHR technology' has the meaning given such term in 
        section 1848(o)(4).
            ``(6) Definitions.--For purposes of this subsection:
                    ``(A) Eligible hospital.--The term `eligible 
                hospital' means a subsection (d) hospital.
                    ``(B) Reporting period.--The term `reporting 
                period' means any period (or periods), with respect to 
                a payment year, as specified by the Secretary.''.
    (b) Incentive Market Basket Adjustment.--Section 1886(b)(3)(B) of 
the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)) is amended--
            (1) in clause (viii)(I), by inserting ``(or, beginning with 
        fiscal year 2016, by one-quarter)'' after ``2.0 percentage 
        points''; and
            (2) by adding at the end the following new clause:
    ``(ix)(I) For purposes of clause (i) for fiscal year 2016 and each 
subsequent fiscal year, in the case of an eligible hospital (as defined 
in subsection (n)(6)(A)) that is not a meaningful EHR user (as defined 
in subsection (n)(3)) for the reporting period for such fiscal year, 
three-quarters of the applicable percentage increase otherwise 
applicable under clause (i) for such fiscal year shall be reduced by 
33\1/3\ percent for fiscal year 2016, 66\2/3\ percent for fiscal year 
2017, and 100 percent for fiscal year 2018 and each subsequent fiscal 
year. Such reduction shall apply only with respect to the fiscal year 
involved and the Secretary shall not take into account such reduction 
in computing the applicable percentage increase under clause (i) for a 
subsequent fiscal year.
    ``(II) The Secretary may, on a case-by-case basis, exempt a 
subsection (d) hospital from the application of subclause (I) with 
respect to a fiscal year if the Secretary determines, subject to annual 
renewal, that requiring such hospital to be a meaningful EHR user 
during such fiscal year would result in a significant hardship, such as 
in the case of a hospital in a rural area without sufficient Internet 
access. In no case may a hospital be granted an exemption under this 
subclause for more than 5 years.
    ``(III) For fiscal year 2016 and each subsequent fiscal year, a 
State in which hospitals are paid for services under section 1814(b)(3) 
shall adjust the payments to each subsection (d) hospital in the State 
that is not a meaningful EHR user (as defined in subsection (n)(3)) in 
a manner that is designed to result in an aggregate reduction in 
payments to hospitals in the State that is equivalent to the aggregate 
reduction that would have occurred if payments had been reduced to each 
subsection (d) hospital in the State in a manner comparable to the 
reduction under the previous provisions of this clause. The State shall 
report to the Secretary the methodology it will use to make the payment 
adjustment under the previous sentence.
    ``(IV) For purposes of this clause, the term `reporting period' 
means, with respect to a fiscal year, any period (or periods), with 
respect to the fiscal year, as specified by the Secretary.''.
    (c) Application to Certain HMO-Affiliated Eligible Hospitals.--
Section 1853 of the Social Security Act (42 U.S.C. 1395w-23), as 
amended by section 311(c), is further amended by adding at the end the 
following new subsection:
    ``(m) Application of Eligible Hospital Incentives for Certain MA 
Organizations for Adoption and Meaningful Use of Certified EHR 
Technology.--
            ``(1) Application.--Subject to paragraphs (3) and (4), in 
        the case of a qualifying MA organization, the provisions of 
        sections 1886(n) and 1886(b)(3)(B)(ix) shall apply with respect 
        to eligible hospitals described in paragraph (2) of the 
        organization which the organization attests under subsection 
        (l)(6) to be meaningful EHR users in a similar manner as they 
        apply to eligible hospitals under such sections. Incentive 
        payments under paragraph (3) shall be made to and payment 
        adjustments under paragraph (4) shall apply to such qualifying 
        organizations.
            ``(2) Eligible hospital described.--With respect to a 
        qualifying MA organization, an eligible hospital described in 
        this paragraph is an eligible hospital that is under common 
        corporate governance with such organization and serves 
        individuals enrolled under an MA plan offered by such 
        organization.
            ``(3) Eligible hospital incentive payments.--
                    ``(A) In general.--In applying section 1886(n)(2) 
                under paragraph (1), instead of the additional payment 
                amount under section 1886(n)(2), there shall be 
                substituted an amount determined by the Secretary to be 
                similar to the estimated amount in the aggregate that 
                would be payable if payment for services furnished by 
                such hospitals was payable under part A instead of this 
                part. In implementing the previous sentence, the 
                Secretary--
                            ``(i) shall, insofar as data to determine 
                        the discharge related amount under section 
                        1886(n)(2)(C) for an eligible hospital are not 
                        available to the Secretary, use such 
                        alternative data and methodology to estimate 
                        such discharge related amount as the Secretary 
                        determines appropriate; and
                            ``(ii) shall, insofar as data to determine 
                        the medicare share described in section 
                        1886(n)(2)(D) for an eligible hospital are not 
                        available to the Secretary, use such 
                        alternative data and methodology to estimate 
                        such share, which data and methodology may 
                        include use of the inpatient bed days (or 
                        discharges) with respect to an eligible 
                        hospital during the appropriate period which 
                        are attributable to both individuals for whom 
                        payment may be made under part A or individuals 
                        enrolled in an MA plan under a Medicare 
                        Advantage organization under this part as a 
                        proportion of the total number of patient-bed-
                        days (or discharges) with respect to such 
                        hospital during such period.
                    ``(B) Avoiding duplication of payments.--
                            ``(i) In general.--In the case of a 
                        hospital that for a payment year is an eligible 
                        hospital described in paragraph (2), is an 
                        eligible hospital under section 1886(n), and 
                        for which at least one-third of their 
                        discharges (or bed-days) of Medicare patients 
                        for the year are covered under part A, payment 
                        for the payment year shall be made only under 
                        section 1886(n) and not under this subsection.
                            ``(ii) Methods.--In the case of a hospital 
                        that is an eligible hospital described in 
                        paragraph (2) and also is eligible for an 
                        incentive payment under section 1886(n) but is 
                        not described in clause (i) for the same 
                        payment period, the Secretary shall develop a 
                        process--
                                    ``(I) to ensure that duplicate 
                                payments are not made with respect to 
                                an eligible hospital both under this 
                                subsection and under section 1886(n); 
                                and
                                    ``(II) to collect data from 
                                Medicare Advantage organizations to 
                                ensure against such duplicate payments.
            ``(4) Payment adjustment.--
                    ``(A) Subject to paragraph (3), in the case of a 
                qualifying MA organization (as defined in section 
                1853(l)(5)), if, according to the attestation of the 
                organization submitted under subsection (l)(6) for an 
                applicable period, one or more eligible hospitals (as 
                defined in section 1886(n)(6)(A)) that are under common 
                corporate governance with such organization and that 
                serve individuals enrolled under a plan offered by such 
                organization are not meaningful EHR users (as defined 
                in section 1886(n)(3)) with respect to a period, the 
                payment amount payable under this section for such 
                organization for such period shall be the percent 
                specified in subparagraph (B) for such period of the 
                payment amount otherwise provided under this section 
                for such period.
                    ``(B) Specified percent.--The percent specified 
                under this subparagraph for a year is 100 percent minus 
                a number of percentage points equal to the product of--
                            ``(i) the number of the percentage point 
                        reduction effected under section 
                        1886(b)(3)(B)(ix)(I) for the period; and
                            ``(ii) the Medicare hospital expenditure 
                        proportion specified in subparagraph (C) for 
                        the year.
                    ``(C) Medicare hospital expenditure proportion.--
                The Medicare hospital expenditure proportion under this 
                subparagraph for a year is the Secretary's estimate of 
                the proportion, of the expenditures under parts A and B 
                that are not attributable to this part, that are 
                attributable to expenditures for inpatient hospital 
                services.
                    ``(D) Application of payment adjustment.--In the 
                case that a qualifying MA organization attests that not 
                all eligible hospitals are meaningful EHR users with 
                respect to an applicable period, the Secretary shall 
                apply the payment adjustment under this paragraph based 
                on a methodology specified by the Secretary, taking 
                into account the proportion of such eligible hospitals, 
                or discharges from such hospitals, that are not 
                meaningful EHR users for such period.''.
    (d) Conforming Amendments.--
            (1) Section 1814(b) of the Social Security Act (42 U.S.C. 
        1395f(b)) is amended--
                    (A) in paragraph (3), in the matter preceding 
                subparagraph (A), by inserting ``, subject to section 
                1886(d)(3)(B)(ix)(III),'' after ``then''; and
                    (B) by adding at the end the following: ``For 
                purposes of applying paragraph (3), there shall be 
                taken into account incentive payments, and payment 
                adjustments under subsection (b)(3)(B)(ix) or (n) of 
                section 1886.''.
            (2) Section 1851(i)(1) of the Social Security Act (42 
        U.S.C. 1395w-21(i)(1)) is amended by striking ``and 
        1886(h)(3)(D)'' and inserting ``1886(h)(3)(D), and 1853(m)''.
            (3) Section 1853 of the Social Security Act (42 U.S.C. 
        1395w-23), as amended by section 4311(d)(1), is amended--
                    (A) in subsection (c)--
                            (i) in paragraph (1)(D)(i), by striking 
                        ``1848(o)'' and inserting ``, 1848(o), and 
                        1886(n)''; and
                            (ii) in paragraph (6)(A), by inserting 
                        ``and subsections (b)(3)(B)(ix) and (n) of 
                        section 1886'' after ``section 1848''; and
                    (B) in subsection (f), by inserting ``and 
                subsection (m)'' after ``under subsection (l)''.

SEC. 4313. TREATMENT OF PAYMENTS AND SAVINGS; IMPLEMENTATION FUNDING.

    (a) Premium Hold Harmless.--
            (1) In general.--Section 1839(a)(1) of the Social Security 
        Act (42 U.S.C. 1395r(a)(1)) is amended by adding at the end the 
        following: ``In applying this paragraph there shall not be 
        taken into account additional payments under section 1848(o) 
        and section 1853(l)(3) and the Government contribution under 
        section 1844(a)(3).''.
            (2) Payment.--Section 1844(a) of such Act (42 U.S.C. 
        1395w(a)) is amended--
                    (A) in paragraph (2), by striking the period at the 
                end and inserting ``; plus''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(3) a Government contribution equal to the amount of 
        payment incentives payable under sections 1848(o) and 
        1853(l)(3).''.
    (b) Medicare Improvement Fund.--Section 1898 of the Social Security 
Act (42 U.S.C. 1395iii), as added by section 7002(a) of the 
Supplemental Appropriations Act, 2008 (Public Law 110-252) and as 
amended by section 188(a)(2) of the Medicare Improvements for Patients 
and Providers Act of 2008 (Public Law 110-275; 122 Stat. 2589) and by 
section 6 of the QI Program Supplemental Funding Act of 2008, is 
amended--
            (1) in subsection (a)--
                    (A) by inserting ``medicare'' before ``fee-for-
                service''; and
                    (B) by inserting before the period at the end the 
                following: ``including, but not limited to, an increase 
                in the conversion factor under section 1848(d) to 
                address, in whole or in part, any projected shortfall 
                in the conversion factor for 2014 relative to the 
                conversion factor for 2008 and adjustments to payments 
                for items and services furnished by providers of 
                services and suppliers under such original medicare 
                fee-for-service program''; and
            (2) in subsection (b)--
                    (A) in paragraph (1), by striking ``during fiscal 
                year 2014,'' and all that follows and inserting the 
                following: ``during--
                    ``(A) fiscal year 2014, $22,290,000,000; and
                    ``(B) fiscal year 2020 and each subsequent fiscal 
                year, the Secretary's estimate, as of July 1 of the 
                fiscal year, of the aggregate reduction in expenditures 
                under this title during the preceding fiscal year 
                directly resulting from the reduction in payment 
                amounts under sections 1848(a)(7), 1853(l)(4), 
                1853(m)(4), and 1886(b)(3)(B)(ix).''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(4) No effect on payments in subsequent years.--In the 
        case that expenditures from the Fund are applied to, or 
        otherwise affect, a payment rate for an item or service under 
        this title for a year, the payment rate for such item or 
        service shall be computed for a subsequent year as if such 
        application or effect had never occurred.''.
    (c) Implementation Funding.--In addition to funds otherwise 
available, out of any funds in the Treasury not otherwise appropriated, 
there are appropriated to the Secretary of Health and Human Services 
for the Center for Medicare & Medicaid Services Program Management 
Account, $60,000,000 for each of fiscal years 2009 through 2015 and 
$30,000,000 for each succeeding fiscal year through fiscal year 2019, 
which shall be available for purposes of carrying out the provisions of 
(and amendments made by) this part. Amounts appropriated under this 
subsection for a fiscal year shall be available until expended.

SEC. 4314. STUDY ON APPLICATION OF HIT PAYMENT INCENTIVES FOR PROVIDERS 
              NOT RECEIVING OTHER INCENTIVE PAYMENTS.

    (a) Study.--
            (1) In general.--The Secretary of Health and Human Services 
        shall conduct a study to determine the extent to which and 
        manner in which payment incentives (such as under title XVIII 
        or XIX of the Social Security Act) and other funding for 
        purposes of implementing and using qualified health information 
        technology should be made available to health care providers 
        who are receiving minimal or no payment incentives or other 
        funding under this Act, under title XVIII or XIX of the Social 
        Security Act, or otherwise, for such purposes.
            (2) Details of study.--Such study shall include an 
        examination of--
                    (A) the adoption rates of qualified health 
                information technology by such health care providers;
                    (B) the clinical utility of such technology by such 
                health care providers;
                    (C) whether the services furnished by such health 
                care providers are appropriate for or would benefit 
                from the use of such technology;
                    (D) the extent to which such health care providers 
                work in settings that might otherwise receive an 
                incentive payment or other funding under this Act, 
                title XVIII or XIX of the Social Security Act, or 
                otherwise;
                    (E) the potential costs and the potential benefits 
                of making payment incentives and other funding 
                available to such health care providers; and
                    (F) any other issues the Secretary deems to be 
                appropriate.
    (b) Report.--Not later than June 30, 2010, the Secretary shall 
submit to Congress a report on the findings and conclusions of the 
study conducted under subsection (a).

                       PART III--MEDICAID FUNDING

SEC. 4321. MEDICAID PROVIDER HIT ADOPTION AND OPERATION PAYMENTS; 
              IMPLEMENTATION FUNDING.

    (a) In General.--Section 1903 of the Social Security Act (42 U.S.C. 
1396b) is amended--
            (1) in subsection (a)(3)--
                    (A) by striking ``and'' at the end of subparagraph 
                (D);
                    (B) by striking ``plus'' at the end of subparagraph 
                (E) and inserting ``and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(F)(i) 100 percent of so much of the sums 
                expended during such quarter as are attributable to 
                payments for certified EHR technology (and support 
                services including maintenance and training that is 
                for, or is necessary for the adoption and operation of, 
                such technology) by Medicaid providers described in 
                subsection (t)(1); and
                    ``(ii) 90 percent of so much of the sums expended 
                during such quarter as are attributable to payments for 
                reasonable administrative expenses related to the 
                administration of payments described in clause (i) if 
                the State meets the condition described in subsection 
                (t)(9); plus''; and
            (2) by inserting after subsection (s) the following new 
        subsection:
    ``(t)(1) For purposes of subsection (a)(3)(F), the payments for 
certified EHR technology (and support services including maintenance 
that is for, or is necessary for the operation of, such technology) by 
Medicaid providers described in this paragraph are payments made by the 
State in accordance with this subsection of 85 percent of the net 
allowable costs of Medicaid providers (as defined in paragraph (2)) for 
such technology (and support services).
    ``(2) In this subsection and subsection (a)(3)(F), the term 
`Medicaid provider' means--
            ``(A) an eligible professional (as defined in paragraph 
        (3)(B)) who is not hospital-based and has at least 30 percent 
        of the professional's patient volume (as estimated in 
        accordance with standards established by the Secretary) 
        attributable to individuals who are receiving medical 
        assistance under this title; and
            ``(B)(i) a children's hospital;
            ``(ii) an acute-care hospital that is not described in 
        clause (i) and that has at least 10 percent of the hospital's 
        patient volume (as estimated in accordance with standards 
        established by the Secretary) attributable to individuals who 
        are receiving medical assistance under this title; or
            ``(iii) a Federally-qualified health center or rural health 
        clinic that has at least 30 percent of the center's or clinic's 
        patient volume (as estimated in accordance with standards 
        established by the Secretary) attributable to individuals who 
        are receiving medical assistance under this title.
A professional shall not qualify as a Medicaid provider under this 
subsection unless the professional has waived, in a manner specified by 
the Secretary, any right to payment under section 1848(o) with respect 
to the adoption or support of certified EHR technology by the 
professional. In applying clauses (ii) and (iii) of subparagraph (B), 
the standards established by the Secretary for patient volume shall 
include individuals enrolled in a Medicaid managed care plan (under 
section 1903(m) or section 1932).
    ``(3) In this subsection and subsection (a)(3)(F):
            ``(A) The term `certified EHR technology' means a qualified 
        electronic health record (as defined in 3000(13) of the Public 
        Health Service Act) that is certified pursuant to section 
        3001(c)(5) of such Act as meeting standards adopted under 
        section 3004 of such Act that are applicable to the type of 
        record involved (as determined by the Secretary, such as an 
        ambulatory electronic health record for office-based physicians 
        or an inpatient hospital electronic health record for 
        hospitals).
            ``(B) The term `eligible professional' means a physician as 
        defined in paragraphs (1) and (2) of section 1861(r), and 
        includes a nurse mid-wife and a nurse practitioner.
            ``(C) The term `hospital-based' means, with respect to an 
        eligible professional, a professional (such as a pathologist, 
        anesthesiologist, or emergency physician) who furnishes 
        substantially all of the individual's professional services in 
        a hospital setting (whether inpatient or outpatient) and 
        through the use of the facilities and equipment, including 
        computer equipment, of the hospital.
    ``(4)(A) The term `allowable costs' means, with respect to 
certified EHR technology of a Medicaid provider, costs of such 
technology (and support services including maintenance and training 
that is for, or is necessary for the adoption and operation of, such 
technology) as determined by the Secretary to be reasonable.
    ``(B) The term `net allowable costs' means allowable costs reduced 
by any payment that is made to the provider involved from any other 
source that is directly attributable to payment for certified EHR 
technology or services described in subparagraph (A).
    ``(C) In no case shall--
            ``(i) the aggregate allowable costs under this subsection 
        (covering one or more years) with respect to a Medicaid 
        provider described in paragraph (2)(A) for purchase and initial 
        implementation of certified EHR technology (and services 
        described in subparagraph (A)) exceed $25,000 or include costs 
        over a period of longer than 5 years;
            ``(ii) for costs not described in clause (i) relating to 
        the operation, maintenance, or use of certified EHR technology, 
        the annual allowable costs under this subsection with respect 
        to such a Medicaid provider for costs not described in clause 
        (i) for any year exceed $10,000;
            ``(iii) payment described in paragraph (1) for costs 
        described in clause (ii) be made with respect to such a 
        Medicaid provider over a period of more than 5 years;
            ``(iv) the aggregate allowable costs under this subsection 
        with respect to such a Medicaid provider for all costs exceed 
        $75,000; or
            ``(v) the allowable costs, whether for purchase and initial 
        implementation, maintenance, or otherwise, for a Medicaid 
        provider described in paragraph (2)(B) exceed such aggregate or 
        annual limitation as the Secretary shall establish, based on an 
        amount determined by the Secretary as being adequate to adopt 
        and maintain certified EHR technology, consistent with 
        paragraph (6).
    ``(5) Payments described in paragraph (1) are not in accordance 
with this subsection unless the following requirements are met:
            ``(A) The State provides assurances satisfactory to the 
        Secretary that amounts received under subsection (a)(3)(F) with 
        respect to costs of a Medicaid provider are paid directly to 
        such provider without any deduction or rebate.
            ``(B) Such Medicaid provider is responsible for payment of 
        the costs described in such paragraph that are not provided 
        under this title.
            ``(C) With respect to payments to such Medicaid provider 
        for costs other than costs related to the initial adoption of 
        certified EHR technology, the Medicaid provider demonstrates 
        meaningful use of certified EHR technology through a means that 
        is approved by the State and acceptable to the Secretary, and 
        that may be based upon the methodologies applied under section 
        1848(o) or 1886(n).
            ``(D) To the extent specified by the Secretary, the 
        certified EHR technology is compatible with State or Federal 
        administrative management systems.
    ``(6)(A) In no case shall the payments described in paragraph (1), 
with respect to a hospital, exceed in the aggregate the product of--
            ``(i) the overall hospital HIT amount for the hospital 
        computed under subparagraph (B); and
            ``(ii) the Medicaid share for such hospital computed under 
        subparagraph (C).
    ``(B) For purposes of this paragraph, the overall hospital HIT 
amount, with respect to a hospital, is the sum of the applicable 
amounts specified in section 1886(n)(2)(A) for such hospital for the 
first 4 payment years (as estimated by the Secretary) determined as if 
the Medicare share specified in clause (ii) of such section were 1. The 
Secretary shall publish in the Federal Register the overall hospital 
HIT amount for each hospital eligible for payments under this 
subsection. In computing amounts under clause (ii) for payment years 
after the first payment year, the Secretary shall assume that in 
subsequent payment years discharges increase at an annual rate of 2 
percent per year.
    ``(C) The Medicaid share computed under this subparagraph, for a 
hospital for a period specified by the Secretary, shall be calculated 
in the same manner as the Medicare share under section 1886(n)(2)(D) 
for such a hospital and period, except that there shall be substituted 
for the numerator under clause (i) of such section the amount that is 
equal to the number of inpatient-bed-days (as established by the 
Secretary) which are attributable to individuals who are receiving 
medical assistance under this title and who are not described in 
section 1886(n)(2)(D)(i). In computing inpatient-bed-days under the 
previous sentence, the Secretary shall take into account inpatient-bed-
days attributable to inpatient-bed-days that are paid for individuals 
enrolled in a Medicaid managed care plan (under section 1903(m) or 
section 1932).
    ``(7) With respect to health care providers other than hospitals, 
the Secretary shall ensure coordination of the different programs for 
payment of such health care providers for adoption or use of health 
information technology (including certified EHR technology), as well as 
payments for such health care providers provided under this title or 
title XVIII, to assure no duplication of funding.
    ``(8) In carrying out paragraph (5)(C), the State and Secretary 
shall seek, to the maximum extent practicable, to avoid duplicative 
requirements from Federal and State Governments to demonstrate 
meaningful use of certified EHR technology under this title and title 
XVIII. In doing so, the Secretary may deem satisfaction of requirements 
for such meaningful use for a payment year under title XVIII to be 
sufficient to qualify as meaningful use under this subsection. The 
Secretary may also specify the reporting periods under this subsection 
in order to carry out this paragraph.
    ``(9) In order to be provided Federal financial participation under 
subsection (a)(3)(F)(ii), a State must demonstrate to the satisfaction 
of the Secretary, that the State--
            ``(A) is using the funds provided for the purposes of 
        administering payments under this subsection, including 
        tracking of meaningful use by Medicaid providers;
            ``(B) conducting adequate oversight of the program under 
        this subsection, including routine tracking of meaningful use 
        attestations and reporting mechanisms; and
            ``(C) be pursuing initiatives to encourage the adoption of 
        certified EHR technology to promote health care quality and the 
        exchange of health care information under this title, subject 
        to applicable laws and regulations governing such exchange.
    ``(10) The Secretary shall periodically submit reports to the 
Committee on Energy and Commerce of the House of Representatives and 
the Committee on Finance of the Senate on status, progress, and 
oversight of payments under paragraph (1).''.
    (b) Implementation Funding.--In addition to funds otherwise 
available, out of any funds in the Treasury not otherwise appropriated, 
there are appropriated to the Secretary of Health and Human Services 
for the Center for Medicare & Medicaid Services Program Management 
Account, $40,000,000 for each of fiscal years 2009 through 2015 and 
$20,000,000 for each succeeding fiscal year through fiscal year 2019, 
which shall be available for purposes of carrying out the provisions of 
(and the amendments made by) this part. Amounts appropriated under this 
subsection for a fiscal year shall be available until expended.

                          Subtitle D--Privacy

SEC. 4400. DEFINITIONS.

    In this subtitle, except as specified otherwise:
            (1) Breach.--The term ``breach'' means the unauthorized 
        acquisition, access, use, or disclosure of protected health 
        information which compromises the security, privacy, or 
        integrity of protected health information maintained by or on 
        behalf of a person. Such term does not include any 
        unintentional acquisition, access, use, or disclosure of such 
        information by an employee or agent of the covered entity or 
        business associate involved if such acquisition, access, use, 
        or disclosure, respectively, was made in good faith and within 
        the course and scope of the employment or other contractual 
        relationship of such employee or agent, respectively, with the 
        covered entity or business associate and if such information is 
        not further acquired, accessed, used, or disclosed by such 
        employee or agent.
            (2) Business associate.--The term ``business associate'' 
        has the meaning given such term in section 160.103 of title 45, 
        Code of Federal Regulations.
            (3) Covered entity.--The term ``covered entity'' has the 
        meaning given such term in section 160.103 of title 45, Code of 
        Federal Regulations.
            (4) Disclose.--The terms ``disclose'' and ``disclosure'' 
        have the meaning given the term ``disclosure'' in section 
        160.103 of title 45, Code of Federal Regulations.
            (5) Electronic health record.--The term ``electronic health 
        record'' means an electronic record of health-related 
        information on an individual that is created, gathered, 
        managed, and consulted by authorized health care clinicians and 
        staff.
            (6) Health care operations.--The term ``health care 
        operation'' has the meaning given such term in section 164.501 
        of title 45, Code of Federal Regulations.
            (7) Health care provider.--The term ``health care 
        provider'' has the meaning given such term in section 160.103 
        of title 45, Code of Federal Regulations.
            (8) Health plan.--The term ``health plan'' has the meaning 
        given such term in section 1171(5) of the Social Security Act.
            (9) National coordinator.--The term ``National 
        Coordinator'' means the head of the Office of the National 
        Coordinator for Health Information Technology established under 
        section 3001(a) of the Public Health Service Act, as added by 
        section 4101.
            (10) Payment.--The term ``payment'' has the meaning given 
        such term in section 164.501 of title 45, Code of Federal 
        Regulations.
            (11) Personal health record.--The term ``personal health 
        record'' means an electronic record of individually 
        identifiable health information on an individual that can be 
        drawn from multiple sources and that is managed, shared, and 
        controlled by or for the individual.
            (12) Protected health information.--The term ``protected 
        health information'' has the meaning given such term in section 
        160.103 of title 45, Code of Federal Regulations.
            (13) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (14) Security.--The term ``security'' has the meaning given 
        such term in section 164.304 of title 45, Code of Federal 
        Regulations.
            (15) State.--The term ``State'' means each of the several 
        States, the District of Columbia, Puerto Rico, the Virgin 
        Islands, Guam, American Samoa, and the Northern Mariana 
        Islands.
            (16) Treatment.--The term ``treatment'' has the meaning 
        given such term in section 164.501 of title 45, Code of Federal 
        Regulations.
            (17) Use.--The term ``use'' has the meaning given such term 
        in section 160.103 of title 45, Code of Federal Regulations.
            (18) Vendor of personal health records.--The term ``vendor 
        of personal health records'' means an entity, other than a 
        covered entity (as defined in paragraph (3)), that offers or 
        maintains a personal health record.

      PART I--IMPROVED PRIVACY PROVISIONS AND SECURITY PROVISIONS

SEC. 4401. APPLICATION OF SECURITY PROVISIONS AND PENALTIES TO BUSINESS 
              ASSOCIATES OF COVERED ENTITIES; ANNUAL GUIDANCE ON 
              SECURITY PROVISIONS.

    (a) Application of Security Provisions.--Sections 164.308, 164.310, 
164.312, and 164.316 of title 45, Code of Federal Regulations, shall 
apply to a business associate of a covered entity in the same manner 
that such sections apply to the covered entity. The additional 
requirements of this title that relate to security and that are made 
applicable with respect to covered entities shall also be applicable to 
such a business associate and shall be incorporated into the business 
associate agreement between the business associate and the covered 
entity.
    (b) Application of Civil and Criminal Penalties.--In the case of a 
business associate that violates any security provision specified in 
subsection (a), sections 1176 and 1177 of the Social Security Act (42 
U.S.C. 1320d-5, 1320d-6) shall apply to the business associate with 
respect to such violation in the same manner such sections apply to a 
covered entity that violates such security provision.
    (c) Annual Guidance.--For the first year beginning after the date 
of the enactment of this Act and annually thereafter, the Secretary of 
Health and Human Services shall, in consultation with industry 
stakeholders, annually issue guidance on the most effective and 
appropriate technical safeguards for use in carrying out the sections 
referred to in subsection (a) and the security standards in subpart C 
of part 164 of title 45, Code of Federal Regulations, as such 
provisions are in effect as of the date before the enactment of this 
Act.

SEC. 4402. NOTIFICATION IN THE CASE OF BREACH.

    (a) In General.--A covered entity that accesses, maintains, 
retains, modifies, records, stores, destroys, or otherwise holds, uses, 
or discloses unsecured protected health information (as defined in 
subsection (h)(1)) shall, in the case of a breach of such information 
that is discovered by the covered entity, notify each individual whose 
unsecured protected health information has been, or is reasonably 
believed by the covered entity to have been, accessed, acquired, or 
disclosed as a result of such breach.
    (b) Notification of Covered Entity by Business Associate.--A 
business associate of a covered entity that accesses, maintains, 
retains, modifies, records, stores, destroys, or otherwise holds, uses, 
or discloses unsecured protected health information shall, following 
the discovery of a breach of such information, notify the covered 
entity of such breach. Such notice shall include the identification of 
each individual whose unsecured protected health information has been, 
or is reasonably believed by the business associate to have been, 
accessed, acquired, or disclosed during such breach.
    (c) Breaches Treated as Discovered.--For purposes of this section, 
a breach shall be treated as discovered by a covered entity or by a 
business associate as of the first day on which such breach is known to 
such entity or associate, respectively, (including any person, other 
than the individual committing the breach, that is an employee, 
officer, or other agent of such entity or associate, respectively) or 
should reasonably have been known to such entity or associate (or 
person) to have occurred.
    (d) Timeliness of Notification.--
            (1) In general.--Subject to subsection (g), all 
        notifications required under this section shall be made without 
        unreasonable delay and in no case later than 60 calendar days 
        after the discovery of a breach by the covered entity involved 
        (or business associate involved in the case of a notification 
        required under subsection (b)).
            (2) Burden of proof.--The covered entity involved (or 
        business associate involved in the case of a notification 
        required under subsection (b)), shall have the burden of 
        demonstrating that all notifications were made as required 
        under this part, including evidence demonstrating the necessity 
        of any delay.
    (e) Methods of Notice.--
            (1) Individual notice.--Notice required under this section 
        to be provided to an individual, with respect to a breach, 
        shall be provided promptly and in the following form:
                    (A) Written notification by first-class mail to the 
                individual (or the next of kin of the individual if the 
                individual is deceased) at the last known address of 
                the individual or the next of kin, respectively, or, if 
                specified as a preference by the individual, by 
                electronic mail. The notification may be provided in 
                one or more mailings as information is available.
                    (B) In the case in which there is insufficient, or 
                out-of-date contact information (including a phone 
                number, e-mail address, or any other form of 
                appropriate communication) that precludes direct 
                written (or, if specified by the individual under 
                subparagraph (A), electronic) notification to the 
                individual, a substitute form of notice shall be 
                provided, including, in the case that there are 10 or 
                more individuals for which there is insufficient or 
                out-of-date contact information, a conspicuous posting 
                for a period determined by the Secretary on the home 
                page of the website of the covered entity involved or 
                notice in major print or broadcast media, including 
                major media in geographic areas where the individuals 
                affected by the breach likely reside. Such a notice in 
                media or web posting will include a toll-free phone 
                number where an individual can learn whether or not the 
                individual's unsecured protected health information is 
                possibly included in the breach.
                    (C) In any case deemed by the covered entity 
                involved to require urgency because of possible 
                imminent misuse of unsecured protected health 
                information, the covered entity, in addition to notice 
                provided under subparagraph (A), may provide 
                information to individuals by telephone or other means, 
                as appropriate.
            (2) Media notice.--Notice shall be provided to prominent 
        media outlets serving a State or jurisdiction, following the 
        discovery of a breach described in subsection (a), if the 
        unsecured protected health information of more than 500 
        residents of such State or jurisdiction is, or is reasonably 
        believed to have been, accessed, acquired, or disclosed during 
        such breach.
            (3) Notice to secretary.--Notice shall be provided to the 
        Secretary by covered entities of unsecured protected health 
        information that has been acquired or disclosed in a breach. If 
        the breach was with respect to 500 or more individuals than 
        such notice must be provided immediately. If the breach was 
        with respect to less than 500 individuals, the covered entity 
        involved may maintain a log of any such breach occurring and 
        annually submit such a log to the Secretary documenting such 
        breaches occuring during the year involved.
            (4) Posting on hhs public website.--The Secretary shall 
        make available to the public on the Internet website of the 
        Department of Health and Human Services a list that identifies 
        each covered entity involved in a breach described in 
        subsection (a) in which the unsecured protected health 
        information of more than 500 individuals is acquired or 
        disclosed.
    (f) Content of Notification.--Regardless of the method by which 
notice is provided to individuals under this section, notice of a 
breach shall include, to the extent possible, the following:
            (1) A brief description of what happened, including the 
        date of the breach and the date of the discovery of the breach, 
        if known.
            (2) A description of the types of unsecured protected 
        health information that were involved in the breach (such as 
        full name, Social Security number, date of birth, home address, 
        account number, or disability code).
            (3) The steps individuals should take to protect themselves 
        from potential harm resulting from the breach.
            (4) A brief description of what the covered entity involved 
        is doing to investigate the breach, to mitigate losses, and to 
        protect against any further breaches.
            (5) Contact procedures for individuals to ask questions or 
        learn additional information, which shall include a toll-free 
        telephone number, an e-mail address, website, or postal 
        address.
    (g) Delay of Notification Authorized for Law Enforcement 
Purposes.--If a law enforcement official determines that a 
notification, notice, or posting required under this section would 
impede a criminal investigation or cause damage to national security, 
such notification, notice, or posting shall be delayed in the same 
manner as provided under section 164.528(a)(2) of title 45, Code of 
Federal Regulations, in the case of a disclosure covered under such 
section.
    (h) Unsecured Protected Health Information.--
            (1) Definition.--
                    (A) In general.--Subject to subparagraph (B), for 
                purposes of this section, the term ``unsecured 
                protected health information'' means protected health 
                information that is not secured through the use of a 
                technology or methodology specified by the Secretary in 
                the guidance issued under paragraph (2).
                    (B) Exception in case timely guidance not issued.--
                In the case that the Secretary does not issue guidance 
                under paragraph (2) by the date specified in such 
                paragraph, for purposes of this section, the term 
                ``unsecured protected health information'' shall mean 
                protected health information that is not secured by a 
                technology standard that renders protected health 
                information unusable, unreadable, or indecipherable to 
                unauthorized individuals and is developed or endorsed 
                by a standards developing organization that is 
                accredited by the American National Standards 
                Institute.
            (2) Guidance.--For purposes of paragraph (1) and section 
        407(f)(3), not later than the date that is 60 days after the 
        date of the enactment of this Act, the Secretary shall, after 
        consultation with stakeholders, issue (and annually update) 
        guidance specifying the technologies and methodologies that 
        render protected health information unusable, unreadable, or 
        indecipherable to unauthorized individuals.
    (i) Report to Congress on Breaches.--
            (1) In general.--Not later than 12 months after the date of 
        the enactment of this Act and annually thereafter, the 
        Secretary shall prepare and submit to the Committee on Finance 
        and the Committee on Health, Education, Labor, and Pensions of 
        the Senate and the Committee on Ways and Means and the 
        Committee on Energy and Commerce of the House of 
        Representatives a report containing the information described 
        in paragraph (2) regarding breaches for which notice was 
        provided to the Secretary under subsection (e)(3).
            (2) Information.--The information described in this 
        paragraph regarding breaches specified in paragraph (1) shall 
        include--
                    (A) the number and nature of such breaches; and
                    (B) actions taken in response to such breaches.
    (j) Regulations; Effective Date.--To carry out this section, the 
Secretary of Health and Human Services shall promulgate interim final 
regulations by not later than the date that is 180 days after the date 
of the enactment of this title. The provisions of this section shall 
apply to breaches that are discovered on or after the date that is 30 
days after the date of publication of such interim final regulations.

SEC. 4403. EDUCATION ON HEALTH INFORMATION PRIVACY.

    (a) Regional Office Privacy Advisors.--Not later than 6 months 
after the date of the enactment of this Act, the Secretary shall 
designate an individual in each regional office of the Department of 
Health and Human Services to offer guidance and education to covered 
entities, business associates, and individuals on their rights and 
responsibilities related to Federal privacy and security requirements 
for protected health information.
    (b) Education Initiative on Uses of Health Information.--Not later 
than 12 months after the date of the enactment of this Act, the Office 
for Civil Rights within the Department of Health and Human Services 
shall develop and maintain a multi-faceted national education 
initiative to enhance public transparency regarding the uses of 
protected health information, including programs to educate individuals 
about the potential uses of their protected health information, the 
effects of such uses, and the rights of individuals with respect to 
such uses. Such programs shall be conducted in a variety of languages 
and present information in a clear and understandable manner.

SEC. 4404. APPLICATION OF PRIVACY PROVISIONS AND PENALTIES TO BUSINESS 
              ASSOCIATES OF COVERED ENTITIES.

    (a) Application of Contract Requirements.--In the case of a 
business associate of a covered entity that obtains or creates 
protected health information pursuant to a written contract (or other 
written arrangement) described in section 164.502(e)(2) of title 45, 
Code of Federal Regulations, with such covered entity, the business 
associate may use and disclose such protected health information only 
if such use or disclosure, respectively, is in compliance with each 
applicable requirement of section 164.504(e) of such title. The 
additional requirements of this subtitle that relate to privacy and 
that are made applicable with respect to covered entities shall also be 
applicable to such a business associate and shall be incorporated into 
the business associate agreement between the business associate and the 
covered entity.
    (b) Application of Knowledge Elements Associated With Contracts.--
Section 164.504(e)(1)(ii) of title 45, Code of Federal Regulations, 
shall apply to a business associate described in subsection (a), with 
respect to compliance with such subsection, in the same manner that 
such section applies to a covered entity, with respect to compliance 
with the standards in sections 164.502(e) and 164.504(e) of such title, 
except that in applying such section 164.504(e)(1)(ii) each reference 
to the business associate, with respect to a contract, shall be treated 
as a reference to the covered entity involved in such contract.
    (c) Application of Civil and Criminal Penalties.--In the case of a 
business associate that violates any provision of subsection (a) or 
(b), the provisions of sections 1176 and 1177 of the Social Security 
Act (42 U.S.C. 1320d-5, 1320d-6) shall apply to the business associate 
with respect to such violation in the same manner as such provisions 
apply to a person who violates a provision of part C of title XI of 
such Act.

SEC. 4405. RESTRICTIONS ON CERTAIN DISCLOSURES AND SALES OF HEALTH 
              INFORMATION; ACCOUNTING OF CERTAIN PROTECTED HEALTH 
              INFORMATION DISCLOSURES; ACCESS TO CERTAIN INFORMATION IN 
              ELECTRONIC FORMAT.

    (a) Requested Restrictions on Certain Disclosures of Health 
Information.--In the case that an individual requests under paragraph 
(a)(1)(i)(A) of section 164.522 of title 45, Code of Federal 
Regulations, that a covered entity restrict the disclosure of the 
protected health information of the individual, notwithstanding 
paragraph (a)(1)(ii) of such section, the covered entity must comply 
with the requested restriction if--
            (1) except as otherwise required by law, the disclosure is 
        to a health plan for purposes of carrying out payment or health 
        care operations (and is not for purposes of carrying out 
        treatment); and
            (2) the protected health information pertains solely to a 
        health care item or service for which the health care provider 
        involved has been paid out of pocket in full.
    (b) Disclosures Required To Be Limited to the Limited Data Set or 
the Minimum Necessary.--
            (1) In general.--
                    (A) In general.--Subject to subparagraph (B), a 
                covered entity shall be treated as being in compliance 
                with section 164.502(b)(1) of title 45, Code of Federal 
                Regulations, with respect to the use, disclosure, or 
                request of protected health information described in 
                such section, only if the covered entity limits such 
                protected health information, to the extent 
                practicable, to the limited data set (as defined in 
                section 164.514(e)(2) of such title) or, if needed by 
                such entity, to the minimum necessary to accomplish the 
                intended purpose of such use, disclosure, or request, 
                respectively.
                    (B) Guidance.--Not later than 18 months after the 
                date of the enactment of this section, the Secretary 
                shall issue guidance on what constitutes ``minimum 
                necessary'' for purposes of subpart E of part 164 of 
                title 45, Code of Federal Regulation. In issuing such 
                guidance the Secretary shall take into consideration 
                the guidance under section 4424(c).
                    (C) Sunset.--Subparagraph (A) shall not apply on 
                and after the effective date on which the Secretary 
                issues the guidance under subparagraph (B).
            (2) Determination of minimum necessary.--For purposes of 
        paragraph (1), in the case of the disclosure of protected 
        health information, the covered entity or business associate 
        disclosing such information shall determine what constitutes 
        the minimum necessary to accomplish the intended purpose of 
        such disclosure.
            (3) Application of exceptions.--The exceptions described in 
        section 164.502(b)(2) of title 45, Code of Federal Regulations, 
        shall apply to the requirement under paragraph (1) as of the 
        effective date described in section 4423 in the same manner 
        that such exceptions apply to section 164.502(b)(1) of such 
        title before such date.
            (4) Rule of construction.--Nothing in this subsection shall 
        be construed as affecting the use, disclosure, or request of 
        protected health information that has been de-identified.
    (c) Accounting of Certain Protected Health Information Disclosures 
Required if Covered Entity Uses Electronic Health Record.--
            (1) In general.--In applying section 164.528 of title 45, 
        Code of Federal Regulations, in the case that a covered entity 
        uses or maintains an electronic health record with respect to 
        protected health information--
                    (A) the exception under paragraph (a)(1)(i) of such 
                section shall not apply to disclosures through an 
                electronic health record made by such entity of such 
                information; and
                    (B) an individual shall have a right to receive an 
                accounting of disclosures described in such paragraph 
                of such information made by such covered entity during 
                only the three years prior to the date on which the 
                accounting is requested.
            (2) Regulations.--The Secretary shall promulgate 
        regulations on what information shall be collected about each 
        disclosure referred to in paragraph (1)(A) not later than 18 
        months after the date on which the Secretary adopts standards 
        on accounting for disclosure described in the section 
        3002(b)(2)(B)(iv) of the Public Health Service Act, as added by 
        section 4101. Such regulations shall only require such 
        information to be collected through an electronic health record 
        in a manner that takes into account the interests of 
        individuals in learning the circumstances under which their 
        protected health information is being disclosed and takes into 
        account the administrative burden of accounting for such 
        disclosures.
            (3) Construction.--Nothing in this subsection shall be 
        construed as requiring a covered entity to account for 
        disclosures of protected health information that are not made 
        by such covered entity or by a business associate acting on 
        behalf of the covered entity.
            (4) Effective date.--
                    (A) Current users of electronic records.--In the 
                case of a covered entity insofar as it acquired an 
                electronic health record as of January 1, 2009, 
                paragraph (1) shall apply to disclosures, with respect 
                to protected health information, made by the covered 
                entity from such a record on and after January 1, 2014.
                    (B) Others.--In the case of a covered entity 
                insofar as it acquires an electronic health record 
                after January 1, 2009, paragraph (1) shall apply to 
                disclosures, with respect to protected health 
                information, made by the covered entity from such 
                record on and after the later of the following:
                            (i) January 1, 2011; or
                            (ii) the date that it acquires an 
                        electronic health record.
    (d) Review of Health Care Operations.--Not later than 18 months 
after the date of the enactment of this title, the Secretary shall 
promulgate regulations to eliminate from the definition of health care 
operations under section 164.501 of title 45, Code of Federal 
Regulations, those activities that can reasonably and efficiently be 
conducted through the use of information that is de-identified (in 
accordance with the requirements of section 164.514(b) of such title) 
or that should require a valid authorization for use or disclosure. In 
promulgating such regulations, the Secretary may choose to narrow or 
clarify activities that the Secretary chooses to retain in the 
definition of health care operations and the Secretary shall take into 
account the report under section 424(d). In such regulations the 
Secretary shall specify the date on which such regulations shall apply 
to disclosures made by a covered entity, but in no case would such date 
be sooner than the date that is 24 months after the date of the 
enactment of this section.
    (e) Prohibition on Sale of Electronic Health Records or Protected 
Health Information Obtained From Electronic Health Records.--
            (1) In general.--Except as provided in paragraph (2), a 
        covered entity or business associate shall not directly or 
        indirectly receive remuneration in exchange for any protected 
        health information of an individual unless the covered entity 
        obtained from the individual, in accordance with section 
        164.508 of title 45, Code of Federal Regulations, a valid 
        authorization that includes, in accordance with such section, a 
        specification of whether the protected health information can 
        be further exchanged for remuneration by the entity receiving 
        protected health information of that individual.
            (2) Exceptions.--Paragraph (1) shall not apply in the 
        following cases:
                    (A) The purpose of the exchange is for research or 
                public health activities (as described in sections 
                164.501, 164.512(i), and 164.512(b) of title 45, Code 
                of Federal Regulations) and the price charged reflects 
                the costs of preparation and transmittal of the data 
                for such purpose.
                    (B) The purpose of the exchange is for the 
                treatment of the individual and the price charges 
                reflects not more than the costs of preparation and 
                transmittal of the data for such purpose.
                    (C) The purpose of the exchange is the health care 
                operation specifically described in subparagraph (iv) 
                of paragraph (6) of the definition of health care 
                operations in section 164.501 of title 45, Code of 
                Federal Regulations.
                    (D) The purpose of the exchange is for remuneration 
                that is provided by a covered entity to a business 
                associate for activities involving the exchange of 
                protected health information that the business 
                associate undertakes on behalf of and at the specific 
                request of the covered entity pursuant to a business 
                associate agreement.
                    (E) The purpose of the exchange is to provide an 
                individual with a copy of the individual's protected 
                health information pursuant to section 164.524 of title 
                45, Code of Federal Regulations.
                    (F) The purpose of the exchange is otherwise 
                determined by the Secretary in regulations to be 
                similarly necessary and appropriate as the exceptions 
                provided in subparagraphs (A) through (E).
            (3) Regulations.--The Secretary shall promulgate 
        regulations to carry out paragraph (this subsection, including 
        exceptions described in paragraph (2), not later than 18 months 
        after the date of the enactment of this title.
            (4) Effective date.--Paragraph (1) shall apply to exchanges 
        occurring on or after the date that is 6 months after the date 
        of the promulgation of final regulations implementing this 
        subsection.
    (f) Access to Certain Information in Electronic Format.--In 
applying section 164.524 of title 45, Code of Federal Regulations, in 
the case that a covered entity uses or maintains an electronic health 
record with respect to protected health information of an individual--
            (1) the individual shall have a right to obtain from such 
        covered entity a copy of such information in an electronic 
        format; and
            (2) notwithstanding paragraph (c)(4) of such section, any 
        fee that the covered entity may impose for providing such 
        individual with a copy of such information (or a summary or 
        explanation of such information) if such copy (or summary or 
        explanation) is in an electronic form shall not be greater than 
        the entity's labor costs in responding to the request for the 
        copy (or summary or explanation).

SEC. 4406. CONDITIONS ON CERTAIN CONTACTS AS PART OF HEALTH CARE 
              OPERATIONS.

    (a) Marketing.--
            (1) In general.--A communication by a covered entity or 
        business associate that is about a product or service and that 
        encourages recipients of the communication to purchase or use 
        the product or service shall not be considered a health care 
        operation for purposes of subpart E of part 164 of title 45, 
        Code of Federal Regulations, unless the communication is made 
        as described in subparagraph (i), (ii), or (iii) of paragraph 
        (1) of the definition of marketing in section 164.501 of such 
        title.
            (2) Payment for certain communications.--A covered entity 
        or business associate may not receive direct or indirect 
        payment in exchange for making any communication described in 
        subparagraph (i), (ii), or (iii) of paragraph (1) of the 
        definition of marketing in section 164.501 of title 45, Code of 
        Federal Regulations, except--
                    (A) a business associate of a covered entity may 
                receive payment from the covered entity for making any 
                such communication on behalf of the covered entity that 
                is consistent with the written contract (or other 
                written arrangement) described in section 164.502(e)(2) 
                of such title between such business associate and 
                covered entity; and
                    (B) a covered entity may receive payment in 
                exchange for making any such communication if the 
                entity obtains from the recipient of the communication, 
                in accordance with section 164.508 of title 45, Code of 
                Federal Regulations, a valid authorization (as 
                described in paragraph (b) of such section) with 
                respect to such communication.
    (b) Fundraising.--Fundraising for the benefit of a covered entity 
shall not be considered a health care operation for purposes of section 
164.501 of title 45, Code of Federal Regulations.
    (c) Effective Date.--This section shall apply to contracting 
occurring on or after the effective date specified under section 4423.

SEC. 4407. TEMPORARY BREACH NOTIFICATION REQUIREMENT FOR VENDORS OF 
              PERSONAL HEALTH RECORDS AND OTHER NON-HIPAA COVERED 
              ENTITIES.

    (a) In General.--In accordance with subsection (c), each vendor of 
personal health records, following the discovery of a breach of 
security of unsecured PHR identifiable health information that is in a 
personal health record maintained or offered by such vendor, and each 
entity described in clause (ii) or (iii) of section 4424(b)(1)(A), 
following the discovery of a breach of security of such information 
that is obtained through a product or service provided by such entity, 
shall--
            (1) notify each individual who is a citizen or resident of 
        the United States whose unsecured PHR identifiable health 
        information was acquired by an unauthorized person as a result 
        of such a breach of security; and
            (2) notify the Federal Trade Commission.
    (b) Notification by Third Party Service Providers.--A third party 
service provider that provides services to a vendor of personal health 
records or to an entity described in clause (ii) or (iii) of section 
4424(b)(1)(A) in connection with the offering or maintenance of a 
personal health record or a related product or service and that 
accesses, maintains, retains, modifies, records, stores, destroys, or 
otherwise holds, uses, or discloses unsecured PHR identifiable health 
information in such a record as a result of such services shall, 
following the discovery of a breach of security of such information, 
notify such vendor or entity, respectively, of such breach. Such notice 
shall include the identification of each individual whose unsecured PHR 
identifiable health information has been, or is reasonably believed to 
have been, accessed, acquired, or disclosed during such breach.
    (c) Application of Requirements for Timeliness, Method, and Content 
of Notifications.--Subsections (c), (d), (e), and (f) of section 402 
shall apply to a notification required under subsection (a) and a 
vendor of personal health records, an entity described in subsection 
(a) and a third party service provider described in subsection (b), 
with respect to a breach of security under subsection (a) of unsecured 
PHR identifiable health information in such records maintained or 
offered by such vendor, in a manner specified by the Federal Trade 
Commission.
    (d) Notification of the Secretary.--Upon receipt of a notification 
of a breach of security under subsection (a)(2), the Federal Trade 
Commission shall notify the Secretary of such breach.
    (e) Enforcement.--A violation of subsection (a) or (b) shall be 
treated as an unfair and deceptive act or practice in violation of a 
regulation under section 18(a)(1)(B) of the Federal Trade Commission 
Act (15 U.S.C. 57a(a)(1)(B)) regarding unfair or deceptive acts or 
practices.
    (f) Definitions.--For purposes of this section:
            (1) Breach of security.--The term ``breach of security'' 
        means, with respect to unsecured PHR identifiable health 
        information of an individual in a personal health record, 
        acquisition of such information without the authorization of 
        the individual.
            (2) PHR identifiable health information.--The term ``PHR 
        identifiable health information'' means individually 
        identifiable health information, as defined in section 1171(6) 
        of the Social Security Act (42 U.S.C. 1320d(6)), and includes, 
        with respect to an individual, information--
                    (A) that is provided by or on behalf of the 
                individual; and
                    (B) that identifies the individual or with respect 
                to which there is a reasonable basis to believe that 
                the information can be used to identify the individual.
            (3) Unsecured phr identifiable health information.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``unsecured PHR identifiable health information'' 
                means PHR identifiable health information that is not 
                protected through the use of a technology or 
                methodology specified by the Secretary in the guidance 
                issued under section 4402(h)(2).
                    (B) Exception in case timely guidance not issued.--
                In the case that the Secretary does not issue guidance 
                under section 4402(h)(2) by the date specified in such 
                section, for purposes of this section, the term 
                ``unsecured PHR identifiable health information'' shall 
                mean PHR identifiable health information that is not 
                secured by a technology standard that renders protected 
                health information unusable, unreadable, or 
                indecipherable to unauthorized individuals and that is 
                developed or endorsed by a standards developing 
                organization that is accredited by the American 
                National Standards Institute.
    (g) Regulations; Effective Date; Sunset.--
            (1) Regulations; effective date.--To carry out this 
        section, the Secretary of Health and Human Services shall 
        promulgate interim final regulations by not later than the date 
        that is 180 days after the date of the enactment of this 
        section. The provisions of this section shall apply to breaches 
        of security that are discovered on or after the date that is 30 
        days after the date of publication of such interim final 
        regulations.
            (2) Sunset.--The provisions of this section shall not apply 
        to breaches of security occurring on or after the earlier of 
        the following the dates:
                    (A) The date on which a standard relating to 
                requirements for entities that are not covered entities 
                that includes requirements relating to breach 
                notification has been promulgated by the Secretary.
                    (B) The date on which a standard relating to 
                requirements for entities that are not covered entities 
                that includes requirements relating to breach 
                notification has been promulgated by the Federal Trade 
                Commission and has taken effect.

SEC. 4408. BUSINESS ASSOCIATE CONTRACTS REQUIRED FOR CERTAIN ENTITIES.

    Each organization, with respect to a covered entity, that provides 
data transmission of protected health information to such entity (or 
its business associate) and that requires access on a routine basis to 
such protected health information, such as a Health Information 
Exchange Organization, Regional Health Information Organization, E-
prescribing Gateway, or each vendor that contracts with a covered 
entity to allow that covered entity to offer a personal health record 
to patients as part of its electronic health record, is required to 
enter into a written contract (or other written arrangement) described 
in section 164.502(e)(2) of title 45, Code of Federal Regulations and a 
written contract (or other arrangement) described in section 164.308(b) 
of such title, with such entity and shall be treated as a business 
associate of the covered entity for purposes of the provisions of this 
subtitle and subparts C and E of part 164 of title 45, Code of Federal 
Regulations, as such provisions are in effect as of the date of 
enactment of this title.

SEC. 4409. CLARIFICATION OF APPLICATION OF WRONGFUL DISCLOSURES 
              CRIMINAL PENALTIES.

    Section 1177(a) of the Social Security Act (42 U.S.C. 1320d-6(a)) 
is amended by adding at the end the following new sentence: ``For 
purposes of the previous sentence, a person (including an employee or 
other individual) shall be considered to have obtained or disclosed 
individually identifiable health information in violation of this part 
if the information is maintained by a covered entity (as defined in the 
HIPAA privacy regulation described in section 1180(b)(3)) and the 
individual obtained or disclosed such information without 
authorization.''.

SEC. 4410. IMPROVED ENFORCEMENT.

    (a) In General.--Section 1176 of the Social Security Act (42 U.S.C. 
1320d-5) is amended--
            (1) in subsection (b)(1), by striking ``the act constitutes 
        an offense punishable under section 1177'' and inserting ``a 
        penalty has been imposed under section 1177 with respect to 
        such act''; and
            (2) by adding at the end the following new subsection:
    ``(c) Noncompliance Due to Willful Neglect.--
            ``(1) In general.--A violation of a provision of this part 
        due to willful neglect is a violation for which the Secretary 
        is required to impose a penalty under subsection (a)(1).
            ``(2) Required investigation.--For purposes of paragraph 
        (1), the Secretary shall formally investigate any complaint of 
        a violation of a provision of this part if a preliminary 
        investigation of the facts of the complaint indicate such a 
        possible violation due to willful neglect.''.
    (b) Effective Date; Regulations.--
            (1) The amendments made by subsection (a) shall apply to 
        penalties imposed on or after the date that is 24 months after 
        the date of the enactment of this title.
            (2) Not later than 18 months after the date of the 
        enactment of this title, the Secretary of Health and Human 
        Services shall promulgate regulations to implement such 
        amendments.
    (c) Distribution of Certain Civil Monetary Penalties Collected.--
            (1) In general.--Subject to the regulation promulgated 
        pursuant to paragraph (3), any civil monetary penalty or 
        monetary settlement collected with respect to an offense 
        punishable under this subtitle or section 1176 of the Social 
        Security Act (42 U.S.C. 1320d-5) insofar as such section 
        relates to privacy or security shall be transferred to the 
        Office of Civil Rights of the Department of Health and Human 
        Services to be used for purposes of enforcing the provisions of 
        this subtitle and subparts C and E of part 164 of title 45, 
        Code of Federal Regulations, as such provisions are in effect 
        as of the date of enactment of this Act.
            (2) GAO report.--Not later than 18 months after the date of 
        the enactment of this title, the Comptroller General shall 
        submit to the Secretary a report including recommendations for 
        a methodology under which an individual who is harmed by an act 
        that constitutes an offense referred to in paragraph (1) may 
        receive a percentage of any civil monetary penalty or monetary 
        settlement collected with respect to such offense.
            (3) Establishment of methodology to distribute percentage 
        of cmps collected to harmed individuals.--Not later than 3 
        years after the date of the enactment of this title, the 
        Secretary shall establish by regulation and based on the 
        recommendations submitted under paragraph (2), a methodology 
        under which an individual who is harmed by an act that 
        constitutes an offense referred to in paragraph (1) may receive 
        a percentage of any civil monetary penalty or monetary 
        settlement collected with respect to such offense.
            (4) Application of methodology.--The methodology under 
        paragraph (3) shall be applied with respect to civil monetary 
        penalties or monetary settlements imposed on or after the 
        effective date of the regulation.
    (d) Tiered Increase in Amount of Civil Monetary Penalties.--
            (1) In general.--Section 1176(a)(1) of the Social Security 
        Act (42 U.S.C. 1320d-5(a)(1)) is amended by striking ``who 
        violates a provision of this part a penalty of not more than'' 
        and all that follows and inserting the following: ``who 
        violates a provision of this part--
                    ``(A) in the case of a violation of such provision 
                in which it is established that the person did not know 
                (and by exercising reasonable diligence would not have 
                known) that such person violated such provision, a 
                penalty for each such violation of an amount that is at 
                least the amount described in paragraph (3)(A) but not 
                to exceed the amount described in paragraph (3)(D);
                    ``(B) in the case of a violation of such provision 
                in which it is established that the violation was due 
                to reasonable cause and not to willful neglect, a 
                penalty for each such violation of an amount that is at 
                least the amount described in paragraph (3)(B) but not 
                to exceed the amount described in paragraph (3)(D); and
                    ``(C) in the case of a violation of such provision 
                in which it is established that the violation was due 
                to willful neglect--
                            ``(i) if the violation is corrected as 
                        described in subsection (b)(3)(A), a penalty in 
                        an amount that is at least the amount described 
                        in paragraph (3)(C) but not to exceed the 
                        amount described in paragraph (3)(D); and
                            ``(ii) if the violation is not corrected as 
                        described in such subsection, a penalty in an 
                        amount that is at least the amount described in 
                        paragraph (3)(D).
                In determining the amount of a penalty under this 
                section for a violation, the Secretary shall base such 
                determination on the nature and extent of the violation 
                and the nature and extent of the harm resulting from 
                such violation.''.
            (2) Tiers of penalties described.--Section 1176(a) of such 
        Act (42 U.S.C. 1320d-5(a)) is further amended by adding at the 
        end the following new paragraph:
            ``(3) Tiers of penalties described.--For purposes of 
        paragraph (1), with respect to a violation by a person of a 
        provision of this part--
                    ``(A) the amount described in this subparagraph is 
                $100 for each such violation, except that the total 
                amount imposed on the person for all such violations of 
                an identical requirement or prohibition during a 
                calendar year may not exceed $25,000;
                    ``(B) the amount described in this subparagraph is 
                $1,000 for each such violation, except that the total 
                amount imposed on the person for all such violations of 
                an identical requirement or prohibition during a 
                calendar year may not exceed $100,000;
                    ``(C) the amount described in this subparagraph is 
                $10,000 for each such violation, except that the total 
                amount imposed on the person for all such violations of 
                an identical requirement or prohibition during a 
                calendar year may not exceed $250,000; and
                    ``(D) the amount described in this subparagraph is 
                $50,000 for each such violation, except that the total 
                amount imposed on the person for all such violations of 
                an identical requirement or prohibition during a 
                calendar year may not exceed $1,500,000.''.
            (3) Conforming amendments.--Section 1176(b) of such Act (42 
        U.S.C. 1320d-5(b)) is amended--
                    (A) by striking paragraph (2) and redesignating 
                paragraphs (3) and (4) as paragraphs (2) and (3), 
                respectively; and
                    (B) in paragraph (2), as so redesignated--
                            (i) in subparagraph (A), by striking ``in 
                        subparagraph (B), a penalty may not be imposed 
                        under subsection (a) if'' and all that follows 
                        through ``the failure to comply is corrected'' 
                        and inserting ``in subparagraph (B) or 
                        subsection (a)(1)(C), a penalty may not be 
                        imposed under subsection (a) if the failure to 
                        comply is corrected''; and
                            (ii) in subparagraph (B), by striking 
                        ``(A)(ii)'' and inserting ``(A)'' each place it 
                        appears.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to violations occurring after the date of the 
        enactment of this title.
    (e) Enforcement Through State Attorneys General.--
            (1) In general.--Section 1176 of the Social Security Act 
        (42 U.S.C. 1320d-5) is amended by adding at the end the 
        following new subsection:
    ``(c) Enforcement by State Attorneys General.--
            ``(1) Civil action.--Except as provided in subsection (b), 
        in any case in which the attorney general of a State has reason 
        to believe that an interest of one or more of the residents of 
        that State has been or is threatened or adversely affected by 
        any person who violates a provision of this part, the attorney 
        general of the State, as parens patriae, may bring a civil 
        action on behalf of such residents of the State in a district 
        court of the United States of appropriate jurisdiction--
                    ``(A) to enjoin further such violation by the 
                defendant; or
                    ``(B) to obtain damages on behalf of such residents 
                of the State, in an amount equal to the amount 
                determined under paragraph (2).
            ``(2) Statutory damages.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(B), the amount determined under this paragraph is 
                the amount calculated by multiplying the number of 
                violations by up to $100. For purposes of the preceding 
                sentence, in the case of a continuing violation, the 
                number of violations shall be determined consistent 
                with the HIPAA privacy regulations (as defined in 
                section 1180(b)(3)) for violations of subsection (a).
                    ``(B) Limitation.--The total amount of damages 
                imposed on the person for all violations of an 
                identical requirement or prohibition during a calendar 
                year may not exceed $25,000.
                    ``(C) Reduction of damages.--In assessing damages 
                under subparagraph (A), the court may consider the 
                factors the Secretary may consider in determining the 
                amount of a civil money penalty under subsection (a) 
                under the HIPAA privacy regulations.
            ``(3) Attorney fees.--In the case of any successful action 
        under paragraph (1), the court, in its discretion, may award 
        the costs of the action and reasonable attorney fees to the 
        State.
            ``(4) Notice to secretary.--The State shall serve prior 
        written notice of any action under paragraph (1) upon the 
        Secretary and provide the Secretary with a copy of its 
        complaint, except in any case in which such prior notice is not 
        feasible, in which case the State shall serve such notice 
        immediately upon instituting such action. The Secretary shall 
        have the right--
                    ``(A) to intervene in the action;
                    ``(B) upon so intervening, to be heard on all 
                matters arising therein; and
                    ``(C) to file petitions for appeal.
            ``(5) Construction.--For purposes of bringing any civil 
        action under paragraph (1), nothing in this section shall be 
        construed to prevent an attorney general of a State from 
        exercising the powers conferred on the attorney general by the 
        laws of that State.
            ``(6) Venue; service of process.--
                    ``(A) Venue.--Any action brought under paragraph 
                (1) may be brought in the district court of the United 
                States that meets applicable requirements relating to 
                venue under section 1391 of title 28, United States 
                Code.
                    ``(B) Service of process.--In an action brought 
                under paragraph (1), process may be served in any 
                district in which the defendant--
                            ``(i) is an inhabitant; or
                            ``(ii) maintains a physical place of 
                        business.
            ``(7) Limitation on state action while federal action is 
        pending.--If the Secretary has instituted an action against a 
        person under subsection (a) with respect to a specific 
        violation of this part, no State attorney general may bring an 
        action under this subsection against the person with respect to 
        such violation during the pendency of that action.
            ``(8) Application of cmp statute of limitation.--A civil 
        action may not be instituted with respect to a violation of 
        this part unless an action to impose a civil money penalty may 
        be instituted under subsection (a) with respect to such 
        violation consistent with the second sentence of section 
        1128A(c)(1).''.
            (2) Conforming amendments.--Subsection (b) of such section, 
        as amended by subsection (d)(3), is amended--
                    (A) in paragraph (1), by striking ``A penalty may 
                not be imposed under subsection (a)'' and inserting 
                ``No penalty may be imposed under subsection (a) and no 
                damages obtained under subsection (c)'';
                    (B) in paragraph (2)(A)--
                            (i) in the matter before clause (i), by 
                        striking ``a penalty may not be imposed under 
                        subsection (a)'' and inserting ``no penalty may 
                        be imposed under subsection (a) and no damages 
                        obtained under subsection (c)''; and
                            (ii) in clause (ii), by inserting ``or 
                        damages'' after ``the penalty'';
                    (C) in paragraph (2)(B)(i), by striking ``The 
                period'' and inserting ``With respect to the imposition 
                of a penalty by the Secretary under subsection (a), the 
                period''; and
                    (D) in paragraph (3), by inserting ``and any 
                damages under subsection (c)'' after ``any penalty 
                under subsection (a)''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to violations occurring after the date of the 
        enactment of this Act.
    (f) Allowing Continued Use of Corrective Action.--Such section is 
further amended by adding at the end the following new subsection:
    ``(d) Allowing Continued Use of Corrective Action.--Nothing in this 
section shall be construed as preventing the Office of Civil Rights of 
the Department of Health and Human Services from continuing, in its 
discretion, to use corrective action without a penalty in cases where 
the person did not know (and by exercising reasonable diligence would 
not have known) of the violation involved.''.

SEC. 4411. AUDITS.

    The Secretary shall provide for periodic audits to ensure that 
covered entities and business associates that are subject to the 
requirements of this subtitle and subparts C and E of part 164 of title 
45, Code of Federal Regulations, as such provisions are in effect as of 
the date of enactment of this Act, comply with such requirements.

 PART II--RELATIONSHIP TO OTHER LAWS; REGULATORY REFERENCES; EFFECTIVE 
                             DATE; REPORTS

SEC. 4421. RELATIONSHIP TO OTHER LAWS.

    (a) Application of HIPAA State Preemption.--Section 1178 of the 
Social Security Act (42 U.S.C. 1320d-7) shall apply to a provision or 
requirement under this subtitle in the same manner that such section 
applies to a provision or requirement under part C of title XI of such 
Act or a standard or implementation specification adopted or 
established under sections 1172 through 1174 of such Act.
    (b) Health Insurance Portability and Accountability Act.--The 
standards governing the privacy and security of individually 
identifiable health information promulgated by the Secretary under 
sections 262(a) and 264 of the Health Insurance Portability and 
Accountability Act of 1996 shall remain in effect to the extent that 
they are consistent with this subtitle. The Secretary shall by rule 
amend such Federal regulations as required to make such regulations 
consistent with this subtitle.

SEC. 4422. REGULATORY REFERENCES.

    Each reference in this subtitle to a provision of the Code of 
Federal Regulations refers to such provision as in effect on the date 
of the enactment of this title (or to the most recent update of such 
provision).

SEC. 4423. EFFECTIVE DATE.

    Except as otherwise specifically provided, the provisions of part I 
shall take effect on the date that is 12 months after the date of the 
enactment of this title.

SEC. 4424. STUDIES, REPORTS, GUIDANCE.

    (a) Report on Compliance.--
            (1) In general.--For the first year beginning after the 
        date of the enactment of this Act and annually thereafter, the 
        Secretary shall prepare and submit to the Committee on Health, 
        Education, Labor, and Pensions of the Senate and the Committee 
        on Ways and Means and the Committee on Energy and Commerce of 
        the House of Representatives a report concerning complaints of 
        alleged violations of law, including the provisions of this 
        subtitle as well as the provisions of subparts C and E of part 
        164 of title 45, Code of Federal Regulations, (as such 
        provisions are in effect as of the date of enactment of this 
        Act) relating to privacy and security of health information 
        that are received by the Secretary during the year for which 
        the report is being prepared. Each such report shall include, 
        with respect to such complaints received during the year--
                    (A) the number of such complaints;
                    (B) the number of such complaints resolved 
                informally, a summary of the types of such complaints 
                so resolved, and the number of covered entities that 
                received technical assistance from the Secretary during 
                such year in order to achieve compliance with such 
                provisions and the types of such technical assistance 
                provided;
                    (C) the number of such complaints that have 
                resulted in the imposition of civil monetary penalties 
                or have been resolved through monetary settlements, 
                including the nature of the complaints involved and the 
                amount paid in each penalty or settlement;
                    (D) the number of compliance reviews conducted and 
                the outcome of each such review;
                    (E) the number of subpoenas or inquiries issued;
                    (F) the Secretary's plan for improving compliance 
                with and enforcement of such provisions for the 
                following year; and
                    (G) the number of audits performed and a summary of 
                audit findings pursuant to section 4411.
            (2) Availability to public.--Each report under paragraph 
        (1) shall be made available to the public on the Internet 
        website of the Department of Health and Human Services.
    (b) Study and Report on Application of Privacy and Security 
Requirements to Non-HIPAA Covered Entities.--
            (1) Study.--Not later than one year after the date of the 
        enactment of this title, the Secretary, in consultation with 
        the Federal Trade Commission, shall conduct a study, and submit 
        a report under paragraph (2), on privacy and security 
        requirements for entities that are not covered entities or 
        business associates as of the date of the enactment of this 
        title, including--
                    (A) requirements relating to security, privacy, and 
                notification in the case of a breach of security or 
                privacy (including the applicability of an exemption to 
                notification in the case of individually identifiable 
                health information that has been rendered unusable, 
                unreadable, or indecipherable through technologies or 
                methodologies recognized by appropriate professional 
                organization or standard setting bodies to provide 
                effective security for the information) that should be 
                applied to--
                            (i) vendors of personal health records;
                            (ii) entities that offer products or 
                        services through the website of a vendor of 
                        personal health records;
                            (iii) entities that are not covered 
                        entities and that offer products or services 
                        through the s of covered entities that offer 
                        individuals personal health records;
                            (iv) entities that are not covered entities 
                        and that access information in a personal 
                        health record or send information to a personal 
                        health record; and
                            (v) third party service providers used by a 
                        vendor or entity described in clause (i), (ii), 
                        (iii), or (iv) to assist in providing personal 
                        health record products or services;
                    (B) a determination of which Federal Government 
                agency is best equipped to enforce such requirements 
                recommended to be applied to such vendors, entities, 
                and service providers under subparagraph (A); and
                    (C) a timeframe for implementing regulations based 
                on such findings.
            (2) Report.--The Secretary shall submit to the Committee on 
        Finance, the Committee on Health, Education, Labor, and 
        Pensions, and the Committee on Commerce of the Senate and the 
        Committee on Ways and Means and the Committee on Energy and 
        Commerce of the House of Representatives a report on the 
        findings of the study under paragraph (1) and shall include in 
        such report recommendations on the privacy and security 
        requirements described in such paragraph.
    (c) Guidance on Implementation Specification To De-Identify 
Protected Health Information.--Not later than 12 months after the date 
of the enactment of this title, the Secretary shall, in consultation 
with stakeholders, issue guidance on how best to implement the 
requirements for the de-identification of protected health information 
under section 164.514(b) of title 45, Code of Federal Regulations.
    (d) GAO Report on Treatment Disclosures.--Not later than one year 
after the date of the enactment of this title, the Comptroller General 
of the United States shall submit to the Committee on Health, 
Education, Labor, and Pensions of the Senate and the Committee on Ways 
and Means and the Committee on Energy and Commerce of the House of 
Representatives a report on the best practices related to the 
disclosure among health care providers of protected health information 
of an individual for purposes of treatment of such individual. Such 
report shall include an examination of the best practices implemented 
by States and by other entities, such as health information exchanges 
and regional health information organizations, an examination of the 
extent to which such best practices are successful with respect to the 
quality of the resulting health care provided to the individual and 
with respect to the ability of the health care provider to manage such 
best practices, and an examination of the use of electronic informed 
consent for disclosing protected health information for treatment, 
payment, and health care operations.

             Subtitle E--Miscellaneous Medicare Provisions

SEC. 4501. MORATORIA ON CERTAIN MEDICARE REGULATIONS.

    (a) Delay in Phase Out of Medicare Hospice Budget Neutrality 
Adjustment Factor During Fiscal Year 2009.--Notwithstanding any other 
provision of law, including the final rule published on August 8, 2008, 
73 Federal Register 46464 et seq., relating to Medicare Program; 
Hospice Wage Index for Fiscal Year 2009, the Secretary of Health and 
Human Services shall not phase out or eliminate the budget neutrality 
adjustment factor in the Medicare hospice wage index before October 1, 
2009, and the Secretary shall recompute and apply the final Medicare 
hospice wage index for fiscal year 2009 as if there had been no 
reduction in the budget neutrality adjustment factor.
    (b) Non-Application of Phased-Out Indirect Medical Education (IME) 
Adjustment Factor for Fiscal Year 2009.--
            (1) In general.--Section 412.322 of title 42, Code of 
        Federal Regulations, shall be applied without regard to 
        paragraph (c) of such section, and the Secretary of Health and 
        Human Services shall recompute payments for discharges 
        occurring on or after October 1, 2008, as if such paragraph had 
        never been in effect.
            (2) No effect on subsequent years.--Nothing in paragraph 
        (1) shall be construed as having any effect on the application 
        of paragraph (d) of section 412.322 of title 42, Code of 
        Federal Regulations.
    (c) Funding for Implementation.--In addition to funds otherwise 
available, for purposes of implementing the provisions of subsections 
(a) and (b), including costs incurred in reprocessing claims in 
carrying out such provisions, the Secretary of Health and Human 
Services shall provide for the transfer from the Federal Hospital 
Insurance Trust Fund established under section 1817 of the Social 
Security Act (42 U.S.C. 1395i) to the Centers for Medicare & Medicaid 
Services Program Management Account of $2,000,000 for fiscal year 2009.

SEC. 4502. LONG-TERM CARE HOSPITAL TECHNICAL CORRECTIONS.

    (a) Payment.--Subsection (c) of section 114 of the Medicare, 
Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-173) is 
amended--
            (1) in paragraph (1)--
                    (A) by amending the heading to read as follows: 
                ``Delay in application of 25 percent patient threshold 
                payment adjustment'';
                    (B) by striking ``the date of the enactment of this 
                Act'' and inserting ``July 1, 2007,''; and
                    (C) in subparagraph (A), by inserting ``or to a 
                long-term care hospital, or satellite facility, that as 
                of December 29, 2007, was co-located with an entity 
                that is a provider-based, off-campus location of a 
                subsection (d) hospital which did not provide services 
                payable under section 1886(d) of the Social Security 
                Act at the off-campus location'' after ``freestanding 
                long-term care hospitals''; and
            (2) in paragraph (2)--
                    (A) in subparagraph (B)(ii), by inserting ``or that 
                is described in section 412.22(h)(3)(i) of such title'' 
                before the period; and
                    (B) in subparagraph (C), by striking ``the date of 
                the enactment of this Act'' and inserting ``October 1, 
                2007 (or July 1, 2007, in the case of a satellite 
                facility described in section 412.22(h)(3)(i) of title 
                42, Code of Federal Regulations)''.
    (b) Moratorium.--Subsection (d)(3)(A) of such section is amended by 
striking ``if the hospital or facility'' and inserting ``if the 
hospital or facility obtained a certificate of need for an increase in 
beds that is in a State for which such certificate of need is required 
and that was issued on or after April 1, 2005, and before December 29, 
2007, or if the hospital or facility''.
    (c) Effective Date.--The amendments made by this section shall be 
effective and apply as if included in the enactment of the Medicare, 
Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-173).
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