I 

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. 

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

3 TITLE I—TAX PROVISIONS 

4 SECTION 1000. SHORT TITLE, ETC. 

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

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

7 (b) REFERENCE.—Except as otherwise expressly pro8 vided, whenever in this title an amendment or repeal is 


pwalker on PROD1PC71 with BILLS
2 

•HR 598 IH

1 expressed in terms of an amendment to, or repeal of, a 

2 section or other provision, the reference shall be consid3 ered to be made to a section or other provision of the In4 ternal Revenue Code of 1986. 

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

6 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 


pwalker on PROD1PC71 with BILLS
3 

•HR 598 IH

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 


pwalker on PROD1PC71 with BILLS
4 

•HR 598 IH

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. 

1 Subtitle A—Making Work Pay 

2 SEC. 1001. MAKING WORK PAY CREDIT. 

3 (a) IN GENERAL.—Subpart C of part IV of sub4 chapter A of chapter 1 is amended by inserting after sec5 tion 36 the following new section: 

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

7 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli8 gible individual, there shall be allowed as a credit against 

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

10 amount equal to the lesser of— 

11 ‘‘(1) 6.2 percent of earned income of the tax12 payer, or 

13 ‘‘(2) $500 ($1,000 in the case of a joint re14 turn). 

15 ‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED

16 GROSS INCOME.— 

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

18 credit under subsection (a) (determined without re19 gard to this paragraph) for the taxable year shall be 


pwalker on PROD1PC71 with BILLS
5 

•HR 598 IH

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

2 much of the taxpayer’s modified adjusted gross in3 come as exceeds $75,000 ($150,000 in the case of 

4 a joint return). 

5 ‘‘(2) MODIFIED ADJUSTED GROSS INCOME.— 

6 For purposes of subparagraph (A), the term ‘modi7 fied adjusted gross income’ means the adjusted 

8 gross income of the taxpayer for the taxable year in9 creased by any amount excluded from gross income 

10 under section 911, 931, or 933. 

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

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

13 individual’ means any individual other than— 

14 ‘‘(A) any nonresident alien individual, 

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

16 a deduction under section 151 is allowable to 

17 another taxpayer for a taxable year beginning 

18 in the calendar year in which the individual’s 

19 taxable year begins, and 

20 ‘‘(C) an estate or trust. 

21 ‘‘(2) EARNED INCOME.—The term ‘earned in22 come’ has the meaning given such term by section 

23 32(c)(2), except that such term shall not include net 

24 earnings from self-employment which are not taken 

25 into account in computing taxable income. For purVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
6 

•HR 598 IH

1 poses of the preceding sentence, any amount ex2 cluded from gross income by reason of section 112 

3 shall be treated as earned income which is taken 

4 into account in computing taxable income for the 

5 taxable year. 

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

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

8 (b) TREATMENT OF POSSESSIONS.— 

9 (1) PAYMENTS TO POSSESSIONS.— 

10 (A) MIRROR CODE POSSESSION.—The Sec11 retary of the Treasury shall pay to each posses12 sion of the United States with a mirror code 

13 tax system amounts equal to the loss to that 

14 possession by reason of the amendments made 

15 by this section with respect to taxable years be16 ginning in 2009 and 2010. Such amounts shall 

17 be determined by the Secretary of the Treasury 

18 based on information provided by the govern19 ment of the respective possession. 

20 (B) OTHER POSSESSIONS.—The Secretary 

21 of the Treasury shall pay to each possession of 

22 the United States which does not have a mirror 

23 code tax system amounts estimated by the Sec24 retary of the Treasury as being equal to the ag25 gregate benefits that would have been provided 


pwalker on PROD1PC71 with BILLS
7 

•HR 598 IH

1 to residents of such possession by reason of the 

2 amendments made by this section for taxable 

3 years beginning in 2009 and 2010 if a mirror 

4 code tax system had been in effect in such pos5 session. The preceding sentence shall not apply 

6 with respect to any possession of the United 

7 States unless such possession has a plan, which 

8 has been approved by the Secretary of the 

9 Treasury, under which such possession will 

10 promptly distribute such payments to the resi11 dents of such possession. 

12 (2) COORDINATION WITH CREDIT ALLOWED

13 AGAINST UNITED STATES INCOME TAXES.—No cred14 it shall be allowed against United States income 

15 taxes for any taxable year under section 36A of the 

16 Internal Revenue Code of 1986 (as added by this 

17 section) to any person— 

18 (A) to whom a credit is allowed against 

19 taxes imposed by the possession by reason of 

20 the amendments made by this section for such 

21 taxable year, or 

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

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

24 to such taxable year. 

25 (3) DEFINITIONS AND SPECIAL RULES.— 


pwalker on PROD1PC71 with BILLS
8 

•HR 598 IH

1 (A) POSSESSION OF THE UNITED

2 STATES.—For purposes of this subsection, the 

3 term ‘‘possession of the United States’’ includes 

4 the Commonwealth of Puerto Rico and the 

5 Commonwealth of the Northern Mariana Is6 lands. 

7 (B) MIRROR CODE TAX SYSTEM.—For pur8 poses of this subsection, the term ‘‘mirror code 

9 tax system’’ means, with respect to any posses10 sion of the United States, the income tax sys11 tem of such possession if the income tax liabil12 ity of the residents of such possession under 

13 such system is determined by reference to the 

14 income tax laws of the United States as if such 

15 possession were the United States. 

16 (C) TREATMENT OF PAYMENTS.—For pur17 poses of section 1324(b)(2) of title 31, United 

18 States Code, the payments under this sub19 section shall be treated in the same manner as 

20 a refund due from the credit allowed under sec21 tion 36A of the Internal Revenue Code of 1986 

22 (as added by this section). 

23 (c) REFUNDS DISREGARDED IN THE ADMINISTRA24 TION OF FEDERAL PROGRAMS AND FEDERALLY AS25 SISTED PROGRAMS.—Any credit or refund allowed or 


pwalker on PROD1PC71 with BILLS
9 

•HR 598 IH

1 made to any individual by reason of section 36A of the 

2 Internal Revenue Code of 1986 (as added by this section) 

3 or by reason of subsection (b) of this section shall not be 

4 taken into account as income and shall not be taken into 

5 account as resources for the month of receipt and the fol6 lowing 2 months, for purposes of determining the eligi7 bility of such individual or any other individual for benefits 

8 or assistance, or the amount or extent of benefits or assist9 ance, under any Federal program or under any State or 

10 local program financed in whole or in part with Federal 

11 funds. 

12 (d) CONFORMING AMENDMENTS.— 

13 (1) Section 6211(b)(4)(A) is amended by insert14 ing ‘‘36A,’’ after ‘‘36,’’. 

15 (2) Section 1324(b)(2) of title 31, United 

16 States Code, is amended by inserting ‘‘36A,’’ after 

17 ‘‘36,’’. 

18 (3) The table of sections for subpart C of part 

19 IV of subchapter A of chapter 1 is amended by in20 serting after the item relating to section 36 the fol21 lowing new item: 

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

22 (e) EFFECTIVE DATE.—This section shall apply to 

23 taxable years beginning after December 31, 2008. 


pwalker on PROD1PC71 with BILLS
10 

•HR 598 IH

1 Subtitle B—Additional Tax Relief 

2 for Families With Children 

3 SEC. 1101. TEMPORARY INCREASE IN EARNED INCOME TAX 

4 CREDIT. 

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

6 amended by adding at the end the following new para7 graph: 

8 ‘‘(3) TEMPORARY INCREASE.—In the case of 

9 any taxable year beginning in 2009 or 2010— 

10 ‘‘(A) INCREASED CREDIT PERCENTAGE

11 FOR 3 OR MORE QUALIFYING CHILDREN.—In 

12 the case of a taxpayer with 3 or more qualifying 

13 children, the credit percentage is 45 percent. 

14 ‘‘(B) REDUCTION OF MARRIAGE PEN15 ALTY.— 

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

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

18 $5,000. 

19 ‘‘(ii) INFLATION ADJUSTMENT.—In 

20 the case of any taxable year beginning in 

21 2010, the $5,000 amount in clause (i) 

22 shall be increased by an amount equal to— 

23 ‘‘(I) such dollar amount, multi24 plied by 


pwalker on PROD1PC71 with BILLS
11 

•HR 598 IH

1 ‘‘(II) the cost of living adjust2 ment determined under section 1(f)(3) 

3 for the calendar year in which the tax4 able year begins determined by sub5 stituting ‘calendar year 2008’ for ‘cal6 endar year 1992’ in subparagraph (B) 

7 thereof. 

8 ‘‘(iii) ROUNDING.—Subparagraph (A) 

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

10 into account any increase under clause 

11 (ii).’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years beginning after 

14 December 31, 2008. 

15 SEC. 1102. TEMPORARY INCREASE OF REFUNDABLE POR16 TION OF CHILD CREDIT. 

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

18 amended to read as follows: 

19 ‘‘(4) SPECIAL RULE FOR 2009 AND 2010.—Not20 withstanding paragraph (3), in the case of any tax21 able year beginning in 2009 or 2010, the dollar 

22 amount in effect for such taxable year under para23 graph (1)(B)(i) shall be zero.’’. 


pwalker on PROD1PC71 with BILLS
12 

•HR 598 IH

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

2 this section shall apply to taxable years beginning after 

3 December 31, 2008. 

4 Subtitle C—American Opportunity 

5 Tax Credit 

6 SEC. 1201. AMERICAN OPPORTUNITY TAX CREDIT. 

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

8 scholarship credit) is amended by redesignating subsection 

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

10 the following new subsection: 

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

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

13 ‘‘(1) INCREASE IN CREDIT.—The Hope Scholar14 ship Credit shall be an amount equal to the sum 

15 of— 

16 ‘‘(A) 100 percent of so much of the quali17 fied tuition and related expenses paid by the 

18 taxpayer during the taxable year (for education 

19 furnished to the eligible student during any 

20 academic period beginning in such taxable year) 

21 as does not exceed $2,000, plus 

22 ‘‘(B) 25 percent of such expenses so paid 

23 as exceeds $2,000 but does not exceed $4,000. 

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

25 POST-SECONDARY EDUCATION.—Subparagraphs (A) 


pwalker on PROD1PC71 with BILLS
13 

•HR 598 IH

1 and (C) of subsection (b)(2) shall be applied by sub2 stituting ‘4’ for ‘2’. 

3 ‘‘(3) QUALIFIED TUITION AND RELATED EX4 PENSES TO INCLUDE REQUIRED COURSE MATE5 RIALS.—Subsection (f)(1)(A) shall be applied by 

6 substituting ‘tuition, fees, and course materials’ for 

7 ‘tuition and fees’. 

8 ‘‘(4) INCREASE IN AGI LIMITS FOR HOPE

9 SCHOLARSHIP CREDIT.—In lieu of applying sub10 section (d) with respect to the Hope Scholarship 

11 Credit, such credit (determined without regard to 

12 this paragraph) shall be reduced (but not below 

13 zero) by the amount which bears the same ratio to 

14 such credit (as so determined) as— 

15 ‘‘(A) the excess of— 

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

17 gross income (as defined in subsection 

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

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

20 a joint return), bears to 

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

22 joint return). 

23 ‘‘(5) CREDIT ALLOWED AGAINST ALTERNATIVE

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

25 which section 26(a)(2) does not apply, so much of 


pwalker on PROD1PC71 with BILLS
14 

•HR 598 IH

1 the credit allowed under subsection (a) as is attrib2 utable to the Hope Scholarship Credit shall not ex3 ceed the excess of— 

4 ‘‘(A) the sum of the regular tax liability 

5 (as defined in section 26(b)) plus the tax im6 posed by section 55, over 

7 ‘‘(B) the sum of the credits allowable 

8 under this subpart (other than this section and 

9 sections 23, 25D, and 30D) and section 27 for 

10 the taxable year. 

11 Any reference in section 24, 25, 26, 25B, 904, or 

12 1400C to a credit allowed under this subsection shall 

13 be treated as a reference to so much of the credit 

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

15 Hope Scholarship Credit. 

16 ‘‘(6) PORTION OF CREDIT MADE REFUND17 ABLE.—40 percent of so much of the credit allowed 

18 under subsection (a) as is attributable to the Hope 

19 Scholarship Credit (determined after application of 

20 paragraph (4) and without regard to this paragraph 

21 and section 26(a)(2) or paragraph (5), as the case 

22 may be) shall be treated as a credit allowable under 

23 subpart C (and not allowed under subsection (a)). 

24 The preceding sentence shall not apply to any tax25 payer for any taxable year if such taxpayer is a child 


pwalker on PROD1PC71 with BILLS
15 

•HR 598 IH

1 to whom subsection (g) of section 1 applies for such 

2 taxable year.’’. 

3 (b) CONFORMING AMENDMENTS.— 

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

5 ‘‘25A(i),’’ after ‘‘23,’’. 

6 (2) Section 25(e)(1)(C)(ii) is amended by in7 serting ‘‘25A(i),’’ after ‘‘24,’’. 

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

9 ‘‘25A(i),’’ after ‘‘24,’’. 

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

11 ‘‘25A(i),’’ after ‘‘23,’’. 

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

13 ‘‘25A(i),’’ after ‘‘24,’’. 

14 (6) Section 1400C(d)(2) is amended by insert15 ing ‘‘25A(i),’’ after ‘‘24,’’. 

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

17 States Code, is amended by inserting ‘‘25A,’’ before 

18 ‘‘35’’. 

19 (c) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to taxable years beginning after 

21 December 31, 2008. 

22 (d) APPLICATION OF EGTRRA SUNSET.—The 

23 amendment made by subsection (b)(1) shall be subject to 

24 title IX of the Economic Growth and Tax Relief ReconciliVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
16 

•HR 598 IH

1 ation Act of 2001 in the same manner as the provision 

2 of such Act to which such amendment relates. 

3 (e) TREASURY STUDIES REGARDING EDUCATION IN4 CENTIVES.— 

5 (1) STUDY REGARDING COORDINATION WITH

6 NON-TAX EDUCATIONAL INCENTIVES.—The Sec7 retary of the Treasury, or the Secretary’s delegate, 

8 shall study how to coordinate the credit allowed 

9 under section 25A of the Internal Revenue Code of 

10 1986 with the Federal Pell Grant program under 

11 section 401 of the Higher Education Act of 1965. 

12 (2) STUDY REGARDING IMPOSITION OF COMMU13 NITY SERVICE REQUIREMENTS.—The Secretary of 

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

15 the feasibility of requiring students to perform com16 munity service as a condition of taking their tuition 

17 and related expenses into account under section 25A 

18 of the Internal Revenue Code of 1986. 

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

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

21 the Treasury, or the Secretary’s delegate, shall re22 port to Congress on the results of the studies con23 ducted under this paragraph. 


pwalker on PROD1PC71 with BILLS
17 

•HR 598 IH

1 Subtitle D—Housing Incentives 

2 SEC. 1301. WAIVER OF REQUIREMENT TO REPAY FIRST3 TIME HOMEBUYER CREDIT. 

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

5 amended by adding at the end the following new subpara6 graph: 

7 ‘‘(D) WAIVER OF RECAPTURE FOR PUR8 CHASES IN 2009.—In the case of any credit al9 lowed with respect to the purchase of a prin10 cipal residence after December 31, 2008, and 

11 before July 1, 2009— 

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

13 and 

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

15 the disposition or cessation described in 

16 paragraph (2) with respect to such resi17 dence occurs during the 36-month period 

18 beginning on the date of the purchase of 

19 such residence by the taxpayer.’’. 

20 (b) CONFORMING AMENDMENT.—Subsection (g) of 

21 section 36 is amended by striking ‘‘subsection (c)’’ and 

22 inserting ‘‘subsections (c) and (f)(4)(D)’’. 

23 (c) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to residences purchased after De25 cember 31, 2008. 


pwalker on PROD1PC71 with BILLS
18 

•HR 598 IH

1 SEC. 1302. COORDINATION OF LOW-INCOME HOUSING 

2 CREDIT AND LOW-INCOME HOUSING GRANTS. 

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

4 Code of 1986 is amended by adding at the end the fol5 lowing new paragraph: 

6 ‘‘(9) COORDINATION WITH LOW-INCOME HOUS7 ING GRANTS.— 

8 ‘‘(A) REDUCTION IN STATE HOUSING

9 CREDIT CEILING FOR LOW-INCOME HOUSING

10 GRANTS RECEIVED IN 2009.—For purposes of 

11 this section, the amounts described in clauses 

12 (i) through (iv) of subsection (h)(3)(C) with re13 spect to any State for 2009 shall each be re14 duced by so much of such amount as is taken 

15 into account in determining the amount of any 

16 grant to such State under section 1711 of the 

17 American Recovery and Reinvestment Tax Act 

18 of 2009. 

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

20 a qualified low-income building shall not be re21 duced by the amount of any grant described in 

22 subparagraph (A).’’. 


pwalker on PROD1PC71 with BILLS
19 

•HR 598 IH

1 Subtitle E—Tax Incentives for 

2 Business 

3 PART I—TEMPORARY INVESTMENT INCENTIVES 

4 SEC. 1401. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY 

5 ACQUIRED DURING 2009. 

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

7 is amended— 

8 (1) by striking ‘‘January 1, 2010’’ and insert9 ing ‘‘January 1, 2011’’, and 

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

11 it appears and inserting ‘‘January 1, 2010’’. 

12 (b) CONFORMING AMENDMENTS.— 

13 (1) The heading for subsection (k) of section 

14 168 is amended by striking ‘‘JANUARY 1, 2009’’ and 

15 inserting ‘‘JANUARY 1, 2010’’. 

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

17 168(k)(2)(B) is amended by striking ‘‘PRE-JANUARY

18 1, 2009’’ and inserting ‘‘PRE-JANUARY 1, 2010’’. 

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

20 amended— 

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

22 (i), 

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

24 (v), and 


pwalker on PROD1PC71 with BILLS
20 

•HR 598 IH

1 (C) by inserting after clause (i) the fol2 lowing new clauses: 

3 ‘‘(ii) ‘April 1, 2008’ shall be sub4 stituted for ‘January 1, 2008’ in subpara5 graph (A)(iii)(I) thereof, 

6 ‘‘(iii) ‘January 1, 2009’ shall be sub7 stituted for ‘January 1, 2010’ each place it 

8 appears, 

9 ‘‘(iv) ‘January 1, 2010’ shall be sub10 stituted for ‘January 1, 2011’ in subpara11 graph (A)(iv) thereof, and’’. 

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

13 amended by striking ‘‘January 1, 2009’’ and insert14 ing ‘‘January 1, 2010’’. 

15 (5) Subparagraph (B) of section 1400N(d)(3) 

16 is amended by striking ‘‘January 1, 2009’’ and in17 serting ‘‘January 1, 2010’’. 

18 (c) EFFECTIVE DATES.— 

19 (1) IN GENERAL.—Except as provided in para20 graph (2), the amendments made by this section 

21 shall apply to property placed in service after De22 cember 31, 2008, in taxable years ending after such 

23 date. 

24 (2) TECHNICAL AMENDMENT.—Section 

25 168(k)(4)(D)(ii) of the Internal Revenue Code of 


pwalker on PROD1PC71 with BILLS
21 

•HR 598 IH

1 1986, as added by subsection (b)(3)(C), shall apply 

2 to taxable years ending after March 31, 2008. 

3 SEC. 1402. TEMPORARY INCREASE IN LIMITATIONS ON EX4 PENSING OF CERTAIN DEPRECIABLE BUSI5 NESS ASSETS. 

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

7 is amended— 

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

9 2009’’, and 

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

11 and inserting ‘‘2008, AND 2009’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years beginning after 

14 December 31, 2008. 

15 PART II—5-YEAR CARRYBACK OF OPERATING 

16 LOSSES 

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

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

19 172(b)(1) is amended to read as follows: 

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

21 OPERATING LOSSES.—In the case of a net oper22 ating loss for any taxable year ending during 

23 2008 or 2009— 

24 ‘‘(i) subparagraph (A)(i) shall be ap25 plied by substituting ‘5’ for ‘2’, 


pwalker on PROD1PC71 with BILLS
22 

•HR 598 IH

1 ‘‘(ii) subparagraph (E)(ii) shall be ap2 plied by substituting ‘4’ for ‘2’, and 

3 ‘‘(iii) subparagraph (F) shall not 

4 apply.’’. 

5 (b) ALTERNATIVE TAX NET OPERATING LOSS DE6 DUCTION.—Subclause (I) of section 56(d)(1)(A)(ii) is 

7 amended to read as follows: 

8 ‘‘(I) the amount of such deduc9 tion attributable to the sum of 

10 carrybacks of net operating losses 

11 from taxable years ending during 

12 2001, 2002, 2008, or 2009 and 

13 carryovers of net operating losses to 

14 taxable years ending during such cal15 endar years, or’’. 

16 (c) ELECTION TO CARRY BACK A FEWER NUMBER

17 OF YEARS.—Subsection (k) of section 172 is amended by 

18 inserting ‘‘or may elect to apply such subsection by sub19 stituting a whole number less than 5 for ‘5’ in such sub20 section’’ before the period at the end of the first sentence. 

21 (d) LOSS FROM OPERATIONS OF LIFE INSURANCE

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

23 by adding at the end the following new paragraph: 

24 ‘‘(4) CARRYBACK FOR 2008 AND 2009 LOSS

25 YEARS.—In the case of a loss from operations for 


pwalker on PROD1PC71 with BILLS
23 

•HR 598 IH

1 any taxable year ending during 2008 or 2009, the 

2 taxpayer may elect to apply paragraph (1)(A) by 

3 substituting any whole number less than 6 for ‘3’. 

4 Such election shall be made in such manner as may 

5 be prescribed by the Secretary and shall be made by 

6 the due date (including extensions of time) for filing 

7 the taxpayer’s return for the taxable year of the loss 

8 from operations. Such election, once made for any 

9 taxable year, shall be irrevocable for such taxable 

10 year.’’. 

11 (e) EFFECTIVE DATE.— 

12 (1) IN GENERAL.—Except as otherwise pro13 vided in this subsection, the amendments made by 

14 this section shall apply to net operating losses aris15 ing in taxable years ending after December 31, 

16 2007. 

17 (2) ALTERNATIVE TAX NET OPERATING LOSS

18 DEDUCTION.—The amendment made by subsection 

19 (b) shall apply to taxable years ending after 1997. 

20 (3) LOSS FROM OPERATIONS OF LIFE INSUR21 ANCE COMPANIES.—The amendment made by sub22 section (d) shall apply to losses from operations aris23 ing in taxable years ending after December 31, 

24 2007. 


pwalker on PROD1PC71 with BILLS
24 

•HR 598 IH

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

2 operating loss (or, in the case of a life insurance 

3 company, a loss from operations) for a taxable year 

4 ending during 2008— 

5 (A) any election made under section 

6 172(b)(3) or 810(b)(3) of the Internal Revenue 

7 Code of 1986 with respect to such loss may 

8 (notwithstanding such section) be revoked be9 fore the applicable date, 

10 (B) any election made under section 

11 172(k) or 810(b)(4) of such Code with respect 

12 to such loss shall (notwithstanding such sec13 tion) be treated as timely made if made before 

14 the applicable date, and 

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

16 of such Code with respect to such loss shall be 

17 treated as timely filed if filed before the appli18 cable date. 

19 For purposes of this paragraph, the term ‘‘applica20 ble date’’ means the date which is 60 days after the 

21 date of the enactment of this Act. 

22 SEC. 1412. EXCEPTION FOR TARP RECIPIENTS. 

23 The amendments made by this part shall not apply 

24 to— 

25 (1) any taxpayer if— 


pwalker on PROD1PC71 with BILLS
25 

•HR 598 IH

1 (A) the Federal Government acquires, at 

2 any time, an equity interest in the taxpayer 

3 pursuant to the Emergency Economic Stabiliza4 tion Act of 2008, or 

5 (B) the Federal Government acquires, at 

6 any time, any warrant (or other right) to ac7 quire any equity interest with respect to the 

8 taxpayer pursuant to such Act, 

9 (2) the Federal National Mortgage Association 

10 and the Federal Home Loan Mortgage Corporation, 

11 and 

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

13 2009 is a member of the same affiliated group (as 

14 defined in section 1504 of the Internal Revenue 

15 Code of 1986, determined without regard to sub16 section (b) thereof) as a taxpayer described in para17 graph (1) or (2). 

18 PART III—INCENTIVES FOR NEW JOBS 

19 SEC. 1421. INCENTIVES TO HIRE UNEMPLOYED VETERANS 

20 AND DISCONNECTED YOUTH. 

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

22 amended by adding at the end the following new para23 graph: 


pwalker on PROD1PC71 with BILLS
26 

•HR 598 IH

1 ‘‘(14) CREDIT ALLOWED FOR UNEMPLOYED

2 VETERANS AND DISCONNECTED YOUTH HIRED IN

3 2009 OR 2010.— 

4 ‘‘(A) IN GENERAL.—Any unemployed vet5 eran or disconnected youth who begins work for 

6 the employer during 2009 or 2010 shall be 

7 treated as a member of a targeted group for 

8 purposes of this subpart. 

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

10 paragraph— 

11 ‘‘(i) UNEMPLOYED VETERAN.—The 

12 term ‘unemployed veteran’ means any vet13 eran (as defined in paragraph (3)(B), de14 termined without regard to clause (ii) 

15 thereof) who is certified by the designated 

16 local agency as— 

17 ‘‘(I) having been discharged or 

18 released from active duty in the 

19 Armed Forces during 2008, 2009, or 

20 2010, and 

21 ‘‘(II) being in receipt of unem22 ployment compensation under State or 

23 Federal law for not less than 4 weeks 

24 during the 1-year period ending on 

25 the hiring date. 


pwalker on PROD1PC71 with BILLS
27 

•HR 598 IH

1 ‘‘(ii) DISCONNECTED YOUTH.—The 

2 term ‘disconnected youth’ means any indi3 vidual who is certified by the designated 

4 local agency— 

5 ‘‘(I) as having attained age 16 

6 but not age 25 on the hiring date, 

7 ‘‘(II) as not regularly attending 

8 any secondary, technical, or post-sec9 ondary school during the 6-month pe10 riod preceding the hiring date, 

11 ‘‘(III) as not regularly employed 

12 during such 6-month period, and 

13 ‘‘(IV) as not readily employable 

14 by reason of lacking a sufficient num15 ber of basic skills.’’. 

16 (b) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to individuals who begin work for 

18 the employer after December 31, 2008. 


pwalker on PROD1PC71 with BILLS
28 

•HR 598 IH

1 PART IV—CLARIFICATION OF REGULATIONS RE2 LATED TO LIMITATIONS ON CERTAIN BUILT3 IN LOSSES FOLLOWING AN OWNERSHIP 

4 CHANGE 

5 SEC. 1431. CLARIFICATION OF REGULATIONS RELATED TO 

6 LIMITATIONS ON CERTAIN BUILT-IN LOSSES 

7 FOLLOWING AN OWNERSHIP CHANGE. 

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

9 (1) The delegation of authority to the Secretary 

10 of the Treasury under section 382(m) of the Inter11 nal Revenue Code of 1986 does not authorize the 

12 Secretary to provide exemptions or special rules that 

13 are restricted to particular industries or classes of 

14 taxpayers. 

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

16 inconsistent with the congressional intent in enact17 ing such section 382(m). 

18 (3) The legal authority to prescribe Internal 

19 Revenue Service Notice 2008–83 is doubtful. 

20 (4) However, as taxpayers should generally be 

21 able to rely on guidance issued by the Secretary of 

22 the Treasury legislation is necessary to clarify the 

23 force and effect of Internal Revenue Service Notice 

24 2008–83 and restore the proper application under 

25 the Internal Revenue Code of 1986 of the limitation 


pwalker on PROD1PC71 with BILLS
29 

•HR 598 IH

1 on built-in losses following an ownership change of 

2 a bank. 

3 (b) DETERMINATION OF FORCE AND EFFECT OF IN4 TERNAL REVENUE SERVICE NOTICE 2008–83 EXEMPT5 ING BANKS FROM LIMITATION ON CERTAIN BUILT–IN

6 LOSSES FOLLOWING OWNERSHIP CHANGE.— 

7 (1) IN GENERAL.—Internal Revenue Service 

8 Notice 2008–83— 

9 (A) shall be deemed to have the force and 

10 effect of law with respect to any ownership 

11 change (as defined in section 382(g) of the In12 ternal Revenue Code of 1986) occurring on or 

13 before January 16, 2009, and 

14 (B) shall have no force or effect with re15 spect to any ownership change after such date. 

16 (2) BINDING CONTRACTS.—Notwithstanding 

17 paragraph (1), Internal Revenue Service Notice 

18 2008–83 shall have the force and effect of law with 

19 respect to any ownership change (as so defined) 

20 which occurs after January 16, 2009 if such 

21 change— 

22 (A) is pursuant to a written binding con23 tract entered into on or before such date, or 

24 (B) was described on or before such date 

25 in a public announcement or in a filing with the 


pwalker on PROD1PC71 with BILLS
30 

•HR 598 IH

1 Securities and Exchange Commision required 

2 by reason of such ownership change. 

3 Subtitle F—Fiscal Relief for State 

4 and Local Governments 

5 PART I—IMPROVED MARKETABILITY FOR TAX6 EXEMPT BONDS 

7 SEC. 1501. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX8 EXEMPT INTEREST EXPENSE OF FINANCIAL 

9 INSTITUTIONS. 

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

11 amended by adding at the end the following new para12 graph: 

13 ‘‘(7) DE MINIMIS EXCEPTION FOR BONDS

14 ISSUED DURING 2009 OR 2010.— 

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

16 (2)(A), there shall not be taken into account 

17 tax-exempt obligations issued during 2009 or 

18 2010. 

19 ‘‘(B) LIMITATION.—The amount of tax-ex20 empt obligations not taken into account by rea21 son of subparagraph (A) shall not exceed 2 per22 cent of the amount determined under para23 graph (2)(B). 

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

25 paragraph, a refunding bond (whether a current 


pwalker on PROD1PC71 with BILLS
31 

•HR 598 IH

1 or advance refunding) shall be treated as issued 

2 on the date of the issuance of the refunded 

3 bond (or in the case of a series of refundings, 

4 the original bond).’’. 

5 (b) TREATMENT AS FINANCIAL INSTITUTION PREF6 ERENCE ITEM.—Clause (iv) of section 291(e)(1)(B) is 

7 amended by adding at the end the following: ‘‘That por8 tion of any obligation not taken into account under para9 graph (2)(A) of section 265(b) by reason of paragraph (7) 

10 of such section shall be treated for purposes of this section 

11 as having been acquired on August 7, 1986.’’. 

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

13 this section shall apply to obligations issued after Decem14 ber 31, 2008. 

15 SEC. 1502. MODIFICATION OF SMALL ISSUER EXCEPTION 

16 TO TAX-EXEMPT INTEREST EXPENSE ALLOCA17 TION RULES FOR FINANCIAL INSTITUTIONS. 

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

19 (relating to exception for certain tax-exempt obligations) 

20 is amended by adding at the end the following new sub21 paragraph: 

22 ‘‘(G) SPECIAL RULES FOR OBLIGATIONS

23 ISSUED DURING 2009 AND 2010.— 

24 ‘‘(i) INCREASE IN LIMITATION.—In 

25 the case of obligations issued during 2009 


pwalker on PROD1PC71 with BILLS
32 

•HR 598 IH

1 or 2010, subparagraphs (C)(i), (D)(i), and 

2 (D)(iii)(II) shall each be applied by sub3 stituting ‘$30,000,000’ for ‘$10,000,000’. 

4 ‘‘(ii) SPECIAL RULE FOR POOLED

5 FINANCINGS.—In the case of a pooled fi6 nancing issue issued during 2009 or 

7 2010— 

8 ‘‘(I) subparagraph (F) shall not 

9 apply, and 

10 ‘‘(II) any obligation issued as a 

11 part of such issue shall be treated as 

12 a qualified tax-exempt obligation if 

13 the requirements of this paragraph 

14 are met with respect to each qualified 

15 portion of the issue (determined by 

16 treating each qualified portion as a 

17 separate issue). 

18 ‘‘(iii) POOLED FINANCING ISSUE.— 

19 For purposes of this subparagraph, the 

20 term ‘pooled financing issue’ means any 

21 issue the proceeds of which are used di22 rectly or indirectly to make or finance 

23 loans to 2 or more ultimate borrowers all 

24 of whom are qualified borrowers. 


pwalker on PROD1PC71 with BILLS
33 

•HR 598 IH

1 ‘‘(iv) QUALIFIED PORTION.—For pur2 poses of this subparagraph, the term 

3 ‘qualified portion’ means that portion of 

4 the proceeds which are used with respect 

5 to each qualified borrower under the issue. 

6 ‘‘(v) QUALIFIED BORROWER.—For 

7 purposes of this subparagraph, the term 

8 ‘qualified borrower’ means a borrower 

9 which is a State or political subdivision 

10 thereof or an organization described in sec11 tion 501(c)(3) and exempt from taxation 

12 under section 501(a).’’. 

13 (b) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to obligations issued after Decem15 ber 31, 2008. 

16 SEC. 1503. TEMPORARY MODIFICATION OF ALTERNATIVE 

17 MINIMUM TAX LIMITATIONS ON TAX-EXEMPT 

18 BONDS. 

19 (a) INTEREST ON PRIVATE ACTIVITY BONDS ISSUED

20 DURING 2009 AND 2010 NOT TREATED AS TAX PREF21 ERENCE ITEM.—Subparagraph (C) of section 57(a)(5) is 

22 amended by adding at the end a new clause: 

23 ‘‘(vi) EXCEPTION FOR BONDS ISSUED

24 IN 2009 AND 2010.—For purposes of clause 

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


pwalker on PROD1PC71 with BILLS
34 

•HR 598 IH

1 not include any bond issued after Decem2 ber 31, 2008, and before January 1, 2011. 

3 For purposes of the preceding sentence, a 

4 refunding bond (whether a current or ad5 vance refunding) shall be treated as issued 

6 on the date of the issuance of the refunded 

7 bond (or in the case of a series of 

8 refundings, the original bond).’’. 

9 (b) NO ADJUSTMENT TO ADJUSTED CURRENT

10 EARNINGS FOR INTEREST ON TAX-EXEMPT BONDS

11 ISSUED AFTER 2008.—Subparagraph (B) of section 

12 56(g)(4) is amended by adding at the end the following 

13 new clause: 

14 ‘‘(iv) TAX EXEMPT INTEREST ON

15 BONDS ISSUED IN 2009 AND 2010.—Clause 

16 (i) shall not apply in the case of any inter17 est on a bond issued after December 31, 

18 2008, and before January 1, 2011. For 

19 purposes of the preceding sentence, a re20 funding bond (whether a current or ad21 vance refunding) shall be treated as issued 

22 on the date of the issuance of the refunded 

23 bond (or in the case of a series of 

24 refundings, the original bond).’’. 


pwalker on PROD1PC71 with BILLS
35 

•HR 598 IH

1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to obligations issued after Decem3 ber 31, 2008. 

4 PART II—TAX CREDIT BONDS FOR SCHOOLS 

5 SEC. 1511. QUALIFIED SCHOOL CONSTRUCTION BONDS. 

6 (a) IN GENERAL.—Subpart I of part IV of sub7 chapter A of chapter 1 is amended by adding at the end 

8 the following new section: 

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

10 ‘‘(a) QUALIFIED SCHOOL CONSTRUCTION BOND.— 

11 For purposes of this subchapter, the term ‘qualified school 

12 construction bond’ means any bond issued as part of an 

13 issue if— 

14 ‘‘(1) 100 percent of the available project pro15 ceeds of such issue are to be used for the construc16 tion, rehabilitation, or repair of a public school facil17 ity or for the acquisition of land on which such a fa18 cility is to be constructed with part of the proceeds 

19 of such issue, 

20 ‘‘(2) the bond is issued by a State or local gov21 ernment within the jurisdiction of which such school 

22 is located, and 

23 ‘‘(3) the issuer designates such bond for pur24 poses of this section. 


pwalker on PROD1PC71 with BILLS
36 

•HR 598 IH

1 ‘‘(b) LIMITATION ON AMOUNT OF BONDS DES2 IGNATED.—The maximum aggregate face amount of 

3 bonds issued during any calendar year which may be des4 ignated under subsection (a) by any issuer shall not exceed 

5 the sum of— 

6 ‘‘(1) the limitation amount allocated under sub7 section (d) for such calendar year to such issuer, 

8 and 

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

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

11 on behalf of such an agency, the limitation amount 

12 allocated under subsection (e) for such calendar year 

13 to such agency. 

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

15 DESIGNATED.—There is a national qualified school con16 struction bond limitation for each calendar year. Such lim17 itation is— 

18 ‘‘(1) $10,000,000,000 for 2009, 

19 ‘‘(2) $10,000,000,000 for 2010, and 

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

21 after 2010. 

22 ‘‘(d) 60 PERCENT OF LIMITATION ALLOCATED

23 AMONG STATES.— 

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

25 applicable under subsection (c) for any calendar year 


pwalker on PROD1PC71 with BILLS
37 

•HR 598 IH

1 shall be allocated by the Secretary among the States 

2 in proportion to the respective numbers of children 

3 in each State who have attained age 5 but not age 

4 18 for the most recent fiscal year ending before such 

5 calendar year. The limitation amount allocated to a 

6 State under the preceding sentence shall be allocated 

7 by the State to issuers within such State. 

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

9 ‘‘(A) IN GENERAL.—The Secretary shall 

10 adjust the allocations under this subsection for 

11 any calendar year for each State to the extent 

12 necessary to ensure that the sum of— 

13 ‘‘(i) the amount allocated to such 

14 State under this subsection for such year, 

15 and 

16 ‘‘(ii) the aggregate amounts allocated 

17 under subsection (e) to large local edu18 cational agencies in such State for such 

19 year, 

20 is not less than an amount equal to such 

21 State’s adjusted minimum percentage of the 

22 amount to be allocated under paragraph (1) for 

23 the calendar year. 


pwalker on PROD1PC71 with BILLS
38 

•HR 598 IH

1 ‘‘(B) ADJUSTED MINIMUM PERCENTAGE.— 

2 A State’s adjusted minimum percentage for any 

3 calendar year is the product of— 

4 ‘‘(i) the minimum percentage de5 scribed in section 1124(d) of the Elemen6 tary and Secondary Education Act of 1965 

7 (20 U.S.C. 6334(d)) for such State for the 

8 most recent fiscal year ending before such 

9 calendar year, multiplied by 

10 ‘‘(ii) 1.68. 

11 ‘‘(3) ALLOCATIONS TO CERTAIN POSSES12 SIONS.—The amount to be allocated under para13 graph (1) to any possession of the United States 

14 other than Puerto Rico shall be the amount which 

15 would have been allocated if all allocations under 

16 paragraph (1) were made on the basis of respective 

17 populations of individuals below the poverty line (as 

18 defined by the Office of Management and Budget). 

19 In making other allocations, the amount to be allo20 cated under paragraph (1) shall be reduced by the 

21 aggregate amount allocated under this paragraph to 

22 possessions of the United States. 

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

24 addition to the amounts otherwise allocated under 

25 this subsection, $200,000,000 for calendar year 


pwalker on PROD1PC71 with BILLS
39 

•HR 598 IH

1 2009, and $200,000,000 for calendar year 2010, 

2 shall be allocated by the Secretary of the Interior for 

3 purposes of the construction, rehabilitation, and re4 pair of schools funded by the Bureau of Indian Af5 fairs. In the case of amounts allocated under the 

6 preceding sentence, Indian tribal governments (as 

7 defined in section 7701(a)(40)) shall be treated as 

8 qualified issuers for purposes of this subchapter. 

9 ‘‘(e) 40 PERCENT OF LIMITATION ALLOCATED

10 AMONG LARGEST SCHOOL DISTRICTS.— 

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

12 applicable under subsection (c) for any calendar year 

13 shall be allocated under paragraph (2) by the Sec14 retary among local educational agencies which are 

15 large local educational agencies for such year. 

16 ‘‘(2) ALLOCATION FORMULA.—The amount to 

17 be allocated under paragraph (1) for any calendar 

18 year shall be allocated among large local educational 

19 agencies in proportion to the respective amounts 

20 each such agency received for Basic Grants under 

21 subpart 2 of part A of title I of the Elementary and 

22 Secondary Education Act of 1965 (20 U.S.C. 6331 

23 et seq.) for the most recent fiscal year ending before 

24 such calendar year. 


pwalker on PROD1PC71 with BILLS
40 

•HR 598 IH

1 ‘‘(3) ALLOCATION OF UNUSED LIMITATION TO

2 STATE.—The amount allocated under this subsection 

3 to a large local educational agency for any calendar 

4 year may be reallocated by such agency to the State 

5 in which such agency is located for such calendar 

6 year. Any amount reallocated to a State under the 

7 preceding sentence may be allocated as provided in 

8 subsection (d)(1). 

9 ‘‘(4) LARGE LOCAL EDUCATIONAL AGENCY.— 

10 For purposes of this section, the term ‘large local 

11 educational agency’ means, with respect to a cal12 endar year, any local educational agency if such 

13 agency is— 

14 ‘‘(A) among the 100 local educational 

15 agencies with the largest numbers of children 

16 aged 5 through 17 from families living below 

17 the poverty level, as determined by the Sec18 retary using the most recent data available 

19 from the Department of Commerce that are 

20 satisfactory to the Secretary, or 

21 ‘‘(B) 1 of not more than 25 local edu22 cational agencies (other than those described in 

23 subparagraph (A)) that the Secretary of Edu24 cation determines (based on the most recent 

25 data available satisfactory to the Secretary) are 


pwalker on PROD1PC71 with BILLS
41 

•HR 598 IH

1 in particular need of assistance, based on a low 

2 level of resources for school construction, a high 

3 level of enrollment growth, or such other factors 

4 as the Secretary deems appropriate. 

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

6 any calendar year— 

7 ‘‘(1) the amount allocated under subsection (d) 

8 to any State, exceeds 

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

10 year which are designated under subsection (a) pur11 suant to such allocation, 

12 the limitation amount under such subsection for such 

13 State for the following calendar year shall be increased 

14 by the amount of such excess. A similar rule shall apply 

15 to the amounts allocated under subsection (d)(4) or (e).’’. 

16 (b) CONFORMING AMENDMENTS.— 

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

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

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

20 by inserting after subparagraph (D) the following 

21 new subparagraph: 

22 ‘‘(E) a qualified school construction 

23 bond,’’. 

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

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


pwalker on PROD1PC71 with BILLS
42 

•HR 598 IH

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

2 inserting ‘‘, and’’, and by adding at the end the fol3 lowing new clause: 

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

5 construction bond, a purpose specified in 

6 section 54F(a)(1).’’. 

7 (3) The table of sections for subpart I of part 

8 IV of subchapter A of chapter 1 is amended by add9 ing at the end the following new item: 

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

10 (c) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to obligations issued after Decem12 ber 31, 2008. 

13 SEC. 1512. EXTENSION AND EXPANSION OF QUALIFIED 

14 ZONE ACADEMY BONDS. 

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

16 striking ‘‘and 2009’’ and inserting ‘‘and $1,400,000,000 

17 for 2009 and 2010’’. 

18 (b) EFFECTIVE DATE.—The amendment made by 

19 this section shall apply to obligations issued after Decem20 ber 31, 2008. 


pwalker on PROD1PC71 with BILLS
43 

•HR 598 IH

1 PART III—TAXABLE BOND OPTION FOR 

2 GOVERNMENTAL BONDS 

3 SEC. 1521. TAXABLE BOND OPTION FOR GOVERNMENTAL 

4 BONDS. 

5 (a) IN GENERAL.—Part IV of subchapter A of chap6 ter 1 is amended by adding at the end the following new 

7 subpart: 

8 ‘‘Subpart J—Taxable Bond Option for Governmental 

9 Bonds 

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

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

11 BONDS. 

12 ‘‘(a) IN GENERAL.—If a taxpayer holds a taxable 

13 governmental bond on one or more interest payment dates 

14 of the bond during any taxable year, there shall be allowed 

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

16 the taxable year an amount equal to the sum of the credits 

17 determined under subsection (b) with respect to such 

18 dates. 

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

20 determined under this subsection with respect to any in21 terest payment date for a taxable governmental bond is 

22 35 percent of the amount of interest payable by the issuer 

23 with respect to such date. 

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


pwalker on PROD1PC71 with BILLS
44 

•HR 598 IH

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

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

3 the excess of— 

4 ‘‘(A) the sum of the regular tax liability 

5 (as defined in section 26(b)) plus the tax im6 posed by section 55, over 

7 ‘‘(B) the sum of the credits allowable 

8 under this part (other than subpart C and this 

9 subpart). 

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

11 credit allowable under subsection (a) exceeds the 

12 limitation imposed by paragraph (1) for such taxable 

13 year, such excess shall be carried to the succeeding 

14 taxable year and added to the credit allowable under 

15 subsection (a) for such taxable year (determined be16 fore the application of paragraph (1) for such suc17 ceeding taxable year). 

18 ‘‘(d) TAXABLE GOVERNMENTAL BOND.— 

19 ‘‘(1) IN GENERAL.—For purposes of this sec20 tion, the term ‘taxable governmental bond’ means 

21 any obligation (other than a private activity bond) 

22 if— 

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

24 (but for this section) be excludable from gross 

25 income under section 103, and 


pwalker on PROD1PC71 with BILLS
45 

•HR 598 IH

1 ‘‘(B) the issuer makes an irrevocable elec2 tion to have this section apply. 

3 ‘‘(2) APPLICABLE RULES.—For purposes of ap4 plying paragraph (1)— 

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

6 be treated as federally guaranteed by reason of 

7 the credit allowed under subsection (a) or sec8 tion 6431, 

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

10 bond shall be determined without regard to the 

11 credit allowed under subsection (a), and 

12 ‘‘(C) a bond shall not be treated as a tax13 able governmental bond if the issue price has 

14 more than a de minimis amount (determined 

15 under rules similar to the rules of section 

16 1273(a)(3)) of premium over the stated prin17 cipal amount of the bond. 

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

19 this section, the term ‘interest payment date’ means any 

20 date on which the holder of record of the taxable govern21 mental bond is entitled to a payment of interest under 

22 such bond. 

23 ‘‘(f) SPECIAL RULES.— 

24 ‘‘(1) INTEREST ON TAXABLE GOVERNMENTAL

25 BONDS INCLUDIBLE IN GROSS INCOME FOR FEDVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00045 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
46 

•HR 598 IH

1 ERAL INCOME TAX PURPOSES.—For purposes of this 

2 title, interest on any taxable governmental bond 

3 shall be includible in gross income. 

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

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

6 (i) of section 54A shall apply for purposes of the 

7 credit allowed under subsection (a). 

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

9 BEFORE 2011.—In the case of a qualified bond issued be10 fore January 1, 2011— 

11 ‘‘(1) ISSUER ALLOWED REFUNDABLE CRED12 IT.—In lieu of any credit allowed under this section 

13 with respect to such bond, the issuer of such bond 

14 shall be allowed a credit as provided in section 6431. 

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

16 subsection, the term ‘qualified bond’ means any tax17 able governmental bond issued as part of an issue 

18 if— 

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

20 proceeds (as defined in section 54A) of such 

21 issue are to be used for capital expenditures, 

22 and 

23 ‘‘(B) the issuer makes an irrevocable elec24 tion to have this subsection apply.’’. 


pwalker on PROD1PC71 with BILLS
47 

•HR 598 IH

1 (b) CREDIT FOR QUALIFIED BONDS ISSUED BEFORE

2 2011.—Subchapter B of chapter 65 is amended by adding 

3 at the end the following new section: 

4 ‘‘SEC. 6431. CREDIT FOR QUALIFIED BONDS ALLOWED TO 

5 ISSUER. 

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

7 issued before January 1, 2011, the issuer of such bond 

8 shall be allowed a credit with respect to each interest pay9 ment under such bond which shall be payable by the Sec10 retary as provided in subsection (b). 

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

12 (contemporaneously with each interest payment date 

13 under such bond) to the issuer of such bond (or to any 

14 person who makes such interest payments on behalf of the 

15 issuer) 35 percent of the interest payable under such bond 

16 on such date. 

17 ‘‘(c) APPLICATION OF ARBITRAGE RULES.—For pur18 poses of section 148, the yield on a qualified bond shall 

19 be reduced by the credit allowed under this section. 

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

21 this subsection, the term ‘interest payment date’ means 

22 each date on which interest is payable by the issuer under 

23 the terms of the bond. 


pwalker on PROD1PC71 with BILLS
48 

•HR 598 IH

1 ‘‘(e) QUALIFIED BOND.—For purposes of this sub2 section, the term ‘qualified bond’ has the meaning given 

3 such term in section 54AA(h).’’. 

4 (c) CONFORMING AMENDMENTS.— 

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

6 States Code, is amended by striking ‘‘or 6428’’ and 

7 inserting ‘‘6428, or 6431,’’. 

8 (2) Section 54A(c)(1)(B) is amended by strik9 ing ‘‘subpart C’’ and inserting ‘‘subparts C and J’’. 

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

11 1400N(l)(3)(B) are each amended by striking ‘‘and 

12 I’’ and inserting ‘‘, I, and J’’. 

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

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

15 (5) The table of subparts for part IV of sub16 chapter A of chapter 1 is amended by adding at the 

17 end the following new item: 

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

18 (6) The table of section for subchapter B of 

19 chapter 65 is amended by adding at the end the fol20 lowing new item: 

‘‘Sec. 6431. Credit for qualified bonds allowed to issuer on advance basis.’’. 

21 (d) TRANSITIONAL COORDINATION WITH STATE

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

23 date of the enactment of this Act, the interest on any tax24 able governmental bond (as defined in section 54AA of 


pwalker on PROD1PC71 with BILLS
49 

•HR 598 IH

1 the Internal Revenue Code of 1986, as added by this sec2 tion) and the amount of any credit determined under such 

3 section with respect to such bond shall be treated for pur4 poses of the income tax laws of such State as being exempt 

5 from Federal income tax. 

6 (e) EFFECTIVE DATE.—The amendments made by 

7 this section shall apply to obligations issued after the date 

8 of the enactment of this Act. 

9 PART IV—RECOVERY ZONE BONDS 

10 SEC. 1531. RECOVERY ZONE BONDS. 

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

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

13 ‘‘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. 

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

15 ‘‘(a) ALLOCATIONS.— 

16 ‘‘(1) IN GENERAL.—The Secretary shall allo17 cate the national recovery zone economic develop18 ment bond limitation and the national recovery zone 

19 facility bond limitation among the States in the pro20 portion that each such State’s 2008 State employ21 ment decline bears to the aggregate of the 2008 

22 State employment declines for all of the States. 

23 ‘‘(2) 2008 STATE EMPLOYMENT DECLINE.—For 

24 purposes of this subsection, the term ‘2008 State 


pwalker on PROD1PC71 with BILLS
50 

•HR 598 IH

1 employment decline’ means, with respect to any 

2 State, the excess (if any) of— 

3 ‘‘(A) the number of individuals employed 

4 in such State determined for December 2007, 

5 over 

6 ‘‘(B) the number of individuals employed 

7 in such State determined for December 2008. 

8 ‘‘(3) ALLOCATIONS BY STATES.— 

9 ‘‘(A) IN GENERAL.—Each State with re10 spect to which an allocation is made under 

11 paragraph (1) shall reallocate such allocation 

12 among the counties and large municipalities in 

13 such State in the proportion the each such 

14 county’s or municipality’s 2008 employment de15 cline bears to the aggregate of the 2008 em16 ployment declines for all the counties and mu17 nicipalities in such State. 

18 ‘‘(B) LARGE MUNICIPALITIES.—For pur19 poses of subparagraph (A), the term ‘large mu20 nicipality’ means a municipality with a popu21 lation of more than 100,000. 

22 ‘‘(C) DETERMINATION OF LOCAL EMPLOY23 MENT DECLINES.—For purposes of this para24 graph, the employment decline of any munici25 pality or county shall be determined in the 


pwalker on PROD1PC71 with BILLS
51 

•HR 598 IH

1 same manner as determining the State employ2 ment decline under paragraph (2), except that 

3 in the case of a municipality any portion of 

4 which is in a county, such portion shall be 

5 treated as part of such municipality and not 

6 part of such county. 

7 ‘‘(4) NATIONAL LIMITATIONS.— 

8 ‘‘(A) RECOVERY ZONE ECONOMIC DEVEL9 OPMENT BONDS.—There is a national recovery 

10 zone economic development bond limitation of 

11 $10,000,000,000. 

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

13 There is a national recovery zone facility bond 

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

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

16 the term ‘recovery zone’ means— 

17 ‘‘(1) any area designated by the issuer as hav18 ing significant poverty, unemployment, or rate of 

19 home foreclosures, and 

20 ‘‘(2) any area for which a designation as an em21 powerment zone or renewal community is in effect. 

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

23 BONDS. 

24 ‘‘(a) IN GENERAL.—In the case of a recovery zone 

25 economic development bond— 


pwalker on PROD1PC71 with BILLS
52 

•HR 598 IH

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

2 bond for purposes of section 6431, and 

3 ‘‘(2) subsection (b) of such section shall be ap4 plied by substituting ‘40 percent’ for ‘35 percent’. 

5 ‘‘(b) RECOVERY ZONE ECONOMIC DEVELOPMENT

6 BOND.— 

7 ‘‘(1) IN GENERAL.—For purposes of this sec8 tion, the term ‘recovery zone economic development 

9 bond’ means any taxable governmental bond (as de10 fined in section 54AA(d)) issued before January 1, 

11 2011, as part of issue if— 

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

13 proceeds (as defined in section 54A) of such 

14 issue are to be used for one or more qualified 

15 economic development purposes, and 

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

17 purposes of this section. 

18 ‘‘(2) LIMITATION ON AMOUNT OF BONDS DES19 IGNATED.—The maximum aggregate face amount of 

20 bonds which may be designated by any issuer under 

21 paragraph (1) shall not exceed the amount of the re22 covery zone economic development bond limitation 

23 allocated to such issuer under section 1400U–1. 

24 ‘‘(c) QUALIFIED ECONOMIC DEVELOPMENT PUR25 POSE.—For purposes of this section, the term ‘qualified 


pwalker on PROD1PC71 with BILLS
53 

•HR 598 IH

1 economic development purpose’ means expenditures for 

2 purposes of promoting development or other economic ac3 tivity in a recovery zone, including— 

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

5 respect to property located in such zone, 

6 ‘‘(2) expenditures for public infrastructure and 

7 construction of public facilities, and 

8 ‘‘(3) expenditures for job training and edu9 cational programs. 

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

11 ‘‘(a) IN GENERAL.—For purposes of part IV of sub12 chapter B (relating to tax exemption requirements for 

13 State and local bonds), the term ‘exempt facility bond’ in14 cludes any recovery zone facility bond. 

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

16 ‘‘(1) IN GENERAL.—For purposes of this sec17 tion, the term ‘recovery zone facility bond’ means 

18 any bond issued as part of an issue if— 

19 ‘‘(A) 95 percent or more of the net pro20 ceeds (as defined in section 150(a)(3)) of such 

21 issue are to be used for recovery zone property, 

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

23 2011, and 

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

25 purposes of this section. 


pwalker on PROD1PC71 with BILLS
54 

•HR 598 IH

1 ‘‘(2) LIMITATION ON AMOUNT OF BONDS DES2 IGNATED.—The maximum aggregate face amount of 

3 bonds which may be designated by any issuer under 

4 paragraph (1) shall not exceed the amount of recov5 ery zone facility bond limitation allocated to such 

6 issuer under section 1400U–1. 

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

8 this section— 

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

10 property’ means any property to which section 168 

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

12 ‘‘(A) such property was acquired by the 

13 taxpayer by purchase (as defined in section 

14 179(d)(2)) after the date on which the designa15 tion of the recovery zone took effect, 

16 ‘‘(B) the original use of which in the recov17 ery zone commences with the taxpayer, and 

18 ‘‘(C) substantially all of the use of which 

19 is in the recovery zone and is in the active con20 duct of a qualified business by the taxpayer in 

21 such zone. 

22 ‘‘(2) QUALIFIED BUSINESS.—The term ‘quali23 fied business’ means any trade or business except 

24 that— 


pwalker on PROD1PC71 with BILLS
55 

•HR 598 IH

1 ‘‘(A) the rental to others of real property 

2 located in a recovery zone shall be treated as a 

3 qualified business only if the property is not 

4 residential rental property (as defined in section 

5 168(e)(2)), and 

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

7 or business consisting of the operation of any 

8 facility described in section 144(c)(6)(B). 

9 ‘‘(3) SPECIAL RULES FOR SUBSTANTIAL REN10 OVATIONS AND SALE-LEASEBACK.—Rules similar to 

11 the rules of subsections (a)(2) and (b) of section 

12 1397D shall apply for purposes of this subsection. 

13 ‘‘(d) NONAPPLICATION OF CERTAIN RULES.—Sec14 tions 146 (relating to volume cap) and 147(d) (relating 

15 to acquisition of existing property not permitted) shall not 

16 apply to any recovery zone facility bond.’’. 

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

18 subchapter Y of chapter 1 of such Code is amended by 

19 adding at the end the following new item: 

‘‘PART III. RECOVERY ZONE BONDS.’’. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to obligations issued after the date 

22 of the enactment of this Act. 

23 SEC. 1532. TRIBAL ECONOMIC DEVELOPMENT BONDS. 

24 (a) IN GENERAL.—Section 7871 is amended by add25 ing at the end the following new subsection: 


pwalker on PROD1PC71 with BILLS
56 

•HR 598 IH

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

2 ‘‘(1) ALLOCATION OF LIMITATION.— 

3 ‘‘(A) IN GENERAL.—The Secretary shall 

4 allocate the national tribal economic develop5 ment bond limitation among the Indian tribal 

6 governments in such manner as the Secretary, 

7 in consultation with the Secretary of the Inte8 rior, determines appropriate. 

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

10 national tribal economic development bond limi11 tation of $2,000,000,000. 

12 ‘‘(2) BONDS TREATED AS EXEMPT FROM

13 TAX.—In the case of a tribal economic development 

14 bond— 

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

16 bond shall be treated for purposes of this title 

17 in the same manner as if such bond were issued 

18 by a State, and 

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

20 ‘‘(3) TRIBAL ECONOMIC DEVELOPMENT

21 BOND.— 

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

23 section, the term ‘tribal economic development 

24 bond’ means any bond issued by an Indian trib25 al government— 


pwalker on PROD1PC71 with BILLS
57 

•HR 598 IH

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

3 of subsection (c) (determined without re4 gard to this subsection) but would be so 

5 exempt if issued by a State or local govern6 ment, and 

7 ‘‘(ii) which is designated by the In8 dian tribal government as a tribal eco9 nomic development bond for purposes of 

10 this subsection. 

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

13 bond issued as part of an issue if any portion 

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

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

17 class II or class III gaming (as defined in 

18 section 4 of the Indian Gaming Regulatory 

19 Act) is conducted or housed or any other 

20 property actually used in the conduct of 

21 such gaming, or 

22 ‘‘(ii) any facility located outside the 

23 Indian reservation (as defined in section 

24 168(j)(6)). 


pwalker on PROD1PC71 with BILLS
58 

•HR 598 IH

1 ‘‘(C) LIMITATION ON AMOUNT OF BONDS

2 DESIGNATED.—The maximum aggregate face 

3 amount of bonds which may be designated by 

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

9 (b) STUDY.—The Secretary of the Treasury, or the 

10 Secretary’s delegate, shall conduct a study of the effects 

11 of the amendment made by subsection (a). Not later than 

12 1 year after the date of the enactment of this Act, the 

13 Secretary of the Treasury, or the Secretary’s delegate, 

14 shall report to Congress on the results of the studies con15 ducted under this paragraph, including the Secretary’s 

16 recommendations regarding such amendment. 

17 (c) EFFECTIVE DATE.—The amendment made by 

18 subsection (a) shall apply to obligations issued after the 

19 date of the enactment of this Act. 

20 PART V—REPEAL OF WITHHOLDING TAX ON 

21 GOVERNMENT CONTRACTORS 

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

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


pwalker on PROD1PC71 with BILLS
59 

•HR 598 IH

1 Subtitle G—Energy Incentives 

2 PART I—RENEWABLE ENERGY INCENTIVES 

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

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

7 amended— 

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

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

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

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

14 and inserting ‘‘2014’’. 

15 (b) TECHNICAL AMENDMENT.—Paragraph (5) of 

16 section 45(d) is amended by striking ‘‘and before’’ and 

17 all that follows and inserting ‘‘and before October 3, 

18 2008.’’. 

19 (c) EFFECTIVE DATE.— 

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

21 subsection (a) shall apply to property placed in serv22 ice after the date of the enactment of this Act. 

23 (2) TECHNICAL AMENDMENT.—The amendment 

24 made by subsection (b) shall take effect as if inVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00059 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
60 

•HR 598 IH

1 cluded in section 102 of the Energy Improvement 

2 and Extension Act of 2008. 

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

4 PRODUCTION CREDIT. 

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

6 amended by adding at the end the following new para7 graph: 

8 ‘‘(5) ELECTION TO TREAT QUALIFIED FACILI9 TIES AS ENERGY PROPERTY.— 

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

11 qualified investment credit facility placed in 

12 service in 2009 or 2010— 

13 ‘‘(i) such facility shall be treated as 

14 energy property for purposes of this sec15 tion, and 

16 ‘‘(ii) the energy percentage with re17 spect to such property shall be 30 percent. 

18 ‘‘(B) DENIAL OF PRODUCTION CREDIT.— 

19 No credit shall be allowed under section 45 for 

20 any taxable year with respect to any qualified 

21 investment credit facility. 

22 ‘‘(C) QUALIFIED INVESTMENT CREDIT FA23 CILITY.—For purposes of this paragraph, the 

24 term ‘qualified investment credit facility’ means 

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


pwalker on PROD1PC71 with BILLS
61 

•HR 598 IH

1 (4), (6), (7), (9), or (11) of section 45(d) if no 

2 credit has been allowed under section 45 with 

3 respect to such facility and the taxpayer makes 

4 an irrevocable election to have this paragraph 

5 apply to such facility.’’. 

6 (b) EFFECTIVE DATE.—The amendments made by 

7 this section shall apply to facilities placed in service after 

8 December 31, 2008. 

9 SEC. 1603. REPEAL OF CERTAIN LIMITATIONS ON CREDIT 

10 FOR RENEWABLE ENERGY PROPERTY. 

11 (a) REPEAL OF LIMITATION ON CREDIT FOR QUALI12 FIED SMALL WIND ENERGY PROPERTY.—Paragraph (4) 

13 of section 48(c) is amended by striking subparagraph (B) 

14 and by redesignating subparagraphs (C) and (D) as sub15 paragraphs (B) and (C). 

16 (b) REPEAL OF LIMITATION ON PROPERTY FI17 NANCED BY SUBSIDIZED ENERGY FINANCING.— 

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

19 is amended by striking paragraph (4). 

20 (2) CONFORMING AMENDMENTS.— 

21 (A) Section 25C(e)(1) is amended by strik22 ing ‘‘(8), and (9)’’ and inserting ‘‘and (8)’’. 

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

24 paragraph (9). 

25 (c) EFFECTIVE DATE.— 


pwalker on PROD1PC71 with BILLS
62 

•HR 598 IH

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

3 apply to periods after December 31, 2008, under 

4 rules similar to the rules of section 48(m) of the In5 ternal Revenue Code of 1986 (as in effect on the day 

6 before the date of the enactment of the Revenue 

7 Reconciliation Act of 1990). 

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

11 SEC. 1604. COORDINATION WITH RENEWABLE ENERGY 

12 GRANTS. 

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

15 ‘‘(d) COORDINATION WITH DEPARTMENT OF EN16 ERGY GRANTS.—In the case of any property with respect 

17 to which the Secretary of Energy makes a grant under 

18 section 1721 of the American Recovery and Reinvestment 

19 Tax Act of 2009— 

20 ‘‘(1) DENIAL OF PRODUCTION AND INVEST21 MENT CREDITS.—No credit shall be determined 

22 under this section or section 45 with respect to such 

23 property for the taxable year in which such grant is 

24 made or any subsequent taxable year. 


pwalker on PROD1PC71 with BILLS
63 

•HR 598 IH

1 ‘‘(2) RECAPTURE OF CREDITS FOR PROGRESS

2 EXPENDITURES MADE BEFORE GRANT.—If a credit 

3 was determined under this section with respect to 

4 such property for any taxable year ending before 

5 such grant is made— 

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

7 the taxpayer for the taxable year in which such 

8 grant is made shall be increased by so much of 

9 such credit as was allowed under section 38, 

10 ‘‘(B) the general business carryforwards 

11 under section 39 shall be adjusted so as to re12 capture the portion of such credit which was 

13 not so allowed, and 

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

16 basis of such property by reason of such credit. 

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

18 shall— 

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

20 of the taxpayer, but 

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

23 grant relates, except that the basis of such 

24 property shall be reduced under section 50(c) in 


pwalker on PROD1PC71 with BILLS
64 

•HR 598 IH

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

3 PART II—INCREASED ALLOCATIONS OF NEW 

4 CLEAN RENEWABLE ENERGY BONDS AND 

5 QUALIFIED ENERGY CONSERVATION BONDS 

6 SEC. 1611. INCREASED LIMITATION ON ISSUANCE OF NEW 

7 CLEAN RENEWABLE ENERGY BONDS. 

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

9 at the end the following new paragraph: 

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

11 new clean renewable energy bond limitation shall be 

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

13 allocated by the Secretary consistent with the rules 

14 of paragraphs (2) and (3).’’. 

15 SEC. 1612. INCREASED LIMITATION ON ISSUANCE OF 

16 QUALIFIED ENERGY CONSERVATION BONDS. 

17 Subsection (e) of section 54D is amended by adding 

18 at the end the following new paragraph: 

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

20 qualified energy conservation bond limitation shall 

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

22 be allocated by the Secretary consistent with the 

23 rules of paragraphs (1), (2), and (3).’’. 


pwalker on PROD1PC71 with BILLS
65 

•HR 598 IH

1 PART III—ENERGY CONSERVATION INCENTIVES 

2 SEC. 1621. EXTENSION AND MODIFICATION OF CREDIT FOR 

3 NONBUSINESS ENERGY PROPERTY. 

4 (a) IN GENERAL.—Section 25C is amended by strik5 ing subsections (a) and (b) and inserting the following new 

6 subsections: 

7 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in8 dividual, there shall be allowed as a credit against the tax 

9 imposed by this chapter for the taxable year an amount 

10 equal to 30 percent of the sum of— 

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

13 efficiency improvements, and 

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

16 during such taxable year. 

17 ‘‘(b) LIMITATION.—The aggregate amount of the 

18 credits allowed under this section for taxable years begin19 ning in 2009 and 2010 with respect to any taxpayer shall 

20 not exceed $1,500.’’. 

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

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

23 31, 2010’’. 

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

25 this section shall apply to taxable years beginning after 

26 December 31, 2008. 


pwalker on PROD1PC71 with BILLS
66 

•HR 598 IH

1 SEC. 1622. MODIFICATION OF CREDIT FOR RESIDENTIAL 

2 ENERGY EFFICIENT PROPERTY. 

3 (a) REMOVAL OF CREDIT LIMITATION FOR PROP4 ERTY PLACED IN SERVICE.— 

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

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

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

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

12 half kilowatt of capacity of the qualified fuel cell 

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

14 such expenditure relates.’’. 

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

16 of section 25D(e) is amended— 

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

19 ‘‘(4) FUEL CELL EXPENDITURE LIMITATIONS

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

21 dwelling unit with respect to which qualified fuel cell 

22 property expenditures are made and which is jointly 

23 occupied and used during any calendar year as a 

24 residence by two or more individuals the following 

25 rules shall apply: 


pwalker on PROD1PC71 with BILLS
67 

•HR 598 IH

1 ‘‘(A) MAXIMUM EXPENDITURES FOR FUEL

2 CELLS.—The maximum amount of such ex3 penditures which may be taken into account 

4 under subsection (a) by all such individuals 

5 with respect to such dwelling unit during such 

6 calendar year shall be $1,667 in the case of 

7 each half kilowatt of capacity of qualified fuel 

8 cell property (as defined in section 48(c)(1)) 

9 with respect to which such expenditures re10 late.’’, and 

11 (B) by striking subparagraph (C). 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years beginning after 

14 December 31, 2008. 

15 SEC. 1623. TEMPORARY INCREASE IN CREDIT FOR ALTER16 NATIVE FUEL VEHICLE REFUELING PROP17 ERTY. 

18 (a) IN GENERAL.—Section 30C(e) is amended by 

19 adding at the end the following new paragraph: 

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

21 SERVICE DURING 2009 AND 2010.—In the case of 

22 property placed in service in taxable years beginning 

23 after December 31, 2008, and before January 1, 

24 2011— 


pwalker on PROD1PC71 with BILLS
68 

•HR 598 IH

1 ‘‘(A) in the case of any such property 

2 which does not relate to hydrogen— 

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

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

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

6 by substituting ‘$50,000’ for ‘$30,000’, 

7 and 

8 ‘‘(iii) subsection (b)(2) shall be ap9 plied by substituting ‘$2,000’ for ‘$1,000’, 

10 and 

11 ‘‘(B) in the case of any such property 

12 which relates to hydrogen, subsection (b) shall 

13 be applied by substituting ‘$200,000’ for 

14 ‘$30,000’.’’. 

15 (b) EFFECTIVE DATE.—The amendment made by 

16 this section shall apply to taxable years beginning after 

17 December 31, 2008. 

18 PART IV—ENERGY RESEARCH INCENTIVES 

19 SEC. 1631. INCREASED RESEARCH CREDIT FOR ENERGY RE20 SEARCH. 

21 (a) IN GENERAL.—Section 41 is amended by redesig22 nating subsection (h) as subsection (i) and by inserting 

23 after subsection (g) the following new subsection: 

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

25 any taxable year beginning in 2009 or 2010— 


pwalker on PROD1PC71 with BILLS
69 

•HR 598 IH

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

2 under subsection (a)(1) shall be increased by 20 per3 cent of the qualified energy research expenses for 

4 the taxable year. 

5 ‘‘(2) QUALIFIED ENERGY RESEARCH EX6 PENSES.—For purposes of this subsection, the term 

7 ‘qualified energy research expenses’ means so much 

8 of the taxpayer’s qualified research expenses as are 

9 related to the fields of fuel cells and battery tech10 nology, renewable energy, energy conservation tech11 nology, efficient transmission and distribution of 

12 electricity, and carbon capture and sequestration. 

13 ‘‘(3) COORDINATION WITH OTHER RESEARCH

14 CREDITS.— 

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

16 of qualified energy research expenses taken into 

17 account under subsection (a)(1)(A) shall not ex18 ceed the base amount. 

19 ‘‘(B) ALTERNATIVE SIMPLIFIED CREDIT.— 

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

21 of qualified energy research expenses taken into 

22 account for the taxable year for which the cred23 it is being determined shall not exceed— 

24 ‘‘(i) in the case of subsection 

25 (c)(5)(A), 50 percent of the average qualiVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00069 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
70 

•HR 598 IH

1 fied research expenses for the 3 taxable 

2 years preceding the taxable year for which 

3 the credit is being determined, and 

4 ‘‘(ii) in the case of subsection 

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

6 ‘‘(C) BASIC RESEARCH AND ENERGY RE7 SEARCH CONSORTIUM PAYMENTS.—Any amount 

8 taken into account under paragraph (1) shall 

9 not be taken into account under paragraph (2) 

10 or (3) of subsection (a).’’. 

11 (b) CONFORMING AMENDMENT.—Subparagraph (B) 

12 of section 41(i)(1)(B), as redesignated by subsection (a), 

13 is amended by inserting ‘‘(in the case of the increase in 

14 the credit determined under subsection (h), December 31, 

15 2010)’’ after ‘‘December 31, 2009’’. 

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

17 this section shall apply to taxable years beginning after 

18 December 31, 2008. 


pwalker on PROD1PC71 with BILLS
71 

•HR 598 IH

1 Subtitle H—Other Provisions 

2 PART I—APPLICATION OF CERTAIN LABOR 

3 STANDARDS TO PROJECTS FINANCED WITH 

4 CERTAIN TAX-FAVORED BONDS 

5 SEC. 1701. APPLICATION OF CERTAIN LABOR STANDARDS 

6 TO PROJECTS FINANCED WITH CERTAIN TAX7 FAVORED BONDS. 

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

9 States Code, shall apply to projects financed with the pro10 ceeds of— 

11 (1) any qualified clean renewable energy bond 

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

13 Code of 1986) issued after the date of the enact14 ment of this Act, 

15 (2) any qualified energy conservation bond (as 

16 defined in section 54D of the Internal Revenue Code 

17 of 1986) issued after the date of the enactment of 

18 this Act, 

19 (3) any qualified zone academy bond (as de20 fined in section 54E of the Internal Revenue Code 

21 of 1986) issued after the date of the enactment of 

22 this Act, 

23 (4) any qualified school construction bond (as 

24 defined in section 54F of the Internal Revenue Code 

25 of 1986), and 


pwalker on PROD1PC71 with BILLS
72 

•HR 598 IH

1 (5) any recovery zone economic development 

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

3 Revenue Code of 1986). 

4 PART II—GRANTS TO PROVIDE FINANCING FOR 

5 LOW-INCOME HOUSING 

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

7 PROJECTS IN LIEU OF LOW-INCOME HOUS8 ING CREDIT ALLOCATIONS FOR 2009. 

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

10 shall make a grant to the housing credit agency of each 

11 State in an amount equal to such State’s low-income hous12 ing grant election amount. 

13 (b) LOW-INCOME HOUSING GRANT ELECTION

14 AMOUNT.—For purposes of this section, the term ‘‘low15 income housing grant election amount’’ means, with re16 spect to any State, such amount as the State may elect 

17 which does not exceed 85 percent of the product of— 

18 (1) the sum of— 

19 (A) 100 percent of the State housing credit 

20 ceiling for 2009 which is attributable to 

21 amounts described in clauses (i) and (iii) of sec22 tion 42(h)(3)(C) of the Internal Revenue Code 

23 of 1986, and 

24 (B) 40 percent of the State housing credit 

25 ceiling for 2009 which is attributable to 


pwalker on PROD1PC71 with BILLS
73 

•HR 598 IH

1 amounts described in clauses (ii) and (iv) of 

2 such section, multiplied by 

3 (2) 10. 

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

5 (1) IN GENERAL.—A State housing credit agen6 cy receiving a grant under this section shall use such 

7 grant to make subawards to finance the construction 

8 or acquisition and rehabilitation of qualified low-in9 come buildings. A subaward under this section may 

10 be made to finance a qualified low-income building 

11 with or without an allocation under section 42 of the 

12 Internal Revenue Code of 1986, except that a State 

13 housing credit agency may make subawards to fi14 nance qualified low-income buildings without an allo15 cation only if it makes a determination that such use 

16 will increase the total funds available to the State to 

17 build and rehabilitate affordable housing. In com18 plying with such determination requirement, a State 

19 housing credit agency shall establish a process in 

20 which applicants that are allocated credits are re21 quired to demonstrate good faith efforts to obtain 

22 investment commitments for such credits before the 

23 agency makes such subawards. 

24 (2) SUBAWARDS SUBJECT TO SAME REQUIRE25 MENTS AS LOW-INCOME HOUSING CREDIT ALLOCAVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00073 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
74 

•HR 598 IH

1 TIONS.—Any such subaward with respect to any 

2 qualified low-income building shall be made in the 

3 same manner and shall be subject to the same limi4 tations (including rent, income, and use restrictions 

5 on such building) as an allocation of housing credit 

6 dollar amount allocated by such State housing credit 

7 agency under section 42 of the Internal Revenue 

8 Code of 1986, except that such subawards shall not 

9 be limited by, or otherwise affect (except as provided 

10 in subsection (h)(3)(J) of such section), the State 

11 housing credit ceiling applicable to such agency. 

12 (3) COMPLIANCE AND ASSET MANAGEMENT.— 

13 The State housing credit agency shall perform asset 

14 management functions to ensure compliance with 

15 section 42 of the Internal Revenue Code of 1986 

16 and the long-term viability of buildings funded by 

17 any subaward under this section. The State housing 

18 credit agency may collect reasonable fees from a 

19 subaward recipient to cover expenses associated with 

20 the performance of its duties under this paragraph. 

21 The State housing credit agency may retain an 

22 agent or other private contractor to satisfy the re23 quirements of this paragraph. 

24 (4) RECAPTURE.—The State housing credit 

25 agency shall impose conditions or restrictions, inVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00074 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
75 

•HR 598 IH

1 cluding a requirement providing for recapture, on 

2 any subaward under this section so as to assure that 

3 the building with respect to which such subaward is 

4 made remains a qualified low-income building during 

5 the compliance period. Any such recapture shall be 

6 payable to the Secretary of the Treasury for deposit 

7 in the general fund of the Treasury and may be en8 forced by means of liens or such other methods as 

9 the Secretary of the Treasury determines appro10 priate. 

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

12 funds not used to make subawards under this section be13 fore January 1, 2011, shall be returned to the Secretary 

14 of the Treasury on such date. Any subawards returned 

15 to the State housing credit agency on or after such date 

16 shall be promptly returned to the Secretary of the Treas17 ury. Any amounts returned to the Secretary of the Treas18 ury under this subsection shall be deposited in the general 

19 fund of the Treasury. 

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

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

22 Code of 1986 shall have the same meaning for purposes 

23 of this section as when used in such section 42. Any ref24 erence in this section to the Secretary of the Treasury 

25 shall be treated as including the Secretary’s delegate. 


pwalker on PROD1PC71 with BILLS
76 

•HR 598 IH

1 (f) APPROPRIATIONS.—There is hereby appropriated 

2 to the Secretary of the Treasury such sums as may be 

3 necessary to carry out this section. 

4 PART III—GRANTS FOR SPECIFIED ENERGY 

5 PROPERTY IN LIEU OF TAX CREDITS 

6 SEC. 1721. GRANTS FOR SPECIFIED ENERGY PROPERTY IN 

7 LIEU OF TAX CREDITS. 

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

9 of Energy shall, within 60 days of the application and sub10 ject to the requirements of this section, provide a grant 

11 to each person who places in service specified energy prop12 erty during 2009 or 2010 to reimburse such person for 

13 a portion of the expense of such facility as provided in 

14 subsection (b). 

15 (b) GRANT AMOUNT.— 

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

17 under subsection (a) with respect to any specified 

18 energy property shall be the applicable percentage of 

19 the basis of such facility. 

20 (2) APPLICABLE PERCENTAGE.—For purposes 

21 of paragraph (1), the term ‘‘applicable percentage’’ 

22 means— 

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

24 described in paragraphs (1) through (4) of sub25 section (c), and 


pwalker on PROD1PC71 with BILLS
77 

•HR 598 IH

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

2 property. 

3 (3) DOLLAR LIMITATIONS.—In the case of 

4 property described in paragraph (2), (6), or (7) of 

5 subsection (c), the amount of any grant under this 

6 section with respect to such property shall not ex7 ceed the limitation described in section 48(c)(1)(B), 

8 48(c)(2)(B), or 48(c)(3)(B) of the Internal Revenue 

9 Code of 1986, respectively, with respect to such 

10 property. 

11 (c) SPECIFIED ENERGY PROPERTY.—For purposes 

12 of this section, the term ‘‘specified energy property’’ 

13 means any of the following: 

14 (1) QUALIFIED FACILITIES.—Any facility de15 scribed in paragraph (1), (2), (3), (4), (6), (7), (9), 

16 or (11) of section 45(d) of the Internal Revenue 

17 Code of 1986. 

18 (2) QUALIFIED FUEL CELL PROPERTY.—Any 

19 qualified fuel cell property (as defined in section 

20 48(c)(1) of such Code). 

21 (3) SOLAR PROPERTY.—Any property described 

22 in clause (i) or (ii) of section 48(a)(3)(A) of such 

23 Code. 


pwalker on PROD1PC71 with BILLS
78 

•HR 598 IH

1 (4) QUALIFIED SMALL WIND ENERGY PROP2 ERTY.—Any qualified small wind energy property 

3 (as defined in section 48(c)(4) of such Code). 

4 (5) GEOTHERMAL PROPERTY.—Any property 

5 described in clause (iii) of section 48(a)(3)(A) of 

6 such Code. 

7 (6) QUALIFIED MICROTURBINE PROPERTY.— 

8 Any qualified microturbine property (as defined in 

9 section 48(c)(2) of such Code). 

10 (7) COMBINED HEAT AND POWER SYSTEM

11 PROPERTY.—Any combined heat and power system 

12 property (as defined in section 48(c)(3) of such 

13 Code). 

14 (8) GEOTHERMAL HEATPUMP PROPERTY.—Any 

15 property described in clause (vii) of section 

16 48(a)(3)(A) of such Code. 

17 (d) APPLICATION OF CERTAIN RULES.—In making 

18 grants under this section, the Secretary of Energy shall 

19 apply rules similar to the rules of section 50 of the Inter20 nal Revenue Code of 1986. In applying such rules, if the 

21 facility is disposed of, or otherwise ceases to be a qualified 

22 renewable energy facility, the Secretary of Energy shall 

23 provide for the recapture of the appropriate percentage of 

24 the grant amount in such manner as the Secretary of En25 ergy determines appropriate. 


pwalker on PROD1PC71 with BILLS
79 

•HR 598 IH

1 (e) EXCEPTION FOR CERTAIN NON-TAXPAYERS.— 

2 The Secretary of Energy shall not make any grant under 

3 this section to any Federal, State, or local government (or 

4 any political subdivision, agency, or instrumentality there5 of) or any organization described in section 501(c) of the 

6 Internal Revenue Code of 1986 and exempt from tax 

7 under section 501(a) of such Code. 

8 (f) DEFINITIONS.—Terms used in this section which 

9 are also used in section 45 or 48 of the Internal Revenue 

10 Code of 1986 shall have the same meaning for purposes 

11 of this section as when used in such section 45 or 48. 

12 Any reference in this section to the Secretary of the Treas13 ury shall be treated as including the Secretary’s delegate. 

14 (g) COORDINATION BETWEEN DEPARTMENTS OF

15 TREASURY AND ENERGY.—The Secretary of the Treasury 

16 shall provide the Secretary of Energy with such technical 

17 assistance as the Secretary of Energy may require in car18 rying out this section. The Secretary of Energy shall pro19 vide the Secretary of the Treasury with such information 

20 as the Secretary of the Treasury may require in carrying 

21 out the amendment made by section 1604. 

22 (h) APPROPRIATIONS.—There is hereby appropriated 

23 to the Secretary of Energy such sums as may be necessary 

24 to carry out this section. 


pwalker on PROD1PC71 with BILLS
80 

•HR 598 IH

1 (i) TERMINATION.—The Secretary of Energy shall 

2 not make any grant to any person under this section un3 less the application of such person for such grant is re4 ceived before October 1, 2011. 

5 TITLE II—ASSISTANCE FOR UN6 EMPLOYED WORKERS AND 

7 STRUGGLING FAMILIES 

8 SEC. 2000. SHORT TITLE, ETC. 

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

10 ‘‘Assistance for Unemployed Workers and Struggling 

11 Families Act’’. 

12 (b) TABLE OF CONTENTS.—The table of contents for 

13 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. 

14 Subtitle A—Unemployment 

15 Insurance 

16 SEC. 2001. EXTENSION OF EMERGENCY UNEMPLOYMENT 

17 COMPENSATION PROGRAM. 

18 (a) IN GENERAL.—Section 4007 of the Supplemental 

19 Appropriations Act, 2008 (Public Law 110–252; 26 

20 U.S.C. 3304 note), as amended by section 4 of the UnemVerDate Nov 24 2008 02:28 Jan 29, 2009 Jkt 079200 PO 00000 Frm 00080 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
81 

•HR 598 IH

1 ployment Compensation Extension Act of 2008 (Public 

2 Law 110–449; 122 Stat. 5015), is amended— 

3 (1) by striking ‘‘March 31, 2009’’ each place it 

4 appears and inserting ‘‘December 31, 2009’’; 

5 (2) in the heading for subsection (b)(2), by 

6 striking ‘‘MARCH 31, 2009’’ and inserting ‘‘DECEM7 BER 31, 2009’’; and 

8 (3) in subsection (b)(3), by striking ‘‘August 

9 27, 2009’’ and inserting ‘‘May 31, 2010’’. 

10 (b) FINANCING PROVISIONS.—Section 4004 of such 

11 Act is amended by adding at the end the following: 

12 ‘‘(e) TRANSFER OF FUNDS.—Notwithstanding any 

13 other provision of law, the Secretary of the Treasury shall 

14 transfer from the general fund of the Treasury (from 

15 funds not otherwise appropriated)— 

16 ‘‘(1) to the extended unemployment compensa17 tion account (as established by section 905 of the 

18 Social Security Act) such sums as the Secretary of 

19 Labor estimates to be necessary to make payments 

20 to States under this title by reason of the amend21 ments made by section 2001(a) of the Assistance for 

22 Unemployed Workers and Struggling Families Act; 

23 and 

24 ‘‘(2) to the employment security administration 

25 account (as established by section 901 of the Social 


pwalker on PROD1PC71 with BILLS
82 

•HR 598 IH

1 Security Act) such sums as the Secretary of Labor 

2 estimates to be necessary for purposes of assisting 

3 States in meeting administrative costs by reason of 

4 the amendments referred to in paragraph (1). 

5 There are appropriated from the general fund of the 

6 Treasury, without fiscal year limitation, the sums referred 

7 to in the preceding sentence and such sums shall not be 

8 required to be repaid.’’. 

9 SEC. 2002. INCREASE IN UNEMPLOYMENT COMPENSATION 

10 BENEFITS. 

11 (a) FEDERAL-STATE AGREEMENTS.—Any State 

12 which desires to do so may enter into and participate in 

13 an agreement under this section with the Secretary of 

14 Labor (hereinafter in this section referred to as the ‘‘Sec15 retary’’). Any State which is a party to an agreement 

16 under this section may, upon providing 30 days’ written 

17 notice to the Secretary, terminate such agreement. 

18 (b) PROVISIONS OF AGREEMENT.— 

19 (1) ADDITIONAL COMPENSATION.—Any agree20 ment under this section shall provide that the State 

21 agency of the State will make payments of regular 

22 compensation to individuals in amounts and to the 

23 extent that they would be determined if the State 

24 law of the State were applied, with respect to any 

25 week for which the individual is (disregarding this 


pwalker on PROD1PC71 with BILLS
83 

•HR 598 IH

1 section) otherwise entitled under the State law to re2 ceive regular compensation, as if such State law had 

3 been modified in a manner such that the amount of 

4 regular compensation (including dependents’ allow5 ances) payable for any week shall be equal to the 

6 amount determined under the State law (before the 

7 application of this paragraph) plus an additional 

8 $25. 

9 (2) ALLOWABLE METHODS OF PAYMENT.—Any 

10 additional compensation provided for in accordance 

11 with paragraph (1) shall be payable either— 

12 (A) as an amount which is paid at the 

13 same time and in the same manner as any reg14 ular compensation otherwise payable for the 

15 week involved; or 

16 (B) at the option of the State, by pay17 ments which are made separately from, but on 

18 the same weekly basis as, any regular com19 pensation otherwise payable. 

20 (c) NONREDUCTION RULE.—An agreement under 

21 this section shall not apply (or shall cease to apply) with 

22 respect to a State upon a determination by the Secretary 

23 that the method governing the computation of regular 

24 compensation under the State law of that State has been 

25 modified in a manner such that— 


pwalker on PROD1PC71 with BILLS
84 

•HR 598 IH

1 (1) the average weekly benefit amount of reg2 ular compensation which will be payable during the 

3 period of the agreement (determined disregarding 

4 any additional amounts attributable to the modifica5 tion described in subsection (b)(1)) will be less than 

6 (2) the average weekly benefit amount of reg7 ular compensation which would otherwise have been 

8 payable during such period under the State law, as 

9 in effect on December 31, 2008. 

10 (d) PAYMENTS TO STATES.— 

11 (1) IN GENERAL.— 

12 (A) FULL REIMBURSEMENT.—There shall 

13 be paid to each State which has entered into an 

14 agreement under this section an amount equal 

15 to 100 percent of— 

16 (i) the total amount of additional 

17 compensation (as described in subsection 

18 (b)(1)) paid to individuals by the State 

19 pursuant to such agreement; and 

20 (ii) any additional administrative ex21 penses incurred by the State by reason of 

22 such agreement (as determined by the Sec23 retary). 

24 (B) TERMS OF PAYMENTS.—Sums payable 

25 to any State by reason of such State’s having 


pwalker on PROD1PC71 with BILLS
85 

•HR 598 IH

1 an agreement under this section shall be pay2 able, either in advance or by way of reimburse3 ment (as determined by the Secretary), in such 

4 amounts as the Secretary estimates the State 

5 will be entitled to receive under this section for 

6 each calendar month, reduced or increased, as 

7 the case may be, by any amount by which the 

8 Secretary finds that his estimates for any prior 

9 calendar month were greater or less than the 

10 amounts which should have been paid to the 

11 State. Such estimates may be made on the 

12 basis of such statistical, sampling, or other 

13 method as may be agreed upon by the Secretary 

14 and the State agency of the State involved. 

15 (2) CERTIFICATIONS.—The Secretary shall 

16 from time to time certify to the Secretary of the 

17 Treasury for payment to each State the sums pay18 able to such State under this section. 

19 (3) APPROPRIATION.—There are appropriated 

20 from the general fund of the Treasury, without fiscal 

21 year limitation, such sums as may be necessary for 

22 purposes of this subsection. 

23 (e) APPLICABILITY.— 


pwalker on PROD1PC71 with BILLS
86 

•HR 598 IH

1 (1) IN GENERAL.—An agreement entered into 

2 under this section shall apply to weeks of unemploy3 ment— 

4 (A) beginning after the date on which such 

5 agreement is entered into; and 

6 (B) ending before January 1, 2010. 

7 (2) TRANSITION RULE FOR INDIVIDUALS RE8 MAINING ENTITLED TO REGULAR COMPENSATION AS

9 OF JANUARY 1, 2010.—In the case of any individual 

10 who, as of the date specified in paragraph (1)(B), 

11 has not yet exhausted all rights to regular com12 pensation under the State law of a State with re13 spect to a benefit year that began before such date, 

14 additional compensation (as described in subsection 

15 (b)(1)) shall continue to be payable to such indi16 vidual for any week beginning on or after such date 

17 for which the individual is otherwise eligible for reg18 ular compensation with respect to such benefit year. 

19 (3) TERMINATION.—Notwithstanding any other 

20 provision of this subsection, no additional compensa21 tion (as described in subsection (b)(1)) shall be pay22 able for any week beginning after June 30, 2010. 

23 (f) FRAUD AND OVERPAYMENTS.—The provisions of 

24 section 4005 of the Supplemental Appropriations Act, 

25 2008 (Public Law 110–252; 122 Stat. 2356) shall apply 


pwalker on PROD1PC71 with BILLS
87 

•HR 598 IH

1 with respect to additional compensation (as described in 

2 subsection (b)(1)) to the same extent and in the same 

3 manner as in the case of emergency unemployment com4 pensation. 

5 (g) APPLICATION TO OTHER UNEMPLOYMENT BENE6 FITS.— 

7 (1) IN GENERAL.—Each agreement under this 

8 section shall include provisions to provide that the 

9 purposes of the preceding provisions of this section 

10 shall be applied with respect to unemployment bene11 fits described in subsection (h)(3) to the same extent 

12 and in the same manner as if those benefits were 

13 regular compensation. 

14 (2) ELIGIBILITY AND TERMINATION RULES.— 

15 Additional compensation (as described in subsection 

16 (b)(1))— 

17 (A) shall not be payable, pursuant to this 

18 subsection, with respect to any unemployment 

19 benefits described in subsection (h)(3) for any 

20 week beginning on or after the date specified in 

21 subsection (e)(1)(B), except in the case of an 

22 individual who was eligible to receive additional 

23 compensation (as so described) in connection 

24 with any regular compensation or any unem25 ployment benefits described in subsection (h)(3) 


pwalker on PROD1PC71 with BILLS
88 

•HR 598 IH

1 for any period of unemployment ending before 

2 such date; and 

3 (B) shall in no event be payable for any 

4 week beginning after the date specified in sub5 section (e)(3). 

6 (h) DEFINITIONS.—For purposes of this section— 

7 (1) the terms ‘‘compensation’’, ‘‘regular com8 pensation’’, ‘‘benefit year’’, ‘‘State’’, ‘‘State agency’’, 

9 ‘‘State law’’, and ‘‘week’’ have the respective mean10 ings given such terms under section 205 of the Fed11 eral-State Extended Unemployment Compensation 

12 Act of 1970 (26 U.S.C. 3304 note); 

13 (2) the term ‘‘emergency unemployment com14 pensation’’ means emergency unemployment com15 pensation under title IV of the Supplemental Appro16 priations Act, 2008 (Public Law 110–252; 122 Stat. 

17 2353); and 

18 (3) any reference to unemployment benefits de19 scribed in this paragraph shall be considered to refer 

20 to— 

21 (A) extended compensation (as defined by 

22 section 205 of the Federal-State Extended Un23 employment Compensation Act of 1970); and 

24 (B) unemployment compensation (as de25 fined by section 85(b) of the Internal Revenue 


pwalker on PROD1PC71 with BILLS
89 

•HR 598 IH

1 Code of 1986) provided under any program ad2 ministered by a State under an agreement with 

3 the Secretary. 

4 SEC. 2003. SPECIAL TRANSFERS FOR UNEMPLOYMENT 

5 COMPENSATION MODERNIZATION. 

6 (a) IN GENERAL.—Section 903 of the Social Security 

7 Act (42 U.S.C. 1103) is amended by adding at the end 

8 the following: 

9 ‘‘Special Transfers in Fiscal Years 2009, 2010, and 2011 

10 for Modernization 

11 ‘‘(f)(1)(A) In addition to any other amounts, the Sec12 retary of Labor shall provide for the making of unemploy13 ment compensation modernization incentive payments 

14 (hereinafter ‘incentive payments’) to the accounts of the 

15 States in the Unemployment Trust Fund, by transfer from 

16 amounts reserved for that purpose in the Federal unem17 ployment account, in accordance with succeeding provi18 sions of this subsection. 

19 ‘‘(B) The maximum incentive payment allowable 

20 under this subsection with respect to any State shall, as 

21 determined by the Secretary of Labor, be equal to the 

22 amount obtained by multiplying $7,000,000,000 by the 

23 same ratio as would apply under subsection (a)(2)(B) for 

24 purposes of determining such State’s share of any excess 

25 amount (as described in subsection (a)(1)) that would 


pwalker on PROD1PC71 with BILLS
90 

•HR 598 IH

1 have been subject to transfer to State accounts, as of Oc2 tober 1, 2008, under the provisions of subsection (a). 

3 ‘‘(C) Of the maximum incentive payment determined 

4 under subparagraph (B) with respect to a State— 

5 ‘‘(i) one-third shall be transferred to the ac6 count of such State upon a certification under para7 graph (4)(B) that the State law of such State meets 

8 the requirements of paragraph (2); and 

9 ‘‘(ii) the remainder shall be transferred to the 

10 account of such State upon a certification under 

11 paragraph (4)(B) that the State law of such State 

12 meets the requirements of paragraph (3). 

13 ‘‘(2) The State law of a State meets the requirements 

14 of this paragraph if such State law— 

15 ‘‘(A) uses a base period that includes the most 

16 recently completed calendar quarter before the start 

17 of the benefit year for purposes of determining eligi18 bility for unemployment compensation; or 

19 ‘‘(B) provides that, in the case of an individual 

20 who would not otherwise be eligible for unemploy21 ment compensation under the State law because of 

22 the use of a base period that does not include the 

23 most recently completed calendar quarter before the 

24 start of the benefit year, eligibility shall be deterVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00090 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
91 

•HR 598 IH

1 mined using a base period that includes such cal2 endar quarter. 

3 ‘‘(3) The State law of a State meets the requirements 

4 of this paragraph if such State law includes provisions to 

5 carry out at least 2 of the following subparagraphs: 

6 ‘‘(A) An individual shall not be denied regular 

7 unemployment compensation under any State law 

8 provisions relating to availability for work, active 

9 search for work, or refusal to accept work, solely be10 cause such individual is seeking only part-time (and 

11 not full-time) work, except that the State law provi12 sions carrying out this subparagraph may exclude an 

13 individual if a majority of the weeks of work in such 

14 individual’s base period do not include part-time 

15 work. 

16 ‘‘(B) An individual shall not be disqualified 

17 from regular unemployment compensation for sepa18 rating from employment if that separation is for any 

19 compelling family reason. For purposes of this sub20 paragraph, the term ‘compelling family reason’ 

21 means the following: 

22 ‘‘(i) Domestic violence, verified by such 

23 reasonable and confidential documentation as 

24 the State law may require, which causes the in25 dividual reasonably to believe that such individVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00091 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
92 

•HR 598 IH

1 ual’s continued employment would jeopardize 

2 the safety of the individual or of any member 

3 of the individual’s immediate family (as defined 

4 by the Secretary of Labor). 

5 ‘‘(ii) The illness or disability of a member 

6 of the individual’s immediate family (as defined 

7 by the Secretary of Labor). 

8 ‘‘(iii) The need for the individual to accom9 pany such individual’s spouse— 

10 ‘‘(I) to a place from which it is im11 practical for such individual to commute; 

12 and 

13 ‘‘(II) due to a change in location of 

14 the spouse’s employment. 

15 ‘‘(C) Weekly unemployment compensation is 

16 payable under this subparagraph to any individual 

17 who is unemployed (as determined under the State 

18 unemployment compensation law), has exhausted all 

19 rights to regular unemployment compensation under 

20 the State law, and is enrolled and making satisfac21 tory progress in a State-approved training program 

22 or in a job training program authorized under the 

23 Workforce Investment Act of 1998. Such programs 

24 shall prepare individuals who have been separated 

25 from a declining occupation, or who have been involVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00092 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
93 

•HR 598 IH

1 untarily and indefinitely separated from employment 

2 as a result of a permanent reduction of operations 

3 at the individual’s place of employment, for entry 

4 into a high-demand occupation. The amount of un5 employment compensation payable under this sub6 paragraph to an individual for a week of unemploy7 ment shall be equal to the individual’s average week8 ly benefit amount (including dependents’ allowances) 

9 for the most recent benefit year, and the total 

10 amount of unemployment compensation payable 

11 under this subparagraph to any individual shall be 

12 equal to at least 26 times the individual’s average 

13 weekly benefit amount (including dependents’ allow14 ances) for the most recent benefit year. 

15 ‘‘(D) Dependents’ allowances are provided, in 

16 the case of any individual who is entitled to receive 

17 regular unemployment compensation and who has 

18 any dependents (as defined by State law), in an 

19 amount equal to at least $15 per dependent per 

20 week, subject to any aggregate limitation on such al21 lowances which the State law may establish (but 

22 which aggregate limitation on the total allowance for 

23 dependents paid to an individual may not be less 

24 than $50 for each week of unemployment or 50 perVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00093 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
94 

•HR 598 IH

1 cent of the individual’s weekly benefit amount for 

2 the benefit year, whichever is less). 

3 ‘‘(4)(A) Any State seeking an incentive payment 

4 under this subsection shall submit an application therefor 

5 at such time, in such manner, and complete with such in6 formation as the Secretary of Labor may within 60 days 

7 after the date of the enactment of this subsection prescribe 

8 (whether by regulation or otherwise), including informa9 tion relating to compliance with the requirements of para10 graph (2) or (3), as well as how the State intends to use 

11 the incentive payment to improve or strengthen the State’s 

12 unemployment compensation program. The Secretary of 

13 Labor shall, within 30 days after receiving a complete ap14 plication, notify the State agency of the State of the Sec15 retary’s findings with respect to the requirements of para16 graph (2) or (3) (or both). 

17 ‘‘(B)(i) If the Secretary of Labor finds that the State 

18 law provisions (disregarding any State law provisions 

19 which are not then currently in effect as permanent law 

20 or which are subject to discontinuation) meet the require21 ments of paragraph (2) or (3), as the case may be, the 

22 Secretary of Labor shall thereupon make a certification 

23 to that effect to the Secretary of the Treasury, together 

24 with a certification as to the amount of the incentive pay25 ment to be transferred to the State account pursuant to 


pwalker on PROD1PC71 with BILLS
95 

•HR 598 IH

1 that finding. The Secretary of the Treasury shall make 

2 the appropriate transfer within 7 days after receiving such 

3 certification. 

4 ‘‘(ii) For purposes of clause (i), State law provisions 

5 which are to take effect within 12 months after the date 

6 of their certification under this subparagraph shall be con7 sidered to be in effect as of the date of such certification. 

8 ‘‘(C)(i) No certification of compliance with the re9 quirements of paragraph (2) or (3) may be made with re10 spect to any State whose State law is not otherwise eligible 

11 for certification under section 303 or approvable under 

12 section 3304 of the Federal Unemployment Tax Act. 

13 ‘‘(ii) No certification of compliance with the require14 ments of paragraph (3) may be made with respect to any 

15 State whose State law is not in compliance with the re16 quirements of paragraph (2). 

17 ‘‘(iii) No application under subparagraph (A) may be 

18 considered if submitted before the date of the enactment 

19 of this subsection or after the latest date necessary (as 

20 specified by the Secretary of Labor) to ensure that all in21 centive payments under this subsection are made before 

22 October 1, 2011. 

23 ‘‘(5)(A) Except as provided in subparagraph (B), any 

24 amount transferred to the account of a State under this 

25 subsection may be used by such State only in the payment 


pwalker on PROD1PC71 with BILLS
96 

•HR 598 IH

1 of cash benefits to individuals with respect to their unem2 ployment (including for dependents’ allowances and for 

3 unemployment compensation under paragraph (3)(C)), ex4 clusive of expenses of administration. 

5 ‘‘(B) A State may, subject to the same conditions as 

6 set forth in subsection (c)(2) (excluding subparagraph (B) 

7 thereof, and deeming the reference to ‘subsections (a) and 

8 (b)’ in subparagraph (D) thereof to include this sub9 section), use any amount transferred to the account of 

10 such State under this subsection for the administration 

11 of its unemployment compensation law and public employ12 ment offices. 

13 ‘‘(6) Out of any money in the Federal unemployment 

14 account not otherwise appropriated, the Secretary of the 

15 Treasury shall reserve $7,000,000,000 for incentive pay16 ments under this subsection. Any amount so reserved shall 

17 not be taken into account for purposes of any determina18 tion under section 902, 910, or 1203 of the amount in 

19 the Federal unemployment account as of any given time. 

20 Any amount so reserved for which the Secretary of the 

21 Treasury has not received a certification under paragraph 

22 (4)(B) by the deadline described in paragraph (4)(C)(iii) 

23 shall, upon the close of fiscal year 2011, become unre24 stricted as to use as part of the Federal unemployment 

25 account. 


pwalker on PROD1PC71 with BILLS
97 

•HR 598 IH

1 ‘‘(7) For purposes of this subsection, the terms ‘ben2 efit year’, ‘base period’, and ‘week’ have the respective 

3 meanings given such terms under section 205 of the Fed4 eral-State Extended Unemployment Compensation Act of 

5 1970 (26 U.S.C. 3304 note). 

6 ‘‘Special Transfer in Fiscal Year 2009 for Administration 

7 ‘‘(g)(1) In addition to any other amounts, the Sec8 retary of the Treasury shall transfer from the employment 

9 security administration account to the account of each 

10 State in the Unemployment Trust Fund, within 30 days 

11 after the date of the enactment of this subsection, the 

12 amount determined with respect to such State under para13 graph (2). 

14 ‘‘(2) The amount to be transferred under this sub15 section to a State account shall (as determined by the Sec16 retary of Labor and certified by such Secretary to the Sec17 retary of the Treasury) be equal to the amount obtained 

18 by multiplying $500,000,000 by the same ratio as deter19 mined under subsection (f)(1)(B) with respect to such 

20 State. 

21 ‘‘(3) Any amount transferred to the account of a 

22 State as a result of the enactment of this subsection may 

23 be used by the State agency of such State only in the pay24 ment of expenses incurred by it for— 


pwalker on PROD1PC71 with BILLS
98 

•HR 598 IH

1 ‘‘(A) the administration of the provisions of its 

2 State law carrying out the purposes of subsection 

3 (f)(2) or any subparagraph of subsection (f)(3); 

4 ‘‘(B) improved outreach to individuals who 

5 might be eligible for regular unemployment com6 pensation by virtue of any provisions of the State 

7 law which are described in subparagraph (A); 

8 ‘‘(C) the improvement of unemployment benefit 

9 and unemployment tax operations, including re10 sponding to increased demand for unemployment 

11 compensation; and 

12 ‘‘(D) staff-assisted reemployment services for 

13 unemployment compensation claimants.’’. 

14 (b) REGULATIONS.—The Secretary of Labor may 

15 prescribe any regulations, operating instructions, or other 

16 guidance necessary to carry out the amendment made by 

17 subsection (a). 

18 Subtitle B—Assistance for 

19 Vulnerable Individuals 

20 SEC. 2101. EMERGENCY FUND FOR TANF PROGRAM. 

21 (a) IN GENERAL.—Section 403 of the Social Security 

22 Act (42 U.S.C. 603) is amended by adding at the end the 

23 following: 

24 ‘‘(c) EMERGENCY FUND.— 


pwalker on PROD1PC71 with BILLS
99 

•HR 598 IH

1 ‘‘(1) ESTABLISHMENT.—There is established in 

2 the Treasury of the United States a fund which 

3 shall be known as the ‘Emergency Contingency 

4 Fund for State Temporary Assistance for Needy 

5 Families Programs’ (in this subsection referred to as 

6 the ‘Emergency Fund’). 

7 ‘‘(2) DEPOSITS INTO FUND.—Out of any money 

8 in the Treasury of the United States not otherwise 

9 appropriated, there are appropriated such sums as 

10 are necessary for payment to the Emergency Fund. 

11 ‘‘(3) GRANTS.— 

12 ‘‘(A) GRANT RELATED TO CASELOAD IN13 CREASES.— 

14 ‘‘(i) IN GENERAL.—For each calendar 

15 quarter in fiscal year 2009 or 2010, the 

16 Secretary shall make a grant from the 

17 Emergency Fund to each State that— 

18 ‘‘(I) requests a grant under this 

19 subparagraph for the quarter; and 

20 ‘‘(II) meets the requirement of 

21 clause (ii) for the quarter. 

22 ‘‘(ii) CASELOAD INCREASE REQUIRE23 MENT.—A State meets the requirement of 

24 this clause for a quarter if the average 

25 monthly assistance caseload of the State 


pwalker on PROD1PC71 with BILLS
100 

•HR 598 IH

1 for the quarter exceeds the average month2 ly assistance caseload of the State for the 

3 corresponding quarter in the emergency 

4 fund base year of the State. 

5 ‘‘(iii) AMOUNT OF GRANT.—Subject to 

6 paragraph (5), the amount of the grant to 

7 be made to a State under this subpara8 graph for a quarter shall be 80 percent of 

9 the amount (if any) by which the total ex10 penditures of the State for basic assistance 

11 (as defined by the Secretary) in the quar12 ter, whether under the State program 

13 funded under this part or as qualified 

14 State expenditures, exceeds the total ex15 penditures of the State for such assistance 

16 for the corresponding quarter in the emer17 gency fund base year of the State. 

18 ‘‘(B) GRANT RELATED TO INCREASED EX19 PENDITURES FOR NON-RECURRENT SHORT20 TERM BENEFITS.— 

21 ‘‘(i) IN GENERAL.—For each calendar 

22 quarter in fiscal year 2009 or 2010, the 

23 Secretary shall make a grant from the 

24 Emergency Fund to each State that— 


pwalker on PROD1PC71 with BILLS
101 

•HR 598 IH

1 ‘‘(I) requests a grant under this 

2 subparagraph for the quarter; and 

3 ‘‘(II) meets the requirement of 

4 clause (ii) for the quarter. 

5 ‘‘(ii) NON-RECURRENT SHORT-TERM

6 EXPENDITURE REQUIREMENT.—A State 

7 meets the requirement of this clause for a 

8 quarter if the total expenditures of the 

9 State for non-recurrent short-term benefits 

10 in the quarter, whether under the State 

11 program funded under this part or as 

12 qualified State expenditures, exceeds the 

13 total such expenditures of the State for 

14 non-recurrent short-term benefits in the 

15 corresponding quarter in the emergency 

16 fund base year of the State. 

17 ‘‘(iii) AMOUNT OF GRANT.—Subject to 

18 paragraph (5), the amount of the grant to 

19 be made to a State under this subpara20 graph for a quarter shall be an amount 

21 equal to 80 percent of the excess described 

22 in clause (ii). 

23 ‘‘(C) GRANT RELATED TO INCREASED EX24 PENDITURES FOR SUBSIDIZED EMPLOYMENT.— 


pwalker on PROD1PC71 with BILLS
102 

•HR 598 IH

1 ‘‘(i) IN GENERAL.—For each calendar 

2 quarter in fiscal year 2009 or 2010, the 

3 Secretary shall make a grant from the 

4 Emergency Fund to each State that— 

5 ‘‘(I) requests a grant under this 

6 subparagraph for the quarter; and 

7 ‘‘(II) meets the requirement of 

8 clause (ii) for the quarter. 

9 ‘‘(ii) SUBSIDIZED EMPLOYMENT EX10 PENDITURE REQUIREMENT.—A State 

11 meets the requirement of this clause for a 

12 quarter if the total expenditures of the 

13 State for subsidized employment in the 

14 quarter, whether under the State program 

15 funded under this part or as qualified 

16 State expenditures, exceeds the total of 

17 such expenditures of the State in the cor18 responding quarter in the emergency fund 

19 base year of the State. 

20 ‘‘(iii) AMOUNT OF GRANT.—Subject to 

21 paragraph (5), the amount of the grant to 

22 be made to a State under this subpara23 graph for a quarter shall be an amount 

24 equal to 80 percent of the excess described 

25 in clause (ii). 


pwalker on PROD1PC71 with BILLS
103 

•HR 598 IH

1 ‘‘(4) AUTHORITY TO MAKE NECESSARY ADJUST2 MENTS TO DATA AND COLLECT NEEDED DATA.—In 

3 determining the size of the caseload of a State and 

4 the expenditures of a State for basic assistance, non5 recurrent short-term benefits, and subsidized em6 ployment, during any period for which the State re7 quests funds under this subsection, and during the 

8 emergency fund base year of the State, the Sec9 retary may make appropriate adjustments to the 

10 data to ensure that the data reflect expenditures 

11 under the State program funded under this part and 

12 qualified State expenditures. The Secretary may de13 velop a mechanism for collecting expenditure data, 

14 including procedures which allow States to make 

15 reasonable estimates, and may set deadlines for 

16 making revisions to the data. 

17 ‘‘(5) LIMITATION.—The total amount payable 

18 to a single State under subsection (b) and this sub19 section for a fiscal year shall not exceed 25 percent 

20 of the State family assistance grant. 

21 ‘‘(6) LIMITATIONS ON USE OF FUNDS.—A State 

22 to which an amount is paid under this subsection 

23 may use the amount only as authorized by section 

24 404. 


pwalker on PROD1PC71 with BILLS
104 

•HR 598 IH

1 ‘‘(7) TIMING OF IMPLEMENTATION.—The Sec2 retary shall implement this subsection as quickly as 

3 reasonably possible, pursuant to appropriate guid4 ance to States. 

5 ‘‘(8) DEFINITIONS.—In this subsection: 

6 ‘‘(A) AVERAGE MONTHLY ASSISTANCE

7 CASELOAD.—The term ‘average monthly assist8 ance caseload’ means, with respect to a State 

9 and a quarter, the number of families receiving 

10 assistance during the quarter under the State 

11 program funded under this part or as qualified 

12 State expenditures, subject to adjustment under 

13 paragraph (4). 

14 ‘‘(B) EMERGENCY FUND BASE YEAR.— 

15 ‘‘(i) IN GENERAL.—The term ‘emer16 gency fund base year’ means, with respect 

17 to a State and a category described in 

18 clause (ii), whichever of fiscal year 2007 or 

19 2008 is the fiscal year in which the 

20 amount described by the category with re21 spect to the State is the lesser. 

22 ‘‘(ii) CATEGORIES DESCRIBED.—The 

23 categories described in this clause are the 

24 following: 


pwalker on PROD1PC71 with BILLS
105 

•HR 598 IH

1 ‘‘(I) The average monthly assist2 ance caseload of the State. 

3 ‘‘(II) The total expenditures of 

4 the State for non-recurrent short-term 

5 benefits, whether under the State pro6 gram funded under this part or as 

7 qualified State expenditures. 

8 ‘‘(III) The total expenditures of 

9 the State for subsidized employment, 

10 whether under the State program 

11 funded under this part or as qualified 

12 State expenditures. 

13 ‘‘(C) QUALIFIED STATE EXPENDITURES.— 

14 The term ‘qualified State expenditures’ has the 

15 meaning given the term in section 409(a)(7).’’. 

16 (b) TEMPORARY MODIFICATION OF CASELOAD RE17 DUCTION CREDIT.—Section 407(b)(3)(A)(i) of such Act 

18 (42 U.S.C. 607(b)(3)(A)(i)) is amended by inserting ‘‘(or 

19 if the immediately preceding fiscal year is fiscal year 2009 

20 or 2010, then, at State option, during the emergency fund 

21 base year of the State with respect to the average monthly 

22 assistance caseload of the State (within the meaning of 

23 section 403(c)(8)(B)))’’ before ‘‘under the State’’. 


pwalker on PROD1PC71 with BILLS
106 

•HR 598 IH

1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall take effect on the date of the enactment 

3 of this Act. 

4 SEC. 2102. ONE-TIME EMERGENCY SSI PAYMENT. 

5 (a) PAYMENT AUTHORITY.— 

6 (1) IN GENERAL.—At the earliest practicable 

7 date in calendar year 2009 but not later than 90 

8 days after the date of the enactment of this section, 

9 the Commissioner of Social Security shall make a 

10 one-time payment, subject to subsection (b)(2) of 

11 this section, to each individual who is determined by 

12 the Commissioner in calendar year 2009 to be an in13 dividual who— 

14 (A) is entitled to a cash benefit under the 

15 supplemental security income program under 

16 title XVI of the Social Security Act (other than 

17 pursuant to section 1611(e)(1)(B) of such Act) 

18 for at least 1 day in the calendar month in 

19 which the first payment under this section is to 

20 be made; or 

21 (B)(i) was entitled to such a cash benefit 

22 (other than pursuant to section 1611(e)(1)(B) 

23 of such Act) for at least 1 day in the 2-month 

24 period preceding that calendar month; and 


pwalker on PROD1PC71 with BILLS
107 

•HR 598 IH

1 (ii) whose entitlement to that benefit 

2 ceased in that 2-month period solely because 

3 the income of the individual (and the income of 

4 the spouse, if any, of the individual) exceeded 

5 the applicable income limit described in para6 graph (1)(A) or (2)(A) of section 1611(a) of 

7 such Act. 

8 (2) AMOUNT OF PAYMENT.—Subject to sub9 section (b)(1) of this section, the amount of the pay10 ment shall be— 

11 (A) in the case of an individual eligible for 

12 a payment under this section who does not have 

13 a spouse eligible for such a payment, an 

14 amount equal to the average of the cash bene15 fits payable in the aggregate under section 

16 1611 or 1619(a) of the Social Security Act to 

17 eligible individuals who do not have an eligible 

18 spouse, for the most recent month for which 

19 data on payment of the benefits are available, 

20 as determined by the Commissioner of Social 

21 Security; or 

22 (B) in the case of an individual eligible for 

23 a payment under this section who has a spouse 

24 eligible for such a payment, an amount equal to 

25 the average of the cash benefits payable in the 


pwalker on PROD1PC71 with BILLS
108 

•HR 598 IH

1 aggregate under section 1611 or 1619(a) of the 

2 Social Security Act to eligible individuals who 

3 have an eligible spouse, for the most recent 

4 month for which data on payment of the bene5 fits are available, as so determined. 

6 (b) ADMINISTRATIVE PROVISIONS.— 

7 (1) AUTHORITY TO WITHHOLD PAYMENT TO

8 RECOVER PRIOR OVERPAYMENT OF SSI BENEFITS.— 

9 The Commissioner of Social Security may withhold 

10 part or all of a payment otherwise required to be 

11 made under subsection (a) of this section to an indi12 vidual, in order to recover a prior overpayment of 

13 benefits to the individual under the supplemental se14 curity income program under title XVI of the Social 

15 Security Act, subject to the limitations of section 

16 1631(b) of such Act. 

17 (2) AUTHORITY TO MAKE PAYMENTS OVER THE

18 COURSE OF 2 MONTHS.—The Commissioner of So19 cial Security may provide for payments under this 

20 section to be made over the course of 2 calendar 

21 months as may be necessary for the effective and ef22 ficient administration of this section. 

23 (3) PAYMENT TO BE DISREGARDED IN DETER24 MINING UNDERPAYMENTS UNDER THE SSI PRO25 GRAM.—A payment under subsection (a) shall be 


pwalker on PROD1PC71 with BILLS
109 

•HR 598 IH

1 disregarded in determining whether there has been 

2 an underpayment of benefits under the supplemental 

3 security income program under title XVI of the So4 cial Security Act. 

5 (4) NONASSIGNMENT.—The provisions of sec6 tion 207 of the Social Security Act shall apply with 

7 respect to payments under this section to the same 

8 extent as they apply in the case of title II of such 

9 Act. 

10 (c) PAYMENTS TO BE DISREGARDED FOR PURPOSES

11 OF ALL FEDERAL AND FEDERALLY ASSISTED PRO12 GRAMS.—A payment under subsection (a) shall not be re13 garded as income to the recipient, and shall not be re14 garded as a resource of the recipient for the month of re15 ceipt and the following 6 months, for purposes of deter16 mining the eligibility of any individual for benefits or as17 sistance, or the amount or extent of benefits or assistance, 

18 under any Federal program or under any State or local 

19 program financed in whole or in part with Federal funds. 

20 (d) APPROPRIATION.—Out of any sums in the Treas21 ury of the United States not otherwise appropriated, there 

22 are appropriated such sums as may be necessary to carry 

23 out this section. 


pwalker on PROD1PC71 with BILLS
110 

•HR 598 IH

1 SEC. 2103. TEMPORARY RESUMPTION OF PRIOR CHILD 

2 SUPPORT LAW. 

3 During the period that begins with October 1, 2008, 

4 and ends with September 30, 2010, section 455(a)(1) of 

5 the Social Security Act shall be applied and administered 

6 as if the phrase ‘‘from amounts paid to the State under 

7 section 458 or’’ did not appear in such section. 

8 TITLE III—HEALTH INSURANCE 

9 ASSISTANCE FOR THE UNEM10 PLOYED 

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

12 TITLE. 

13 (a) SHORT TITLE OF TITLE.—This title may be cited 

14 as the ‘‘Health Insurance Assistance for the Unemployed 

15 Act of 2009’’. 

16 (b) TABLE OF CONTENTS OF TITLE.—The table of 

17 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. 

18 SEC. 3002. PREMIUM ASSISTANCE FOR COBRA BENEFITS 

19 AND EXTENSION OF COBRA BENEFITS FOR 

20 OLDER OR LONG-TERM EMPLOYEES. 

21 (a) PREMIUM ASSISTANCE FOR COBRA CONTINU22 ATION COVERAGE FOR INDIVIDUALS AND THEIR FAMI23 LIES.— 


pwalker on PROD1PC71 with BILLS
111 

•HR 598 IH

1 (1) PROVISION OF PREMIUM ASSISTANCE.— 

2 (A) REDUCTION OF PREMIUMS PAY3 ABLE.—In the case of any premium for a pe4 riod of coverage beginning on or after the date 

5 of the enactment of this Act for COBRA con6 tinuation coverage with respect to any assist7 ance eligible individual, such individual shall be 

8 treated for purposes of any COBRA continu9 ation provision as having paid the amount of 

10 such premium if such individual pays 35 per11 cent of the amount of such premium (as deter12 mined without regard to this subsection). 

13 (B) PREMIUM REIMBURSEMENT.—For pro14 visions providing the balance of such premium, 

15 see section 6431 of the Internal Revenue Code 

16 of 1986, as added by paragraph (12). 

17 (2) LIMITATION OF PERIOD OF PREMIUM AS18 SISTANCE.— 

19 (A) IN GENERAL.—Paragraph (1)(A) shall 

20 not apply with respect to any assistance eligible 

21 individual for months of coverage beginning on 

22 or after the earlier of— 

23 (i) the first date that such individual 

24 is eligible for coverage under any other 

25 group health plan (other than coverage 


pwalker on PROD1PC71 with BILLS
112 

•HR 598 IH

1 consisting of only dental, vision, coun2 seling, or referral services (or a combina3 tion thereof), coverage under a health re4 imbursement arrangement or a health 

5 flexible spending arrangement, or coverage 

6 of treatment that is furnished in an on-site 

7 medical facility maintained by the em8 ployer and that consists primarily of first9 aid services, prevention and wellness care, 

10 or similar care (or a combination thereof)) 

11 or is eligible for benefits under title XVIII 

12 of the Social Security Act. 

13 (ii) the earliest of— 

14 (I) the date which is 12 months 

15 after the first day of first month that 

16 paragraph (1)(A) applies with respect 

17 to such individual, 

18 (II) the date following the expira19 tion of the maximum period of con20 tinuation coverage required under the 

21 applicable COBRA continuation cov22 erage provision, or 

23 (III) the date following the expi24 ration of the period of continuation 


pwalker on PROD1PC71 with BILLS
113 

•HR 598 IH

1 coverage allowed under paragraph 

2 (4)(B)(ii). 

3 (B) TIMING OF ELIGIBILITY FOR ADDI4 TIONAL COVERAGE.—For purposes of subpara5 graph (A)(i), an individual shall not be treated 

6 as eligible for coverage under a group health 

7 plan before the first date on which such indi8 vidual could be covered under such plan. 

9 (C) NOTIFICATION REQUIREMENT.—An 

10 assistance eligible individual shall notify in writ11 ing the group health plan with respect to which 

12 paragraph (1)(A) applies if such paragraph 

13 ceases to apply by reason of subparagraph 

14 (A)(i). Such notice shall be provided to the 

15 group health plan in such time and manner as 

16 may be specified by the Secretary of Labor. 

17 (3) ASSISTANCE ELIGIBLE INDIVIDUAL.—For 

18 purposes of this section, the term ‘‘assistance eligible 

19 individual’’ means any qualified beneficiary if— 

20 (A) at any time during the period that be21 gins with September 1, 2008, and ends with 

22 December 31, 2009, such qualified beneficiary 

23 is eligible for COBRA continuation coverage, 

24 (B) such qualified beneficiary elects such 

25 coverage, and 


pwalker on PROD1PC71 with BILLS
114 

•HR 598 IH

1 (C) the qualifying event with respect to the 

2 COBRA continuation coverage consists of the 

3 involuntary termination of the covered employ4 ee’s employment and occurred during such pe5 riod. 

6 (4) EXTENSION OF ELECTION PERIOD AND EF7 FECT ON COVERAGE.— 

8 (A) IN GENERAL.—Notwithstanding sec9 tion 605(a) of the Employee Retirement Income 

10 Security Act of 1974, section 4980B(f)(5)(A) of 

11 the Internal Revenue Code of 1986, section 

12 2205(a) of the Public Health Service Act, and 

13 section 8905a(c)(2) of title 5, United States 

14 Code, in the case of an individual who is a 

15 qualified beneficiary described in paragraph 

16 (3)(A) as of the date of the enactment of this 

17 Act and has not made the election referred to 

18 in paragraph (3)(B) as of such date, such indi19 vidual may elect the COBRA continuation cov20 erage under the COBRA continuation coverage 

21 provisions containing such sections during the 

22 60-day period commencing with the date on 

23 which the notification required under paragraph 

24 (7)(C) is provided to such individual. 


pwalker on PROD1PC71 with BILLS
115 

•HR 598 IH

1 (B) COMMENCEMENT OF COVERAGE; NO

2 REACH-BACK.—Any COBRA continuation cov3 erage elected by a qualified beneficiary during 

4 an extended election period under subparagraph 

5 (A)— 

6 (i) shall commence on the date of the 

7 enactment of this Act, and 

8 (ii) shall not extend beyond the period 

9 of COBRA continuation coverage that 

10 would have been required under the appli11 cable COBRA continuation coverage provi12 sion if the coverage had been elected as re13 quired under such provision. 

14 (C) PREEXISTING CONDITIONS.—With re15 spect to a qualified beneficiary who elects 

16 COBRA continuation coverage pursuant to sub17 paragraph (A), the period— 

18 (i) beginning on the date of the quali19 fying event, and 

20 (ii) ending with the day before the 

21 date of the enactment of this Act, 

22 shall be disregarded for purposes of deter23 mining the 63-day periods referred to in section 

24 701)(2) of the Employee Retirement Income 

25 Security Act of 1974, section 9801(c)(2) of the 


pwalker on PROD1PC71 with BILLS
116 

•HR 598 IH

1 Internal Revenue Code of 1986, and section 

2 2701(c)(2) of the Public Health Service Act. 

3 (5) EXPEDITED REVIEW OF DENIALS OF PRE4 MIUM ASSISTANCE.—In any case in which an indi5 vidual requests treatment as an assistance eligible 

6 individual and is denied such treatment by the group 

7 health plan by reason of such individual’s ineligi8 bility for COBRA continuation coverage, the Sec9 retary of Labor (or the Secretary of Health and 

10 Human services in connection with COBRA continu11 ation coverage which is provided other than pursu12 ant to part 6 of subtitle B of title I of the Employee 

13 Retirement Income Security Act of 1974), in con14 sultation with the Secretary of the Treasury, shall 

15 provide for expedited review of such denial. An indi16 vidual shall be entitled to such review upon applica17 tion to such Secretary in such form and manner as 

18 shall be provided by such Secretary. Such Secretary 

19 shall make a determination regarding such individ20 ual’s eligibility within 10 business days after receipt 

21 of such individual’s application for review under this 

22 paragraph. 

23 (6) DISREGARD OF SUBSIDIES FOR PURPOSES

24 OF FEDERAL AND STATE PROGRAMS.—Notwith25 standing any other provision of law, any premium 


pwalker on PROD1PC71 with BILLS
117 

•HR 598 IH

1 reduction with respect to an assistance eligible indi2 vidual under this subsection shall not be considered 

3 income or resources in determining eligibility for, or 

4 the amount of assistance or benefits provided under, 

5 any other public benefit provided under Federal law 

6 or the law of any State or political subdivision there7 of. 

8 (7) NOTICES TO INDIVIDUALS.— 

9 (A) GENERAL NOTICE.— 

10 (i) IN GENERAL.—In the case of no11 tices provided under section 606(4) of the 

12 Employee Retirement Income Security Act 

13 of 1974 (29 U.S.C. 1166(4)), section 

14 4980B(f)(6)(D) of the Internal Revenue 

15 Code of 1986, section 2206(4) of the Pub16 lic Health Service Act (42 U.S.C. 300bb– 

17 6(4)), or section 8905a(f)(2)(A) of title 5, 

18 United States Code, with respect to indi19 viduals who, during the period described in 

20 paragraph (3)(A), become entitled to elect 

21 COBRA continuation coverage, such no22 tices shall include an additional notifica23 tion to the recipient of the availability of 

24 premium reduction with respect to such 

25 coverage under this subsection. 


pwalker on PROD1PC71 with BILLS
118 

•HR 598 IH

1 (ii) ALTERNATIVE NOTICE.—In the 

2 case of COBRA continuation coverage to 

3 which the notice provision under such sec4 tions does not apply, the Secretary of 

5 Labor, in consultation with the Secretary 

6 of the Treasury and the Secretary of 

7 Health and Human Services, shall, in co8 ordination with administrators of the 

9 group health plans (or other entities) that 

10 provide or administer the COBRA continu11 ation coverage involved, provide rules re12 quiring the provision of such notice. 

13 (iii) FORM.—The requirement of the 

14 additional notification under this subpara15 graph may be met by amendment of exist16 ing notice forms or by inclusion of a sepa17 rate document with the notice otherwise 

18 required. 

19 (B) SPECIFIC REQUIREMENTS.—Each ad20 ditional notification under subparagraph (A) 

21 shall include— 

22 (i) the forms necessary for estab23 lishing eligibility for premium reduction 

24 under this subsection, 


pwalker on PROD1PC71 with BILLS
119 

•HR 598 IH

1 (ii) the name, address, and telephone 

2 number necessary to contact the plan ad3 ministrator and any other person main4 taining relevant information in connection 

5 with such premium reduction, 

6 (iii) a description of the extended elec7 tion period provided for in paragraph 

8 (4)(A), 

9 (iv) a description of the obligation of 

10 the qualified beneficiary under paragraph 

11 (2)(C) to notify the plan providing continu12 ation coverage of eligibility for subsequent 

13 coverage under another group health plan 

14 or eligibility for benefits under title XVIII 

15 of the Social Security Act and the penalty 

16 provided for failure to so notify the plan, 

17 and 

18 (v) a description, displayed in a 

19 prominent manner, of the qualified bene20 ficiary’s right to a reduced premium and 

21 any conditions on entitlement to the re22 duced premium. 

23 (C) NOTICE RELATING TO RETROACTIVE

24 COVERAGE.—In the case of an individual de25 scribed in paragraph (3)(A) who has elected 


pwalker on PROD1PC71 with BILLS
120 

•HR 598 IH

1 COBRA continuation coverage as of the date of 

2 enactment of this Act or an individual described 

3 in paragraph (4)(A), the administrator of the 

4 group health plan (or other entity) involved 

5 shall provide (within 60 days after the date of 

6 enactment of this Act) for the additional notifi7 cation required to be provided under subpara8 graph (A). 

9 (D) MODEL NOTICES.—Not later than 30 

10 days after the date of enactment of this Act, 

11 the Secretary of the Labor, in consultation with 

12 the Secretary of the Treasury and the Secretary 

13 of Health and Human Services, shall prescribe 

14 models for the additional notification required 

15 under this paragraph. 

16 (8) SAFEGUARDS.—The Secretary of the Treas17 ury shall provide such rules, procedures, regulations, 

18 and other guidance as may be necessary and appro19 priate to prevent fraud and abuse under this sub20 section. 

21 (9) OUTREACH.—The Secretary of Labor, in 

22 consultation with the Secretary of the Treasury and 

23 the Secretary of Health and Human Services, shall 

24 provide outreach consisting of public education and 

25 enrollment assistance relating to premium reduction 


pwalker on PROD1PC71 with BILLS
121 

•HR 598 IH

1 provided under this subsection. Such outreach shall 

2 target employers, group health plan administrators, 

3 public assistance programs, States, insurers, and 

4 other entities as determined appropriate by such 

5 Secretaries. Such outreach shall include an initial 

6 focus on those individuals electing continuation cov7 erage who are referred to in paragraph (7)(C). In8 formation on such premium reduction, including en9 rollment, shall also be made available on website of 

10 the Departments of Labor, Treasury, and Health 

11 and Human Services. 

12 (10) DEFINITIONS.—For purposes of this sub13 section— 

14 (A) ADMINISTRATOR.—The term ‘‘admin15 istrator’’ has the meaning given such term in 

16 section 3(16) of the Employee Retirement In17 come Security Act of 1974. 

18 (B) COBRA CONTINUATION COVERAGE.— 

19 The term ‘‘COBRA continuation coverage’’ 

20 means continuation coverage provided pursuant 

21 to part 6 of subtitle B of title I of the Em22 ployee Retirement Income Security Act of 1974 

23 (other than under section 609), title XXII of 

24 the Public Health Service Act, section 4980B of 

25 the Internal Revenue Code of 1986 (other than 


pwalker on PROD1PC71 with BILLS
122 

•HR 598 IH

1 subsection (f)(1) of such section insofar as it 

2 relates to pediatric vaccines), or section 8905a 

3 of title 5, United States Code, or under a State 

4 program that provides continuation coverage 

5 comparable to such continuation coverage. Such 

6 term does not include coverage under a health 

7 flexible spending arrangement. 

8 (C) COBRA CONTINUATION PROVISION.— 

9 The term ‘‘COBRA continuation provision’’ 

10 means the provisions of law described in sub11 paragraph (B). 

12 (D) COVERED EMPLOYEE.—The term 

13 ‘‘covered employee’’ has the meaning given such 

14 term in section 607(2) of the Employee Retire15 ment Income Security Act of 1974. 

16 (E) QUALIFIED BENEFICIARY.—The term 

17 ‘‘qualified beneficiary’’ has the meaning given 

18 such term in section 607(3) of the Employee 

19 Retirement Income Security Act of 1974. 

20 (F) GROUP HEALTH PLAN.—The term 

21 ‘‘group health plan’’ has the meaning given 

22 such term in section 607(1) of the Employee 

23 Retirement Income Security Act of 1974. 

24 (G) STATE.—The term ‘‘State’’ includes 

25 the District of Columbia, the Commonwealth of 


pwalker on PROD1PC71 with BILLS
123 

•HR 598 IH

1 Puerto Rico, the Virgin Islands, Guam, Amer2 ican Samoa, and the Commonwealth of the 

3 Northern Mariana Islands. 

4 (11) REPORTS.— 

5 (A) INTERIM REPORT.—The Secretary of 

6 the Treasury shall submit an interim report to 

7 the Committee on Education and Labor, the 

8 Committee on Ways and Means, and the Com9 mittee on Energy and Commerce of the House 

10 of Representatives and the Committee on 

11 Health, Education, Labor, and Pensions and 

12 the Committee on Finance of the Senate re13 garding the premium reduction provided under 

14 this subsection that includes— 

15 (i) the number of individuals provided 

16 such assistance as of the date of the re17 port; and 

18 (ii) the total amount of expenditures 

19 incurred (with administrative expenditures 

20 noted separately) in connection with such 

21 assistance as of the date of the report. 

22 (B) FINAL REPORT.—As soon as prac23 ticable after the last period of COBRA continu24 ation coverage for which premium reduction is 

25 provided under this section, the Secretary of the 


pwalker on PROD1PC71 with BILLS
124 

•HR 598 IH

1 Treasury shall submit a final report to each 

2 Committee referred to in subparagraph (A) that 

3 includes— 

4 (i) the number of individuals provided 

5 premium reduction under this section; 

6 (ii) the average dollar amount 

7 (monthly and annually) of premium reduc8 tions provided to such individuals; and 

9 (iii) the total amount of expenditures 

10 incurred (with administrative expenditures 

11 noted separately) in connection with pre12 mium reduction under this section. 

13 (12) COBRA PREMIUM ASSISTANCE.— 

14 (A) IN GENERAL.—Subchapter B of chap15 ter 65 of the Internal Revenue Code of 1986 is 

16 amended by adding at the end the following 

17 new section: 

18 ‘‘SEC. 6431. COBRA PREMIUM ASSISTANCE. 

19 ‘‘(a) IN GENERAL.—The entity to whom premiums 

20 are payable under COBRA continuation coverage shall be 

21 reimbursed for the amount of premiums not paid by plan 

22 beneficiaries by reason of section 3002(a) of the Health 

23 Insurance Assistance for the Unemployed Act of 2009. 

24 Such amount shall be treated as a credit against the re25 quirement of such entity to make deposits of payroll taxes. 


pwalker on PROD1PC71 with BILLS
125 

•HR 598 IH

1 To the extent that such amount exceeds the amount of 

2 such taxes, the Secretary shall pay to such entity the 

3 amount of such excess. No payment may be made under 

4 this subsection to an entity with respect to any assistance 

5 eligible individual until after such entity has received the 

6 reduced premium from such individual required under sec7 tion 3002(a)(1)(A) of such Act. 

8 ‘‘(b) PAYROLL TAXES.—For purposes of this section, 

9 the term ‘payroll taxes’ means— 

10 ‘‘(1) amounts required to be deducted and with11 held for the payroll period under section 3401 (relat12 ing to wage withholding), 

13 ‘‘(2) amounts required to be deducted for the 

14 payroll period under section 3102 (relating to FICA 

15 employee taxes), and 

16 ‘‘(3) amounts of the taxes imposed for the pay17 roll period under section 3111 (relating to FICA em18 ployer taxes). 

19 ‘‘(c) TREATMENT OF CREDIT.—Except as otherwise 

20 provided by the Secretary, the credit described in sub21 section (a) shall be applied as though the employer had 

22 paid to the Secretary, on the day that the qualified bene23 ficiary’s premium payment is received, an amount equal 

24 to such credit. 


pwalker on PROD1PC71 with BILLS
126 

•HR 598 IH

1 ‘‘(d) TREATMENT OF PAYMENT.—For purposes of 

2 section 1324(b)(2) of title 31, United States Code, any 

3 payment under this subsection shall be treated in the same 

4 manner as a refund of the credit under section 35. 

5 ‘‘(e) REPORTING.— 

6 ‘‘(1) IN GENERAL.—Each entity entitled to re7 imbursement under subsection (a) for any period 

8 shall submit such reports as the Secretary may re9 quire, including— 

10 ‘‘(A) an attestation of involuntary termi11 nation of employment for each covered em12 ployee on the basis of whose termination entitle13 ment to reimbursement is claimed under sub14 section (a), and 

15 ‘‘(B) a report of the amount of payroll 

16 taxes offset under subsection (a) for the report17 ing period and the estimated offsets of such 

18 taxes for the subsequent reporting period in 

19 connection with reimbursements under sub20 section (a). 

21 ‘‘(2) TIMING OF REPORTS RELATING TO

22 AMOUNT OF PAYROLL TAXES.—Reports required 

23 under paragraph (1)(B) shall be submitted at the 

24 same time as deposits of taxes imposed by chapters 


pwalker on PROD1PC71 with BILLS
127 

•HR 598 IH

1 21, 22, and 24 or at such time as is specified by the 

2 Secretary. 

3 ‘‘(f) REGULATIONS.—The Secretary may issue such 

4 regulations or other guidance as may be necessary or ap5 propriate to carry out this section, including the require6 ment to report information or the establishment of other 

7 methods for verifying the correct amounts of payments 

8 and credits under this section.’’. 

9 (B) SOCIAL SECURITY TRUST FUNDS HELD

10 HARMLESS.—In determining any amount trans11 ferred or appropriated to any fund under the 

12 Social Security Act, section 6431 of the Inter13 nal Revenue Code of 1986 shall not be taken 

14 into account. 

15 (C) CLERICAL AMENDMENT.—The table of 

16 sections for subchapter B of chapter 65 of the 

17 Internal Revenue Code of 1986 is amended by 

18 adding at the end the following new item: 

‘‘Sec. 6431. COBRA premium assistance.’’. 

19 (D) EFFECTIVE DATE.—The amendments 

20 made by this paragraph shall apply to pre21 miums to which subsection (a)(1)(A) applies. 

22 (13) PENALTY FOR FAILURE TO NOTIFY

23 HEALTH PLAN OF CESSATION OF ELIGIBILITY FOR

24 PREMIUM ASSISTANCE.— 


pwalker on PROD1PC71 with BILLS
128 

•HR 598 IH

1 (A) IN GENERAL.—Part I of subchapter B 

2 of chapter 68 of the Internal Revenue Code of 

3 1986 is amended by adding at the end the fol4 lowing new section: 

5 ‘‘SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH 

6 PLAN OF CESSATION OF ELIGIBILITY FOR 

7 COBRA PREMIUM ASSISTANCE. 

8 ‘‘(a) IN GENERAL.—Any person required to notify a 

9 group health plan under section 3002(a)(2)(C)) of the 

10 Health Insurance Assistance for the Unemployed Act of 

11 2009 who fails to make such a notification at such time 

12 and in such manner as the Secretary of Labor may require 

13 shall pay a penalty of 110 percent of the premium reduc14 tion provided under such section after termination of eligi15 bility under such subsection. 

16 ‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty 

17 shall be imposed under subsection (a) with respect to any 

18 failure if it is shown that such failure is due to reasonable 

19 cause and not to willful neglect.’’. 

20 (B) CLERICAL AMENDMENT.—The table of 

21 sections of part I of subchapter B of chapter 68 

22 of such Code is amended by adding at the end 

23 the following new item: 

‘‘Sec. 6720C. Penalty for failure to notify health plan of cessation of eligibility 

for COBRA premium assistance.’’. 


pwalker on PROD1PC71 with BILLS
129 

•HR 598 IH

1 (C) EFFECTIVE DATE.—The amendments 

2 made by this paragraph shall apply to failures 

3 occurring after the date of the enactment of 

4 this Act. 

5 (14) COORDINATION WITH HCTC.— 

6 (A) IN GENERAL.—Subsection (g) of sec7 tion 35 of the Internal Revenue Code of 1986 

8 is amended by redesignating paragraph (9) as 

9 paragraph (10) and inserting after paragraph 

10 (8) the following new paragraph: 

11 ‘‘(9) COBRA PREMIUM ASSISTANCE.—In the 

12 case of an assistance eligible individual who receives 

13 premium reduction for COBRA continuation cov14 erage under section 3002(a) of the Health Insurance 

15 Assistance for the Unemployed Act of 2009 for any 

16 month during the taxable year, such individual shall 

17 not be treated as an eligible individual, a certified 

18 individual, or a qualifying family member for pur19 poses of this section or section 7527 with respect to 

20 such month.’’. 

21 (B) EFFECTIVE DATE.—The amendment 

22 made by subparagraph (A) shall apply to tax23 able years ending after the date of the enact24 ment of this Act. 


pwalker on PROD1PC71 with BILLS
130 

•HR 598 IH

1 (15) EXCLUSION OF COBRA PREMIUM ASSIST2 ANCE FROM GROSS INCOME.— 

3 (A) IN GENERAL.—Part III of subchapter 

4 B of chapter 1 of the Internal Revenue Code of 

5 1986 is amended by inserting after section 

6 139B the following new section: 

7 ‘‘SEC. 139C. COBRA PREMIUM ASSISTANCE. 

8 ‘‘In the case of an assistance eligible individual (as 

9 defined in section 3002 of the Health Insurance Assist10 ance for the Unemployed Act of 2009), gross income does 

11 not include any premium reduction provided under sub12 section (a) of such section.’’. 

13 (B) CLERICAL AMENDMENT.—The table of 

14 sections for part III of subchapter B of chapter 

15 1 of such Code is amended by inserting after 

16 the item relating to section 139B the following 

17 new item: 

‘‘Sec. 139C. COBRA premium assistance.’’. 

18 (C) EFFECTIVE DATE.—The amendments 

19 made by this paragraph shall apply to taxable 

20 years ending after the date of the enactment of 

21 this Act. 

22 (b) EXTENSION OF COBRA BENEFITS FOR OLDER

23 OR LONG-TERM EMPLOYEES.— 

24 (1) ERISA AMENDMENT.—Section 602(2)(A) 

25 of the Employee Retirement Income Security Act of 


pwalker on PROD1PC71 with BILLS
131 

•HR 598 IH

1 1974 is amended by adding at the end the following 

2 new clauses: 

3 ‘‘(x) SPECIAL RULE FOR OLDER OR

4 LONG-TERM EMPLOYEES GENERALLY.—In 

5 the case of a qualifying event described in 

6 section 603(2) with respect to a covered 

7 employee who (as of such qualifying event) 

8 has attained age 55 or has completed 10 

9 or more years of service with the entity 

10 that is the employer at the time of the 

11 qualifying event, clauses (i) and (ii) shall 

12 not apply. 

13 ‘‘(xi) YEAR OF SERVICE.—For pur14 poses of this subparagraph, the term ‘year 

15 of service’ shall have the meaning provided 

16 in section 202(a)(3).’’. 

17 (2) IRC AMENDMENT.—Clause (i) of section 

18 4980B(f)(2)(B) of the Internal Revenue Code of 

19 1986 is amended by adding at the end the following 

20 new subclauses: 

21 ‘‘(X) SPECIAL RULE FOR OLDER

22 OR LONG-TERM EMPLOYEES GEN23 ERALLY.—In the case of a qualifying 

24 event described in paragraph (3)(B) 

25 with respect to a covered employee 


pwalker on PROD1PC71 with BILLS
132 

•HR 598 IH

1 who (as of such qualifying event) has 

2 attained age 55 or has completed 10 

3 or more years of service with the enti4 ty that is the employer at the time of 

5 the qualifying event, subclauses (I) 

6 and (II) shall not apply. 

7 ‘‘(XI) YEAR OF SERVICE.—For 

8 purposes of this clause, the term ‘year 

9 of service’ shall have the meaning pro10 vided in section 202(a)(3) of the Em11 ployee Retirement Income Security 

12 Act of 1974.’’. 

13 (3) PHSA AMENDMENT.—Section 2202(2)(A) 

14 of the Public Health Service Act is amended by add15 ing at the end the following new clauses: 

16 ‘‘(viii) SPECIAL RULE FOR OLDER OR

17 LONG-TERM EMPLOYEES GENERALLY.—In 

18 the case of a qualifying event described in 

19 section 2203(2) with respect to a covered 

20 employee who (as of such qualifying event) 

21 has attained age 55 or has completed 10 

22 or more years of service with the entity 

23 that is the employer at the time of the 

24 qualifying event, clauses (i) and (ii) shall 

25 not apply. 


pwalker on PROD1PC71 with BILLS
133 

•HR 598 IH

1 ‘‘(ix) YEAR OF SERVICE.—For pur2 poses of this subparagraph, the term ‘year 

3 of service’ shall have the meaning provided 

4 in section 202(a)(3) of the Employee Re5 tirement Income Security Act of 1974.’’. 

6 (4) EFFECTIVE DATE OF AMENDMENTS.—The 

7 amendments made by this subsection shall apply to 

8 periods of coverage which would (without regard to 

9 the amendments made by this section) end on or 

10 after the date of the enactment of this Act. 

11 SEC. 3003. TEMPORARY OPTIONAL MEDICAID COVERAGE 

12 FOR THE UNEMPLOYED. 

13 (a) IN GENERAL.—Section 1902 of the Social Secu14 rity Act (42 U.S.C. 1396b) is amended— 

15 (1) in subsection (a)(10)(A)(ii)— 

16 (A) by striking ‘‘or’’ at the end of sub17 clause (XVIII); 

18 (B) by adding ‘‘or’’ at the end of subclause 

19 (XIX); and 

20 (C) by adding at the end the following new 

21 subclause 

22 ‘‘(XX) who are described in sub23 section (dd)(1) (relating to certain un24 employed individuals and their fami25 lies);’’; and 


pwalker on PROD1PC71 with BILLS
134 

•HR 598 IH

1 (2) by adding at the end the following new sub2 section: 

3 ‘‘(dd)(1) Individuals described in this paragraph 

4 are— 

5 ‘‘(A) individuals who— 

6 ‘‘(i) are within one or more of the cat7 egories described in paragraph (2), as elected 

8 under the State plan; and 

9 ‘‘(ii) meet the applicable requirements of 

10 paragraph (3); and 

11 ‘‘(B) individuals who— 

12 ‘‘(i) are the spouse, or dependent child 

13 under 19 years of age, of an individual de14 scribed in subparagraph (A); and 

15 ‘‘(ii) meet the requirement of paragraph 

16 (3)(B). 

17 ‘‘(2) The categories of individuals described in this 

18 paragraph are each of the following: 

19 ‘‘(A) Individuals who are receiving unemploy20 ment compensation benefits. 

21 ‘‘(B) Individuals who were receiving, but have 

22 exhausted, unemployment compensation benefits on 

23 or after July 1, 2008. 

24 ‘‘(C) Individuals who are involuntarily unem25 ployed and were involuntarily separated from emVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00134 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
135 

•HR 598 IH

1 ployment on or after September 1, 2008, and before 

2 January 1, 2011, whose family gross income does 

3 not exceed a percentage specified by the State (not 

4 to exceed 200 percent) of the income official poverty 

5 line (as defined by the Office of Management and 

6 Budget, and revised annually in accordance with sec7 tion 673(2) of the Omnibus Budget Reconciliation 

8 Act of 1981) applicable to a family of the size in9 volved, and who, but for subsection 

10 (a)(10)(A)(ii)(XX), are not eligible for medical as11 sistance under this title or health assistance under 

12 title XXI. 

13 ‘‘(D) Individuals who are involuntarily unem14 ployed and were involuntarily separated from em15 ployment on or after September 1, 2008, and before 

16 January 1, 2011, who are members of households 

17 participating in the supplemental nutrition assist18 ance program established under the Food and Nutri19 tion Act of 2008 (7 U.S.C. 2011 et seq), and who, 

20 but for subsection (a)(10)(A)(ii)(XX), are not eligi21 ble for medical assistance under this title or health 

22 assistance under title XXI. 

23 A State plan may elect one or more of the categories de24 scribed in this paragraph but may not elect the category 


pwalker on PROD1PC71 with BILLS
136 

•HR 598 IH

1 described in subparagraph (B) unless the State plan also 

2 elects the category described in subparagraph (A). 

3 ‘‘(3) The requirements of this paragraph with respect 

4 to an individual are the following: 

5 ‘‘(A) In the case of individuals within a cat6 egory described in subparagraph (A) or (B) of para7 graph (2), the individual was involuntarily separated 

8 from employment on or after September 1, 2008, 

9 and before January 1, 2011, or meets such com10 parable requirement as the Secretary specifies 

11 through rule, guidance, or otherwise in the case of 

12 an individual who was an independent contractor. 

13 ‘‘(B) The individual is not otherwise covered 

14 under creditable coverage, as defined in section 

15 2701(c) of the Public Health Service Act (42 U.S.C. 

16 300gg(c)), but applied without regard to paragraph 

17 (1)(F) of such section and without regard to cov18 erage provided by reason of the application of sub19 section (a)(10)(A)(ii)(XX). 

20 ‘‘(4)(A) No income or resources test shall be applied 

21 with respect to any category of individuals described in 

22 subparagraph (A), (B), or (D) of paragraph (2) who are 

23 eligible for medical assistance only by reason of the appli24 cation of subsection (a)(10)(A)(ii)(XX). 


pwalker on PROD1PC71 with BILLS
137 

•HR 598 IH

1 ‘‘(B) Nothing in this subsection shall be construed 

2 to prevent a State from imposing a resource test for the 

3 category of individuals described in paragraph (2)(C)). 

4 ‘‘(C) In the case of individuals provided medical as5 sistance by reason of the application of subsection 

6 (a)(10)(A)(ii)(XX), the requirements of subsections 

7 (i)(22) and (x) shall not apply.’’. 

8 (b) 100 PERCENT FEDERAL MATCHING RATE.— 

9 (1) FMAP FOR TIME-LIMITED PERIOD.—The 

10 third sentence of section 1905(b) of such Act (42 

11 U.S.C. 1396d(b)) is amended by inserting before the 

12 period at the end the following: ‘‘and for items and 

13 services furnished on or after the date of enactment 

14 of this Act and before January 1, 2011, to individ15 uals who are eligible for medical assistance only by 

16 reason of the application of section 

17 1902(a)(10)(A)(ii)(XX)’’. 

18 (2) CERTAIN ENROLLMENT-RELATED ADMINIS19 TRATIVE COSTS.—Notwithstanding any other provi20 sion of law, for purposes of applying section 1903(a) 

21 of the Social Security Act (42 U.S.C. 1396b(a)), 

22 with respect to expenditures incurred on or after the 

23 date of the enactment of this Act and before Janu24 ary 1, 2011, for costs of administration (including 

25 outreach and the modification and operation of eligiVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00137 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
138 

•HR 598 IH

1 bility information systems) attributable to eligibility 

2 determination and enrollment of individuals who are 

3 eligible for medical assistance only by reason of the 

4 application of section 1902(a)(10)(A)(ii)(XX) of 

5 such Act, as added by subsection (a)(1), the Federal 

6 matching percentage shall be 100 percent instead of 

7 the matching percentage otherwise applicable. 

8 (c) CONFORMING AMENDMENTS.—(1) Section 

9 1903(f)(4) of such Act (42 U.S.C. 1396c(f)(4)) is amend10 ed by inserting ‘‘1902(a)(10)(A)(ii)(XX), or’’ after 

11 ‘‘1902(a)(10)(A)(ii)(XIX),’’. 

12 (2) Section 1905(a) of such Act (42 U.S.C. 

13 1396d(a)) is amended, in the matter preceding paragraph 

14 (1)— 

15 (A) by striking ‘‘or’’ at the end of clause (xii); 

16 (B) by adding ‘‘or’’ at the end of clause (xiii); 

17 and 

18 (C) by inserting after clause (xiii) the following 

19 new clause: 

20 ‘‘(xiv) individuals described in section 

21 1902(dd)(1),’’. 


pwalker on PROD1PC71 with BILLS
139 

•HR 598 IH

1 TITLE IV—HEALTH 

2 INFORMATION TECHNOLOGY 

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

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

5 ‘‘Health Information Technology for Economic and Clin6 ical Health Act’’ or the ‘‘HITECH Act’’. 

7 (b) TABLE OF CONTENTS OF TITLE.—The table of 

8 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. 


pwalker on PROD1PC71 with BILLS
140 

•HR 598 IH

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. 


pwalker on PROD1PC71 with BILLS
141 

•HR 598 IH

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. 

1 Subtitle A—Promotion of Health 

2 Information Technology 

3 PART I—IMPROVING HEALTH CARE QUALITY, 

4 SAFETY, AND EFFICIENCY 

5 SEC. 4101. ONCHIT; STANDARDS DEVELOPMENT AND ADOP6 TION. 

7 The Public Health Service Act (42 U.S.C. 201 et 

8 seq.) is amended by adding at the end the following: 

9 ‘‘TITLE XXX—HEALTH INFORMA10 TION TECHNOLOGY AND 

11 QUALITY 

12 ‘‘SEC. 3000. DEFINITIONS. 

13 ‘‘In this title: 

14 ‘‘(1) CERTIFIED EHR TECHNOLOGY.—The term 

15 ‘certified EHR technology’ means a qualified elec16 tronic health record that is certified pursuant to sec17 tion 3001(c)(5) as meeting standards adopted under 

18 section 3004 that are applicable to the type of 


pwalker on PROD1PC71 with BILLS
142 

•HR 598 IH

1 record involved (as determined by the Secretary, 

2 such as an ambulatory electronic health record for 

3 office-based physicians or an inpatient hospital elec4 tronic health record for hospitals). 

5 ‘‘(2) ENTERPRISE INTEGRATION.—The term 

6 ‘enterprise integration’ means the electronic linkage 

7 of health care providers, health plans, the govern8 ment, and other interested parties, to enable the 

9 electronic exchange and use of health information 

10 among all the components in the health care infra11 structure in accordance with applicable law, and 

12 such term includes related application protocols and 

13 other related standards. 

14 ‘‘(3) HEALTH CARE PROVIDER.—The term 

15 ‘health care provider’ means a hospital, skilled nurs16 ing facility, nursing facility, home health entity or 

17 other long-term care facility, health care clinic, Fed18 erally qualified health center, group practice (as de19 fined in section 1877(h)(4) of the Social Security 

20 Act), a pharmacist, a pharmacy, a laboratory, a phy21 sician (as defined in section 1861(r) of the Social 

22 Security Act), a practitioner (as described in section 

23 1842(b)(18)(C) of the Social Security Act), a pro24 vider operated by, or under contract with, the Indian 

25 Health Service or by an Indian tribe (as defined in 


pwalker on PROD1PC71 with BILLS
143 

•HR 598 IH

1 the Indian Self-Determination and Education Assist2 ance Act), tribal organization, or urban Indian orga3 nization (as defined in section 4 of the Indian 

4 Health Care Improvement Act), a rural health clinic, 

5 a covered entity under section 340B, and any other 

6 category of facility or clinician determined appro7 priate by the Secretary. 

8 ‘‘(4) HEALTH INFORMATION.—The term ‘health 

9 information’ has the meaning given such term in 

10 section 1171(4) of the Social Security Act. 

11 ‘‘(5) HEALTH INFORMATION TECHNOLOGY.— 

12 The term ‘health information technology’ means 

13 hardware, software, integrated technologies and re14 lated licenses, intellectual property, upgrades, and 

15 packaged solutions sold as services that are specifi16 cally designed for use by health care entities for the 

17 electronic creation, maintenance, or exchange of 

18 health information. 

19 ‘‘(6) HEALTH PLAN.—The term ‘health plan’ 

20 has the meaning given such term in section 1171(5) 

21 of the Social Security Act. 

22 ‘‘(7) HIT POLICY COMMITTEE.—The term ‘HIT 

23 Policy Committee’ means such Committee estab24 lished under section 3002(a). 


pwalker on PROD1PC71 with BILLS
144 

•HR 598 IH

1 ‘‘(8) HIT STANDARDS COMMITTEE.—The term 

2 ‘HIT Standards Committee’ means such Committee 

3 established under section 3003(a). 

4 ‘‘(9) INDIVIDUALLY IDENTIFIABLE HEALTH IN5 FORMATION.—The term ‘individually identifiable 

6 health information’ has the meaning given such term 

7 in section 1171(6) of the Social Security Act. 

8 ‘‘(10) LABORATORY.—The term ‘laboratory’ 

9 has the meaning given such term in section 353(a). 

10 ‘‘(11) NATIONAL COORDINATOR.—The term 

11 ‘National Coordinator’ means the head of the Office 

12 of the National Coordinator for Health Information 

13 Technology established under section 3001(a). 

14 ‘‘(12) PHARMACIST.—The term ‘pharmacist’ 

15 has the meaning given such term in section 804(2) 

16 of the Federal Food, Drug, and Cosmetic Act. 

17 ‘‘(13) QUALIFIED ELECTRONIC HEALTH

18 RECORD.—The term ‘qualified electronic health 

19 record’ means an electronic record of health-related 

20 information on an individual that— 

21 ‘‘(A) includes patient demographic and 

22 clinical health information, such as medical his23 tory and problem lists; and 

24 ‘‘(B) has the capacity— 


pwalker on PROD1PC71 with BILLS
145 

•HR 598 IH

1 ‘‘(i) to provide clinical decision sup2 port; 

3 ‘‘(ii) to support physician order entry; 

4 ‘‘(iii) to capture and query informa5 tion relevant to health care quality; and 

6 ‘‘(iv) to exchange electronic health in7 formation with, and integrate such infor8 mation from other sources. 

9 ‘‘(14) STATE.—The term ‘State’ means each of 

10 the several States, the District of Columbia, Puerto 

11 Rico, the Virgin Islands, Guam, American Samoa, 

12 and the Northern Mariana Islands. 

13 ‘‘Subtitle A—Promotion of Health 

14 Information Technology 

15 ‘‘SEC. 3001. OFFICE OF THE NATIONAL COORDINATOR FOR 

16 HEALTH INFORMATION TECHNOLOGY. 

17 ‘‘(a) ESTABLISHMENT.—There is established within 

18 the Department of Health and Human Services an Office 

19 of the National Coordinator for Health Information Tech20 nology (referred to in this section as the ‘Office’). The Of21 fice shall be headed by a National Coordinator who shall 

22 be appointed by the Secretary and shall report directly to 

23 the Secretary. 

24 ‘‘(b) PURPOSE.—The National Coordinator shall per25 form the duties under subsection (c) in a manner conVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00145 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
146 

•HR 598 IH

1 sistent with the development of a nationwide health infor2 mation technology infrastructure that allows for the elec3 tronic use and exchange of information and that— 

4 ‘‘(1) ensures that each patient’s health informa5 tion is secure and protected, in accordance with ap6 plicable law; 

7 ‘‘(2) improves health care quality, reduces med8 ical errors, and advances the delivery of patient-cen9 tered medical care; 

10 ‘‘(3) reduces health care costs resulting from 

11 inefficiency, medical errors, inappropriate care, du12 plicative care, and incomplete information; 

13 ‘‘(4) provides appropriate information to help 

14 guide medical decisions at the time and place of 

15 care; 

16 ‘‘(5) ensures the inclusion of meaningful public 

17 input in such development of such infrastructure; 

18 ‘‘(6) improves the coordination of care and in19 formation among hospitals, laboratories, physician 

20 offices, and other entities through an effective infra21 structure for the secure and authorized exchange of 

22 health care information; 

23 ‘‘(7) improves public health activities and facili24 tates the early identification and rapid response to 


pwalker on PROD1PC71 with BILLS
147 

•HR 598 IH

1 public health threats and emergencies, including bio2 terror events and infectious disease outbreaks; 

3 ‘‘(8) facilitates health and clinical research and 

4 health care quality; 

5 ‘‘(9) promotes prevention of chronic diseases; 

6 ‘‘(10) promotes a more effective marketplace, 

7 greater competition, greater systems analysis, in8 creased consumer choice, and improved outcomes in 

9 health care services; and 

10 ‘‘(11) improves efforts to reduce health dispari11 ties. 

12 ‘‘(c) DUTIES OF THE NATIONAL COORDINATOR.— 

13 ‘‘(1) STANDARDS.—The National Coordinator 

14 shall review and determine whether to endorse each 

15 standard, implementation specification, and certifi16 cation criterion for the electronic exchange and use 

17 of health information that is recommended by the 

18 HIT Standards Committee under section 3003 for 

19 purposes of adoption under section 3004. The Coor20 dinator shall make such determination, and report to 

21 the Secretary such determination, not later than 45 

22 days after the date the recommendation is received 

23 by the Coordinator. 

24 ‘‘(2) HIT POLICY COORDINATION.— 


pwalker on PROD1PC71 with BILLS
148 

•HR 598 IH

1 ‘‘(A) IN GENERAL.—The National Coordi2 nator shall coordinate health information tech3 nology policy and programs of the Department 

4 with those of other relevant executive branch 

5 agencies with a goal of avoiding duplication of 

6 efforts and of helping to ensure that each agen7 cy undertakes health information technology ac8 tivities primarily within the areas of its greatest 

9 expertise and technical capability and in a man10 ner towards a coordinated national goal. 

11 ‘‘(B) HIT POLICY AND STANDARDS COM12 MITTEES.—The National Coordinator shall be a 

13 leading member in the establishment and oper14 ations of the HIT Policy Committee and the 

15 HIT Standards Committee and shall serve as a 

16 liaison among those two Committees and the 

17 Federal Government. 

18 ‘‘(3) STRATEGIC PLAN.— 

19 ‘‘(A) IN GENERAL.—The National Coordi20 nator shall, in consultation with other appro21 priate Federal agencies (including the National 

22 Institute of Standards and Technology), update 

23 the Federal Health IT Strategic Plan (devel24 oped as of June 3, 2008) to include specific obVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00148 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
149 

•HR 598 IH

1 jectives, milestones, and metrics with respect to 

2 the following: 

3 ‘‘(i) The electronic exchange and use 

4 of health information and the enterprise 

5 integration of such information. 

6 ‘‘(ii) The utilization of an electronic 

7 health record for each person in the United 

8 States by 2014. 

9 ‘‘(iii) The incorporation of privacy and 

10 security protections for the electronic ex11 change of an individual’s individually iden12 tifiable health information. 

13 ‘‘(iv) Ensuring security methods to 

14 ensure appropriate authorization and elec15 tronic authentication of health information 

16 and specifying technologies or methodolo17 gies for rendering health information unus18 able, unreadable, or indecipherable. 

19 ‘‘(v) Specifying a framework for co20 ordination and flow of recommendations 

21 and policies under this subtitle among the 

22 Secretary, the National Coordinator, the 

23 HIT Policy Committee, the HIT Standards 

24 Committee, and other health information 

25 exchanges and other relevant entities. 


pwalker on PROD1PC71 with BILLS
150 

•HR 598 IH

1 ‘‘(vi) Methods to foster the public un2 derstanding of health information tech3 nology. 

4 ‘‘(vii) Strategies to enhance the use of 

5 health information technology in improving 

6 the quality of health care, reducing medical 

7 errors, reducing health disparities, improv8 ing public health, and improving the con9 tinuity of care among health care settings. 

10 ‘‘(B) COLLABORATION.—The strategic 

11 plan shall be updated through collaboration of 

12 public and private entities. 

13 ‘‘(C) MEASURABLE OUTCOME GOALS.— 

14 The strategic plan update shall include measur15 able outcome goals. 

16 ‘‘(D) PUBLICATION.—The National Coor17 dinator shall republish the strategic plan, in18 cluding all updates. 

19 ‘‘(4) WEBSITE.—The National Coordinator 

20 shall maintain and frequently update an Internet 

21 website on which there is posted information on the 

22 work, schedules, reports, recommendations, and 

23 other information to ensure transparency in pro24 motion of a nationwide health information tech25 nology infrastructure. 


pwalker on PROD1PC71 with BILLS
151 

•HR 598 IH

1 ‘‘(5) CERTIFICATION.— 

2 ‘‘(A) IN GENERAL.—The National Coordi3 nator, in consultation with the Director of the 

4 National Institute of Standards and Tech5 nology, shall develop a program (either directly 

6 or by contract) for the voluntary certification of 

7 health information technology as being in com8 pliance with applicable certification criteria 

9 adopted under this subtitle. Such program shall 

10 include testing of the technology in accordance 

11 with section 4201(b) of the HITECH Act. 

12 ‘‘(B) CERTIFICATION CRITERIA DE13 SCRIBED.—In this title, the term ‘certification 

14 criteria’ means, with respect to standards and 

15 implementation specifications for health infor16 mation technology, criteria to establish that the 

17 technology meets such standards and implemen18 tation specifications. 

19 ‘‘(6) REPORTS AND PUBLICATIONS.— 

20 ‘‘(A) REPORT ON ADDITIONAL FUNDING

21 OR AUTHORITY NEEDED.—Not later than 12 

22 months after the date of the enactment of this 

23 title, the National Coordinator shall submit to 

24 the appropriate committees of jurisdiction of 

25 the House of Representatives and the Senate a 


pwalker on PROD1PC71 with BILLS
152 

•HR 598 IH

1 report on any additional funding or authority 

2 the Coordinator or the HIT Policy Committee 

3 or HIT Standards Committee requires to evalu4 ate and develop standards, implementation 

5 specifications, and certification criteria, or to 

6 achieve full participation of stakeholders in the 

7 adoption of a nationwide health information 

8 technology infrastructure that allows for the 

9 electronic use and exchange of health informa10 tion. 

11 ‘‘(B) IMPLEMENTATION REPORT.—The 

12 National Coordinator shall prepare a report 

13 that identifies lessons learned from major pub14 lic and private health care systems in their im15 plementation of health information technology, 

16 including information on whether the tech17 nologies and practices developed by such sys18 tems may be applicable to and usable in whole 

19 or in part by other health care providers. 

20 ‘‘(C) ASSESSMENT OF IMPACT OF HIT ON

21 COMMUNITIES WITH HEALTH DISPARITIES AND

22 UNINSURED, UNDERINSURED, AND MEDICALLY

23 UNDERSERVED AREAS.—The National Coordi24 nator shall assess and publish the impact of 

25 health information technology in communities 


pwalker on PROD1PC71 with BILLS
153 

•HR 598 IH

1 with health disparities and in areas with a high 

2 proportion of individuals who are uninsured, 

3 underinsured, and medically underserved indi4 viduals (including urban and rural areas) and 

5 identify practices to increase the adoption of 

6 such technology by health care providers in 

7 such communities. 

8 ‘‘(D) EVALUATION OF BENEFITS AND

9 COSTS OF THE ELECTRONIC USE AND EX10 CHANGE OF HEALTH INFORMATION.—The Na11 tional Coordinator shall evaluate and publish 

12 evidence on the benefits and costs of the elec13 tronic use and exchange of health information 

14 and assess to whom these benefits and costs ac15 crue. 

16 ‘‘(E) RESOURCE REQUIREMENTS.—The 

17 National Coordinator shall estimate and publish 

18 resources required annually to reach the goal of 

19 utilization of an electronic health record for 

20 each person in the United States by 2014, in21 cluding the required level of Federal funding, 

22 expectations for regional, State, and private in23 vestment, and the expected contributions by vol24 unteers to activities for the utilization of such 

25 records. 


pwalker on PROD1PC71 with BILLS
154 

•HR 598 IH

1 ‘‘(7) ASSISTANCE.—The National Coordinator 

2 may provide financial assistance to consumer advo3 cacy groups and not-for-profit entities that work in 

4 the public interest for purposes of defraying the cost 

5 to such groups and entities to participate under, 

6 whether in whole or in part, the National Tech7 nology Transfer Act of 1995 (15 U.S.C. 272 note). 

8 ‘‘(8) GOVERNANCE FOR NATIONWIDE HEALTH

9 INFORMATION NETWORK.—The National Coordi10 nator shall establish a governance mechanism for the 

11 nationwide health information network. 

12 ‘‘(d) DETAIL OF FEDERAL EMPLOYEES.— 

13 ‘‘(1) IN GENERAL.—Upon the request of the 

14 National Coordinator, the head of any Federal agen15 cy is authorized to detail, with or without reimburse16 ment from the Office, any of the personnel of such 

17 agency to the Office to assist it in carrying out its 

18 duties under this section. 

19 ‘‘(2) EFFECT OF DETAIL.—Any detail of per20 sonnel under paragraph (1) shall— 

21 ‘‘(A) not interrupt or otherwise affect the 

22 civil service status or privileges of the Federal 

23 employee; and 


pwalker on PROD1PC71 with BILLS
155 

•HR 598 IH

1 ‘‘(B) be in addition to any other staff of 

2 the Department employed by the National Co3 ordinator. 

4 ‘‘(3) ACCEPTANCE OF DETAILEES.—Notwith5 standing any other provision of law, the Office may 

6 accept detailed personnel from other Federal agen7 cies without regard to whether the agency described 

8 under paragraph (1) is reimbursed. 

9 ‘‘(e) CHIEF PRIVACY OFFICER OF THE OFFICE OF

10 THE NATIONAL COORDINATOR.—Not later than 12 

11 months after the date of the enactment of this title, the 

12 Secretary shall appoint a Chief Privacy Officer of the Of13 fice of the National Coordinator, whose duty it shall be 

14 to advise the National Coordinator on privacy, security, 

15 and data stewardship of electronic health information and 

16 to coordinate with other Federal agencies (and similar pri17 vacy officers in such agencies), with State and regional 

18 efforts, and with foreign countries with regard to the pri19 vacy, security, and data stewardship of electronic individ20 ually identifiable health information. 

21 ‘‘SEC. 3002. HIT POLICY COMMITTEE. 

22 ‘‘(a) ESTABLISHMENT.—There is established a HIT 

23 Policy Committee to make policy recommendations to the 

24 National Coordinator relating to the implementation of a 

25 nationwide health information technology infrastructure, 


pwalker on PROD1PC71 with BILLS
156 

•HR 598 IH

1 including implementation of the strategic plan described 

2 in section 3001(c)(3). 

3 ‘‘(b) DUTIES.— 

4 ‘‘(1) RECOMMENDATIONS ON HEALTH INFOR5 MATION TECHNOLOGY INFRASTRUCTURE.—The HIT 

6 Policy Committee shall recommend a policy frame7 work for the development and adoption of a nation8 wide health information technology infrastructure 

9 that permits the electronic exchange and use of 

10 health information as is consistent with the strategic 

11 plan under section 3001(c)(3) and that includes the 

12 recommendations under paragraph (2). The Com13 mittee shall update such recommendations and make 

14 new recommendations as appropriate. 

15 ‘‘(2) SPECIFIC AREAS OF STANDARD DEVELOP16 MENT.— 

17 ‘‘(A) IN GENERAL.—The HIT Policy Com18 mittee shall recommend the areas in which 

19 standards, implementation specifications, and 

20 certification criteria are needed for the elec21 tronic exchange and use of health information 

22 for purposes of adoption under section 3004 

23 and shall recommend an order of priority for 

24 the development, harmonization, and recogni25 tion of such standards, specifications, and cerVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00156 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
157 

•HR 598 IH

1 tification criteria among the areas so rec2 ommended. Such standards and implementation 

3 specifications shall include named standards, 

4 architectures, and software schemes for the au5 thentication and security of individually identifi6 able health information and other information 

7 as needed to ensure the reproducible develop8 ment of common solutions across disparate en9 tities. 

10 ‘‘(B) AREAS REQUIRED FOR CONSIDER11 ATION.—For purposes of subparagraph (A), the 

12 HIT Policy Committee shall make recommenda13 tions for at least the following areas: 

14 ‘‘(i) Technologies that protect the pri15 vacy of health information and promote se16 curity in a qualified electronic health 

17 record, including for the segmentation and 

18 protection from disclosure of specific and 

19 sensitive individually identifiable health in20 formation with the goal of minimizing the 

21 reluctance of patients to seek care (or dis22 close information about a condition) be23 cause of privacy concerns, in accordance 

24 with applicable law, and for the use and 


pwalker on PROD1PC71 with BILLS
158 

•HR 598 IH

1 disclosure of limited data sets of such in2 formation. 

3 ‘‘(ii) A nationwide health information 

4 technology infrastructure that allows for 

5 the electronic use and accurate exchange of 

6 health information. 

7 ‘‘(iii) The utilization of a certified 

8 electronic health record for each person in 

9 the United States by 2014. 

10 ‘‘(iv) Technologies that as a part of a 

11 qualified electronic health record allow for 

12 an accounting of disclosures made by a 

13 covered entity (as defined for purposes of 

14 regulations promulgated under section 

15 264(c) of the Health Insurance Portability 

16 and Accountability Act of 1996) for pur17 poses of treatment, payment, and health 

18 care operations (as such terms are defined 

19 for purposes of such regulations). 

20 ‘‘(v) The use of certified electronic 

21 health records to improve the quality of 

22 health care, such as by promoting the co23 ordination of health care and improving 

24 continuity of health care among health 

25 care providers, by reducing medical errors, 


pwalker on PROD1PC71 with BILLS
159 

•HR 598 IH

1 by improving population health, and by ad2 vancing research and education. 

3 ‘‘(C) OTHER AREAS FOR CONSIDER4 ATION.—In making recommendations under 

5 subparagraph (A), the HIT Policy Committee 

6 may consider the following additional areas: 

7 ‘‘(i) The appropriate uses of a nation8 wide health information infrastructure, in9 cluding for purposes of— 

10 ‘‘(I) the collection of quality data 

11 and public reporting; 

12 ‘‘(II) biosurveillance and public 

13 health; 

14 ‘‘(III) medical and clinical re15 search; and 

16 ‘‘(IV) drug safety. 

17 ‘‘(ii) Self-service technologies that fa18 cilitate the use and exchange of patient in19 formation and reduce wait times. 

20 ‘‘(iii) Telemedicine technologies, in 

21 order to reduce travel requirements for pa22 tients in remote areas. 

23 ‘‘(iv) Technologies that facilitate home 

24 health care and the monitoring of patients 

25 recuperating at home. 


pwalker on PROD1PC71 with BILLS
160 

•HR 598 IH

1 ‘‘(v) Technologies that help reduce 

2 medical errors. 

3 ‘‘(vi) Technologies that facilitate the 

4 continuity of care among health settings. 

5 ‘‘(vii) Technologies that meet the 

6 needs of diverse populations. 

7 ‘‘(viii) Any other technology that the 

8 HIT Policy Committee finds to be among 

9 the technologies with the greatest potential 

10 to improve the quality and efficiency of 

11 health care. 

12 ‘‘(3) FORUM.—The HIT Policy Committee shall 

13 serve as a forum for broad stakeholder input with 

14 specific expertise in policies relating to the matters 

15 described in paragraphs (1) and (2). 

16 ‘‘(c) MEMBERSHIP AND OPERATIONS.— 

17 ‘‘(1) IN GENERAL.—The National Coordinator 

18 shall provide leadership in the establishment and op19 erations of the HIT Policy Committee. 

20 ‘‘(2) MEMBERSHIP.—The membership of the 

21 HIT Policy Committee shall at least reflect pro22 viders, ancillary healthcare workers, consumers, pur23 chasers, health plans, technology vendors, research24 ers, relevant Federal agencies, and individuals with 

25 technical expertise on health care quality, privacy 


pwalker on PROD1PC71 with BILLS
161 

•HR 598 IH

1 and security, and on the electronic exchange and use 

2 of health information. 

3 ‘‘(3) CONSIDERATION.—The National Coordi4 nator shall ensure that the relevant recommenda5 tions and comments from the National Committee 

6 on Vital and Health Statistics are considered in the 

7 development of policies. 

8 ‘‘(d) APPLICATION OF FACA.—The Federal Advisory 

9 Committee Act (5 U.S.C. App.), other than section 14 of 

10 such Act, shall apply to the HIT Policy Committee. 

11 ‘‘(e) PUBLICATION.—The Secretary shall provide for 

12 publication in the Federal Register and the posting on the 

13 Internet website of the Office of the National Coordinator 

14 for Health Information Technology of all policy rec15 ommendations made by the HIT Policy Committee under 

16 this section. 

17 ‘‘SEC. 3003. HIT STANDARDS COMMITTEE. 

18 ‘‘(a) ESTABLISHMENT.—There is established a com19 mittee to be known as the HIT Standards Committee to 

20 recommend to the National Coordinator standards, imple21 mentation specifications, and certification criteria for the 

22 electronic exchange and use of health information for pur23 poses of adoption under section 3004, consistent with the 

24 implementation of the strategic plan described in section 

25 3001(c)(3) and beginning with the areas listed in section 


pwalker on PROD1PC71 with BILLS
162 

•HR 598 IH

1 3002(b)(2)(B) in accordance with policies developed by 

2 the HIT Policy Committee. 

3 ‘‘(b) DUTIES.— 

4 ‘‘(1) STANDARD DEVELOPMENT.— 

5 ‘‘(A) IN GENERAL.—The HIT Standards 

6 Committee shall recommend to the National 

7 Coordinator standards, implementation speci8 fications, and certification criteria described in 

9 subsection (a) that have been developed, har10 monized, or recognized by the HIT Standards 

11 Committee. The HIT Standards Committee 

12 shall update such recommendations and make 

13 new recommendations as appropriate, including 

14 in response to a notification sent under section 

15 3004(b)(2). Such recommendations shall be 

16 consistent with the latest recommendations 

17 made by the HIT Policy Committee. 

18 ‘‘(B) PILOT TESTING OF STANDARDS AND

19 IMPLEMENTATION SPECIFICATIONS.—In the de20 velopment, harmonization, or recognition of 

21 standards and implementation specifications, 

22 the HIT Standards Committee shall, as appro23 priate, provide for the testing of such standards 

24 and specifications by the National Institute for 


pwalker on PROD1PC71 with BILLS
163 

•HR 598 IH

1 Standards and Technology under section 4201 

2 of the HITECH Act. 

3 ‘‘(C) CONSISTENCY.—The standards, im4 plementation specifications, and certification 

5 criteria recommended under this subsection 

6 shall be consistent with the standards for infor7 mation transactions and data elements adopted 

8 pursuant to section 1173 of the Social Security 

9 Act. 

10 ‘‘(2) FORUM.—The HIT Standards Committee 

11 shall serve as a forum for the participation of a 

12 broad range of stakeholders to provide input on the 

13 development, harmonization, and recognition of 

14 standards, implementation specifications, and certifi15 cation criteria necessary for the development and 

16 adoption of a nationwide health information tech17 nology infrastructure that allows for the electronic 

18 use and exchange of health information. 

19 ‘‘(3) SCHEDULE.—Not later than 90 days after 

20 the date of the enactment of this title, the HIT 

21 Standards Committee shall develop a schedule for 

22 the assessment of policy recommendations developed 

23 by the HIT Policy Committee under section 3002. 

24 The HIT Standards Committee shall update such 


pwalker on PROD1PC71 with BILLS
164 

•HR 598 IH

1 schedule annually. The Secretary shall publish such 

2 schedule in the Federal Register. 

3 ‘‘(4) PUBLIC INPUT.—The HIT Standards 

4 Committee shall conduct open public meetings and 

5 develop a process to allow for public comment on the 

6 schedule described in paragraph (3) and rec7 ommendations described in this subsection. Under 

8 such process comments shall be submitted in a time9 ly manner after the date of publication of a rec10 ommendation under this subsection. 

11 ‘‘(c) MEMBERSHIP AND OPERATIONS.— 

12 ‘‘(1) IN GENERAL.—The National Coordinator 

13 shall provide leadership in the establishment and op14 erations of the HIT Standards Committee. 

15 ‘‘(2) MEMBERSHIP.—The membership of the 

16 HIT Standards Committee shall at least reflect pro17 viders, ancillary healthcare workers, consumers, pur18 chasers, health plans, technology vendors, research19 ers, relevant Federal agencies, and individuals with 

20 technical expertise on health care quality, privacy 

21 and security, and on the electronic exchange and use 

22 of health information. 

23 ‘‘(3) CONSIDERATION.—The National Coordi24 nator shall ensure that the relevant recommenda25 tions and comments from the National Committee 


pwalker on PROD1PC71 with BILLS
165 

•HR 598 IH

1 on Vital and Health Statistics are considered in the 

2 development of standards. 

3 ‘‘(4) ASSISTANCE.—For the purposes of car4 rying out this section, the Secretary may provide or 

5 ensure that financial assistance is provided by the 

6 HIT Standards Committee to defray in whole or in 

7 part any membership fees or dues charged by such 

8 Committee to those consumer advocacy groups and 

9 not for profit entities that work in the public inter10 est as a part of their mission. 

11 ‘‘(d) APPLICATION OF FACA.—The Federal Advisory 

12 Committee Act (5 U.S.C. App.), other than section 14, 

13 shall apply to the HIT Standards Committee. 

14 ‘‘(e) PUBLICATION.—The Secretary shall provide for 

15 publication in the Federal Register and the posting on the 

16 Internet website of the Office of the National Coordinator 

17 for Health Information Technology of all recommenda18 tions made by the HIT Standards Committee under this 

19 section. 

20 ‘‘SEC. 3004. PROCESS FOR ADOPTION OF ENDORSED REC21 OMMENDATIONS; ADOPTION OF INITIAL SET 

22 OF STANDARDS, IMPLEMENTATION SPECI23 FICATIONS, AND CERTIFICATION CRITERIA. 

24 ‘‘(a) PROCESS FOR ADOPTION OF ENDORSED REC25 OMMENDATIONS.— 


pwalker on PROD1PC71 with BILLS
166 

•HR 598 IH

1 ‘‘(1) REVIEW OF ENDORSED STANDARDS, IM2 PLEMENTATION SPECIFICATIONS, AND CERTIFI3 CATION CRITERIA.—Not later than 90 days after the 

4 date of receipt of standards, implementation speci5 fications, or certification criteria endorsed under sec6 tion 3001(c), the Secretary, in consultation with rep7 resentatives of other relevant Federal agencies, shall 

8 jointly review such standards, implementation speci9 fications, or certification criteria and shall determine 

10 whether or not to propose adoption of such stand11 ards, implementation specifications, or certification 

12 criteria. 

13 ‘‘(2) DETERMINATION TO ADOPT STANDARDS, 

14 IMPLEMENTATION SPECIFICATIONS, AND CERTIFI15 CATION CRITERIA.—If the Secretary determines— 

16 ‘‘(A) to propose adoption of any grouping 

17 of such standards, implementation specifica18 tions, or certification criteria, the Secretary 

19 shall, by regulation, determine whether or not 

20 to adopt such grouping of standards, implemen21 tation specifications, or certification criteria; or 

22 ‘‘(B) not to propose adoption of any group23 ing of standards, implementation specifications, 

24 or certification criteria, the Secretary shall no25 tify the National Coordinator and the HIT 


pwalker on PROD1PC71 with BILLS
167 

•HR 598 IH

1 Standards Committee in writing of such deter2 mination and the reasons for not proposing the 

3 adoption of such recommendation. 

4 ‘‘(3) PUBLICATION.—The Secretary shall pro5 vide for publication in the Federal Register of all de6 terminations made by the Secretary under para7 graph (1). 

8 ‘‘(b) ADOPTION OF INITIAL SET OF STANDARDS, IM9 PLEMENTATION SPECIFICATIONS, AND CERTIFICATION

10 CRITERIA.— 

11 ‘‘(1) IN GENERAL.—Not later than December 

12 31, 2009, the Secretary shall, through the rule13 making process described in section 3003, adopt an 

14 initial set of standards, implementation specifica15 tions, and certification criteria for the areas required 

16 for consideration under section 3002(b)(2)(B). 

17 ‘‘(2) APPLICATION OF CURRENT STANDARDS, 

18 IMPLEMENTATION SPECIFICATIONS, AND CERTIFI19 CATION CRITERIA.—The standards, implementation 

20 specifications, and certification criteria adopted be21 fore the date of the enactment of this title through 

22 the process existing through the Office of the Na23 tional Coordinator for Health Information Tech24 nology may be applied towards meeting the require25 ment of paragraph (1). 


pwalker on PROD1PC71 with BILLS
168 

•HR 598 IH

1 ‘‘SEC. 3005. APPLICATION AND USE OF ADOPTED STAND2 ARDS AND IMPLEMENTATION SPECIFICA3 TIONS BY FEDERAL AGENCIES. 

4 ‘‘For requirements relating to the application and use 

5 by Federal agencies of the standards and implementation 

6 specifications adopted under section 3004, see section 

7 4111 of the HITECH Act. 

8 ‘‘SEC. 3006. VOLUNTARY APPLICATION AND USE OF ADOPT9 ED STANDARDS AND IMPLEMENTATION 

10 SPECIFICATIONS BY PRIVATE ENTITIES. 

11 ‘‘(a) IN GENERAL.—Except as provided under section 

12 4112 of the HITECH Act, any standard or implementa13 tion specification adopted under section 3004 shall be vol14 untary with respect to private entities. 

15 ‘‘(b) RULE OF CONSTRUCTION.—Nothing in this sub16 title shall be construed to require that a private entity that 

17 enters into a contract with the Federal Government apply 

18 or use the standards and implementation specifications 

19 adopted under section 3004 with respect to activities not 

20 related to the contract. 

21 ‘‘SEC. 3007. FEDERAL HEALTH INFORMATION TECH22 NOLOGY. 

23 ‘‘(a) IN GENERAL.—The National Coordinator shall 

24 support the development, routine updating and provision 

25 of qualified EHR technology (as defined in section 3000) 

26 consistent with subsections (b) and (c) unless the SecVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00168 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
169 

•HR 598 IH

1 retary determines that the needs and demands of pro2 viders are being substantially and adequately met through 

3 the marketplace. 

4 ‘‘(b) CERTIFICATION.—In making such EHR tech5 nology publicly available, the National Coordinator shall 

6 ensure that the qualified EHR technology described in 

7 subsection (a) is certified under the program developed 

8 under section 3001(c)(3) to be in compliance with applica9 ble standards adopted under section 3003(a). 

10 ‘‘(c) AUTHORIZATION TO CHARGE A NOMINAL

11 FEE.—The National Coordinator may impose a nominal 

12 fee for the adoption by a health care provider of the health 

13 information technology system developed or approved 

14 under subsection (a) and (b). Such fee shall take into ac15 count the financial circumstances of smaller providers, low 

16 income providers, and providers located in rural or other 

17 medically underserved areas. 

18 ‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec19 tion shall be construed to require that a private or govern20 ment entity adopt or use the technology provided under 

21 this section. 

22 ‘‘SEC. 3008. TRANSITIONS. 

23 ‘‘(a) ONCHIT.—To the extent consistent with sec24 tion 3001, all functions, personnel, assets, liabilities, and 

25 administrative actions applicable to the National CoordiVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00169 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
170 

•HR 598 IH

1 nator for Health Information Technology appointed under 

2 Executive Order 13335 or the Office of such National Co3 ordinator on the date before the date of the enactment 

4 of this title shall be transferred to the National Coordi5 nator appointed under section 3001(a) and the Office of 

6 such National Coordinator as of the date of the enactment 

7 of this title. 

8 ‘‘(b) AHIC.— 

9 ‘‘(1) To the extent consistent with sections 

10 3002 and 3003, all functions, personnel, assets, and 

11 liabilities applicable to the AHIC Successor, Inc. 

12 doing business as the National eHealth Collaborative 

13 as of the day before the date of the enactment of 

14 this title shall be transferred to the HIT Policy 

15 Committee or the HIT Standards Committee, estab16 lished under section 3002(a) or 3003(a), as appro17 priate, as of the date of the enactment of this title. 

18 ‘‘(2) In carrying out section 3003(b)(1)(A), 

19 until recommendations are made by the HIT Policy 

20 Committee, recommendations of the HIT Standards 

21 Committee shall be consistent with the most recent 

22 recommendations made by such AHIC Successor, 

23 Inc. 

24 ‘‘(c) RULES OF CONSTRUCTION.— 


pwalker on PROD1PC71 with BILLS
171 

•HR 598 IH

1 ‘‘(1) ONCHIT.—Nothing in section 3001 or 

2 subsection (a) shall be construed as requiring the 

3 creation of a new entity to the extent that the Office 

4 of the National Coordinator for Health Information 

5 Technology established pursuant to Executive Order 

6 13335 is consistent with the provisions of section 

7 3001. 

8 ‘‘(2) AHIC.—Nothing in sections 3002 or 3003 

9 or subsection (b) shall be construed as prohibiting 

10 the AHIC Successor, Inc. doing business as the Na11 tional eHealth Collaborative from modifying its char12 ter, duties, membership, and any other structure or 

13 function required to be consistent with section 3002 

14 and 3003 in a manner that would permit the Sec15 retary to choose to recognize such Community as the 

16 HIT Policy Committee or the HIT Standards Com17 mittee. 

18 ‘‘SEC. 3009. RELATION TO HIPAA PRIVACY AND SECURITY 

19 LAW. 

20 ‘‘(a) IN GENERAL.—With respect to the relation of 

21 this title to HIPAA privacy and security law: 

22 ‘‘(1) This title may not be construed as having 

23 any effect on the authorities of the Secretary under 

24 HIPAA privacy and security law. 


pwalker on PROD1PC71 with BILLS
172 

•HR 598 IH

1 ‘‘(2) The purposes of this title include ensuring 

2 that the health information technology standards 

3 and implementation specifications adopted under 

4 section 3004 take into account the requirements of 

5 HIPAA privacy and security law. 

6 ‘‘(b) DEFINITION.—For purposes of this section, the 

7 term ‘HIPAA privacy and security law’ means— 

8 ‘‘(1) the provisions of part C of title XI of the 

9 Social Security Act, section 264 of the Health Insur10 ance Portability and Accountability Act of 1996, and 

11 subtitle D of title IV of the HITECH Act; and 

12 ‘‘(2) regulations under such provisions. 

13 ‘‘SEC. 3010. AUTHORIZATION FOR APPROPRIATIONS. 

14 ‘‘There is authorized to be appropriated to the Office 

15 of the National Coordinator for Health Information Tech16 nology to carry out this subtitle $250,000,000 for fiscal 

17 year 2009.’’. 

18 SEC. 4102. TECHNICAL AMENDMENT. 

19 Section 1171(5) of the Social Security Act (42 U.S.C. 

20 1320d) is amended by striking ‘‘or C’’ and inserting ‘‘C, 

21 or D’’. 


pwalker on PROD1PC71 with BILLS
173 

•HR 598 IH

1 PART II—APPLICATION AND USE OF ADOPTED 

2 HEALTH INFORMATION TECHNOLOGY 

3 STANDARDS; REPORTS 

4 SEC. 4111. COORDINATION OF FEDERAL ACTIVITIES WITH 

5 ADOPTED STANDARDS AND IMPLEMENTA6 TION SPECIFICATIONS. 

7 (a) SPENDING ON HEALTH INFORMATION TECH8 NOLOGY SYSTEMS.—As each agency (as defined in the Ex9 ecutive Order issued on August 22, 2006, relating to pro10 moting quality and efficient health care in Federal Gov11 ernment administered or sponsored health care programs) 

12 implements, acquires, or upgrades health information 

13 technology systems used for the direct exchange of individ14 ually identifiable health information between agencies and 

15 with non-Federal entities, it shall utilize, where available, 

16 health information technology systems and products that 

17 meet standards and implementation specifications adopted 

18 under section 3004(b) of the Public Health Service Act, 

19 as added by section 4101. 

20 (b) FEDERAL INFORMATION COLLECTION ACTIVI21 TIES.—With respect to a standard or implementation 

22 specification adopted under section 3004(b) of the Public 

23 Health Service Act, as added by section 4101, the Presi24 dent shall take measures to ensure that Federal activities 

25 involving the broad collection and submission of health in26 formation are consistent with such standard or implemenVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00173 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
174 

•HR 598 IH

1 tation specification, respectively, within three years after 

2 the date of such adoption. 

3 (c) APPLICATION OF DEFINITIONS.—The definitions 

4 contained in section 3000 of the Public Health Service 

5 Act, as added by section 4101, shall apply for purposes 

6 of this part. 

7 SEC. 4112. APPLICATION TO PRIVATE ENTITIES. 

8 Each agency (as defined in such Executive Order 

9 issued on August 22, 2006, relating to promoting quality 

10 and efficient health care in Federal Government adminis11 tered or sponsored health care programs) shall require in 

12 contracts or agreements with health care providers, health 

13 plans, or health insurance issuers that as each provider, 

14 plan, or issuer implements, acquires, or upgrades health 

15 information technology systems, it shall utilize, where 

16 available, health information technology systems and prod17 ucts that meet standards and implementation specifica18 tions adopted under section 3004(b) of the Public Health 

19 Service Act, as added by section 4101. 

20 SEC. 4113. STUDY AND REPORTS. 

21 (a) REPORT ON ADOPTION OF NATIONWIDE SYS22 TEM.—Not later than 2 years after the date of the enact23 ment of this Act and annually thereafter, the Secretary 

24 of Health and Human Services shall submit to the approVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00174 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
175 

•HR 598 IH

1 priate committees of jurisdiction of the House of Rep2 resentatives and the Senate a report that— 

3 (1) describes the specific actions that have been 

4 taken by the Federal Government and private enti5 ties to facilitate the adoption of a nationwide system 

6 for the electronic use and exchange of health infor7 mation; 

8 (2) describes barriers to the adoption of such a 

9 nationwide system; and 

10 (3) contains recommendations to achieve full 

11 implementation of such a nationwide system. 

12 (b) REIMBURSEMENT INCENTIVE STUDY AND RE13 PORT.— 

14 (1) STUDY.—The Secretary of Health and 

15 Human Services shall carry out, or contract with a 

16 private entity to carry out, a study that examines 

17 methods to create efficient reimbursement incentives 

18 for improving health care quality in federally quali19 fied health centers, rural health clinics, and free 

20 clinics. 

21 (2) REPORT.—Not later than 2 years after the 

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

23 Health and Human Services shall submit to the ap24 propriate committees of jurisdiction of the House of 


pwalker on PROD1PC71 with BILLS
176 

•HR 598 IH

1 Representatives and the Senate a report on the 

2 study carried out under paragraph (1). 

3 (c) AGING SERVICES TECHNOLOGY STUDY AND RE4 PORT.— 

5 (1) IN GENERAL.—The Secretary of Health and 

6 Human Services shall carry out, or contract with a 

7 private entity to carry out, a study of matters relat8 ing to the potential use of new aging services tech9 nology to assist seniors, individuals with disabilities, 

10 and their caregivers throughout the aging process. 

11 (2) MATTERS TO BE STUDIED.—The study 

12 under paragraph (1) shall include— 

13 (A) an evaluation of— 

14 (i) methods for identifying current, 

15 emerging, and future health technology 

16 that can be used to meet the needs of sen17 iors and individuals with disabilities and 

18 their caregivers across all aging services 

19 settings, as specified by the Secretary; 

20 (ii) methods for fostering scientific in21 novation with respect to aging services 

22 technology within the business and aca23 demic communities; and 


pwalker on PROD1PC71 with BILLS
177 

•HR 598 IH

1 (iii) developments in aging services 

2 technology in other countries that may be 

3 applied in the United States; and 

4 (B) identification of— 

5 (i) barriers to innovation in aging 

6 services technology and devising strategies 

7 for removing such barriers; and 

8 (ii) barriers to the adoption of aging 

9 services technology by health care pro10 viders and consumers and devising strate11 gies to removing such barriers. 

12 (3) REPORT.—Not later than 24 months after 

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

14 shall submit to the appropriate committees of juris15 diction of the House of Representatives and of the 

16 Senate a report on the study carried out under para17 graph (1). 

18 (4) DEFINITIONS.—For purposes of this sub19 section: 

20 (A) AGING SERVICES TECHNOLOGY.—The 

21 term ‘‘aging services technology’’ means health 

22 technology that meets the health care needs of 

23 seniors, individuals with disabilities, and the 

24 caregivers of such seniors and individuals. 


pwalker on PROD1PC71 with BILLS
178 

•HR 598 IH

1 (B) SENIOR.—The term ‘‘senior’’ has such 

2 meaning as specified by the Secretary. 

3 Subtitle B—Testing of Health 

4 Information Technology 

5 SEC. 4201. NATIONAL INSTITUTE FOR STANDARDS AND 

6 TECHNOLOGY TESTING. 

7 (a) PILOT TESTING OF STANDARDS AND IMPLEMEN8 TATION SPECIFICATIONS.—In coordination with the HIT 

9 Standards Committee established under section 3003 of 

10 the Public Health Service Act, as added by section 4101, 

11 with respect to the development of standards and imple12 mentation specifications under such section, the Director 

13 of the National Institute for Standards and Technology 

14 shall test such standards and implementation specifica15 tions, as appropriate, in order to assure the efficient im16 plementation and use of such standards and implementa17 tion specifications. 

18 (b) VOLUNTARY TESTING PROGRAM.—In coordina19 tion with the HIT Standards Committee established under 

20 section 3003 of the Public Health Service Act, as added 

21 by section 4101, with respect to the development of stand22 ards and implementation specifications under such sec23 tion, the Director of the National Institute of Standards 

24 and Technology shall support the establishment of a con25 formance testing infrastructure, including the developVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00178 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
179 

•HR 598 IH

1 ment of technical test beds. The development of this con2 formance testing infrastructure may include a program to 

3 accredit independent, non-Federal laboratories to perform 

4 testing. 

5 SEC. 4202. RESEARCH AND DEVELOPMENT PROGRAMS. 

6 (a) HEALTH CARE INFORMATION ENTERPRISE INTE7 GRATION RESEARCH CENTERS.— 

8 (1) IN GENERAL.—The Director of the National 

9 Institute of Standards and Technology, in consulta10 tion with the Director of the National Science Foun11 dation and other appropriate Federal agencies, shall 

12 establish a program of assistance to institutions of 

13 higher education (or consortia thereof which may in14 clude nonprofit entities and Federal Government 

15 laboratories) to establish multidisciplinary Centers 

16 for Health Care Information Enterprise Integration. 

17 (2) REVIEW; COMPETITION.—Grants shall be 

18 awarded under this subsection on a merit-reviewed, 

19 competitive basis. 

20 (3) PURPOSE.—The purposes of the Centers de21 scribed in paragraph (1) shall be— 

22 (A) to generate innovative approaches to 

23 health care information enterprise integration 

24 by conducting cutting-edge, multidisciplinary 


pwalker on PROD1PC71 with BILLS
180 

•HR 598 IH

1 research on the systems challenges to health 

2 care delivery; and 

3 (B) the development and use of health in4 formation technologies and other complemen5 tary fields. 

6 (4) RESEARCH AREAS.—Research areas may in7 clude— 

8 (A) interfaces between human information 

9 and communications technology systems; 

10 (B) voice-recognition systems; 

11 (C) software that improves interoperability 

12 and connectivity among health information sys13 tems; 

14 (D) software dependability in systems crit15 ical to health care delivery; 

16 (E) measurement of the impact of informa17 tion technologies on the quality and productivity 

18 of health care; 

19 (F) health information enterprise manage20 ment; 

21 (G) health information technology security 

22 and integrity; and 

23 (H) relevant health information technology 

24 to reduce medical errors. 


pwalker on PROD1PC71 with BILLS
181 

•HR 598 IH

1 (5) APPLICATIONS.—An institution of higher 

2 education (or a consortium thereof) seeking funding 

3 under this subsection shall submit an application to 

4 the Director of the National Institute of Standards 

5 and Technology at such time, in such manner, and 

6 containing such information as the Director may re7 quire. The application shall include, at a minimum, 

8 a description of— 

9 (A) the research projects that will be un10 dertaken by the Center established pursuant to 

11 assistance under paragraph (1) and the respec12 tive contributions of the participating entities; 

13 (B) how the Center will promote active col14 laboration among scientists and engineers from 

15 different disciplines, such as information tech16 nology, biologic sciences, management, social 

17 sciences, and other appropriate disciplines; 

18 (C) technology transfer activities to dem19 onstrate and diffuse the research results, tech20 nologies, and knowledge; and 

21 (D) how the Center will contribute to the 

22 education and training of researchers and other 

23 professionals in fields relevant to health infor24 mation enterprise integration. 


pwalker on PROD1PC71 with BILLS
182 

•HR 598 IH

1 (b) NATIONAL INFORMATION TECHNOLOGY RE2 SEARCH AND DEVELOPMENT PROGRAM.—The National 

3 High-Performance Computing Program established by 

4 section 101 of the High-Performance Computing Act of 

5 1991 (15 U.S.C. 5511) shall coordinate Federal research 

6 and development programs related to the development and 

7 deployment of health information technology, including ac8 tivities related to— 

9 (1) computer infrastructure; 

10 (2) data security; 

11 (3) development of large-scale, distributed, reli12 able computing systems; 

13 (4) wired, wireless, and hybrid high-speed net14 working; 

15 (5) development of software and software-inten16 sive systems; 

17 (6) human-computer interaction and informa18 tion management technologies; and 

19 (7) the social and economic implications of in20 formation technology. 


pwalker on PROD1PC71 with BILLS
183 

•HR 598 IH

1 Subtitle C—Incentives for the Use 

2 of Health Information Technology 

3 PART I—GRANTS AND LOANS FUNDING 

4 SEC. 4301. GRANT, LOAN, AND DEMONSTRATION PRO5 GRAMS. 

6 Title XXX of the Public Health Service Act, as added 

7 by section 4101, is amended by adding at the end the fol8 lowing new subtitle: 

9 ‘‘Subtitle B—Incentives for the Use 

10 of Health Information Technology 

11 ‘‘SEC. 3011. IMMEDIATE FUNDING TO STRENGTHEN THE 

12 HEALTH INFORMATION TECHNOLOGY INFRA13 STRUCTURE. 

14 ‘‘(a) IN GENERAL.—The Secretary of Health and 

15 Human Services shall, using amounts appropriated under 

16 section 3018, invest in the infrastructure necessary to 

17 allow for and promote the electronic exchange and use of 

18 health information for each individual in the United States 

19 consistent with the goals outlined in the strategic plan de20 veloped by the National Coordinator (and as available) 

21 under section 3001. To the greatest extent practicable, the 

22 Secretary shall ensure that any funds so appropriated 

23 shall be used for the acquisition of health information 

24 technology that meets standards and certification criteria 

25 adopted before the date of the enactment of this title until 


pwalker on PROD1PC71 with BILLS
184 

•HR 598 IH

1 such date as the standards are adopted under section 

2 3004. The Secretary shall invest funds through the dif3 ferent agencies with expertise in such goals, such as the 

4 Office of the National Coordinator for Health Information 

5 Technology, the Health Resources and Services Adminis6 tration, the Agency for Healthcare Research and Quality, 

7 the Centers of Medicare & Medicaid Services, the Centers 

8 for Disease Control and Prevention, and the Indian 

9 Health Service to support the following: 

10 ‘‘(1) Health information technology architecture 

11 that will support the nationwide electronic exchange 

12 and use of health information in a secure, private, 

13 and accurate manner, including connecting health 

14 information exchanges, and which may include up15 dating and implementing the infrastructure nec16 essary within different agencies of the Department 

17 of Health and Human Services to support the elec18 tronic use and exchange of health information. 

19 ‘‘(2) Development and adoption of appropriate 

20 certified electronic health records for categories of 

21 providers not eligible for support under title XVIII 

22 or XIX of the Social Security Act for the adoption 

23 of such records. 

24 ‘‘(3) Training on and dissemination of informa25 tion on best practices to integrate health information 


pwalker on PROD1PC71 with BILLS
185 

•HR 598 IH

1 technology, including electronic health records, into 

2 a provider’s delivery of care, consistent with best 

3 practices learned from the Health Information Tech4 nology Research Center developed under section 302, 

5 including community health centers receiving assist6 ance under section 330 of the Public Health Service 

7 Act, covered entities under section 340B of such 

8 Act, and providers participating in one or more of 

9 the programs under titles XVIII, XIX, and XXI of 

10 the Social Security Act (relating to Medicare, Med11 icaid, and the State Children’s Health Insurance 

12 Program). 

13 ‘‘(4) Infrastructure and tools for the promotion 

14 of telemedicine, including coordination among Fed15 eral agencies in the promotion of telemedicine. 

16 ‘‘(5) Promotion of the interoperability of clinical 

17 data repositories or registries. 

18 ‘‘(6) Promotion of technologies and best prac19 tices that enhance the protection of health informa20 tion by all holders of individually identifiable health 

21 information. 

22 ‘‘(7) Improve and expand the use of health in23 formation technology by public health departments. 


pwalker on PROD1PC71 with BILLS
186 

•HR 598 IH

1 ‘‘(8) Provide $300 million to support regional 

2 or sub-national efforts towards health information 

3 exchange. 

4 ‘‘(b) COORDINATION.—The Secretary shall ensure 

5 funds under this section are used in a coordinated manner 

6 with other health information promotion activities. 

7 ‘‘(c) ADDITIONAL USE OF FUNDS.—In addition to 

8 using funds as provided in subsection (a), the Secretary 

9 may use amounts appropriated under section 3018 to 

10 carry out activities that are provided for under laws in 

11 effect on the date of the enactment of this title. 

12 ‘‘SEC. 3012. HEALTH INFORMATION TECHNOLOGY IMPLE13 MENTATION ASSISTANCE. 

14 ‘‘(a) HEALTH INFORMATION TECHNOLOGY EXTEN15 SION PROGRAM.—To assist health care providers to adopt, 

16 implement, and effectively use certified EHR technology 

17 that allows for the electronic exchange and use of health 

18 information, the Secretary, acting through the Office of 

19 the National Coordinator, shall establish a health informa20 tion technology extension program to provide health infor21 mation technology assistance services to be carried out 

22 through the Department of Health and Human Services. 

23 The National Coordinator shall consult with other Federal 

24 agencies with demonstrated experience and expertise in in25 formation technology services, such as the National InstiVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00186 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
187 

•HR 598 IH

1 tute of Standards and Technology, in developing and im2 plementing this program. 

3 ‘‘(b) HEALTH INFORMATION TECHNOLOGY RE4 SEARCH CENTER.— 

5 ‘‘(1) IN GENERAL.—The Secretary shall create 

6 a Health Information Technology Research Center 

7 (in this section referred to as the ‘Center’) to pro8 vide technical assistance and develop or recognize 

9 best practices to support and accelerate efforts to 

10 adopt, implement, and effectively utilize health infor11 mation technology that allows for the electronic ex12 change and use of information in compliance with 

13 standards, implementation specifications, and certifi14 cation criteria adopted under section 3004(b). 

15 ‘‘(2) INPUT.—The Center shall incorporate 

16 input from— 

17 ‘‘(A) other Federal agencies with dem18 onstrated experience and expertise in informa19 tion technology services such as the National 

20 Institute of Standards and Technology; 

21 ‘‘(B) users of health information tech22 nology, such as providers and their support and 

23 clerical staff and others involved in the care and 

24 care coordination of patients, from the health 


pwalker on PROD1PC71 with BILLS
188 

•HR 598 IH

1 care and health information technology indus2 try; and 

3 ‘‘(C) others as appropriate. 

4 ‘‘(3) PURPOSES.—The purposes of the Center 

5 are to— 

6 ‘‘(A) provide a forum for the exchange of 

7 knowledge and experience; 

8 ‘‘(B) accelerate the transfer of lessons 

9 learned from existing public and private sector 

10 initiatives, including those currently receiving 

11 Federal financial support; 

12 ‘‘(C) assemble, analyze, and widely dis13 seminate evidence and experience related to the 

14 adoption, implementation, and effective use of 

15 health information technology that allows for 

16 the electronic exchange and use of information 

17 including through the regional centers described 

18 in subsection (c); 

19 ‘‘(D) provide technical assistance for the 

20 establishment and evaluation of regional and 

21 local health information networks to facilitate 

22 the electronic exchange of information across 

23 health care settings and improve the quality of 

24 health care; 


pwalker on PROD1PC71 with BILLS
189 

•HR 598 IH

1 ‘‘(E) provide technical assistance for the 

2 development and dissemination of solutions to 

3 barriers to the exchange of electronic health in4 formation; and 

5 ‘‘(F) learn about effective strategies to 

6 adopt and utilize health information technology 

7 in medically underserved communities. 

8 ‘‘(c) HEALTH INFORMATION TECHNOLOGY RE9 GIONAL EXTENSION CENTERS.— 

10 ‘‘(1) IN GENERAL.—The Secretary shall provide 

11 assistance for the creation and support of regional 

12 centers (in this subsection referred to as ‘regional 

13 centers’) to provide technical assistance and dissemi14 nate best practices and other information learned 

15 from the Center to support and accelerate efforts to 

16 adopt, implement, and effectively utilize health infor17 mation technology that allows for the electronic ex18 change and use of information in compliance with 

19 standards, implementation specifications, and certifi20 cation criteria adopted under section 3004. Activities 

21 conducted under this subsection shall be consistent 

22 with the strategic plan developed by the National 

23 Coordinator, (and, as available) under section 3001. 

24 ‘‘(2) AFFILIATION.—Regional centers shall be 

25 affiliated with any U.S.-based nonprofit institution 


pwalker on PROD1PC71 with BILLS
190 

•HR 598 IH

1 or organization, or group thereof, that applies and 

2 is awarded financial assistance under this section. 

3 Individual awards shall be decided on the basis of 

4 merit. 

5 ‘‘(3) OBJECTIVE.—The objective of the regional 

6 centers is to enhance and promote the adoption of 

7 health information technology through— 

8 ‘‘(A) assistance with the implementation, 

9 effective use, upgrading, and ongoing mainte10 nance of health information technology, includ11 ing electronic health records, to healthcare pro12 viders nationwide; 

13 ‘‘(B) broad participation of individuals 

14 from industry, universities, and State govern15 ments; 

16 ‘‘(C) active dissemination of best practices 

17 and research on the implementation, effective 

18 use, upgrading, and ongoing maintenance of 

19 health information technology, including elec20 tronic health records, to health care providers 

21 in order to improve the quality of healthcare 

22 and protect the privacy and security of health 

23 information; 

24 ‘‘(D) participation, to the extent prac25 ticable, in health information exchanges; and 


pwalker on PROD1PC71 with BILLS
191 

•HR 598 IH

1 ‘‘(E) utilization, when appropriate, of the 

2 expertise and capability that exists in Federal 

3 agencies other than the Department; and 

4 ‘‘(F) integration of health information 

5 technology, including electronic health records, 

6 into the initial and ongoing training of health 

7 professionals and others in the healthcare in8 dustry that would be instrumental to improving 

9 the quality of healthcare through the smooth 

10 and accurate electronic use and exchange of 

11 health information. 

12 ‘‘(4) REGIONAL ASSISTANCE.—Each regional 

13 center shall aim to provide assistance and education 

14 to all providers in a region, but shall prioritize any 

15 direct assistance first to the following: 

16 ‘‘(A) Public or not-for-profit hospitals or 

17 critical access hospitals. 

18 ‘‘(B) Federally qualified health centers (as 

19 defined in section 1861(aa)(4) of the Social Se20 curity Act). 

21 ‘‘(C) Entities that are located in rural and 

22 other areas that serve uninsured, underinsured, 

23 and medically underserved individuals (regard24 less of whether such area is urban or rural). 


pwalker on PROD1PC71 with BILLS
192 

•HR 598 IH

1 ‘‘(D) Individual or small group practices 

2 (or a consortium thereof) that are primarily fo3 cused on primary care. 

4 ‘‘(5) FINANCIAL SUPPORT.—The Secretary may 

5 provide financial support to any regional center cre6 ated under this subsection for a period not to exceed 

7 four years. The Secretary may not provide more 

8 than 50 percent of the capital and annual operating 

9 and maintenance funds required to create and main10 tain such a center, except in an instance of national 

11 economic conditions which would render this cost12 share requirement detrimental to the program and 

13 upon notification to Congress as to the justification 

14 to waive the cost-share requirement. 

15 ‘‘(6) NOTICE OF PROGRAM DESCRIPTION AND

16 AVAILABILITY OF FUNDS.—The Secretary shall pub17 lish in the Federal Register, not later than 90 days 

18 after the date of the enactment of this Act, a draft 

19 description of the program for establishing regional 

20 centers under this subsection. Such description shall 

21 include the following: 

22 ‘‘(A) A detailed explanation of the program 

23 and the programs goals. 

24 ‘‘(B) Procedures to be followed by the ap25 plicants. 


pwalker on PROD1PC71 with BILLS
193 

•HR 598 IH

1 ‘‘(C) Criteria for determining qualified ap2 plicants. 

3 ‘‘(D) Maximum support levels expected to 

4 be available to centers under the program. 

5 ‘‘(7) APPLICATION REVIEW.—The Secretary 

6 shall subject each application under this subsection 

7 to merit review. In making a decision whether to ap8 prove such application and provide financial support, 

9 the Secretary shall consider at a minimum the mer10 its of the application, including those portions of the 

11 application regarding— 

12 ‘‘(A) the ability of the applicant to provide 

13 assistance under this subsection and utilization 

14 of health information technology appropriate to 

15 the needs of particular categories of health care 

16 providers; 

17 ‘‘(B) the types of service to be provided to 

18 health care providers; 

19 ‘‘(C) geographical diversity and extent of 

20 service area; and 

21 ‘‘(D) the percentage of funding and 

22 amount of in-kind commitment from other 

23 sources. 

24 ‘‘(8) BIENNIAL EVALUATION.—Each regional 

25 center which receives financial assistance under this 


pwalker on PROD1PC71 with BILLS
194 

•HR 598 IH

1 subsection shall be evaluated biennially by an evalua2 tion panel appointed by the Secretary. Each evalua3 tion panel shall be composed of private experts, none 

4 of whom shall be connected with the center involved, 

5 and of Federal officials. Each evaluation panel shall 

6 measure the involved center’s performance against 

7 the objective specified in paragraph (3). The Sec8 retary shall not continue to provide funding to a re9 gional center unless its evaluation is overall positive. 

10 ‘‘(9) CONTINUING SUPPORT.—After the second 

11 year of assistance under this subsection a regional 

12 center may receive additional support under this 

13 subsection if it has received positive evaluations and 

14 a finding by the Secretary that continuation of Fed15 eral funding to the center was in the best interest 

16 of provision of health information technology exten17 sion services. 

18 ‘‘SEC. 3013. STATE GRANTS TO PROMOTE HEALTH INFOR19 MATION TECHNOLOGY. 

20 ‘‘(a) IN GENERAL.—The Secretary, acting through 

21 the National Coordinator, shall establish a program in ac22 cordance with this section to facilitate and expand the 

23 electronic movement and use of health information among 

24 organizations according to nationally recognized stand25 ards. 


pwalker on PROD1PC71 with BILLS
195 

•HR 598 IH

1 ‘‘(b) PLANNING GRANTS.—The Secretary may award 

2 a grant to a State or qualified State-designated entity (as 

3 described in subsection (d)) that submits an application 

4 to the Secretary at such time, in such manner, and con5 taining such information as the Secretary may specify, for 

6 the purpose of planning activities described in subsection 

7 (b). 

8 ‘‘(c) IMPLEMENTATION GRANTS.—The Secretary 

9 may award a grant to a State or qualified State-des10 ignated entity that— 

11 ‘‘(1) has submitted, and the Secretary has ap12 proved, a plan described in subsection (c) (regardless 

13 of whether such plan was prepared using amounts 

14 awarded under paragraph (1)); and 

15 ‘‘(2) submits an application at such time, in 

16 such manner, and containing such information as 

17 the Secretary may specify. 

18 ‘‘(d) USE OF FUNDS.—Amounts received under a 

19 grant under subsection (a)(3) shall be used to conduct ac20 tivities to facilitate and expand the electronic movement 

21 and use of health information among organizations ac22 cording to nationally recognized standards through activi23 ties that include— 


pwalker on PROD1PC71 with BILLS
196 

•HR 598 IH

1 ‘‘(1) enhancing broad and varied participation 

2 in the authorized and secure nationwide electronic 

3 use and exchange of health information; 

4 ‘‘(2) identifying State or local resources avail5 able towards a nationwide effort to promote health 

6 information technology; 

7 ‘‘(3) complementing other Federal grants, pro8 grams, and efforts towards the promotion of health 

9 information technology; 

10 ‘‘(4) providing technical assistance for the de11 velopment and dissemination of solutions to barriers 

12 to the exchange of electronic health information; 

13 ‘‘(5) promoting effective strategies to adopt and 

14 utilize health information technology in medically 

15 underserved communities; 

16 ‘‘(6) assisting patients in utilizing health infor17 mation technology; 

18 ‘‘(7) encouraging clinicians to work with Health 

19 Information Technology Regional Extension Centers 

20 as described in section 3012, to the extent they are 

21 available and valuable; 

22 ‘‘(8) supporting public health agencies’ author23 ized use of and access to electronic health informa24 tion; 


pwalker on PROD1PC71 with BILLS
197 

•HR 598 IH

1 ‘‘(9) promoting the use of electronic health 

2 records for quality improvement including through 

3 quality measures reporting; and 

4 ‘‘(10) such other activities as the Secretary may 

5 specify. 

6 ‘‘(e) PLAN.— 

7 ‘‘(1) IN GENERAL.—A plan described in this 

8 subsection is a plan that describes the activities to 

9 be carried out by a State or by the qualified State10 designated entity within such State to facilitate and 

11 expand the electronic movement and use of health 

12 information among organizations according to na13 tionally recognized standards and implementation 

14 specifications. 

15 ‘‘(2) REQUIRED ELEMENTS.—A plan described 

16 in paragraph (1) shall— 

17 ‘‘(A) be pursued in the public interest; 

18 ‘‘(B) be consistent with the strategic plan 

19 developed by the National Coordinator, (and, as 

20 available) under section 3001; 

21 ‘‘(C) include a description of the ways the 

22 State or qualified State-designated entity will 

23 carry out the activities described in subsection 

24 (b); and 


pwalker on PROD1PC71 with BILLS
198 

•HR 598 IH

1 ‘‘(D) contain such elements as the Sec2 retary may require. 

3 ‘‘(f) QUALIFIED STATE-DESIGNATED ENTITY.—For 

4 purposes of this section, to be a qualified State-designated 

5 entity, with respect to a State, an entity shall— 

6 ‘‘(1) be designated by the State as eligible to 

7 receive awards under this section; 

8 ‘‘(2) be a not-for-profit entity with broad stake9 holder representation on its governing board; 

10 ‘‘(3) demonstrate that one of its principal goals 

11 is to use information technology to improve health 

12 care quality and efficiency through the authorized 

13 and secure electronic exchange and use of health in14 formation; 

15 ‘‘(4) adopt nondiscrimination and conflict of in16 terest policies that demonstrate a commitment to 

17 open, fair, and nondiscriminatory participation by 

18 stakeholders; and 

19 ‘‘(5) conform to such other requirements as the 

20 Secretary may establish. 

21 ‘‘(g) REQUIRED CONSULTATION.—In carrying out 

22 activities described in subsections (a)(2) and (a)(3), a 

23 State or qualified State-designated entity shall consult 

24 with and consider the recommendations of— 


pwalker on PROD1PC71 with BILLS
199 

•HR 598 IH

1 ‘‘(1) health care providers (including providers 

2 that provide services to low income and underserved 

3 populations); 

4 ‘‘(2) health plans; 

5 ‘‘(3) patient or consumer organizations that 

6 represent the population to be served; 

7 ‘‘(4) health information technology vendors; 

8 ‘‘(5) health care purchasers and employers; 

9 ‘‘(6) public health agencies; 

10 ‘‘(7) health professions schools, universities and 

11 colleges; 

12 ‘‘(8) clinical researchers; 

13 ‘‘(9) other users of health information tech14 nology such as the support and clerical staff of pro15 viders and others involved in the care and care co16 ordination of patients; and 

17 ‘‘(10) such other entities, as may be determined 

18 appropriate by the Secretary. 

19 ‘‘(h) CONTINUOUS IMPROVEMENT.—The Secretary 

20 shall annually evaluate the activities conducted under this 

21 section and shall, in awarding grants under this section, 

22 implement the lessons learned from such evaluation in a 

23 manner so that awards made subsequent to each such 

24 evaluation are made in a manner that, in the determina25 tion of the Secretary, will lead towards the greatest imVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00199 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
200 

•HR 598 IH

1 provement in quality of care, decrease in costs, and the 

2 most effective authorized and secure electronic exchange 

3 of health information. 

4 ‘‘(i) REQUIRED MATCH.— 

5 ‘‘(1) IN GENERAL.—For a fiscal year (begin6 ning with fiscal year 2011), the Secretary may not 

7 make a grant under subsection (a) to a State unless 

8 the State agrees to make available non-Federal con9 tributions (which may include in-kind contributions) 

10 toward the costs of a grant awarded under sub11 section (a)(3) in an amount equal to— 

12 ‘‘(A) for fiscal year 2011, not less than $1 

13 for each $10 of Federal funds provided under 

14 the grant; 

15 ‘‘(B) for fiscal year 2012, not less than $1 

16 for each $7 of Federal funds provided under 

17 the grant; and 

18 ‘‘(C) for fiscal year 2013 and each subse19 quent fiscal year, not less than $1 for each $3 

20 of Federal funds provided under the grant. 

21 ‘‘(2) AUTHORITY TO REQUIRE STATE MATCH

22 FOR FISCAL YEARS BEFORE FISCAL YEAR 2011.—For 

23 any fiscal year during the grant program under this 

24 section before fiscal year 2011, the Secretary may 

25 determine the extent to which there shall be required 


pwalker on PROD1PC71 with BILLS
201 

•HR 598 IH

1 a non-Federal contribution from a State receiving a 

2 grant under this section. 

3 ‘‘SEC. 3014. COMPETITIVE GRANTS TO STATES AND INDIAN 

4 TRIBES FOR THE DEVELOPMENT OF LOAN 

5 PROGRAMS TO FACILITATE THE WIDE6 SPREAD ADOPTION OF CERTIFIED EHR TECH7 NOLOGY. 

8 ‘‘(a) IN GENERAL.—The National Coordinator may 

9 award competitive grants to eligible entities for the estab10 lishment of programs for loans to health care providers 

11 to conduct the activities described in subsection (e). 

12 ‘‘(b) ELIGIBLE ENTITY DEFINED.—For purposes of 

13 this subsection, the term ‘eligible entity’ means a State 

14 or Indian tribe (as defined in the Indian Self-Determina15 tion and Education Assistance Act) that— 

16 ‘‘(1) submits to the National Coordinator an 

17 application at such time, in such manner, and con18 taining such information as the National Coordi19 nator may require; 

20 ‘‘(2) submits to the National Coordinator a 

21 strategic plan in accordance with subsection (d) and 

22 provides to the National Coordinator assurances that 

23 the entity will update such plan annually in accord24 ance with such subsection; 


pwalker on PROD1PC71 with BILLS
202 

•HR 598 IH

1 ‘‘(3) provides assurances to the National Coor2 dinator that the entity will establish a Loan Fund 

3 in accordance with subsection (c); 

4 ‘‘(4) provides assurances to the National Coor5 dinator that the entity will not provide a loan from 

6 the Loan Fund to a health care provider unless the 

7 provider agrees to— 

8 ‘‘(A) submit reports on quality measures 

9 adopted by the Federal Government (by not 

10 later than 90 days after the date on which such 

11 measures are adopted), to— 

12 ‘‘(i) the Director of the Centers for 

13 Medicare & Medicaid Services (or his or 

14 her designee), in the case of an entity par15 ticipating in the Medicare program under 

16 title XVIII of the Social Security Act or 

17 the Medicaid program under title XIX of 

18 such Act; or 

19 ‘‘(ii) the Secretary in the case of other 

20 entities; 

21 ‘‘(B) demonstrate to the satisfaction of the 

22 Secretary (through criteria established by the 

23 Secretary) that any certified EHR technology 

24 purchased, improved, or otherwise financially 

25 supported under a loan under this section is 


pwalker on PROD1PC71 with BILLS
203 

•HR 598 IH

1 used to exchange health information in a man2 ner that, in accordance with law and standards 

3 (as adopted under section 3005) applicable to 

4 the exchange of information, improves the qual5 ity of health care, such as promoting care co6 ordination; and 

7 ‘‘(C) comply with such other requirements 

8 as the entity or the Secretary may require; 

9 ‘‘(D) include a plan on how health care 

10 providers involved intend to maintain and sup11 port the certified EHR technology over time; 

12 ‘‘(E) include a plan on how the health care 

13 providers involved intend to maintain and sup14 port the certified EHR technology that would 

15 be purchased with such loan, including the type 

16 of resources expected to be involved and any 

17 such other information as the State or Indian 

18 tribe, respectively, may require; and 

19 ‘‘(5) agrees to provide matching funds in ac20 cordance with subsection (i). 

21 ‘‘(c) ESTABLISHMENT OF FUND.—For purposes of 

22 subsection (b)(3), an eligible entity shall establish a cer23 tified EHR technology loan fund (referred to in this sub24 section as a ‘Loan Fund’) and comply with the other re25 quirements contained in this section. A grant to an eligible 


pwalker on PROD1PC71 with BILLS
204 

•HR 598 IH

1 entity under this section shall be deposited in the Loan 

2 Fund established by the eligible entity. No funds author3 ized by other provisions of this title to be used for other 

4 purposes specified in this title shall be deposited in any 

5 Loan Fund. 

6 ‘‘(d) STRATEGIC PLAN.— 

7 ‘‘(1) IN GENERAL.—For purposes of subsection 

8 (b)(2), a strategic plan of an eligible entity under 

9 this subsection shall identify the intended uses of 

10 amounts available to the Loan Fund of such entity. 

11 ‘‘(2) CONTENTS.—A strategic plan under para12 graph (1), with respect to a Loan Fund of an eligi13 ble entity, shall include for a year the following: 

14 ‘‘(A) A list of the projects to be assisted 

15 through the Loan Fund during such year. 

16 ‘‘(B) A description of the criteria and 

17 methods established for the distribution of 

18 funds from the Loan Fund during the year. 

19 ‘‘(C) A description of the financial status 

20 of the Loan Fund as of the date of submission 

21 of the plan. 

22 ‘‘(D) The short-term and long-term goals 

23 of the Loan Fund. 

24 ‘‘(e) USE OF FUNDS.—Amounts deposited in a Loan 

25 Fund, including loan repayments and interest earned on 


pwalker on PROD1PC71 with BILLS
205 

•HR 598 IH

1 such amounts, shall be used only for awarding loans or 

2 loan guarantees, making reimbursements described in sub3 section (g)(4)(A), or as a source of reserve and security 

4 for leveraged loans, the proceeds of which are deposited 

5 in the Loan Fund established under subsection (a). Loans 

6 under this section may be used by a health care provider 

7 to— 

8 ‘‘(1) facilitate the purchase of certified EHR 

9 technology; 

10 ‘‘(2) enhance the utilization of certified EHR 

11 technology; 

12 ‘‘(3) train personnel in the use of such tech13 nology; or 

14 ‘‘(4) improve the secure electronic exchange of 

15 health information. 

16 ‘‘(f) TYPES OF ASSISTANCE.—Except as otherwise 

17 limited by applicable State law, amounts deposited into a 

18 Loan Fund under this subsection may only be used for 

19 the following: 

20 ‘‘(1) To award loans that comply with the fol21 lowing: 

22 ‘‘(A) The interest rate for each loan shall 

23 not exceed the market interest rate. 

24 ‘‘(B) The principal and interest payments 

25 on each loan shall commence not later than 1 


pwalker on PROD1PC71 with BILLS
206 

•HR 598 IH

1 year after the date the loan was awarded, and 

2 each loan shall be fully amortized not later than 

3 10 years after the date of the loan. 

4 ‘‘(C) The Loan Fund shall be credited with 

5 all payments of principal and interest on each 

6 loan awarded from the Loan Fund. 

7 ‘‘(2) To guarantee, or purchase insurance for, 

8 a local obligation (all of the proceeds of which fi9 nance a project eligible for assistance under this 

10 subsection) if the guarantee or purchase would im11 prove credit market access or reduce the interest 

12 rate applicable to the obligation involved. 

13 ‘‘(3) As a source of revenue or security for the 

14 payment of principal and interest on revenue or gen15 eral obligation bonds issued by the eligible entity if 

16 the proceeds of the sale of the bonds will be depos17 ited into the Loan Fund. 

18 ‘‘(4) To earn interest on the amounts deposited 

19 into the Loan Fund. 

20 ‘‘(5) To make reimbursements described in sub21 section (g)(4)(A). 

22 ‘‘(g) ADMINISTRATION OF LOAN FUNDS.— 

23 ‘‘(1) COMBINED FINANCIAL ADMINISTRATION.— 

24 An eligible entity may (as a convenience and to 

25 avoid unnecessary administrative costs) combine, in 


pwalker on PROD1PC71 with BILLS
207 

•HR 598 IH

1 accordance with applicable State law, the financial 

2 administration of a Loan Fund established under 

3 this subsection with the financial administration of 

4 any other revolving fund established by the entity if 

5 otherwise not prohibited by the law under which the 

6 Loan Fund was established. 

7 ‘‘(2) COST OF ADMINISTERING FUND.—Each el8 igible entity may annually use not to exceed 4 per9 cent of the funds provided to the entity under a 

10 grant under this subsection to pay the reasonable 

11 costs of the administration of the programs under 

12 this section, including the recovery of reasonable 

13 costs expended to establish a Loan Fund which are 

14 incurred after the date of the enactment of this title. 

15 ‘‘(3) GUIDANCE AND REGULATIONS.—The Na16 tional Coordinator shall publish guidance and pro17 mulgate regulations as may be necessary to carry 

18 out the provisions of this section, including— 

19 ‘‘(A) provisions to ensure that each eligible 

20 entity commits and expends funds allotted to 

21 the entity under this subsection as efficiently as 

22 possible in accordance with this title and appli23 cable State laws; and 

24 ‘‘(B) guidance to prevent waste, fraud, and 

25 abuse. 


pwalker on PROD1PC71 with BILLS
208 

•HR 598 IH

1 ‘‘(4) PRIVATE SECTOR CONTRIBUTIONS.— 

2 ‘‘(A) IN GENERAL.—A Loan Fund estab3 lished under this subsection may accept con4 tributions from private sector entities, except 

5 that such entities may not specify the recipient 

6 or recipients of any loan issued under this sub7 section. An eligible entity may agree to reim8 burse a private sector entity for any contribu9 tion made under this subparagraph, except that 

10 the amount of such reimbursement may not be 

11 greater than the principal amount of the con12 tribution made. 

13 ‘‘(B) AVAILABILITY OF INFORMATION.— 

14 An eligible entity shall make publicly available 

15 the identity of, and amount contributed by, any 

16 private sector entity under subparagraph (A) 

17 and may issue letters of commendation or make 

18 other awards (that have no financial value) to 

19 any such entity. 

20 ‘‘(h) MATCHING REQUIREMENTS.— 

21 ‘‘(1) IN GENERAL.—The National Coordinator 

22 may not make a grant under subsection (a) to an el23 igible entity unless the entity agrees to make avail24 able (directly or through donations from public or 

25 private entities) non-Federal contributions in cash to 


pwalker on PROD1PC71 with BILLS
209 

•HR 598 IH

1 the costs of carrying out the activities for which the 

2 grant is awarded in an amount equal to not less 

3 than $1 for each $5 of Federal funds provided under 

4 the grant. 

5 ‘‘(2) DETERMINATION OF AMOUNT OF NON6 FEDERAL CONTRIBUTION.—In determining the 

7 amount of non-Federal contributions that an eligible 

8 entity has provided pursuant to subparagraph (A), 

9 the National Coordinator may not include any 

10 amounts provided to the entity by the Federal Gov11 ernment. 

12 ‘‘(i) EFFECTIVE DATE.—The Secretary may not 

13 make an award under this section prior to January 1, 

14 2010. 

15 ‘‘SEC. 3015. DEMONSTRATION PROGRAM TO INTEGRATE IN16 FORMATION TECHNOLOGY INTO CLINICAL 

17 EDUCATION. 

18 ‘‘(a) IN GENERAL.—The Secretary may award grants 

19 under this section to carry out demonstration projects to 

20 develop academic curricula integrating certified EHR 

21 technology in the clinical education of health professionals. 

22 Such awards shall be made on a competitive basis and 

23 pursuant to peer review. 

24 ‘‘(b) ELIGIBILITY.—To be eligible to receive a grant 

25 under subsection (a), an entity shall— 


pwalker on PROD1PC71 with BILLS
210 

•HR 598 IH

1 ‘‘(1) submit to the Secretary an application at 

2 such time, in such manner, and containing such in3 formation as the Secretary may require; 

4 ‘‘(2) submit to the Secretary a strategic plan 

5 for integrating certified EHR technology in the clin6 ical education of health professionals to reduce med7 ical errors and enhance health care quality; 

8 ‘‘(3) be— 

9 ‘‘(A) a school of medicine, osteopathic 

10 medicine, dentistry, or pharmacy, a graduate 

11 program in behavioral or mental health, or any 

12 other graduate health professions school; 

13 ‘‘(B) a graduate school of nursing or phy14 sician assistant studies; 

15 ‘‘(C) a consortium of two or more schools 

16 described in subparagraph (A) or (B); or 

17 ‘‘(D) an institution with a graduate med18 ical education program in medicine, osteopathic 

19 medicine, dentistry, pharmacy, nursing, or phy20 sician assistance studies. 

21 ‘‘(4) provide for the collection of data regarding 

22 the effectiveness of the demonstration project to be 

23 funded under the grant in improving the safety of 

24 patients, the efficiency of health care delivery, and 

25 in increasing the likelihood that graduates of the 


pwalker on PROD1PC71 with BILLS
211 

•HR 598 IH

1 grantee will adopt and incorporate certified EHR 

2 technology, in the delivery of health care services; 

3 and 

4 ‘‘(5) provide matching funds in accordance with 

5 subsection (d). 

6 ‘‘(c) USE OF FUNDS.— 

7 ‘‘(1) IN GENERAL.—With respect to a grant 

8 under subsection (a), an eligible entity shall— 

9 ‘‘(A) use grant funds in collaboration with 

10 2 or more disciplines; and 

11 ‘‘(B) use grant funds to integrate certified 

12 EHR technology into community-based clinical 

13 education. 

14 ‘‘(2) LIMITATION.—An eligible entity shall not 

15 use amounts received under a grant under sub16 section (a) to purchase hardware, software, or serv17 ices. 

18 ‘‘(d) FINANCIAL SUPPORT.—The Secretary may not 

19 provide more than 50 percent of the costs of any activity 

20 for which assistance is provided under subsection (a), ex21 cept in an instance of national economic conditions which 

22 would render the cost-share requirement under this sub23 section detrimental to the program and upon notification 

24 to Congress as to the justification to waive the cost-share 

25 requirement. 


pwalker on PROD1PC71 with BILLS
212 

•HR 598 IH

1 ‘‘(e) EVALUATION.—The Secretary shall take such 

2 action as may be necessary to evaluate the projects funded 

3 under this section and publish, make available, and dis4 seminate the results of such evaluations on as wide a basis 

5 as is practicable. 

6 ‘‘(f) REPORTS.—Not later than 1 year after the date 

7 of enactment of this title, and annually thereafter, the Sec8 retary shall submit to the Committee on Health, Edu9 cation, Labor, and Pensions and the Committee on Fi10 nance of the Senate, and the Committee on Energy and 

11 Commerce of the House of Representatives a report 

12 that— 

13 ‘‘(1) describes the specific projects established 

14 under this section; and 

15 ‘‘(2) contains recommendations for Congress 

16 based on the evaluation conducted under subsection 

17 (e). 

18 ‘‘SEC. 3016. INFORMATION TECHNOLOGY PROFESSIONALS 

19 ON HEALTH CARE. 

20 ‘‘(a) IN GENERAL.—The Secretary, in consultation 

21 with the Director of the National Science Foundation, 

22 shall provide assistance to institutions of higher education 

23 (or consortia thereof) to establish or expand medical 

24 health informatics education programs, including certifi25 cation, undergraduate, and masters degree programs, for 


pwalker on PROD1PC71 with BILLS
213 

•HR 598 IH

1 both health care and information technology students to 

2 ensure the rapid and effective utilization and development 

3 of health information technologies (in the United States 

4 health care infrastructure). 

5 ‘‘(b) ACTIVITIES.—Activities for which assistance 

6 may be provided under subsection (a) may include the fol7 lowing: 

8 ‘‘(1) Developing and revising curricula in med9 ical health informatics and related disciplines. 

10 ‘‘(2) Recruiting and retaining students to the 

11 program involved. 

12 ‘‘(3) Acquiring equipment necessary for student 

13 instruction in these programs, including the installa14 tion of testbed networks for student use. 

15 ‘‘(4) Establishing or enhancing bridge programs 

16 in the health informatics fields between community 

17 colleges and universities. 

18 ‘‘(c) PRIORITY.—In providing assistance under sub19 section (a), the Secretary shall give preference to the fol20 lowing: 

21 ‘‘(1) Existing education and training programs. 

22 ‘‘(2) Programs designed to be completed in less 

23 than six months. 

24 ‘‘(d) FINANCIAL SUPPORT.—The Secretary may not 

25 provide more than 50 percent of the costs of any activity 


pwalker on PROD1PC71 with BILLS
214 

•HR 598 IH

1 for which assistance is provided under subsection (a), ex2 cept in an instance of national economic conditions which 

3 would render the cost-share requirement under this sub4 section detrimental to the program and upon notification 

5 to Congress as to the justification to waive the cost-share 

6 requirement. 

7 ‘‘SEC. 3017. GENERAL GRANT AND LOAN PROVISIONS. 

8 ‘‘(a) REPORTS.—The Secretary may require that an 

9 entity receiving assistance under this title shall submit to 

10 the Secretary, not later than the date that is 1 year after 

11 the date of receipt of such assistance, a report that in12 cludes— 

13 ‘‘(1) an analysis of the effectiveness of the ac14 tivities for which the entity receives such assistance, 

15 as compared to the goals for such activities; and 

16 ‘‘(2) an analysis of the impact of the project on 

17 health care quality and safety. 

18 ‘‘(b) REQUIREMENT TO IMPROVE QUALITY OF CARE

19 AND DECREASE IN COSTS.—The National Coordinator 

20 shall annually evaluate the activities conducted under this 

21 title and shall, in awarding grants, implement the lessons 

22 learned from such evaluation in a manner so that awards 

23 made subsequent to each such evaluation are made in a 

24 manner that, in the determination of the National CoordiVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00214 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
215 

•HR 598 IH

1 nator, will result in the greatest improvement in the qual2 ity and efficiency of health care. 

3 ‘‘SEC. 3018. AUTHORIZATION FOR APPROPRIATIONS. 

4 ‘‘For the purposes of carrying out this subtitle, there 

5 is authorized to be appropriated such sums as may be nec6 essary for each of the fiscal years 2009 through 2013. 

7 Amounts so appropriated shall remain available until ex8 pended.’’. 

9 PART II—MEDICARE PROGRAM 

10 SEC. 4311. INCENTIVES FOR ELIGIBLE PROFESSIONALS. 

11 (a) INCENTIVE PAYMENTS.—Section 1848 of the So12 cial Security Act (42 U.S.C. 1395w–4) is amended by add13 ing at the end the following new subsection: 

14 ‘‘(o) INCENTIVES FOR ADOPTION AND MEANINGFUL

15 USE OF CERTIFIED EHR TECHNOLOGY.— 

16 ‘‘(1) INCENTIVE PAYMENTS.— 

17 ‘‘(A) IN GENERAL.—Subject to the suc18 ceeding subparagraphs of this paragraph, with 

19 respect to covered professional services fur20 nished by an eligible professional during a pay21 ment year (as defined in subparagraph (E)), if 

22 the eligible professional is a meaningful EHR 

23 user (as determined under paragraph (2)) for 

24 the reporting period with respect to such year, 

25 in addition to the amount otherwise paid under 


pwalker on PROD1PC71 with BILLS
216 

•HR 598 IH

1 this part, there also shall be paid to the eligible 

2 professional (or to an employer or facility in the 

3 cases described in clause (A) of section 

4 1842(b)(6)), from the Federal Supplementary 

5 Medical Insurance Trust Fund established 

6 under section 1841 an amount equal to 75 per7 cent of the Secretary’s estimate (based on 

8 claims submitted not later than 2 months after 

9 the end of the payment year) of the allowed 

10 charges under this part for all such covered 

11 professional services furnished by the eligible 

12 professional during such year. 

13 ‘‘(B) LIMITATIONS ON AMOUNTS OF IN14 CENTIVE PAYMENTS.— 

15 ‘‘(i) IN GENERAL.—In no case shall 

16 the amount of the incentive payment pro17 vided under this paragraph for an eligible 

18 professional for a payment year exceed the 

19 applicable amount specified under this sub20 paragraph with respect to such eligible 

21 professional and such year. 

22 ‘‘(ii) AMOUNT.—Subject to clause 

23 (iii), the applicable amount specified in this 

24 subparagraph for an eligible professional is 

25 as follows: 


pwalker on PROD1PC71 with BILLS
217 

•HR 598 IH

1 ‘‘(I) For the first payment year 

2 for such professional, $15,000. 

3 ‘‘(II) For the second payment 

4 year for such professional, $12,000. 

5 ‘‘(III) For the third payment 

6 year for such professional, $8,000. 

7 ‘‘(IV) For the fourth payment 

8 year for such professional, $4,000. 

9 ‘‘(V) For the fifth payment year 

10 for such professional, $2,000. 

11 ‘‘(VI) For any succeeding pay12 ment year for such professional, $0. 

13 ‘‘(iii) PHASE DOWN FOR ELIGIBLE

14 PROFESSIONALS FIRST ADOPTING EHR

15 AFTER 2013.—If the first payment year for 

16 an eligible professional is after 2013, then 

17 the amount specified in this subparagraph 

18 for a payment year for such professional is 

19 the same as the amount specified in clause 

20 (ii) for such payment year for an eligible 

21 professional whose first payment year is 

22 2013. If the first payment year for an eli23 gible professional is after 2015 then the 

24 applicable amount specified in this subVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00217 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
218 

•HR 598 IH

1 paragraph for such professional for such 

2 year and any subsequent year shall be $0. 

3 ‘‘(C) NON-APPLICATION TO HOSPITAL4 BASED ELIGIBLE PROFESSIONALS.— 

5 ‘‘(i) IN GENERAL.—No incentive pay6 ment may be made under this paragraph 

7 in the case of a hospital-based eligible pro8 fessional. 

9 ‘‘(ii) HOSPITAL-BASED ELIGIBLE PRO10 FESSIONAL.—For purposes of clause (i), 

11 the term ‘hospital-based eligible profes12 sional’ means, with respect to covered pro13 fessional services furnished by an eligible 

14 professional during the reporting period for 

15 a payment year, an eligible professional, 

16 such as a pathologist, anesthesiologist, or 

17 emergency physician, who furnishes sub18 stantially all of such services in a hospital 

19 setting (whether inpatient or outpatient) 

20 and through the use of the facilities and 

21 equipment, including computer equipment, 

22 of the hospital. 

23 ‘‘(D) PAYMENT.— 

24 ‘‘(i) FORM OF PAYMENT.—The pay25 ment under this paragraph may be in the 


pwalker on PROD1PC71 with BILLS
219 

•HR 598 IH

1 form of a single consolidated payment or 

2 in the form of such periodic installments 

3 as the Secretary may specify. 

4 ‘‘(ii) COORDINATION OF APPLICATION

5 OF LIMITATION FOR PROFESSIONALS IN

6 DIFFERENT PRACTICES.—In the case of an 

7 eligible professional furnishing covered pro8 fessional services in more than one practice 

9 (as specified by the Secretary), the Sec10 retary shall establish rules to coordinate 

11 the incentive payments, including the ap12 plication of the limitation on amounts of 

13 such incentive payments under this para14 graph, among such practices. 

15 ‘‘(iii) COORDINATION WITH MED16 ICAID.—The Secretary shall seek, to the 

17 maximum extent practicable, to avoid du18 plicative requirements from Federal and 

19 State Governments to demonstrate mean20 ingful use of certified EHR technology 

21 under this title and title XIX. In doing so, 

22 the Secretary may deem satisfaction of 

23 State requirements for such meaningful 

24 use for a payment year under title XIX to 

25 be sufficient to qualify as meaningful use 


pwalker on PROD1PC71 with BILLS
220 

•HR 598 IH

1 under this subsection and subsection (a)(7) 

2 and vice versa. The Secretary may also ad3 just the reporting periods under such title 

4 and such subsections in order to carry out 

5 this clause. 

6 ‘‘(E) PAYMENT YEAR DEFINED.— 

7 ‘‘(i) IN GENERAL.—For purposes of 

8 this subsection, the term ‘payment year’ 

9 means a year beginning with 2011. 

10 ‘‘(ii) FIRST, SECOND, ETC. PAYMENT

11 YEAR.—The term ‘first payment year’ 

12 means, with respect to covered professional 

13 services furnished by an eligible profes14 sional, the first year for which an incentive 

15 payment is made for such services under 

16 this subsection. The terms ‘second pay17 ment year’, ‘third payment year’, ‘fourth 

18 payment year’, and ‘fifth payment year’ 

19 mean, with respect to covered professional 

20 services furnished by such eligible profes21 sional, each successive year immediately 

22 following the first payment year for such 

23 professional. 

24 ‘‘(2) MEANINGFUL EHR USER.— 


pwalker on PROD1PC71 with BILLS
221 

•HR 598 IH

1 ‘‘(A) IN GENERAL.—For purposes of para2 graph (1), an eligible professional shall be 

3 treated as a meaningful EHR user for a report4 ing period for a payment year (or, for purposes 

5 of subsection (a)(7), for a reporting period 

6 under such subsection for a year) if each of the 

7 following requirements is met: 

8 ‘‘(i) MEANINGFUL USE OF CERTIFIED

9 EHR TECHNOLOGY.—The eligible profes10 sional demonstrates to the satisfaction of 

11 the Secretary, in accordance with subpara12 graph (C)(i), that during such period the 

13 professional is using certified EHR tech14 nology in a meaningful manner, which 

15 shall include the use of electronic pre16 scribing as determined to be appropriate 

17 by the Secretary. 

18 ‘‘(ii) INFORMATION EXCHANGE.—The 

19 eligible professional demonstrates to the 

20 satisfaction of the Secretary, in accordance 

21 with subparagraph (C)(i), that during such 

22 period such certified EHR technology is 

23 connected in a manner that provides, in 

24 accordance with law and standards appli25 cable to the exchange of information, for 


pwalker on PROD1PC71 with BILLS
222 

•HR 598 IH

1 the electronic exchange of health informa2 tion to improve the quality of health care, 

3 such as promoting care coordination. 

4 ‘‘(iii) REPORTING ON MEASURES

5 USING EHR.—Subject to subparagraph 

6 (B)(ii) and using such certified EHR tech7 nology, the eligible professional submits in8 formation for such period, in a form and 

9 manner specified by the Secretary, on such 

10 clinical quality measures and such other 

11 measures as selected by the Secretary 

12 under subparagraph (B)(i). 

13 The Secretary may provide for the use of alter14 native means for meeting the requirements of 

15 clauses (i), (ii), and (iii) in the case of an eligi16 ble professional furnishing covered professional 

17 services in a group practice (as defined by the 

18 Secretary). The Secretary shall seek to improve 

19 the use of electronic health records and health 

20 care quality over time by requiring more strin21 gent measures of meaningful use selected under 

22 this paragraph. 

23 ‘‘(B) REPORTING ON MEASURES.— 

24 ‘‘(i) SELECTION.—The Secretary shall 

25 select measures for purposes of subparaVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00222 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
223 

•HR 598 IH

1 graph (A)(iii) but only consistent with the 

2 following: 

3 ‘‘(I) The Secretary shall provide 

4 preference to clinical quality measures 

5 that have been endorsed by the entity 

6 with a contract with the Secretary 

7 under section 1890(a). 

8 ‘‘(II) Prior to any measure being 

9 selected under this subparagraph, the 

10 Secretary shall publish in the Federal 

11 Register such measure and provide for 

12 a period of public comment on such 

13 measure. 

14 ‘‘(III) The Secretary shall, to the 

15 extent practicable, select the same 

16 measures for purposes of subpara17 graph (A)(iii) as are selected for qual18 ity purposes under title XIX. 

19 ‘‘(ii) LIMITATION.—The Secretary 

20 may not require the electronic reporting of 

21 information on clinical quality measures 

22 under subparagraph (A)(iii) unless the 

23 Secretary has the capacity to accept the in24 formation electronically, which may be on 

25 a pilot basis. 


pwalker on PROD1PC71 with BILLS
224 

•HR 598 IH

1 ‘‘(iii) COORDINATION OF REPORTING

2 OF INFORMATION.—In selecting such 

3 measures, and in establishing the form and 

4 manner for reporting measures under sub5 paragraph (A)(iii), the Secretary shall seek 

6 to avoid redundant or duplicative reporting 

7 otherwise required, including reporting 

8 under subsection (k)(2)(C). 

9 ‘‘(C) DEMONSTRATION OF MEANINGFUL

10 USE OF CERTIFIED EHR TECHNOLOGY AND IN11 FORMATION EXCHANGE.— 

12 ‘‘(i) IN GENERAL.—A professional 

13 may satisfy the demonstration requirement 

14 of clauses (i) and (ii) of subparagraph (A) 

15 through means specified by the Secretary, 

16 which may include— 

17 ‘‘(I) an attestation; 

18 ‘‘(II) the submission of claims 

19 with appropriate coding (such as a 

20 code indicating that a patient encoun21 ter was documented using certified 

22 EHR technology); 

23 ‘‘(III) a survey response; 

24 ‘‘(IV) reporting under subpara25 graph (A)(iii); and 


pwalker on PROD1PC71 with BILLS
225 

•HR 598 IH

1 ‘‘(V) other means specified by the 

2 Secretary. 

3 ‘‘(ii) USE OF PART D DATA.—Not4 withstanding sections 1860D–15(d)(2)(B) 

5 and 1860D–15(f)(2), the Secretary may 

6 use data regarding drug claims submitted 

7 for purposes of section 1860D–15 that are 

8 necessary for purposes of subparagraph 

9 (A). 

10 ‘‘(3) APPLICATION.— 

11 ‘‘(A) PHYSICIAN REPORTING SYSTEM

12 RULES.—Paragraphs (5), (6), and (8) of sub13 section (k) shall apply for purposes of this sub14 section in the same manner as they apply for 

15 purposes of such subsection. 

16 ‘‘(B) COORDINATION WITH OTHER PAY17 MENTS.—The provisions of this subsection shall 

18 not be taken into account in applying the provi19 sions of subsection (m) of this section and of 

20 section 1833(m) and any payment under such 

21 provisions shall not be taken into account in 

22 computing allowable charges under this sub23 section. 

24 ‘‘(C) LIMITATIONS ON REVIEW.—There 

25 shall be no administrative or judicial review 


pwalker on PROD1PC71 with BILLS
226 

•HR 598 IH

1 under section 1869, section 1878, or otherwise 

2 of the determination of any incentive payment 

3 under this subsection and the payment adjust4 ment under subsection (a)(7), including the de5 termination of a meaningful EHR user under 

6 paragraph (2), a limitation under paragraph 

7 (1)(B), and the exception under subsection 

8 (a)(7)(B). 

9 ‘‘(D) POSTING ON WEBSITE.—The Sec10 retary shall post on the Internet website of the 

11 Centers for Medicare & Medicaid Services, in an 

12 easily understandable format, a list of the 

13 names, business addresses, and business phone 

14 numbers of the eligible professionals who are 

15 meaningful EHR users and, as determined ap16 propriate by the Secretary, of group practices 

17 receiving incentive payments under paragraph 

18 (1). 

19 ‘‘(4) CERTIFIED EHR TECHNOLOGY DEFINED.— 

20 For purposes of this section, the term ‘certified 

21 EHR technology’ means a qualified electronic health 

22 record (as defined in 3000(13) of the Public Health 

23 Service Act) that is certified pursuant to section 

24 3001(c)(5) of such Act as meeting standards adopt25 ed under section 3004 of such Act that are applicaVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00226 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
227 

•HR 598 IH

1 ble to the type of record involved (as determined by 

2 the Secretary, such as an ambulatory electronic 

3 health record for office-based physicians or an inpa4 tient hospital electronic health record for hospitals). 

5 ‘‘(5) DEFINITIONS.—For purposes of this sub6 section: 

7 ‘‘(A) COVERED PROFESSIONAL SERV8 ICES.—The term ‘covered professional services’ 

9 has the meaning given such term in subsection 

10 (k)(3). 

11 ‘‘(B) ELIGIBLE PROFESSIONAL.—The term 

12 ‘eligible professional’ means a physician, as de13 fined in section 1861(r). 

14 ‘‘(C) REPORTING PERIOD.—The term ‘re15 porting period’ means any period (or periods), 

16 with respect to a payment year, as specified by 

17 the Secretary.’’. 

18 (b) INCENTIVE PAYMENT ADJUSTMENT.—Section 

19 1848(a) of the Social Security Act (42 U.S.C. 1395w– 

20 4(a)) is amended by adding at the end the following new 

21 paragraph: 

22 ‘‘(7) INCENTIVES FOR MEANINGFUL USE OF

23 CERTIFIED EHR TECHNOLOGY.— 

24 ‘‘(A) ADJUSTMENT.— 


pwalker on PROD1PC71 with BILLS
228 

•HR 598 IH

1 ‘‘(i) IN GENERAL.—Subject to sub2 paragraphs (B) and (D), with respect to 

3 covered professional services furnished by 

4 an eligible professional during 2016 or any 

5 subsequent payment year, if the eligible 

6 professional is not a meaningful EHR user 

7 (as determined under subsection (o)(2)) for 

8 a reporting period for the year, the fee 

9 schedule amount for such services fur10 nished by such professional during the year 

11 (including the fee schedule amount for pur12 poses of determining a payment based on 

13 such amount) shall be equal to the applica14 ble percent of the fee schedule amount that 

15 would otherwise apply to such services 

16 under this subsection (determined after ap17 plication of paragraph (3) but without re18 gard to this paragraph). 

19 ‘‘(ii) APPLICABLE PERCENT.—Subject 

20 to clause (iii), for purposes of clause (i), 

21 the term ‘applicable percent’ means— 

22 ‘‘(I) for 2016, 99 percent; 

23 ‘‘(II) for 2017, 98 percent; and 

24 ‘‘(III) for 2018 and each subse25 quent year, 97 percent. 


pwalker on PROD1PC71 with BILLS
229 

•HR 598 IH

1 ‘‘(iii) AUTHORITY TO DECREASE AP2 PLICABLE PERCENTAGE FOR 2019 AND

3 SUBSEQUENT YEARS.—For 2019 and each 

4 subsequent year, if the Secretary finds that 

5 the proportion of eligible professionals who 

6 are meaningful EHR users (as determined 

7 under subsection (o)(2)) is less than 75 

8 percent, the applicable percent shall be de9 creased by 1 percentage point from the ap10 plicable percent in the preceding year, but 

11 in no case shall the applicable percent be 

12 less than 95 percent. 

13 ‘‘(B) SIGNIFICANT HARDSHIP EXCEP14 TION.—The Secretary may, on a case-by-case 

15 basis, exempt an eligible professional from the 

16 application of the payment adjustment under 

17 subparagraph (A) if the Secretary determines, 

18 subject to annual renewal, that compliance with 

19 the requirement for being a meaningful EHR 

20 user would result in a significant hardship, such 

21 as in the case of an eligible professional who 

22 practices in a rural area without sufficient 

23 Internet access. In no case may an eligible pro24 fessional be granted an exemption under this 

25 subparagraph for more than 5 years. 


pwalker on PROD1PC71 with BILLS
230 

•HR 598 IH

1 ‘‘(C) APPLICATION OF PHYSICIAN REPORT2 ING SYSTEM RULES.—Paragraphs (5), (6), and 

3 (8) of subsection (k) shall apply for purposes of 

4 this paragraph in the same manner as they 

5 apply for purposes of such subsection. 

6 ‘‘(D) NON-APPLICATION TO HOSPITAL7 BASED ELIGIBLE PROFESSIONALS.—No pay8 ment adjustment may be made under subpara9 graph (A) in the case of hospital-based eligible 

10 professionals (as defined in subsection 

11 (o)(1)(C)(ii)). 

12 ‘‘(E) DEFINITIONS.—For purposes of this 

13 paragraph: 

14 ‘‘(i) COVERED PROFESSIONAL SERV15 ICES.—The term ‘covered professional 

16 services’ has the meaning given such term 

17 in subsection (k)(3). 

18 ‘‘(ii) ELIGIBLE PROFESSIONAL.—The 

19 term ‘eligible professional’ means a physi20 cian, as defined in section 1861(r). 

21 ‘‘(iii) REPORTING PERIOD.—The term 

22 ‘reporting period’ means, with respect to a 

23 year, a period specified by the Secretary.’’. 

24 (c) APPLICATION TO CERTAIN HMO-AFFILIATED

25 ELIGIBLE PROFESSIONALS.—Section 1853 of the Social 


pwalker on PROD1PC71 with BILLS
231 

•HR 598 IH

1 Security Act (42 U.S.C. 1395w–23) is amended by adding 

2 at the end the following new subsection: 

3 ‘‘(l) APPLICATION OF ELIGIBLE PROFESSIONAL IN4 CENTIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOP5 TION AND MEANINGFUL USE OF CERTIFIED EHR TECH6 NOLOGY.— 

7 ‘‘(1) IN GENERAL.—Subject to paragraphs (3) 

8 and (4), in the case of a qualifying MA organization, 

9 the provisions of sections 1848(o) and 1848(a)(7) 

10 shall apply with respect to eligible professionals de11 scribed in paragraph (2) of the organization who the 

12 organization attests under paragraph (6) to be 

13 meaningful EHR users in a similar manner as they 

14 apply to eligible professionals under such sections. 

15 Incentive payments under paragraph (3) shall be 

16 made to and payment adjustments under paragraph 

17 (4) shall apply to such qualifying organizations. 

18 ‘‘(2) ELIGIBLE PROFESSIONAL DESCRIBED.— 

19 With respect to a qualifying MA organization, an eli20 gible professional described in this paragraph is an 

21 eligible professional (as defined for purposes of sec22 tion 1848(o)) who— 

23 ‘‘(A)(i) is employed by the organization, or 

24 ‘‘(ii)(I) is employed by, or is a partner of, 

25 an entity that through contract with the organiVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00231 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
232 

•HR 598 IH

1 zation furnishes at least 80 percent of the enti2 ty’s patient care services to enrollees of such or3 ganization; and 

4 ‘‘(II) furnishes at least 75 percent of the 

5 professional services of the eligible professional 

6 to enrollees of the organization; and 

7 ‘‘(B) furnishes, on average, at least 20 

8 hours per week of patient care services. 

9 ‘‘(3) ELIGIBLE PROFESSIONAL INCENTIVE PAY10 MENTS.— 

11 ‘‘(A) IN GENERAL.—In applying section 

12 1848(o) under paragraph (1), instead of the ad13 ditional payment amount under section 

14 1848(o)(1)(A) and subject to subparagraph 

15 (B), the Secretary may substitute an amount 

16 determined by the Secretary to the extent fea17 sible and practical to be similar to the esti18 mated amount in the aggregate that would be 

19 payable if payment for services furnished by 

20 such professionals was payable under part B in21 stead of this part. 

22 ‘‘(B) AVOIDING DUPLICATION OF PAY23 MENTS.— 

24 ‘‘(i) IN GENERAL.—If an individual is 

25 an eligible professional described in paraVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00232 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
233 

•HR 598 IH

1 graph (2) and also is eligible for the max2 imum incentive payment under section 

3 1848(o)(1)(A) for the same payment pe4 riod, the payment incentive shall be made 

5 only under such section and not under this 

6 subsection. 

7 ‘‘(ii) METHODS.—In the case of an in8 dividual who is an eligible professional de9 scribed in paragraph (2) and also is eligi10 ble for an incentive payment under section 

11 1848(o)(1)(A) but is not described in 

12 clause (i) for the same payment period, the 

13 Secretary shall develop a process— 

14 ‘‘(I) to ensure that duplicate pay15 ments are not made with respect to 

16 an eligible professional both under 

17 this subsection and under section 

18 1848(o)(1)(A); and 

19 ‘‘(II) to collect data from Medi20 care Advantage organizations to en21 sure against such duplicate payments. 

22 ‘‘(C) FIXED SCHEDULE FOR APPLICATION

23 OF LIMITATION ON INCENTIVE PAYMENTS FOR

24 ALL ELIGIBLE PROFESSIONALS.—In applying 

25 section 1848(o)(1)(B)(ii) under subparagraph 


pwalker on PROD1PC71 with BILLS
234 

•HR 598 IH

1 (A), in accordance with rules specified by the 

2 Secretary, a qualifying MA organization shall 

3 specify a year (not earlier than 2011) that shall 

4 be treated as the first payment year for all eli5 gible professionals with respect to such organi6 zation. 

7 ‘‘(4) PAYMENT ADJUSTMENT.— 

8 ‘‘(A) IN GENERAL.—In applying section 

9 1848(a)(7) under paragraph (1), instead of the 

10 payment adjustment being an applicable per11 cent of the fee schedule amount for a year 

12 under such section, subject to subparagraph 

13 (D), the payment adjustment under paragraph 

14 (1) shall be equal to the percent specified in 

15 subparagraph (B) for such year of the payment 

16 amount otherwise provided under this section 

17 for such year. 

18 ‘‘(B) SPECIFIED PERCENT.—The percent 

19 specified under this subparagraph for a year is 

20 100 percent minus a number of percentage 

21 points equal to the product of— 

22 ‘‘(i) the number of percentage points 

23 by which the applicable percent (under sec24 tion 1848(a)(7)(A)(ii)) for the year is less 

25 than 100 percent; and 


pwalker on PROD1PC71 with BILLS
235 

•HR 598 IH

1 ‘‘(ii) the Medicare physician expendi2 ture proportion specified in subparagraph 

3 (C) for the year. 

4 ‘‘(C) MEDICARE PHYSICIAN EXPENDITURE

5 PROPORTION.—The Medicare physician expend6 iture proportion under this subparagraph for a 

7 year is the Secretary’s estimate of the propor8 tion, of the expenditures under parts A and B 

9 that are not attributable to this part, that are 

10 attributable to expenditures for physicians’ 

11 services. 

12 ‘‘(D) APPLICATION OF PAYMENT ADJUST13 MENT.—In the case that a qualifying MA orga14 nization attests that not all eligible profes15 sionals are meaningful EHR users with respect 

16 to a year, the Secretary shall apply the payment 

17 adjustment under this paragraph based on the 

18 proportion of such eligible professionals that are 

19 not meaningful EHR users for such year. 

20 ‘‘(5) QUALIFYING MA ORGANIZATION DE21 FINED.—In this subsection and subsection (m), the 

22 term ‘qualifying MA organization’ means a Medicare 

23 Advantage organization that is organized as a health 

24 maintenance organization (as defined in section 

25 2791(b)(3) of the Public Health Service Act). 


pwalker on PROD1PC71 with BILLS
236 

•HR 598 IH

1 ‘‘(6) MEANINGFUL EHR USER ATTESTATION.— 

2 For purposes of this subsection and subsection (m), 

3 a qualifying MA organization shall submit an attes4 tation, in a form and manner specified by the Sec5 retary which may include the submission of such at6 testation as part of submission of the initial bid 

7 under section 1854(a)(1)(A)(iv), identifying— 

8 ‘‘(A) whether each eligible professional de9 scribed in paragraph (2), with respect to such 

10 organization is a meaningful EHR user (as de11 fined in section 1848(o)(3)) for a year specified 

12 by the Secretary; and 

13 ‘‘(B) whether each eligible hospital de14 scribed in subsection (m)(1), with respect to 

15 such organization, is a meaningful EHR user 

16 (as defined in section 1886(n)(3)) for an appli17 cable period specified by the Secretary.’’. 

18 (d) CONFORMING AMENDMENTS.—Section 1853 of 

19 the Social Security Act (42 U.S.C. 1395w–23) is amend20 ed— 

21 (1) in subsection (a)(1)(A), by striking ‘‘and 

22 (i)’’ and inserting ‘‘(i), and (l)’’; 

23 (2) in subsection (c)— 


pwalker on PROD1PC71 with BILLS
237 

•HR 598 IH

1 (A) in paragraph (1)(D)(i), by striking 

2 ‘‘section 1886(h)’’ and inserting ‘‘sections 

3 1848(o) and 1886(h)’’; and 

4 (B) in paragraph (6)(A), by inserting after 

5 ‘‘under part B,’’ the following: ‘‘excluding ex6 penditures attributable to subsections (a)(7) 

7 and (o) of section 1848,’’; and 

8 (3) in subsection (f), by inserting ‘‘and for pay9 ments under subsection (l)’’ after ‘‘with the organi10 zation’’. 

11 (e) CONFORMING AMENDMENTS TO E-PRE12 SCRIBING.— 

13 (1) Section 1848(a)(5)(A) of the Social Security 

14 Act (42 U.S.C. 1395w–4(a)(5)(A)) is amended— 

15 (A) in clause (i), by striking ‘‘or any sub16 sequent year’’ and inserting ‘‘, 2013, 2014, or 

17 2015’’; and 

18 (B) in clause (ii), by striking ‘‘and each 

19 subsequent year’’ and inserting ‘‘and 2015’’. 

20 (2) Section 1848(m)(2) of such Act (42 U.S.C. 

21 1395w–4(m)(2)) is amended— 

22 (A) in subparagraph (A), by striking ‘‘For 

23 2009’’ and inserting ‘‘Subject to subparagraph 

24 (D), for 2009’’; and 


pwalker on PROD1PC71 with BILLS
238 

•HR 598 IH

1 (B) by adding at the end the following new 

2 subparagraph: 

3 ‘‘(D) LIMITATION WITH RESPECT TO EHR

4 INCENTIVE PAYMENTS.—The provisions of this 

5 paragraph shall not apply to an eligible profes6 sional (or, in the case of a group practice under 

7 paragraph (3)(C), to the group practice) if, for 

8 the reporting period the eligible professional (or 

9 group practice) receives an incentive payment 

10 under subsection (o)(1)(A) with respect to a 

11 certified EHR technology (as defined in sub12 section (o)(6)(A)) that has the capability of 

13 electronic prescribing.’’. 

14 SEC. 4312. INCENTIVES FOR HOSPITALS. 

15 (a) INCENTIVE PAYMENT.—Section 1886 of the So16 cial Security Act (42 U.S.C. 1395ww) is amended by add17 ing at the end the following new subsection: 

18 ‘‘(n) INCENTIVES FOR ADOPTION AND MEANINGFUL

19 USE OF CERTIFIED EHR TECHNOLOGY.— 

20 ‘‘(1) IN GENERAL.—Subject to the succeeding 

21 provisions of this subsection, with respect to inpa22 tient hospital services furnished by an eligible hos23 pital during a payment year (as defined in para24 graph (2)(G)), if the eligible hospital is a meaningful 

25 EHR user (as determined under paragraph (3)) for 


pwalker on PROD1PC71 with BILLS
239 

•HR 598 IH

1 the reporting period with respect to such year, in ad2 dition to the amount otherwise paid under this sec3 tion, there also shall be paid to the eligible hospital, 

4 from the Federal Hospital Insurance Trust Fund es5 tablished under section 1817, an amount equal to 

6 the applicable amount specified in paragraph (2)(A) 

7 for the hospital for such payment year. 

8 ‘‘(2) PAYMENT AMOUNT.— 

9 ‘‘(A) IN GENERAL.—Subject to the suc10 ceeding subparagraphs of this paragraph, the 

11 applicable amount specified in this subpara12 graph for an eligible hospital for a payment 

13 year is equal to the product of the following: 

14 ‘‘(i) INITIAL AMOUNT.—The sum of— 

15 ‘‘(I) the base amount specified in 

16 subparagraph (B); plus 

17 ‘‘(II) the discharge related 

18 amount specified in subparagraph (C) 

19 for a 12-month period selected by the 

20 Secretary with respect to such pay21 ment year. 

22 ‘‘(ii) MEDICARE SHARE.—The Medi23 care share as specified in subparagraph 

24 (D) for the hospital for a period selected 


pwalker on PROD1PC71 with BILLS
240 

•HR 598 IH

1 by the Secretary with respect to such pay2 ment year. 

3 ‘‘(iii) TRANSITION FACTOR.—The 

4 transition factor specified in subparagraph 

5 (E) for the hospital for the payment year. 

6 ‘‘(B) BASE AMOUNT.—The base amount 

7 specified in this subparagraph is $2,000,000. 

8 ‘‘(C) DISCHARGE RELATED AMOUNT.—The 

9 discharge related amount specified in this sub10 paragraph for a 12-month period selected by 

11 the Secretary shall be determined as the sum of 

12 the amount, based upon total discharges (re13 gardless of any source of payment) for the pe14 riod, for each discharge up to the 23,000th dis15 charge as follows: 

16 ‘‘(i) For the 1,150th through the 

17 9,200th discharge, $200. 

18 ‘‘(ii) For the 9,201st through the 

19 13,800th discharge, 50 percent of the 

20 amount specified in clause (i). 

21 ‘‘(iii) For the 13,801st through the 

22 23,000th discharge, 30 percent of the 

23 amount specified in clause (i). 

24 ‘‘(D) MEDICARE SHARE.—The Medicare 

25 share specified under this subparagraph for a 


pwalker on PROD1PC71 with BILLS
241 

•HR 598 IH

1 hospital for a period selected by the Secretary 

2 for a payment year is equal to the fraction— 

3 ‘‘(i) the numerator of which is the 

4 sum (for such period and with respect to 

5 the hospital) of— 

6 ‘‘(I) the number of inpatient-bed7 days (as established by the Secretary) 

8 which are attributable to individuals 

9 with respect to whom payment may be 

10 made under part A; and 

11 ‘‘(II) the number of inpatient12 bed-days (as so established) which are 

13 attributable to individuals who are en14 rolled with a Medicare Advantage or15 ganization under part C; and 

16 ‘‘(ii) the denominator of which is the 

17 product of— 

18 ‘‘(I) the total number of inpa19 tient-bed-days with respect to the hos20 pital during such period; and 

21 ‘‘(II) the total amount of the hos22 pital’s charges during such period, not 

23 including any charges that are attrib24 utable to charity care (as such term is 

25 used for purposes of hospital cost reVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00241 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
242 

•HR 598 IH

1 porting under this title), divided by 

2 the total amount of the hospital’s 

3 charges during such period. 

4 Insofar as the Secretary determines that data 

5 are not available on charity care necessary to 

6 calculate the portion of the formula specified in 

7 clause (ii)(II), the Secretary shall use data on 

8 uncompensated care and may adjust such data 

9 so as to be an appropriate proxy for charity 

10 care including a downward adjustment to elimi11 nate bad debt data from uncompensated care 

12 data. In the absence of the data necessary, with 

13 respect to a hospital, for the Secretary to com14 pute the amount described in clause (ii)(II), the 

15 amount under such clause shall be deemed to 

16 be 1. In the absence of data, with respect to a 

17 hospital, necessary to compute the amount de18 scribed in clause (i)(II), the amount under such 

19 clause shall be deemed to be 0. 

20 ‘‘(E) TRANSITION FACTOR SPECIFIED.— 

21 ‘‘(i) IN GENERAL.—Subject to clause 

22 (ii), the transition factor specified in this 

23 subparagraph for an eligible hospital for a 

24 payment year is as follows: 


pwalker on PROD1PC71 with BILLS
243 

•HR 598 IH

1 ‘‘(I) For the first payment year 

2 for such hospital, 1. 

3 ‘‘(II) For the second payment 

year for such hospital, 3 4 ⁄4. 

5 ‘‘(III) For the third payment 

year for such hospital, 1 6 ⁄2. 

7 ‘‘(IV) For the fourth payment 

year for such hospital, 1 8 ⁄4. 

9 ‘‘(V) For any succeeding pay10 ment year for such hospital, 0. 

11 ‘‘(ii) PHASE DOWN FOR ELIGIBLE

12 HOSPITALS FIRST ADOPTING EHR AFTER

13 2013.—If the first payment year for an eli14 gible hospital is after 2013, then the tran15 sition factor specified in this subparagraph 

16 for a payment year for such hospital is the 

17 same as the amount specified in clause (i) 

18 for such payment year for an eligible hos19 pital for which the first payment year is 

20 2013. If the first payment year for an eli21 gible hospital is after 2015 then the transi22 tion factor specified in this subparagraph 

23 for such hospital and for such year and 

24 any subsequent year shall be 0. 


pwalker on PROD1PC71 with BILLS
244 

•HR 598 IH

1 ‘‘(F) FORM OF PAYMENT.—The payment 

2 under this subsection for a payment year may 

3 be in the form of a single consolidated payment 

4 or in the form of such periodic installments as 

5 the Secretary may specify. 

6 ‘‘(G) PAYMENT YEAR DEFINED.— 

7 ‘‘(i) IN GENERAL.—For purposes of 

8 this subsection, the term ‘payment year’ 

9 means a fiscal year beginning with fiscal 

10 year 2011. 

11 ‘‘(ii) FIRST, SECOND, ETC. PAYMENT

12 YEAR.—The term ‘first payment year’ 

13 means, with respect to inpatient hospital 

14 services furnished by an eligible hospital, 

15 the first fiscal year for which an incentive 

16 payment is made for such services under 

17 this subsection. The terms ‘second pay18 ment year’, ‘third payment year’, and 

19 ‘fourth payment year’ mean, with respect 

20 to an eligible hospital, each successive year 

21 immediately following the first payment 

22 year for that hospital. 

23 ‘‘(3) MEANINGFUL EHR USER.— 

24 ‘‘(A) IN GENERAL.—For purposes of para25 graph (1), an eligible hospital shall be treated 


pwalker on PROD1PC71 with BILLS
245 

•HR 598 IH

1 as a meaningful EHR user for a reporting pe2 riod for a payment year (or, for purposes of 

3 subsection (b)(3)(B)(ix), for a reporting period 

4 under such subsection for a fiscal year) if the 

5 following requirements are met: 

6 ‘‘(i) MEANINGFUL USE OF CERTIFIED

7 EHR TECHNOLOGY.—The eligible hospital 

8 demonstrates to the satisfaction of the Sec9 retary, in accordance with subparagraph 

10 (C)(i), that during such period the hospital 

11 is using certified EHR technology in a 

12 meaningful manner. 

13 ‘‘(ii) INFORMATION EXCHANGE.—The 

14 eligible hospital demonstrates to the satis15 faction of the Secretary, in accordance 

16 with subparagraph (C)(i), that during such 

17 period such certified EHR technology is 

18 connected in a manner that provides, in 

19 accordance with law and standards appli20 cable to the exchange of information, for 

21 the electronic exchange of health informa22 tion to improve the quality of health care, 

23 such as promoting care coordination. 

24 ‘‘(iii) REPORTING ON MEASURES

25 USING EHR.—Subject to subparagraph 


pwalker on PROD1PC71 with BILLS
246 

•HR 598 IH

1 (B)(ii) and using such certified EHR tech2 nology, the eligible hospital submits infor3 mation for such period, in a form and 

4 manner specified by the Secretary, on such 

5 clinical quality measures and such other 

6 measures as selected by the Secretary 

7 under subparagraph (B)(i). 

8 The Secretary shall seek to improve the use of 

9 electronic health records and health care quality 

10 over time by requiring more stringent measures 

11 of meaningful use selected under this para12 graph. 

13 ‘‘(B) REPORTING ON MEASURES.— 

14 ‘‘(i) SELECTION.—The Secretary may 

15 select measures for purposes of subpara16 graph (A)(iii) but only consistent with the 

17 following: 

18 ‘‘(I) The Secretary shall provide 

19 preference to clinical quality measures 

20 that have been selected for purposes 

21 of applying subsection (b)(3)(B)(viii) 

22 or that have been endorsed by the en23 tity with a contract with the Secretary 

24 under section 1890(a). 


pwalker on PROD1PC71 with BILLS
247 

•HR 598 IH

1 ‘‘(II) Prior to any measure (other 

2 than a clinical quality measure that 

3 has been selected for purposes of ap4 plying subsection (b)(3)(B)(viii)) 

5 being selected under this subpara6 graph, the Secretary shall publish in 

7 the Federal Register such measure 

8 and provide for a period of public 

9 comment on such measure. 

10 ‘‘(ii) LIMITATIONS.—The Secretary 

11 may not require the electronic reporting of 

12 information on clinical quality measures 

13 under subparagraph (A)(iii) unless the 

14 Secretary has the capacity to accept the in15 formation electronically, which may be on 

16 a pilot basis. 

17 ‘‘(iii) COORDINATION OF REPORTING

18 OF INFORMATION.—In selecting such 

19 measures, and in establishing the form and 

20 manner for reporting measures under sub21 paragraph (A)(iii), the Secretary shall seek 

22 to avoid redundant or duplicative reporting 

23 with reporting otherwise required, includ24 ing reporting under subsection 

25 (b)(3)(B)(viii). 


pwalker on PROD1PC71 with BILLS
248 

•HR 598 IH

1 ‘‘(C) DEMONSTRATION OF MEANINGFUL

2 USE OF CERTIFIED EHR TECHNOLOGY AND IN3 FORMATION EXCHANGE.— 

4 ‘‘(i) IN GENERAL.—A hospital may 

5 satisfy the demonstration requirement of 

6 clauses (i) and (ii) of subparagraph (A) 

7 through means specified by the Secretary, 

8 which may include— 

9 ‘‘(I) an attestation; 

10 ‘‘(II) the submission of claims 

11 with appropriate coding (such as a 

12 code indicating that inpatient care 

13 was documented using certified EHR 

14 technology); 

15 ‘‘(III) a survey response; 

16 ‘‘(IV) reporting under subpara17 graph (A)(iii); and 

18 ‘‘(V) other means specified by the 

19 Secretary. 

20 ‘‘(ii) USE OF PART D DATA.—Not21 withstanding sections 1860D–15(d)(2)(B) 

22 and 1860D–15(f)(2), the Secretary may 

23 use data regarding drug claims submitted 

24 for purposes of section 1860D–15 that are 


pwalker on PROD1PC71 with BILLS
249 

•HR 598 IH

1 necessary for purposes of subparagraph 

2 (A). 

3 ‘‘(4) APPLICATION.— 

4 ‘‘(A) LIMITATIONS ON REVIEW.—There 

5 shall be no administrative or judicial review 

6 under section 1869, section 1878, or otherwise 

7 of the determination of any incentive payment 

8 under this subsection and the payment adjust9 ment under subsection (b)(3)(B)(ix), including 

10 the determination of a meaningful EHR user 

11 under paragraph (3), determination of meas12 ures applicable to services furnished by eligible 

13 hospitals under this subsection, and the excep14 tion under subsection (b)(3)(B)(ix)(II). 

15 ‘‘(B) POSTING ON WEBSITE.—The Sec16 retary shall post on the Internet website of the 

17 Centers for Medicare & Medicaid Services, in an 

18 easily understandable format, a list of the 

19 names of the eligible hospitals that are mean20 ingful EHR users under this subsection or sub21 section (b)(3)(B)(ix) and other relevant data as 

22 determined appropriate by the Secretary. The 

23 Secretary shall ensure that a hospital has the 

24 opportunity to review the other relevant data 


pwalker on PROD1PC71 with BILLS
250 

•HR 598 IH

1 that are to be made public with respect to the 

2 hospital prior to such data being made public. 

3 ‘‘(5) CERTIFIED EHR TECHNOLOGY DEFINED.— 

4 The term ‘certified EHR technology’ has the mean5 ing given such term in section 1848(o)(4). 

6 ‘‘(6) DEFINITIONS.—For purposes of this sub7 section: 

8 ‘‘(A) ELIGIBLE HOSPITAL.—The term ‘eli9 gible hospital’ means a subsection (d) hospital. 

10 ‘‘(B) REPORTING PERIOD.—The term ‘re11 porting period’ means any period (or periods), 

12 with respect to a payment year, as specified by 

13 the Secretary.’’. 

14 (b) INCENTIVE MARKET BASKET ADJUSTMENT.— 

15 Section 1886(b)(3)(B) of the Social Security Act (42 

16 U.S.C. 1395ww(b)(3)(B)) is amended— 

17 (1) in clause (viii)(I), by inserting ‘‘(or, begin18 ning with fiscal year 2016, by one-quarter)’’ after 

19 ‘‘2.0 percentage points’’; and 

20 (2) by adding at the end the following new 

21 clause: 

22 ‘‘(ix)(I) For purposes of clause (i) for fiscal year 

23 2016 and each subsequent fiscal year, in the case of an 

24 eligible hospital (as defined in subsection (n)(6)(A)) that 

25 is not a meaningful EHR user (as defined in subsection 


pwalker on PROD1PC71 with BILLS
251 

•HR 598 IH

1 (n)(3)) for the reporting period for such fiscal year, three2 quarters of the applicable percentage increase otherwise 

3 applicable under clause (i) for such fiscal year shall be 

reduced by 331⁄3 percent for fiscal year 2016, 662 4 ⁄3 per5 cent for fiscal year 2017, and 100 percent for fiscal year 

6 2018 and each subsequent fiscal year. Such reduction 

7 shall apply only with respect to the fiscal year involved 

8 and the Secretary shall not take into account such reduc9 tion in computing the applicable percentage increase under 

10 clause (i) for a subsequent fiscal year. 

11 ‘‘(II) The Secretary may, on a case-by-case basis, ex12 empt a subsection (d) hospital from the application of sub13 clause (I) with respect to a fiscal year if the Secretary 

14 determines, subject to annual renewal, that requiring such 

15 hospital to be a meaningful EHR user during such fiscal 

16 year would result in a significant hardship, such as in the 

17 case of a hospital in a rural area without sufficient Inter18 net access. In no case may a hospital be granted an ex19 emption under this subclause for more than 5 years. 

20 ‘‘(III) For fiscal year 2016 and each subsequent fis21 cal year, a State in which hospitals are paid for services 

22 under section 1814(b)(3) shall adjust the payments to 

23 each subsection (d) hospital in the State that is not a 

24 meaningful EHR user (as defined in subsection (n)(3)) 

25 in a manner that is designed to result in an aggregate 


pwalker on PROD1PC71 with BILLS
252 

•HR 598 IH

1 reduction in payments to hospitals in the State that is 

2 equivalent to the aggregate reduction that would have oc3 curred if payments had been reduced to each subsection 

4 (d) hospital in the State in a manner comparable to the 

5 reduction under the previous provisions of this clause. The 

6 State shall report to the Secretary the methodology it will 

7 use to make the payment adjustment under the previous 

8 sentence. 

9 ‘‘(IV) For purposes of this clause, the term ‘reporting 

10 period’ means, with respect to a fiscal year, any period 

11 (or periods), with respect to the fiscal year, as specified 

12 by the Secretary.’’. 

13 (c) APPLICATION TO CERTAIN HMO-AFFILIATED

14 ELIGIBLE HOSPITALS.—Section 1853 of the Social Secu15 rity Act (42 U.S.C. 1395w–23), as amended by section 

16 311(c), is further amended by adding at the end the fol17 lowing new subsection: 

18 ‘‘(m) APPLICATION OF ELIGIBLE HOSPITAL INCEN19 TIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOPTION

20 AND MEANINGFUL USE OF CERTIFIED EHR TECH21 NOLOGY.— 

22 ‘‘(1) APPLICATION.—Subject to paragraphs (3) 

23 and (4), in the case of a qualifying MA organization, 

24 the provisions of sections 1886(n) and 

25 1886(b)(3)(B)(ix) shall apply with respect to eligible 


pwalker on PROD1PC71 with BILLS
253 

•HR 598 IH

1 hospitals described in paragraph (2) of the organiza2 tion which the organization attests under subsection 

3 (l)(6) to be meaningful EHR users in a similar man4 ner as they apply to eligible hospitals under such 

5 sections. Incentive payments under paragraph (3) 

6 shall be made to and payment adjustments under 

7 paragraph (4) shall apply to such qualifying organi8 zations. 

9 ‘‘(2) ELIGIBLE HOSPITAL DESCRIBED.—With 

10 respect to a qualifying MA organization, an eligible 

11 hospital described in this paragraph is an eligible 

12 hospital that is under common corporate governance 

13 with such organization and serves individuals en14 rolled under an MA plan offered by such organiza15 tion. 

16 ‘‘(3) ELIGIBLE HOSPITAL INCENTIVE PAY17 MENTS.— 

18 ‘‘(A) IN GENERAL.—In applying section 

19 1886(n)(2) under paragraph (1), instead of the 

20 additional payment amount under section 

21 1886(n)(2), there shall be substituted an 

22 amount determined by the Secretary to be simi23 lar to the estimated amount in the aggregate 

24 that would be payable if payment for services 

25 furnished by such hospitals was payable under 


pwalker on PROD1PC71 with BILLS
254 

•HR 598 IH

1 part A instead of this part. In implementing the 

2 previous sentence, the Secretary— 

3 ‘‘(i) shall, insofar as data to deter4 mine the discharge related amount under 

5 section 1886(n)(2)(C) for an eligible hos6 pital are not available to the Secretary, use 

7 such alternative data and methodology to 

8 estimate such discharge related amount as 

9 the Secretary determines appropriate; and 

10 ‘‘(ii) shall, insofar as data to deter11 mine the medicare share described in sec12 tion 1886(n)(2)(D) for an eligible hospital 

13 are not available to the Secretary, use such 

14 alternative data and methodology to esti15 mate such share, which data and method16 ology may include use of the inpatient bed 

17 days (or discharges) with respect to an eli18 gible hospital during the appropriate pe19 riod which are attributable to both individ20 uals for whom payment may be made 

21 under part A or individuals enrolled in an 

22 MA plan under a Medicare Advantage or23 ganization under this part as a proportion 

24 of the total number of patient-bed-days (or 


pwalker on PROD1PC71 with BILLS
255 

•HR 598 IH

1 discharges) with respect to such hospital 

2 during such period. 

3 ‘‘(B) AVOIDING DUPLICATION OF PAY4 MENTS.— 

5 ‘‘(i) IN GENERAL.—In the case of a 

6 hospital that for a payment year is an eli7 gible hospital described in paragraph (2), 

8 is an eligible hospital under section 

9 1886(n), and for which at least one-third 

10 of their discharges (or bed-days) of Medi11 care patients for the year are covered 

12 under part A, payment for the payment 

13 year shall be made only under section 

14 1886(n) and not under this subsection. 

15 ‘‘(ii) METHODS.—In the case of a 

16 hospital that is an eligible hospital de17 scribed in paragraph (2) and also is eligi18 ble for an incentive payment under section 

19 1886(n) but is not described in clause (i) 

20 for the same payment period, the Secretary 

21 shall develop a process— 

22 ‘‘(I) to ensure that duplicate pay23 ments are not made with respect to 

24 an eligible hospital both under this 


pwalker on PROD1PC71 with BILLS
256 

•HR 598 IH

1 subsection and under section 1886(n); 

2 and 

3 ‘‘(II) to collect data from Medi4 care Advantage organizations to en5 sure against such duplicate payments. 

6 ‘‘(4) PAYMENT ADJUSTMENT.— 

7 ‘‘(A) Subject to paragraph (3), in the case 

8 of a qualifying MA organization (as defined in 

9 section 1853(l)(5)), if, according to the attesta10 tion of the organization submitted under sub11 section (l)(6) for an applicable period, one or 

12 more eligible hospitals (as defined in section 

13 1886(n)(6)(A)) that are under common cor14 porate governance with such organization and 

15 that serve individuals enrolled under a plan of16 fered by such organization are not meaningful 

17 EHR users (as defined in section 1886(n)(3)) 

18 with respect to a period, the payment amount 

19 payable under this section for such organization 

20 for such period shall be the percent specified in 

21 subparagraph (B) for such period of the pay22 ment amount otherwise provided under this sec23 tion for such period. 

24 ‘‘(B) SPECIFIED PERCENT.—The percent 

25 specified under this subparagraph for a year is 


pwalker on PROD1PC71 with BILLS
257 

•HR 598 IH

1 100 percent minus a number of percentage 

2 points equal to the product of— 

3 ‘‘(i) the number of the percentage 

4 point reduction effected under section 

5 1886(b)(3)(B)(ix)(I) for the period; and 

6 ‘‘(ii) the Medicare hospital expendi7 ture proportion specified in subparagraph 

8 (C) for the year. 

9 ‘‘(C) MEDICARE HOSPITAL EXPENDITURE

10 PROPORTION.—The Medicare hospital expendi11 ture proportion under this subparagraph for a 

12 year is the Secretary’s estimate of the propor13 tion, of the expenditures under parts A and B 

14 that are not attributable to this part, that are 

15 attributable to expenditures for inpatient hos16 pital services. 

17 ‘‘(D) APPLICATION OF PAYMENT ADJUST18 MENT.—In the case that a qualifying MA orga19 nization attests that not all eligible hospitals 

20 are meaningful EHR users with respect to an 

21 applicable period, the Secretary shall apply the 

22 payment adjustment under this paragraph 

23 based on a methodology specified by the Sec24 retary, taking into account the proportion of 

25 such eligible hospitals, or discharges from such 


pwalker on PROD1PC71 with BILLS
258 

•HR 598 IH

1 hospitals, that are not meaningful EHR users 

2 for such period.’’. 

3 (d) CONFORMING AMENDMENTS.— 

4 (1) Section 1814(b) of the Social Security Act 

5 (42 U.S.C. 1395f(b)) is amended— 

6 (A) in paragraph (3), in the matter pre7 ceding subparagraph (A), by inserting ‘‘, sub8 ject to section 1886(d)(3)(B)(ix)(III),’’ after 

9 ‘‘then’’; and 

10 (B) by adding at the end the following: 

11 ‘‘For purposes of applying paragraph (3), there 

12 shall be taken into account incentive payments, 

13 and payment adjustments under subsection 

14 (b)(3)(B)(ix) or (n) of section 1886.’’. 

15 (2) Section 1851(i)(1) of the Social Security 

16 Act (42 U.S.C. 1395w–21(i)(1)) is amended by 

17 striking ‘‘and 1886(h)(3)(D)’’ and inserting 

18 ‘‘1886(h)(3)(D), and 1853(m)’’. 

19 (3) Section 1853 of the Social Security Act (42 

20 U.S.C. 1395w–23), as amended by section 

21 4311(d)(1), is amended— 

22 (A) in subsection (c)— 

23 (i) in paragraph (1)(D)(i), by striking 

24 ‘‘1848(o)’’ and inserting ‘‘, 1848(o), and 

25 1886(n)’’; and 


pwalker on PROD1PC71 with BILLS
259 

•HR 598 IH

1 (ii) in paragraph (6)(A), by inserting 

2 ‘‘and subsections (b)(3)(B)(ix) and (n) of 

3 section 1886’’ after ‘‘section 1848’’; and 

4 (B) in subsection (f), by inserting ‘‘and 

5 subsection (m)’’ after ‘‘under subsection (l)’’. 

6 SEC. 4313. TREATMENT OF PAYMENTS AND SAVINGS; IM7 PLEMENTATION FUNDING. 

8 (a) PREMIUM HOLD HARMLESS.— 

9 (1) IN GENERAL.—Section 1839(a)(1) of the 

10 Social Security Act (42 U.S.C. 1395r(a)(1)) is 

11 amended by adding at the end the following: ‘‘In ap12 plying this paragraph there shall not be taken into 

13 account additional payments under section 1848(o) 

14 and section 1853(l)(3) and the Government con15 tribution under section 1844(a)(3).’’. 

16 (2) PAYMENT.—Section 1844(a) of such Act 

17 (42 U.S.C. 1395w(a)) is amended— 

18 (A) in paragraph (2), by striking the pe19 riod at the end and inserting ‘‘; plus’’; and 

20 (B) by adding at the end the following new 

21 paragraph: 

22 ‘‘(3) a Government contribution equal to the 

23 amount of payment incentives payable under sec24 tions 1848(o) and 1853(l)(3).’’. 


pwalker on PROD1PC71 with BILLS
260 

•HR 598 IH

1 (b) MEDICARE IMPROVEMENT FUND.—Section 1898 

2 of the Social Security Act (42 U.S.C. 1395iii), as added 

3 by section 7002(a) of the Supplemental Appropriations 

4 Act, 2008 (Public Law 110–252) and as amended by sec5 tion 188(a)(2) of the Medicare Improvements for Patients 

6 and Providers Act of 2008 (Public Law 110–275; 122 

7 Stat. 2589) and by section 6 of the QI Program Supple8 mental Funding Act of 2008, is amended— 

9 (1) in subsection (a)— 

10 (A) by inserting ‘‘medicare’’ before ‘‘fee11 for-service’’; and 

12 (B) by inserting before the period at the 

13 end the following: ‘‘including, but not limited 

14 to, an increase in the conversion factor under 

15 section 1848(d) to address, in whole or in part, 

16 any projected shortfall in the conversion factor 

17 for 2014 relative to the conversion factor for 

18 2008 and adjustments to payments for items 

19 and services furnished by providers of services 

20 and suppliers under such original medicare fee21 for-service program’’; and 

22 (2) in subsection (b)— 

23 (A) in paragraph (1), by striking ‘‘during 

24 fiscal year 2014,’’ and all that follows and in25 serting the following: ‘‘during— 


pwalker on PROD1PC71 with BILLS
261 

•HR 598 IH

1 ‘‘(A) fiscal year 2014, $22,290,000,000; 

2 and 

3 ‘‘(B) fiscal year 2020 and each subsequent 

4 fiscal year, the Secretary’s estimate, as of July 

5 1 of the fiscal year, of the aggregate reduction 

6 in expenditures under this title during the pre7 ceding fiscal year directly resulting from the re8 duction in payment amounts under sections 

9 1848(a)(7), 1853(l)(4), 1853(m)(4), and 

10 1886(b)(3)(B)(ix).’’; and 

11 (B) by adding at the end the following new 

12 paragraph: 

13 ‘‘(4) NO EFFECT ON PAYMENTS IN SUBSE14 QUENT YEARS.—In the case that expenditures from 

15 the Fund are applied to, or otherwise affect, a pay16 ment rate for an item or service under this title for 

17 a year, the payment rate for such item or service 

18 shall be computed for a subsequent year as if such 

19 application or effect had never occurred.’’. 

20 (c) IMPLEMENTATION FUNDING.—In addition to 

21 funds otherwise available, out of any funds in the Treas22 ury not otherwise appropriated, there are appropriated to 

23 the Secretary of Health and Human Services for the Cen24 ter for Medicare & Medicaid Services Program Manage25 ment Account, $60,000,000 for each of fiscal years 2009 


pwalker on PROD1PC71 with BILLS
262 

•HR 598 IH

1 through 2015 and $30,000,000 for each succeeding fiscal 

2 year through fiscal year 2019, which shall be available for 

3 purposes of carrying out the provisions of (and amend4 ments made by) this part. Amounts appropriated under 

5 this subsection for a fiscal year shall be available until ex6 pended. 

7 SEC. 4314. STUDY ON APPLICATION OF HIT PAYMENT IN8 CENTIVES FOR PROVIDERS NOT RECEIVING 

9 OTHER INCENTIVE PAYMENTS. 

10 (a) STUDY.— 

11 (1) IN GENERAL.—The Secretary of Health and 

12 Human Services shall conduct a study to determine 

13 the extent to which and manner in which payment 

14 incentives (such as under title XVIII or XIX of the 

15 Social Security Act) and other funding for purposes 

16 of implementing and using qualified health informa17 tion technology should be made available to health 

18 care providers who are receiving minimal or no pay19 ment incentives or other funding under this Act, 

20 under title XVIII or XIX of the Social Security Act, 

21 or otherwise, for such purposes. 

22 (2) DETAILS OF STUDY.—Such study shall in23 clude an examination of— 


pwalker on PROD1PC71 with BILLS
263 

•HR 598 IH

1 (A) the adoption rates of qualified health 

2 information technology by such health care pro3 viders; 

4 (B) the clinical utility of such technology 

5 by such health care providers; 

6 (C) whether the services furnished by such 

7 health care providers are appropriate for or 

8 would benefit from the use of such technology; 

9 (D) the extent to which such health care 

10 providers work in settings that might otherwise 

11 receive an incentive payment or other funding 

12 under this Act, title XVIII or XIX of the Social 

13 Security Act, or otherwise; 

14 (E) the potential costs and the potential 

15 benefits of making payment incentives and 

16 other funding available to such health care pro17 viders; and 

18 (F) any other issues the Secretary deems 

19 to be appropriate. 

20 (b) REPORT.—Not later than June 30, 2010, the 

21 Secretary shall submit to Congress a report on the find22 ings and conclusions of the study conducted under sub23 section (a). 


pwalker on PROD1PC71 with BILLS
264 

•HR 598 IH

1 PART III—MEDICAID FUNDING 

2 SEC. 4321. MEDICAID PROVIDER HIT ADOPTION AND OPER3 ATION PAYMENTS; IMPLEMENTATION FUND4 ING. 

5 (a) IN GENERAL.—Section 1903 of the Social Secu6 rity Act (42 U.S.C. 1396b) is amended— 

7 (1) in subsection (a)(3)— 

8 (A) by striking ‘‘and’’ at the end of sub9 paragraph (D); 

10 (B) by striking ‘‘plus’’ at the end of sub11 paragraph (E) and inserting ‘‘and’’; and 

12 (C) by adding at the end the following new 

13 subparagraph: 

14 ‘‘(F)(i) 100 percent of so much of the 

15 sums expended during such quarter as are at16 tributable to payments for certified EHR tech17 nology (and support services including mainte18 nance and training that is for, or is necessary 

19 for the adoption and operation of, such tech20 nology) by Medicaid providers described in sub21 section (t)(1); and 

22 ‘‘(ii) 90 percent of so much of the sums ex23 pended during such quarter as are attributable 

24 to payments for reasonable administrative ex25 penses related to the administration of pay26 ments described in clause (i) if the State meets 


pwalker on PROD1PC71 with BILLS
265 

•HR 598 IH

1 the condition described in subsection (t)(9); 

2 plus’’; and 

3 (2) by inserting after subsection (s) the fol4 lowing new subsection: 

5 ‘‘(t)(1) For purposes of subsection (a)(3)(F), the pay6 ments for certified EHR technology (and support services 

7 including maintenance that is for, or is necessary for the 

8 operation of, such technology) by Medicaid providers de9 scribed in this paragraph are payments made by the State 

10 in accordance with this subsection of 85 percent of the 

11 net allowable costs of Medicaid providers (as defined in 

12 paragraph (2)) for such technology (and support services). 

13 ‘‘(2) In this subsection and subsection (a)(3)(F), the 

14 term ‘Medicaid provider’ means— 

15 ‘‘(A) an eligible professional (as defined in 

16 paragraph (3)(B)) who is not hospital-based and has 

17 at least 30 percent of the professional’s patient vol18 ume (as estimated in accordance with standards es19 tablished by the Secretary) attributable to individ20 uals who are receiving medical assistance under this 

21 title; and 

22 ‘‘(B)(i) a children’s hospital; 

23 ‘‘(ii) an acute-care hospital that is not described 

24 in clause (i) and that has at least 10 percent of the 

25 hospital’s patient volume (as estimated in accordVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00265 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
266 

•HR 598 IH

1 ance with standards established by the Secretary) 

2 attributable to individuals who are receiving medical 

3 assistance under this title; or 

4 ‘‘(iii) a Federally-qualified health center or 

5 rural health clinic that has at least 30 percent of the 

6 center’s or clinic’s patient volume (as estimated in 

7 accordance with standards established by the Sec8 retary) attributable to individuals who are receiving 

9 medical assistance under this title. 

10 A professional shall not qualify as a Medicaid provider 

11 under this subsection unless the professional has waived, 

12 in a manner specified by the Secretary, any right to pay13 ment under section 1848(o) with respect to the adoption 

14 or support of certified EHR technology by the profes15 sional. In applying clauses (ii) and (iii) of subparagraph 

16 (B), the standards established by the Secretary for patient 

17 volume shall include individuals enrolled in a Medicaid 

18 managed care plan (under section 1903(m) or section 

19 1932). 

20 ‘‘(3) In this subsection and subsection (a)(3)(F): 

21 ‘‘(A) The term ‘certified EHR technology’ 

22 means a qualified electronic health record (as de23 fined in 3000(13) of the Public Health Service Act) 

24 that is certified pursuant to section 3001(c)(5) of 

25 such Act as meeting standards adopted under secVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00266 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
267 

•HR 598 IH

1 tion 3004 of such Act that are applicable to the type 

2 of record involved (as determined by the Secretary, 

3 such as an ambulatory electronic health record for 

4 office-based physicians or an inpatient hospital elec5 tronic health record for hospitals). 

6 ‘‘(B) The term ‘eligible professional’ means a 

7 physician as defined in paragraphs (1) and (2) of 

8 section 1861(r), and includes a nurse mid-wife and 

9 a nurse practitioner. 

10 ‘‘(C) The term ‘hospital-based’ means, with re11 spect to an eligible professional, a professional (such 

12 as a pathologist, anesthesiologist, or emergency phy13 sician) who furnishes substantially all of the individ14 ual’s professional services in a hospital setting 

15 (whether inpatient or outpatient) and through the 

16 use of the facilities and equipment, including com17 puter equipment, of the hospital. 

18 ‘‘(4)(A) The term ‘allowable costs’ means, with re19 spect to certified EHR technology of a Medicaid provider, 

20 costs of such technology (and support services including 

21 maintenance and training that is for, or is necessary for 

22 the adoption and operation of, such technology) as deter23 mined by the Secretary to be reasonable. 

24 ‘‘(B) The term ‘net allowable costs’ means allowable 

25 costs reduced by any payment that is made to the provider 


pwalker on PROD1PC71 with BILLS
268 

•HR 598 IH

1 involved from any other source that is directly attributable 

2 to payment for certified EHR technology or services de3 scribed in subparagraph (A). 

4 ‘‘(C) In no case shall— 

5 ‘‘(i) the aggregate allowable costs under this 

6 subsection (covering one or more years) with respect 

7 to a Medicaid provider described in paragraph 

8 (2)(A) for purchase and initial implementation of 

9 certified EHR technology (and services described in 

10 subparagraph (A)) exceed $25,000 or include costs 

11 over a period of longer than 5 years; 

12 ‘‘(ii) for costs not described in clause (i) relat13 ing to the operation, maintenance, or use of certified 

14 EHR technology, the annual allowable costs under 

15 this subsection with respect to such a Medicaid pro16 vider for costs not described in clause (i) for any 

17 year exceed $10,000; 

18 ‘‘(iii) payment described in paragraph (1) for 

19 costs described in clause (ii) be made with respect 

20 to such a Medicaid provider over a period of more 

21 than 5 years; 

22 ‘‘(iv) the aggregate allowable costs under this 

23 subsection with respect to such a Medicaid provider 

24 for all costs exceed $75,000; or 


pwalker on PROD1PC71 with BILLS
269 

•HR 598 IH

1 ‘‘(v) the allowable costs, whether for purchase 

2 and initial implementation, maintenance, or other3 wise, for a Medicaid provider described in paragraph 

4 (2)(B) exceed such aggregate or annual limitation as 

5 the Secretary shall establish, based on an amount 

6 determined by the Secretary as being adequate to 

7 adopt and maintain certified EHR technology, con8 sistent with paragraph (6). 

9 ‘‘(5) Payments described in paragraph (1) are not in 

10 accordance with this subsection unless the following re11 quirements are met: 

12 ‘‘(A) The State provides assurances satisfactory 

13 to the Secretary that amounts received under sub14 section (a)(3)(F) with respect to costs of a Medicaid 

15 provider are paid directly to such provider without 

16 any deduction or rebate. 

17 ‘‘(B) Such Medicaid provider is responsible for 

18 payment of the costs described in such paragraph 

19 that are not provided under this title. 

20 ‘‘(C) With respect to payments to such Med21 icaid provider for costs other than costs related to 

22 the initial adoption of certified EHR technology, the 

23 Medicaid provider demonstrates meaningful use of 

24 certified EHR technology through a means that is 

25 approved by the State and acceptable to the SecVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00269 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
270 

•HR 598 IH

1 retary, and that may be based upon the methodolo2 gies applied under section 1848(o) or 1886(n). 

3 ‘‘(D) To the extent specified by the Secretary, 

4 the certified EHR technology is compatible with 

5 State or Federal administrative management sys6 tems. 

7 ‘‘(6)(A) In no case shall the payments described in 

8 paragraph (1), with respect to a hospital, exceed in the 

9 aggregate the product of— 

10 ‘‘(i) the overall hospital HIT amount for the 

11 hospital computed under subparagraph (B); and 

12 ‘‘(ii) the Medicaid share for such hospital com13 puted under subparagraph (C). 

14 ‘‘(B) For purposes of this paragraph, the overall hos15 pital HIT amount, with respect to a hospital, is the sum 

16 of the applicable amounts specified in section 

17 1886(n)(2)(A) for such hospital for the first 4 payment 

18 years (as estimated by the Secretary) determined as if the 

19 Medicare share specified in clause (ii) of such section were 

20 1. The Secretary shall publish in the Federal Register the 

21 overall hospital HIT amount for each hospital eligible for 

22 payments under this subsection. In computing amounts 

23 under clause (ii) for payment years after the first payment 

24 year, the Secretary shall assume that in subsequent payVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00270 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
271 

•HR 598 IH

1 ment years discharges increase at an annual rate of 2 per2 cent per year. 

3 ‘‘(C) The Medicaid share computed under this sub4 paragraph, for a hospital for a period specified by the Sec5 retary, shall be calculated in the same manner as the 

6 Medicare share under section 1886(n)(2)(D) for such a 

7 hospital and period, except that there shall be substituted 

8 for the numerator under clause (i) of such section the 

9 amount that is equal to the number of inpatient-bed-days 

10 (as established by the Secretary) which are attributable 

11 to individuals who are receiving medical assistance under 

12 this title and who are not described in section 

13 1886(n)(2)(D)(i). In computing inpatient-bed-days under 

14 the previous sentence, the Secretary shall take into ac15 count inpatient-bed-days attributable to inpatient-bed16 days that are paid for individuals enrolled in a Medicaid 

17 managed care plan (under section 1903(m) or section 

18 1932). 

19 ‘‘(7) With respect to health care providers other than 

20 hospitals, the Secretary shall ensure coordination of the 

21 different programs for payment of such health care pro22 viders for adoption or use of health information technology 

23 (including certified EHR technology), as well as payments 

24 for such health care providers provided under this title or 

25 title XVIII, to assure no duplication of funding. 


pwalker on PROD1PC71 with BILLS
272 

•HR 598 IH

1 ‘‘(8) In carrying out paragraph (5)(C), the State and 

2 Secretary shall seek, to the maximum extent practicable, 

3 to avoid duplicative requirements from Federal and State 

4 Governments to demonstrate meaningful use of certified 

5 EHR technology under this title and title XVIII. In doing 

6 so, the Secretary may deem satisfaction of requirements 

7 for such meaningful use for a payment year under title 

8 XVIII to be sufficient to qualify as meaningful use under 

9 this subsection. The Secretary may also specify the report10 ing periods under this subsection in order to carry out this 

11 paragraph. 

12 ‘‘(9) In order to be provided Federal financial partici13 pation under subsection (a)(3)(F)(ii), a State must dem14 onstrate to the satisfaction of the Secretary, that the 

15 State— 

16 ‘‘(A) is using the funds provided for the pur17 poses of administering payments under this sub18 section, including tracking of meaningful use by 

19 Medicaid providers; 

20 ‘‘(B) conducting adequate oversight of the pro21 gram under this subsection, including routine track22 ing of meaningful use attestations and reporting 

23 mechanisms; and 

24 ‘‘(C) be pursuing initiatives to encourage the 

25 adoption of certified EHR technology to promote 


pwalker on PROD1PC71 with BILLS
273 

•HR 598 IH

1 health care quality and the exchange of health care 

2 information under this title, subject to applicable 

3 laws and regulations governing such exchange. 

4 ‘‘(10) The Secretary shall periodically submit reports 

5 to the Committee on Energy and Commerce of the House 

6 of Representatives and the Committee on Finance of the 

7 Senate on status, progress, and oversight of payments 

8 under paragraph (1).’’. 

9 (b) IMPLEMENTATION FUNDING.—In addition to 

10 funds otherwise available, out of any funds in the Treas11 ury not otherwise appropriated, there are appropriated to 

12 the Secretary of Health and Human Services for the Cen13 ter for Medicare & Medicaid Services Program Manage14 ment Account, $40,000,000 for each of fiscal years 2009 

15 through 2015 and $20,000,000 for each succeeding fiscal 

16 year through fiscal year 2019, which shall be available for 

17 purposes of carrying out the provisions of (and the amend18 ments made by) this part. Amounts appropriated under 

19 this subsection for a fiscal year shall be available until ex20 pended. 

21 Subtitle D—Privacy 

22 SEC. 4400. DEFINITIONS. 

23 In this subtitle, except as specified otherwise: 

24 (1) BREACH.—The term ‘‘breach’’ means the 

25 unauthorized acquisition, access, use, or disclosure 


pwalker on PROD1PC71 with BILLS
274 

•HR 598 IH

1 of protected health information which compromises 

2 the security, privacy, or integrity of protected health 

3 information maintained by or on behalf of a person. 

4 Such term does not include any unintentional acqui5 sition, access, use, or disclosure of such information 

6 by an employee or agent of the covered entity or 

7 business associate involved if such acquisition, ac8 cess, use, or disclosure, respectively, was made in 

9 good faith and within the course and scope of the 

10 employment or other contractual relationship of such 

11 employee or agent, respectively, with the covered en12 tity or business associate and if such information is 

13 not further acquired, accessed, used, or disclosed by 

14 such employee or agent. 

15 (2) BUSINESS ASSOCIATE.—The term ‘‘business 

16 associate’’ has the meaning given such term in sec17 tion 160.103 of title 45, Code of Federal Regula18 tions. 

19 (3) COVERED ENTITY.—The term ‘‘covered en20 tity’’ has the meaning given such term in section 

21 160.103 of title 45, Code of Federal Regulations. 

22 (4) DISCLOSE.—The terms ‘‘disclose’’ and ‘‘dis23 closure’’ have the meaning given the term ‘‘disclo24 sure’’ in section 160.103 of title 45, Code of Federal 

25 Regulations. 


pwalker on PROD1PC71 with BILLS
275 

•HR 598 IH

1 (5) ELECTRONIC HEALTH RECORD.—The term 

2 ‘‘electronic health record’’ means an electronic 

3 record of health-related information on an individual 

4 that is created, gathered, managed, and consulted by 

5 authorized health care clinicians and staff. 

6 (6) HEALTH CARE OPERATIONS.—The term 

7 ‘‘health care operation’’ has the meaning given such 

8 term in section 164.501 of title 45, Code of Federal 

9 Regulations. 

10 (7) HEALTH CARE PROVIDER.—The term 

11 ‘‘health care provider’’ has the meaning given such 

12 term in section 160.103 of title 45, Code of Federal 

13 Regulations. 

14 (8) HEALTH PLAN.—The term ‘‘health plan’’ 

15 has the meaning given such term in section 1171(5) 

16 of the Social Security Act. 

17 (9) NATIONAL COORDINATOR.—The term ‘‘Na18 tional Coordinator’’ means the head of the Office of 

19 the National Coordinator for Health Information 

20 Technology established under section 3001(a) of the 

21 Public Health Service Act, as added by section 

22 4101. 

23 (10) PAYMENT.—The term ‘‘payment’’ has the 

24 meaning given such term in section 164.501 of title 

25 45, Code of Federal Regulations. 


pwalker on PROD1PC71 with BILLS
276 

•HR 598 IH

1 (11) PERSONAL HEALTH RECORD.—The term 

2 ‘‘personal health record’’ means an electronic record 

3 of individually identifiable health information on an 

4 individual that can be drawn from multiple sources 

5 and that is managed, shared, and controlled by or 

6 for the individual. 

7 (12) PROTECTED HEALTH INFORMATION.—The 

8 term ‘‘protected health information’’ has the mean9 ing given such term in section 160.103 of title 45, 

10 Code of Federal Regulations. 

11 (13) SECRETARY.—The term ‘‘Secretary’’ 

12 means the Secretary of Health and Human Services. 

13 (14) SECURITY.—The term ‘‘security’’ has the 

14 meaning given such term in section 164.304 of title 

15 45, Code of Federal Regulations. 

16 (15) STATE.—The term ‘‘State’’ means each of 

17 the several States, the District of Columbia, Puerto 

18 Rico, the Virgin Islands, Guam, American Samoa, 

19 and the Northern Mariana Islands. 

20 (16) TREATMENT.—The term ‘‘treatment’’ has 

21 the meaning given such term in section 164.501 of 

22 title 45, Code of Federal Regulations. 

23 (17) USE.—The term ‘‘use’’ has the meaning 

24 given such term in section 160.103 of title 45, Code 

25 of Federal Regulations. 


pwalker on PROD1PC71 with BILLS
277 

•HR 598 IH

1 (18) VENDOR OF PERSONAL HEALTH

2 RECORDS.—The term ‘‘vendor of personal health 

3 records’’ means an entity, other than a covered enti4 ty (as defined in paragraph (3)), that offers or 

5 maintains a personal health record. 

6 PART I—IMPROVED PRIVACY PROVISIONS AND 

7 SECURITY PROVISIONS 

8 SEC. 4401. APPLICATION OF SECURITY PROVISIONS AND 

9 PENALTIES TO BUSINESS ASSOCIATES OF 

10 COVERED ENTITIES; ANNUAL GUIDANCE ON 

11 SECURITY PROVISIONS. 

12 (a) APPLICATION OF SECURITY PROVISIONS.—Sec13 tions 164.308, 164.310, 164.312, and 164.316 of title 45, 

14 Code of Federal Regulations, shall apply to a business as15 sociate of a covered entity in the same manner that such 

16 sections apply to the covered entity. The additional re17 quirements of this title that relate to security and that 

18 are made applicable with respect to covered entities shall 

19 also be applicable to such a business associate and shall 

20 be incorporated into the business associate agreement be21 tween the business associate and the covered entity. 

22 (b) APPLICATION OF CIVIL AND CRIMINAL PEN23 ALTIES.—In the case of a business associate that violates 

24 any security provision specified in subsection (a), sections 

25 1176 and 1177 of the Social Security Act (42 U.S.C. 


pwalker on PROD1PC71 with BILLS
278 

•HR 598 IH

1 1320d–5, 1320d–6) shall apply to the business associate 

2 with respect to such violation in the same manner such 

3 sections apply to a covered entity that violates such secu4 rity provision. 

5 (c) ANNUAL GUIDANCE.—For the first year begin6 ning after the date of the enactment of this Act and annu7 ally thereafter, the Secretary of Health and Human Serv8 ices shall, in consultation with industry stakeholders, an9 nually issue guidance on the most effective and appro10 priate technical safeguards for use in carrying out the sec11 tions referred to in subsection (a) and the security stand12 ards in subpart C of part 164 of title 45, Code of Federal 

13 Regulations, as such provisions are in effect as of the date 

14 before the enactment of this Act. 

15 SEC. 4402. NOTIFICATION IN THE CASE OF BREACH. 

16 (a) IN GENERAL.—A covered entity that accesses, 

17 maintains, retains, modifies, records, stores, destroys, or 

18 otherwise holds, uses, or discloses unsecured protected 

19 health information (as defined in subsection (h)(1)) shall, 

20 in the case of a breach of such information that is discov21 ered by the covered entity, notify each individual whose 

22 unsecured protected health information has been, or is 

23 reasonably believed by the covered entity to have been, 

24 accessed, acquired, or disclosed as a result of such breach. 


pwalker on PROD1PC71 with BILLS
279 

•HR 598 IH

1 (b) NOTIFICATION OF COVERED ENTITY BY BUSI2 NESS ASSOCIATE.—A business associate of a covered enti3 ty that accesses, maintains, retains, modifies, records, 

4 stores, destroys, or otherwise holds, uses, or discloses un5 secured protected health information shall, following the 

6 discovery of a breach of such information, notify the cov7 ered entity of such breach. Such notice shall include the 

8 identification of each individual whose unsecured protected 

9 health information has been, or is reasonably believed by 

10 the business associate to have been, accessed, acquired, 

11 or disclosed during such breach. 

12 (c) BREACHES TREATED AS DISCOVERED.—For pur13 poses of this section, a breach shall be treated as discov14 ered by a covered entity or by a business associate as of 

15 the first day on which such breach is known to such entity 

16 or associate, respectively, (including any person, other 

17 than the individual committing the breach, that is an em18 ployee, officer, or other agent of such entity or associate, 

19 respectively) or should reasonably have been known to 

20 such entity or associate (or person) to have occurred. 

21 (d) TIMELINESS OF NOTIFICATION.— 

22 (1) IN GENERAL.—Subject to subsection (g), all 

23 notifications required under this section shall be 

24 made without unreasonable delay and in no case 

25 later than 60 calendar days after the discovery of a 


pwalker on PROD1PC71 with BILLS
280 

•HR 598 IH

1 breach by the covered entity involved (or business 

2 associate involved in the case of a notification re3 quired under subsection (b)). 

4 (2) BURDEN OF PROOF.—The covered entity in5 volved (or business associate involved in the case of 

6 a notification required under subsection (b)), shall 

7 have the burden of demonstrating that all notifica8 tions were made as required under this part, includ9 ing evidence demonstrating the necessity of any 

10 delay. 

11 (e) METHODS OF NOTICE.— 

12 (1) INDIVIDUAL NOTICE.—Notice required 

13 under this section to be provided to an individual, 

14 with respect to a breach, shall be provided promptly 

15 and in the following form: 

16 (A) Written notification by first-class mail 

17 to the individual (or the next of kin of the indi18 vidual if the individual is deceased) at the last 

19 known address of the individual or the next of 

20 kin, respectively, or, if specified as a preference 

21 by the individual, by electronic mail. The notifi22 cation may be provided in one or more mailings 

23 as information is available. 

24 (B) In the case in which there is insuffi25 cient, or out-of-date contact information (inVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00280 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
281 

•HR 598 IH

1 cluding a phone number, e-mail address, or any 

2 other form of appropriate communication) that 

3 precludes direct written (or, if specified by the 

4 individual under subparagraph (A), electronic) 

5 notification to the individual, a substitute form 

6 of notice shall be provided, including, in the 

7 case that there are 10 or more individuals for 

8 which there is insufficient or out-of-date contact 

9 information, a conspicuous posting for a period 

10 determined by the Secretary on the home page 

11 of the website of the covered entity involved or 

12 notice in major print or broadcast media, in13 cluding major media in geographic areas where 

14 the individuals affected by the breach likely re15 side. Such a notice in media or web posting will 

16 include a toll-free phone number where an indi17 vidual can learn whether or not the individual’s 

18 unsecured protected health information is pos19 sibly included in the breach. 

20 (C) In any case deemed by the covered en21 tity involved to require urgency because of pos22 sible imminent misuse of unsecured protected 

23 health information, the covered entity, in addi24 tion to notice provided under subparagraph (A), 


pwalker on PROD1PC71 with BILLS
282 

•HR 598 IH

1 may provide information to individuals by tele2 phone or other means, as appropriate. 

3 (2) MEDIA NOTICE.—Notice shall be provided 

4 to prominent media outlets serving a State or juris5 diction, following the discovery of a breach described 

6 in subsection (a), if the unsecured protected health 

7 information of more than 500 residents of such 

8 State or jurisdiction is, or is reasonably believed to 

9 have been, accessed, acquired, or disclosed during 

10 such breach. 

11 (3) NOTICE TO SECRETARY.—Notice shall be 

12 provided to the Secretary by covered entities of un13 secured protected health information that has been 

14 acquired or disclosed in a breach. If the breach was 

15 with respect to 500 or more individuals than such 

16 notice must be provided immediately. If the breach 

17 was with respect to less than 500 individuals, the 

18 covered entity involved may maintain a log of any 

19 such breach occurring and annually submit such a 

20 log to the Secretary documenting such breaches 

21 occuring during the year involved. 

22 (4) POSTING ON HHS PUBLIC WEBSITE.—The 

23 Secretary shall make available to the public on the 

24 Internet website of the Department of Health and 

25 Human Services a list that identifies each covered 


pwalker on PROD1PC71 with BILLS
283 

•HR 598 IH

1 entity involved in a breach described in subsection 

2 (a) in which the unsecured protected health informa3 tion of more than 500 individuals is acquired or dis4 closed. 

5 (f) CONTENT OF NOTIFICATION.—Regardless of the 

6 method by which notice is provided to individuals under 

7 this section, notice of a breach shall include, to the extent 

8 possible, the following: 

9 (1) A brief description of what happened, in10 cluding the date of the breach and the date of the 

11 discovery of the breach, if known. 

12 (2) A description of the types of unsecured pro13 tected health information that were involved in the 

14 breach (such as full name, Social Security number, 

15 date of birth, home address, account number, or dis16 ability code). 

17 (3) The steps individuals should take to protect 

18 themselves from potential harm resulting from the 

19 breach. 

20 (4) A brief description of what the covered enti21 ty involved is doing to investigate the breach, to 

22 mitigate losses, and to protect against any further 

23 breaches. 

24 (5) Contact procedures for individuals to ask 

25 questions or learn additional information, which 


pwalker on PROD1PC71 with BILLS
284 

•HR 598 IH

1 shall include a toll-free telephone number, an e-mail 

2 address, website, or postal address. 

3 (g) DELAY OF NOTIFICATION AUTHORIZED FOR LAW

4 ENFORCEMENT PURPOSES.—If a law enforcement official 

5 determines that a notification, notice, or posting required 

6 under this section would impede a criminal investigation 

7 or cause damage to national security, such notification, 

8 notice, or posting shall be delayed in the same manner 

9 as provided under section 164.528(a)(2) of title 45, Code 

10 of Federal Regulations, in the case of a disclosure covered 

11 under such section. 

12 (h) UNSECURED PROTECTED HEALTH INFORMA13 TION.— 

14 (1) DEFINITION.— 

15 (A) IN GENERAL.—Subject to subpara16 graph (B), for purposes of this section, the 

17 term ‘‘unsecured protected health information’’ 

18 means protected health information that is not 

19 secured through the use of a technology or 

20 methodology specified by the Secretary in the 

21 guidance issued under paragraph (2). 

22 (B) EXCEPTION IN CASE TIMELY GUID23 ANCE NOT ISSUED.—In the case that the Sec24 retary does not issue guidance under paragraph 

25 (2) by the date specified in such paragraph, for 


pwalker on PROD1PC71 with BILLS
285 

•HR 598 IH

1 purposes of this section, the term ‘‘unsecured 

2 protected health information’’ shall mean pro3 tected health information that is not secured by 

4 a technology standard that renders protected 

5 health information unusable, unreadable, or in6 decipherable to unauthorized individuals and is 

7 developed or endorsed by a standards devel8 oping organization that is accredited by the 

9 American National Standards Institute. 

10 (2) GUIDANCE.—For purposes of paragraph (1) 

11 and section 407(f)(3), not later than the date that 

12 is 60 days after the date of the enactment of this 

13 Act, the Secretary shall, after consultation with 

14 stakeholders, issue (and annually update) guidance 

15 specifying the technologies and methodologies that 

16 render protected health information unusable, 

17 unreadable, or indecipherable to unauthorized indi18 viduals. 

19 (i) REPORT TO CONGRESS ON BREACHES.— 

20 (1) IN GENERAL.—Not later than 12 months 

21 after the date of the enactment of this Act and an22 nually thereafter, the Secretary shall prepare and 

23 submit to the Committee on Finance and the Com24 mittee on Health, Education, Labor, and Pensions 

25 of the Senate and the Committee on Ways and 


pwalker on PROD1PC71 with BILLS
286 

•HR 598 IH

1 Means and the Committee on Energy and Commerce 

2 of the House of Representatives a report containing 

3 the information described in paragraph (2) regard4 ing breaches for which notice was provided to the 

5 Secretary under subsection (e)(3). 

6 (2) INFORMATION.—The information described 

7 in this paragraph regarding breaches specified in 

8 paragraph (1) shall include— 

9 (A) the number and nature of such 

10 breaches; and 

11 (B) actions taken in response to such 

12 breaches. 

13 (j) REGULATIONS; EFFECTIVE DATE.—To carry out 

14 this section, the Secretary of Health and Human Services 

15 shall promulgate interim final regulations by not later 

16 than the date that is 180 days after the date of the enact17 ment of this title. The provisions of this section shall apply 

18 to breaches that are discovered on or after the date that 

19 is 30 days after the date of publication of such interim 

20 final regulations. 

21 SEC. 4403. EDUCATION ON HEALTH INFORMATION PRI22 VACY. 

23 (a) REGIONAL OFFICE PRIVACY ADVISORS.—Not 

24 later than 6 months after the date of the enactment of 

25 this Act, the Secretary shall designate an individual in 


pwalker on PROD1PC71 with BILLS
287 

•HR 598 IH

1 each regional office of the Department of Health and 

2 Human Services to offer guidance and education to cov3 ered entities, business associates, and individuals on their 

4 rights and responsibilities related to Federal privacy and 

5 security requirements for protected health information. 

6 (b) EDUCATION INITIATIVE ON USES OF HEALTH IN7 FORMATION.—Not later than 12 months after the date of 

8 the enactment of this Act, the Office for Civil Rights with9 in the Department of Health and Human Services shall 

10 develop and maintain a multi-faceted national education 

11 initiative to enhance public transparency regarding the 

12 uses of protected health information, including programs 

13 to educate individuals about the potential uses of their 

14 protected health information, the effects of such uses, and 

15 the rights of individuals with respect to such uses. Such 

16 programs shall be conducted in a variety of languages and 

17 present information in a clear and understandable man18 ner. 

19 SEC. 4404. APPLICATION OF PRIVACY PROVISIONS AND 

20 PENALTIES TO BUSINESS ASSOCIATES OF 

21 COVERED ENTITIES. 

22 (a) APPLICATION OF CONTRACT REQUIREMENTS.— 

23 In the case of a business associate of a covered entity that 

24 obtains or creates protected health information pursuant 

25 to a written contract (or other written arrangement) deVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00287 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
288 

•HR 598 IH

1 scribed in section 164.502(e)(2) of title 45, Code of Fed2 eral Regulations, with such covered entity, the business 

3 associate may use and disclose such protected health infor4 mation only if such use or disclosure, respectively, is in 

5 compliance with each applicable requirement of section 

6 164.504(e) of such title. The additional requirements of 

7 this subtitle that relate to privacy and that are made ap8 plicable with respect to covered entities shall also be appli9 cable to such a business associate and shall be incor10 porated into the business associate agreement between the 

11 business associate and the covered entity. 

12 (b) APPLICATION OF KNOWLEDGE ELEMENTS ASSO13 CIATED WITH CONTRACTS.—Section 164.504(e)(1)(ii) of 

14 title 45, Code of Federal Regulations, shall apply to a 

15 business associate described in subsection (a), with respect 

16 to compliance with such subsection, in the same manner 

17 that such section applies to a covered entity, with respect 

18 to compliance with the standards in sections 164.502(e) 

19 and 164.504(e) of such title, except that in applying such 

20 section 164.504(e)(1)(ii) each reference to the business as21 sociate, with respect to a contract, shall be treated as a 

22 reference to the covered entity involved in such contract. 

23 (c) APPLICATION OF CIVIL AND CRIMINAL PEN24 ALTIES.—In the case of a business associate that violates 

25 any provision of subsection (a) or (b), the provisions of 


pwalker on PROD1PC71 with BILLS
289 

•HR 598 IH

1 sections 1176 and 1177 of the Social Security Act (42 

2 U.S.C. 1320d–5, 1320d–6) shall apply to the business as3 sociate with respect to such violation in the same manner 

4 as such provisions apply to a person who violates a provi5 sion of part C of title XI of such Act. 

6 SEC. 4405. RESTRICTIONS ON CERTAIN DISCLOSURES AND 

7 SALES OF HEALTH INFORMATION; ACCOUNT8 ING OF CERTAIN PROTECTED HEALTH IN9 FORMATION DISCLOSURES; ACCESS TO CER10 TAIN INFORMATION IN ELECTRONIC FOR11 MAT. 

12 (a) REQUESTED RESTRICTIONS ON CERTAIN DIS13 CLOSURES OF HEALTH INFORMATION.—In the case that 

14 an individual requests under paragraph (a)(1)(i)(A) of 

15 section 164.522 of title 45, Code of Federal Regulations, 

16 that a covered entity restrict the disclosure of the pro17 tected health information of the individual, notwith18 standing paragraph (a)(1)(ii) of such section, the covered 

19 entity must comply with the requested restriction if— 

20 (1) except as otherwise required by law, the dis21 closure is to a health plan for purposes of carrying 

22 out payment or health care operations (and is not 

23 for purposes of carrying out treatment); and 

24 (2) the protected health information pertains 

25 solely to a health care item or service for which the 


pwalker on PROD1PC71 with BILLS
290 

•HR 598 IH

1 health care provider involved has been paid out of 

2 pocket in full. 

3 (b) DISCLOSURES REQUIRED TO BE LIMITED TO

4 THE LIMITED DATA SET OR THE MINIMUM NEC5 ESSARY.— 

6 (1) IN GENERAL.— 

7 (A) IN GENERAL.—Subject to subpara8 graph (B), a covered entity shall be treated as 

9 being in compliance with section 164.502(b)(1) 

10 of title 45, Code of Federal Regulations, with 

11 respect to the use, disclosure, or request of pro12 tected health information described in such sec13 tion, only if the covered entity limits such pro14 tected health information, to the extent prac15 ticable, to the limited data set (as defined in 

16 section 164.514(e)(2) of such title) or, if needed 

17 by such entity, to the minimum necessary to ac18 complish the intended purpose of such use, dis19 closure, or request, respectively. 

20 (B) GUIDANCE.—Not later than 18 

21 months after the date of the enactment of this 

22 section, the Secretary shall issue guidance on 

23 what constitutes ‘‘minimum necessary’’ for pur24 poses of subpart E of part 164 of title 45, Code 

25 of Federal Regulation. In issuing such guidance 


pwalker on PROD1PC71 with BILLS
291 

•HR 598 IH

1 the Secretary shall take into consideration the 

2 guidance under section 4424(c). 

3 (C) SUNSET.—Subparagraph (A) shall not 

4 apply on and after the effective date on which 

5 the Secretary issues the guidance under sub6 paragraph (B). 

7 (2) DETERMINATION OF MINIMUM NEC8 ESSARY.—For purposes of paragraph (1), in the 

9 case of the disclosure of protected health informa10 tion, the covered entity or business associate dis11 closing such information shall determine what con12 stitutes the minimum necessary to accomplish the 

13 intended purpose of such disclosure. 

14 (3) APPLICATION OF EXCEPTIONS.—The excep15 tions described in section 164.502(b)(2) of title 45, 

16 Code of Federal Regulations, shall apply to the re17 quirement under paragraph (1) as of the effective 

18 date described in section 4423 in the same manner 

19 that such exceptions apply to section 164.502(b)(1) 

20 of such title before such date. 

21 (4) RULE OF CONSTRUCTION.—Nothing in this 

22 subsection shall be construed as affecting the use, 

23 disclosure, or request of protected health information 

24 that has been de-identified. 


pwalker on PROD1PC71 with BILLS
292 

•HR 598 IH

1 (c) ACCOUNTING OF CERTAIN PROTECTED HEALTH

2 INFORMATION DISCLOSURES REQUIRED IF COVERED EN3 TITY USES ELECTRONIC HEALTH RECORD.— 

4 (1) IN GENERAL.—In applying section 164.528 

5 of title 45, Code of Federal Regulations, in the case 

6 that a covered entity uses or maintains an electronic 

7 health record with respect to protected health infor8 mation— 

9 (A) the exception under paragraph 

10 (a)(1)(i) of such section shall not apply to dis11 closures through an electronic health record 

12 made by such entity of such information; and 

13 (B) an individual shall have a right to re14 ceive an accounting of disclosures described in 

15 such paragraph of such information made by 

16 such covered entity during only the three years 

17 prior to the date on which the accounting is re18 quested. 

19 (2) REGULATIONS.—The Secretary shall pro20 mulgate regulations on what information shall be 

21 collected about each disclosure referred to in para22 graph (1)(A) not later than 18 months after the 

23 date on which the Secretary adopts standards on ac24 counting for disclosure described in the section 

25 3002(b)(2)(B)(iv) of the Public Health Service Act, 


pwalker on PROD1PC71 with BILLS
293 

•HR 598 IH

1 as added by section 4101. Such regulations shall 

2 only require such information to be collected through 

3 an electronic health record in a manner that takes 

4 into account the interests of individuals in learning 

5 the circumstances under which their protected health 

6 information is being disclosed and takes into account 

7 the administrative burden of accounting for such 

8 disclosures. 

9 (3) CONSTRUCTION.—Nothing in this sub10 section shall be construed as requiring a covered en11 tity to account for disclosures of protected health in12 formation that are not made by such covered entity 

13 or by a business associate acting on behalf of the 

14 covered entity. 

15 (4) EFFECTIVE DATE.— 

16 (A) CURRENT USERS OF ELECTRONIC

17 RECORDS.—In the case of a covered entity inso18 far as it acquired an electronic health record as 

19 of January 1, 2009, paragraph (1) shall apply 

20 to disclosures, with respect to protected health 

21 information, made by the covered entity from 

22 such a record on and after January 1, 2014. 

23 (B) OTHERS.—In the case of a covered en24 tity insofar as it acquires an electronic health 

25 record after January 1, 2009, paragraph (1) 


pwalker on PROD1PC71 with BILLS
294 

•HR 598 IH

1 shall apply to disclosures, with respect to pro2 tected health information, made by the covered 

3 entity from such record on and after the later 

4 of the following: 

5 (i) January 1, 2011; or 

6 (ii) the date that it acquires an elec7 tronic health record. 

8 (d) REVIEW OF HEALTH CARE OPERATIONS.—Not 

9 later than 18 months after the date of the enactment of 

10 this title, the Secretary shall promulgate regulations to 

11 eliminate from the definition of health care operations 

12 under section 164.501 of title 45, Code of Federal Regula13 tions, those activities that can reasonably and efficiently 

14 be conducted through the use of information that is de15 identified (in accordance with the requirements of section 

16 164.514(b) of such title) or that should require a valid 

17 authorization for use or disclosure. In promulgating such 

18 regulations, the Secretary may choose to narrow or clarify 

19 activities that the Secretary chooses to retain in the defini20 tion of health care operations and the Secretary shall take 

21 into account the report under section 424(d). In such reg22 ulations the Secretary shall specify the date on which such 

23 regulations shall apply to disclosures made by a covered 

24 entity, but in no case would such date be sooner than the 


pwalker on PROD1PC71 with BILLS
295 

•HR 598 IH

1 date that is 24 months after the date of the enactment 

2 of this section. 

3 (e) PROHIBITION ON SALE OF ELECTRONIC HEALTH

4 RECORDS OR PROTECTED HEALTH INFORMATION OB5 TAINED FROM ELECTRONIC HEALTH RECORDS.— 

6 (1) IN GENERAL.—Except as provided in para7 graph (2), a covered entity or business associate 

8 shall not directly or indirectly receive remuneration 

9 in exchange for any protected health information of 

10 an individual unless the covered entity obtained from 

11 the individual, in accordance with section 164.508 of 

12 title 45, Code of Federal Regulations, a valid au13 thorization that includes, in accordance with such 

14 section, a specification of whether the protected 

15 health information can be further exchanged for re16 muneration by the entity receiving protected health 

17 information of that individual. 

18 (2) EXCEPTIONS.—Paragraph (1) shall not 

19 apply in the following cases: 

20 (A) The purpose of the exchange is for re21 search or public health activities (as described 

22 in sections 164.501, 164.512(i), and 164.512(b) 

23 of title 45, Code of Federal Regulations) and 

24 the price charged reflects the costs of preparaVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00295 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
296 

•HR 598 IH

1 tion and transmittal of the data for such pur2 pose. 

3 (B) The purpose of the exchange is for the 

4 treatment of the individual and the price 

5 charges reflects not more than the costs of 

6 preparation and transmittal of the data for 

7 such purpose. 

8 (C) The purpose of the exchange is the 

9 health care operation specifically described in 

10 subparagraph (iv) of paragraph (6) of the defi11 nition of health care operations in section 

12 164.501 of title 45, Code of Federal Regula13 tions. 

14 (D) The purpose of the exchange is for re15 muneration that is provided by a covered entity 

16 to a business associate for activities involving 

17 the exchange of protected health information 

18 that the business associate undertakes on behalf 

19 of and at the specific request of the covered en20 tity pursuant to a business associate agreement. 

21 (E) The purpose of the exchange is to pro22 vide an individual with a copy of the individ23 ual’s protected health information pursuant to 

24 section 164.524 of title 45, Code of Federal 

25 Regulations. 


pwalker on PROD1PC71 with BILLS
297 

•HR 598 IH

1 (F) The purpose of the exchange is other2 wise determined by the Secretary in regulations 

3 to be similarly necessary and appropriate as the 

4 exceptions provided in subparagraphs (A) 

5 through (E). 

6 (3) REGULATIONS.—The Secretary shall pro7 mulgate regulations to carry out paragraph (this 

8 subsection, including exceptions described in para9 graph (2), not later than 18 months after the date 

10 of the enactment of this title. 

11 (4) EFFECTIVE DATE.—Paragraph (1) shall 

12 apply to exchanges occurring on or after the date 

13 that is 6 months after the date of the promulgation 

14 of final regulations implementing this subsection. 

15 (f) ACCESS TO CERTAIN INFORMATION IN ELEC16 TRONIC FORMAT.—In applying section 164.524 of title 

17 45, Code of Federal Regulations, in the case that a cov18 ered entity uses or maintains an electronic health record 

19 with respect to protected health information of an indi20 vidual— 

21 (1) the individual shall have a right to obtain 

22 from such covered entity a copy of such information 

23 in an electronic format; and 

24 (2) notwithstanding paragraph (c)(4) of such 

25 section, any fee that the covered entity may impose 


pwalker on PROD1PC71 with BILLS
298 

•HR 598 IH

1 for providing such individual with a copy of such in2 formation (or a summary or explanation of such in3 formation) if such copy (or summary or explanation) 

4 is in an electronic form shall not be greater than the 

5 entity’s labor costs in responding to the request for 

6 the copy (or summary or explanation). 

7 SEC. 4406. CONDITIONS ON CERTAIN CONTACTS AS PART 

8 OF HEALTH CARE OPERATIONS. 

9 (a) MARKETING.— 

10 (1) IN GENERAL.—A communication by a cov11 ered entity or business associate that is about a 

12 product or service and that encourages recipients of 

13 the communication to purchase or use the product 

14 or service shall not be considered a health care oper15 ation for purposes of subpart E of part 164 of title 

16 45, Code of Federal Regulations, unless the commu17 nication is made as described in subparagraph (i), 

18 (ii), or (iii) of paragraph (1) of the definition of 

19 marketing in section 164.501 of such title. 

20 (2) PAYMENT FOR CERTAIN COMMUNICA21 TIONS.—A covered entity or business associate may 

22 not receive direct or indirect payment in exchange 

23 for making any communication described in sub24 paragraph (i), (ii), or (iii) of paragraph (1) of the 


pwalker on PROD1PC71 with BILLS
299 

•HR 598 IH

1 definition of marketing in section 164.501 of title 

2 45, Code of Federal Regulations, except— 

3 (A) a business associate of a covered entity 

4 may receive payment from the covered entity 

5 for making any such communication on behalf 

6 of the covered entity that is consistent with the 

7 written contract (or other written arrangement) 

8 described in section 164.502(e)(2) of such title 

9 between such business associate and covered en10 tity; and 

11 (B) a covered entity may receive payment 

12 in exchange for making any such communica13 tion if the entity obtains from the recipient of 

14 the communication, in accordance with section 

15 164.508 of title 45, Code of Federal Regula16 tions, a valid authorization (as described in 

17 paragraph (b) of such section) with respect to 

18 such communication. 

19 (b) FUNDRAISING.—Fundraising for the benefit of a 

20 covered entity shall not be considered a health care oper21 ation for purposes of section 164.501 of title 45, Code of 

22 Federal Regulations. 

23 (c) EFFECTIVE DATE.—This section shall apply to 

24 contracting occurring on or after the effective date speci25 fied under section 4423. 


pwalker on PROD1PC71 with BILLS
300 

•HR 598 IH

1 SEC. 4407. TEMPORARY BREACH NOTIFICATION REQUIRE2 MENT FOR VENDORS OF PERSONAL HEALTH 

3 RECORDS AND OTHER NON-HIPAA COVERED 

4 ENTITIES. 

5 (a) IN GENERAL.—In accordance with subsection (c), 

6 each vendor of personal health records, following the dis7 covery of a breach of security of unsecured PHR identifi8 able health information that is in a personal health record 

9 maintained or offered by such vendor, and each entity de10 scribed in clause (ii) or (iii) of section 4424(b)(1)(A), fol11 lowing the discovery of a breach of security of such infor12 mation that is obtained through a product or service pro13 vided by such entity, shall— 

14 (1) notify each individual who is a citizen or 

15 resident of the United States whose unsecured PHR 

16 identifiable health information was acquired by an 

17 unauthorized person as a result of such a breach of 

18 security; and 

19 (2) notify the Federal Trade Commission. 

20 (b) NOTIFICATION BY THIRD PARTY SERVICE PRO21 VIDERS.—A third party service provider that provides 

22 services to a vendor of personal health records or to an 

23 entity described in clause (ii) or (iii) of section 

24 4424(b)(1)(A) in connection with the offering or mainte25 nance of a personal health record or a related product or 

26 service and that accesses, maintains, retains, modifies, 


pwalker on PROD1PC71 with BILLS
301 

•HR 598 IH

1 records, stores, destroys, or otherwise holds, uses, or dis2 closes unsecured PHR identifiable health information in 

3 such a record as a result of such services shall, following 

4 the discovery of a breach of security of such information, 

5 notify such vendor or entity, respectively, of such breach. 

6 Such notice shall include the identification of each indi7 vidual whose unsecured PHR identifiable health informa8 tion has been, or is reasonably believed to have been, 

9 accessed, acquired, or disclosed during such breach. 

10 (c) APPLICATION OF REQUIREMENTS FOR TIMELI11 NESS, METHOD, AND CONTENT OF NOTIFICATIONS.— 

12 Subsections (c), (d), (e), and (f) of section 402 shall apply 

13 to a notification required under subsection (a) and a ven14 dor of personal health records, an entity described in sub15 section (a) and a third party service provider described 

16 in subsection (b), with respect to a breach of security 

17 under subsection (a) of unsecured PHR identifiable health 

18 information in such records maintained or offered by such 

19 vendor, in a manner specified by the Federal Trade Com20 mission. 

21 (d) NOTIFICATION OF THE SECRETARY.—Upon re22 ceipt of a notification of a breach of security under sub23 section (a)(2), the Federal Trade Commission shall notify 

24 the Secretary of such breach. 


pwalker on PROD1PC71 with BILLS
302 

•HR 598 IH

1 (e) ENFORCEMENT.—A violation of subsection (a) or 

2 (b) shall be treated as an unfair and deceptive act or prac3 tice in violation of a regulation under section 18(a)(1)(B) 

4 of the Federal Trade Commission Act (15 U.S.C. 

5 57a(a)(1)(B)) regarding unfair or deceptive acts or prac6 tices. 

7 (f) DEFINITIONS.—For purposes of this section: 

8 (1) BREACH OF SECURITY.—The term ‘‘breach 

9 of security’’ means, with respect to unsecured PHR 

10 identifiable health information of an individual in a 

11 personal health record, acquisition of such informa12 tion without the authorization of the individual. 

13 (2) PHR IDENTIFIABLE HEALTH INFORMA14 TION.—The term ‘‘PHR identifiable health informa15 tion’’ means individually identifiable health informa16 tion, as defined in section 1171(6) of the Social Se17 curity Act (42 U.S.C. 1320d(6)), and includes, with 

18 respect to an individual, information— 

19 (A) that is provided by or on behalf of the 

20 individual; and 

21 (B) that identifies the individual or with 

22 respect to which there is a reasonable basis to 

23 believe that the information can be used to 

24 identify the individual. 


pwalker on PROD1PC71 with BILLS
303 

•HR 598 IH

1 (3) UNSECURED PHR IDENTIFIABLE HEALTH

2 INFORMATION.— 

3 (A) IN GENERAL.—Subject to subpara4 graph (B), the term ‘‘unsecured PHR identifi5 able health information’’ means PHR identifi6 able health information that is not protected 

7 through the use of a technology or methodology 

8 specified by the Secretary in the guidance 

9 issued under section 4402(h)(2). 

10 (B) EXCEPTION IN CASE TIMELY GUID11 ANCE NOT ISSUED.—In the case that the Sec12 retary does not issue guidance under section 

13 4402(h)(2) by the date specified in such sec14 tion, for purposes of this section, the term ‘‘un15 secured PHR identifiable health information’’ 

16 shall mean PHR identifiable health information 

17 that is not secured by a technology standard 

18 that renders protected health information unus19 able, unreadable, or indecipherable to unauthor20 ized individuals and that is developed or en21 dorsed by a standards developing organization 

22 that is accredited by the American National 

23 Standards Institute. 

24 (g) REGULATIONS; EFFECTIVE DATE; SUNSET.— 


pwalker on PROD1PC71 with BILLS
304 

•HR 598 IH

1 (1) REGULATIONS; EFFECTIVE DATE.—To 

2 carry out this section, the Secretary of Health and 

3 Human Services shall promulgate interim final regu4 lations by not later than the date that is 180 days 

5 after the date of the enactment of this section. The 

6 provisions of this section shall apply to breaches of 

7 security that are discovered on or after the date that 

8 is 30 days after the date of publication of such in9 terim final regulations. 

10 (2) SUNSET.—The provisions of this section 

11 shall not apply to breaches of security occurring on 

12 or after the earlier of the following the dates: 

13 (A) The date on which a standard relating 

14 to requirements for entities that are not covered 

15 entities that includes requirements relating to 

16 breach notification has been promulgated by the 

17 Secretary. 

18 (B) The date on which a standard relating 

19 to requirements for entities that are not covered 

20 entities that includes requirements relating to 

21 breach notification has been promulgated by the 

22 Federal Trade Commission and has taken ef23 fect. 


pwalker on PROD1PC71 with BILLS
305 

•HR 598 IH

1 SEC. 4408. BUSINESS ASSOCIATE CONTRACTS REQUIRED 

2 FOR CERTAIN ENTITIES. 

3 Each organization, with respect to a covered entity, 

4 that provides data transmission of protected health infor5 mation to such entity (or its business associate) and that 

6 requires access on a routine basis to such protected health 

7 information, such as a Health Information Exchange Or8 ganization, Regional Health Information Organization, E9 prescribing Gateway, or each vendor that contracts with 

10 a covered entity to allow that covered entity to offer a per11 sonal health record to patients as part of its electronic 

12 health record, is required to enter into a written contract 

13 (or other written arrangement) described in section 

14 164.502(e)(2) of title 45, Code of Federal Regulations and 

15 a written contract (or other arrangement) described in 

16 section 164.308(b) of such title, with such entity and shall 

17 be treated as a business associate of the covered entity 

18 for purposes of the provisions of this subtitle and subparts 

19 C and E of part 164 of title 45, Code of Federal Regula20 tions, as such provisions are in effect as of the date of 

21 enactment of this title. 

22 SEC. 4409. CLARIFICATION OF APPLICATION OF WRONGFUL 

23 DISCLOSURES CRIMINAL PENALTIES. 

24 Section 1177(a) of the Social Security Act (42 U.S.C. 

25 1320d–6(a)) is amended by adding at the end the fol26 lowing new sentence: ‘‘For purposes of the previous senVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00305 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
306 

•HR 598 IH

1 tence, a person (including an employee or other individual) 

2 shall be considered to have obtained or disclosed individ3 ually identifiable health information in violation of this 

4 part if the information is maintained by a covered entity 

5 (as defined in the HIPAA privacy regulation described in 

6 section 1180(b)(3)) and the individual obtained or dis7 closed such information without authorization.’’. 

8 SEC. 4410. IMPROVED ENFORCEMENT. 

9 (a) IN GENERAL.—Section 1176 of the Social Secu10 rity Act (42 U.S.C. 1320d–5) is amended— 

11 (1) in subsection (b)(1), by striking ‘‘the act 

12 constitutes an offense punishable under section 

13 1177’’ and inserting ‘‘a penalty has been imposed 

14 under section 1177 with respect to such act’’; and 

15 (2) by adding at the end the following new sub16 section: 

17 ‘‘(c) NONCOMPLIANCE DUE TO WILLFUL NE18 GLECT.— 

19 ‘‘(1) IN GENERAL.—A violation of a provision 

20 of this part due to willful neglect is a violation for 

21 which the Secretary is required to impose a penalty 

22 under subsection (a)(1). 

23 ‘‘(2) REQUIRED INVESTIGATION.—For purposes 

24 of paragraph (1), the Secretary shall formally inves25 tigate any complaint of a violation of a provision of 


pwalker on PROD1PC71 with BILLS
307 

•HR 598 IH

1 this part if a preliminary investigation of the facts 

2 of the complaint indicate such a possible violation 

3 due to willful neglect.’’. 

4 (b) EFFECTIVE DATE; REGULATIONS.— 

5 (1) The amendments made by subsection (a) 

6 shall apply to penalties imposed on or after the date 

7 that is 24 months after the date of the enactment 

8 of this title. 

9 (2) Not later than 18 months after the date of 

10 the enactment of this title, the Secretary of Health 

11 and Human Services shall promulgate regulations to 

12 implement such amendments. 

13 (c) DISTRIBUTION OF CERTAIN CIVIL MONETARY

14 PENALTIES COLLECTED.— 

15 (1) IN GENERAL.—Subject to the regulation 

16 promulgated pursuant to paragraph (3), any civil 

17 monetary penalty or monetary settlement collected 

18 with respect to an offense punishable under this sub19 title or section 1176 of the Social Security Act (42 

20 U.S.C. 1320d–5) insofar as such section relates to 

21 privacy or security shall be transferred to the Office 

22 of Civil Rights of the Department of Health and 

23 Human Services to be used for purposes of enforcing 

24 the provisions of this subtitle and subparts C and E 

25 of part 164 of title 45, Code of Federal Regulations, 


pwalker on PROD1PC71 with BILLS
308 

•HR 598 IH

1 as such provisions are in effect as of the date of en2 actment of this Act. 

3 (2) GAO REPORT.—Not later than 18 months 

4 after the date of the enactment of this title, the 

5 Comptroller General shall submit to the Secretary a 

6 report including recommendations for a methodology 

7 under which an individual who is harmed by an act 

8 that constitutes an offense referred to in paragraph 

9 (1) may receive a percentage of any civil monetary 

10 penalty or monetary settlement collected with re11 spect to such offense. 

12 (3) ESTABLISHMENT OF METHODOLOGY TO

13 DISTRIBUTE PERCENTAGE OF CMPS COLLECTED TO

14 HARMED INDIVIDUALS.—Not later than 3 years 

15 after the date of the enactment of this title, the Sec16 retary shall establish by regulation and based on the 

17 recommendations submitted under paragraph (2), a 

18 methodology under which an individual who is 

19 harmed by an act that constitutes an offense re20 ferred to in paragraph (1) may receive a percentage 

21 of any civil monetary penalty or monetary settlement 

22 collected with respect to such offense. 

23 (4) APPLICATION OF METHODOLOGY.—The 

24 methodology under paragraph (3) shall be applied 

25 with respect to civil monetary penalties or monetary 


pwalker on PROD1PC71 with BILLS
309 

•HR 598 IH

1 settlements imposed on or after the effective date of 

2 the regulation. 

3 (d) TIERED INCREASE IN AMOUNT OF CIVIL MONE4 TARY PENALTIES.— 

5 (1) IN GENERAL.—Section 1176(a)(1) of the 

6 Social Security Act (42 U.S.C. 1320d–5(a)(1)) is 

7 amended by striking ‘‘who violates a provision of 

8 this part a penalty of not more than’’ and all that 

9 follows and inserting the following: ‘‘who violates a 

10 provision of this part— 

11 ‘‘(A) in the case of a violation of such pro12 vision in which it is established that the person 

13 did not know (and by exercising reasonable dili14 gence would not have known) that such person 

15 violated such provision, a penalty for each such 

16 violation of an amount that is at least the 

17 amount described in paragraph (3)(A) but not 

18 to exceed the amount described in paragraph 

19 (3)(D); 

20 ‘‘(B) in the case of a violation of such pro21 vision in which it is established that the viola22 tion was due to reasonable cause and not to 

23 willful neglect, a penalty for each such violation 

24 of an amount that is at least the amount deVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00309 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
310 

•HR 598 IH

1 scribed in paragraph (3)(B) but not to exceed 

2 the amount described in paragraph (3)(D); and 

3 ‘‘(C) in the case of a violation of such pro4 vision in which it is established that the viola5 tion was due to willful neglect— 

6 ‘‘(i) if the violation is corrected as de7 scribed in subsection (b)(3)(A), a penalty 

8 in an amount that is at least the amount 

9 described in paragraph (3)(C) but not to 

10 exceed the amount described in paragraph 

11 (3)(D); and 

12 ‘‘(ii) if the violation is not corrected 

13 as described in such subsection, a penalty 

14 in an amount that is at least the amount 

15 described in paragraph (3)(D). 

16 In determining the amount of a penalty under 

17 this section for a violation, the Secretary shall 

18 base such determination on the nature and ex19 tent of the violation and the nature and extent 

20 of the harm resulting from such violation.’’. 

21 (2) TIERS OF PENALTIES DESCRIBED.—Section 

22 1176(a) of such Act (42 U.S.C. 1320d–5(a)) is fur23 ther amended by adding at the end the following 

24 new paragraph: 


pwalker on PROD1PC71 with BILLS
311 

•HR 598 IH

1 ‘‘(3) TIERS OF PENALTIES DESCRIBED.—For 

2 purposes of paragraph (1), with respect to a viola3 tion by a person of a provision of this part— 

4 ‘‘(A) the amount described in this subpara5 graph is $100 for each such violation, except 

6 that the total amount imposed on the person 

7 for all such violations of an identical require8 ment or prohibition during a calendar year may 

9 not exceed $25,000; 

10 ‘‘(B) the amount described in this subpara11 graph is $1,000 for each such violation, except 

12 that the total amount imposed on the person 

13 for all such violations of an identical require14 ment or prohibition during a calendar year may 

15 not exceed $100,000; 

16 ‘‘(C) the amount described in this subpara17 graph is $10,000 for each such violation, except 

18 that the total amount imposed on the person 

19 for all such violations of an identical require20 ment or prohibition during a calendar year may 

21 not exceed $250,000; and 

22 ‘‘(D) the amount described in this sub23 paragraph is $50,000 for each such violation, 

24 except that the total amount imposed on the 

25 person for all such violations of an identical reVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00311 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
312 

•HR 598 IH

1 quirement or prohibition during a calendar year 

2 may not exceed $1,500,000.’’. 

3 (3) CONFORMING AMENDMENTS.—Section 

4 1176(b) of such Act (42 U.S.C. 1320d–5(b)) is 

5 amended— 

6 (A) by striking paragraph (2) and redesig7 nating paragraphs (3) and (4) as paragraphs 

8 (2) and (3), respectively; and 

9 (B) in paragraph (2), as so redesignated— 

10 (i) in subparagraph (A), by striking 

11 ‘‘in subparagraph (B), a penalty may not 

12 be imposed under subsection (a) if’’ and all 

13 that follows through ‘‘the failure to comply 

14 is corrected’’ and inserting ‘‘in subpara15 graph (B) or subsection (a)(1)(C), a pen16 alty may not be imposed under subsection 

17 (a) if the failure to comply is corrected’’; 

18 and 

19 (ii) in subparagraph (B), by striking 

20 ‘‘(A)(ii)’’ and inserting ‘‘(A)’’ each place it 

21 appears. 

22 (4) EFFECTIVE DATE.—The amendments made 

23 by this subsection shall apply to violations occurring 

24 after the date of the enactment of this title. 


pwalker on PROD1PC71 with BILLS
313 

•HR 598 IH

1 (e) ENFORCEMENT THROUGH STATE ATTORNEYS

2 GENERAL.— 

3 (1) IN GENERAL.—Section 1176 of the Social 

4 Security Act (42 U.S.C. 1320d–5) is amended by 

5 adding at the end the following new subsection: 

6 ‘‘(c) ENFORCEMENT BY STATE ATTORNEYS GEN7 ERAL.— 

8 ‘‘(1) CIVIL ACTION.—Except as provided in 

9 subsection (b), in any case in which the attorney 

10 general of a State has reason to believe that an in11 terest of one or more of the residents of that State 

12 has been or is threatened or adversely affected by 

13 any person who violates a provision of this part, the 

14 attorney general of the State, as parens patriae, may 

15 bring a civil action on behalf of such residents of the 

16 State in a district court of the United States of ap17 propriate jurisdiction— 

18 ‘‘(A) to enjoin further such violation by the 

19 defendant; or 

20 ‘‘(B) to obtain damages on behalf of such 

21 residents of the State, in an amount equal to 

22 the amount determined under paragraph (2). 

23 ‘‘(2) STATUTORY DAMAGES.— 

24 ‘‘(A) IN GENERAL.—For purposes of para25 graph (1)(B), the amount determined under 


pwalker on PROD1PC71 with BILLS
314 

•HR 598 IH

1 this paragraph is the amount calculated by mul2 tiplying the number of violations by up to $100. 

3 For purposes of the preceding sentence, in the 

4 case of a continuing violation, the number of 

5 violations shall be determined consistent with 

6 the HIPAA privacy regulations (as defined in 

7 section 1180(b)(3)) for violations of subsection 

8 (a). 

9 ‘‘(B) LIMITATION.—The total amount of 

10 damages imposed on the person for all viola11 tions of an identical requirement or prohibition 

12 during a calendar year may not exceed $25,000. 

13 ‘‘(C) REDUCTION OF DAMAGES.—In as14 sessing damages under subparagraph (A), the 

15 court may consider the factors the Secretary 

16 may consider in determining the amount of a 

17 civil money penalty under subsection (a) under 

18 the HIPAA privacy regulations. 

19 ‘‘(3) ATTORNEY FEES.—In the case of any suc20 cessful action under paragraph (1), the court, in its 

21 discretion, may award the costs of the action and 

22 reasonable attorney fees to the State. 

23 ‘‘(4) NOTICE TO SECRETARY.—The State shall 

24 serve prior written notice of any action under para25 graph (1) upon the Secretary and provide the SecVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00314 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
315 

•HR 598 IH

1 retary with a copy of its complaint, except in any 

2 case in which such prior notice is not feasible, in 

3 which case the State shall serve such notice imme4 diately upon instituting such action. The Secretary 

5 shall have the right— 

6 ‘‘(A) to intervene in the action; 

7 ‘‘(B) upon so intervening, to be heard on 

8 all matters arising therein; and 

9 ‘‘(C) to file petitions for appeal. 

10 ‘‘(5) CONSTRUCTION.—For purposes of bring11 ing any civil action under paragraph (1), nothing in 

12 this section shall be construed to prevent an attor13 ney general of a State from exercising the powers 

14 conferred on the attorney general by the laws of that 

15 State. 

16 ‘‘(6) VENUE; SERVICE OF PROCESS.— 

17 ‘‘(A) VENUE.—Any action brought under 

18 paragraph (1) may be brought in the district 

19 court of the United States that meets applicable 

20 requirements relating to venue under section 

21 1391 of title 28, United States Code. 

22 ‘‘(B) SERVICE OF PROCESS.—In an action 

23 brought under paragraph (1), process may be 

24 served in any district in which the defendant— 

25 ‘‘(i) is an inhabitant; or 


pwalker on PROD1PC71 with BILLS
316 

•HR 598 IH

1 ‘‘(ii) maintains a physical place of 

2 business. 

3 ‘‘(7) LIMITATION ON STATE ACTION WHILE

4 FEDERAL ACTION IS PENDING.—If the Secretary has 

5 instituted an action against a person under sub6 section (a) with respect to a specific violation of this 

7 part, no State attorney general may bring an action 

8 under this subsection against the person with re9 spect to such violation during the pendency of that 

10 action. 

11 ‘‘(8) APPLICATION OF CMP STATUTE OF LIMI12 TATION.—A civil action may not be instituted with 

13 respect to a violation of this part unless an action 

14 to impose a civil money penalty may be instituted 

15 under subsection (a) with respect to such violation 

16 consistent with the second sentence of section 

17 1128A(c)(1).’’. 

18 (2) CONFORMING AMENDMENTS.—Subsection 

19 (b) of such section, as amended by subsection (d)(3), 

20 is amended— 

21 (A) in paragraph (1), by striking ‘‘A pen22 alty may not be imposed under subsection (a)’’ 

23 and inserting ‘‘No penalty may be imposed 

24 under subsection (a) and no damages obtained 

25 under subsection (c)’’; 


pwalker on PROD1PC71 with BILLS
317 

•HR 598 IH

1 (B) in paragraph (2)(A)— 

2 (i) in the matter before clause (i), by 

3 striking ‘‘a penalty may not be imposed 

4 under subsection (a)’’ and inserting ‘‘no 

5 penalty may be imposed under subsection 

6 (a) and no damages obtained under sub7 section (c)’’; and 

8 (ii) in clause (ii), by inserting ‘‘or 

9 damages’’ after ‘‘the penalty’’; 

10 (C) in paragraph (2)(B)(i), by striking 

11 ‘‘The period’’ and inserting ‘‘With respect to 

12 the imposition of a penalty by the Secretary 

13 under subsection (a), the period’’; and 

14 (D) in paragraph (3), by inserting ‘‘and 

15 any damages under subsection (c)’’ after ‘‘any 

16 penalty under subsection (a)’’. 

17 (3) EFFECTIVE DATE.—The amendments made 

18 by this subsection shall apply to violations occurring 

19 after the date of the enactment of this Act. 

20 (f) ALLOWING CONTINUED USE OF CORRECTIVE AC21 TION.—Such section is further amended by adding at the 

22 end the following new subsection: 

23 ‘‘(d) ALLOWING CONTINUED USE OF CORRECTIVE

24 ACTION.—Nothing in this section shall be construed as 

25 preventing the Office of Civil Rights of the Department 


pwalker on PROD1PC71 with BILLS
318 

•HR 598 IH

1 of Health and Human Services from continuing, in its dis2 cretion, to use corrective action without a penalty in cases 

3 where the person did not know (and by exercising reason4 able diligence would not have known) of the violation in5 volved.’’. 

6 SEC. 4411. AUDITS. 

7 The Secretary shall provide for periodic audits to en8 sure that covered entities and business associates that are 

9 subject to the requirements of this subtitle and subparts 

10 C and E of part 164 of title 45, Code of Federal Regula11 tions, as such provisions are in effect as of the date of 

12 enactment of this Act, comply with such requirements. 

13 PART II—RELATIONSHIP TO OTHER LAWS; REGU14 LATORY REFERENCES; EFFECTIVE DATE; RE15 PORTS 

16 SEC. 4421. RELATIONSHIP TO OTHER LAWS. 

17 (a) APPLICATION OF HIPAA STATE PREEMPTION.— 

18 Section 1178 of the Social Security Act (42 U.S.C. 

19 1320d–7) shall apply to a provision or requirement under 

20 this subtitle in the same manner that such section applies 

21 to a provision or requirement under part C of title XI of 

22 such Act or a standard or implementation specification 

23 adopted or established under sections 1172 through 1174 

24 of such Act. 


pwalker on PROD1PC71 with BILLS
319 

•HR 598 IH

1 (b) HEALTH INSURANCE PORTABILITY AND AC2 COUNTABILITY ACT.—The standards governing the pri3 vacy and security of individually identifiable health infor4 mation promulgated by the Secretary under sections 

5 262(a) and 264 of the Health Insurance Portability and 

6 Accountability Act of 1996 shall remain in effect to the 

7 extent that they are consistent with this subtitle. The Sec8 retary shall by rule amend such Federal regulations as re9 quired to make such regulations consistent with this sub10 title. 

11 SEC. 4422. REGULATORY REFERENCES. 

12 Each reference in this subtitle to a provision of the 

13 Code of Federal Regulations refers to such provision as 

14 in effect on the date of the enactment of this title (or to 

15 the most recent update of such provision). 

16 SEC. 4423. EFFECTIVE DATE. 

17 Except as otherwise specifically provided, the provi18 sions of part I shall take effect on the date that is 12 

19 months after the date of the enactment of this title. 

20 SEC. 4424. STUDIES, REPORTS, GUIDANCE. 

21 (a) REPORT ON COMPLIANCE.— 

22 (1) IN GENERAL.—For the first year beginning 

23 after the date of the enactment of this Act and an24 nually thereafter, the Secretary shall prepare and 

25 submit to the Committee on Health, Education, 


pwalker on PROD1PC71 with BILLS
320 

•HR 598 IH

1 Labor, and Pensions of the Senate and the Com2 mittee on Ways and Means and the Committee on 

3 Energy and Commerce of the House of Representa4 tives a report concerning complaints of alleged viola5 tions of law, including the provisions of this subtitle 

6 as well as the provisions of subparts C and E of part 

7 164 of title 45, Code of Federal Regulations, (as 

8 such provisions are in effect as of the date of enact9 ment of this Act) relating to privacy and security of 

10 health information that are received by the Secretary 

11 during the year for which the report is being pre12 pared. Each such report shall include, with respect 

13 to such complaints received during the year— 

14 (A) the number of such complaints; 

15 (B) the number of such complaints re16 solved informally, a summary of the types of 

17 such complaints so resolved, and the number of 

18 covered entities that received technical assist19 ance from the Secretary during such year in 

20 order to achieve compliance with such provi21 sions and the types of such technical assistance 

22 provided; 

23 (C) the number of such complaints that 

24 have resulted in the imposition of civil monetary 

25 penalties or have been resolved through moneVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00320 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
321 

•HR 598 IH

1 tary settlements, including the nature of the 

2 complaints involved and the amount paid in 

3 each penalty or settlement; 

4 (D) the number of compliance reviews con5 ducted and the outcome of each such review; 

6 (E) the number of subpoenas or inquiries 

7 issued; 

8 (F) the Secretary’s plan for improving 

9 compliance with and enforcement of such provi10 sions for the following year; and 

11 (G) the number of audits performed and a 

12 summary of audit findings pursuant to section 

13 4411. 

14 (2) AVAILABILITY TO PUBLIC.—Each report 

15 under paragraph (1) shall be made available to the 

16 public on the Internet website of the Department of 

17 Health and Human Services. 

18 (b) STUDY AND REPORT ON APPLICATION OF PRI19 VACY AND SECURITY REQUIREMENTS TO NON-HIPAA 

20 COVERED ENTITIES.— 

21 (1) STUDY.—Not later than one year after the 

22 date of the enactment of this title, the Secretary, in 

23 consultation with the Federal Trade Commission, 

24 shall conduct a study, and submit a report under 

25 paragraph (2), on privacy and security requirements 


pwalker on PROD1PC71 with BILLS
322 

•HR 598 IH

1 for entities that are not covered entities or business 

2 associates as of the date of the enactment of this 

3 title, including— 

4 (A) requirements relating to security, pri5 vacy, and notification in the case of a breach of 

6 security or privacy (including the applicability 

7 of an exemption to notification in the case of 

8 individually identifiable health information that 

9 has been rendered unusable, unreadable, or in10 decipherable through technologies or methodolo11 gies recognized by appropriate professional or12 ganization or standard setting bodies to provide 

13 effective security for the information) that 

14 should be applied to— 

15 (i) vendors of personal health records; 

16 (ii) entities that offer products or 

17 services through the website of a vendor of 

18 personal health records; 

19 (iii) entities that are not covered enti20 ties and that offer products or services 

21 through the s of covered entities that offer 

22 individuals personal health records; 

23 (iv) entities that are not covered enti24 ties and that access information in a perVerDate Nov 24 2008 22:53 Jan 28, 2009 Jkt 079200 PO 00000 Frm 00322 Fmt 6652 Sfmt 6201 E:\BILLS\H598.IH H598

pwalker on PROD1PC71 with BILLS
323 

•HR 598 IH

1 sonal health record or send information to 

2 a personal health record; and 

3 (v) third party service providers used 

4 by a vendor or entity described in clause 

5 (i), (ii), (iii), or (iv) to assist in providing 

6 personal health record products or services; 

7 (B) a determination of which Federal Gov8 ernment agency is best equipped to enforce 

9 such requirements recommended to be applied 

10 to such vendors, entities, and service providers 

11 under subparagraph (A); and 

12 (C) a timeframe for implementing regula13 tions based on such findings. 

14 (2) REPORT.—The Secretary shall submit to 

15 the Committee on Finance, the Committee on 

16 Health, Education, Labor, and Pensions, and the 

17 Committee on Commerce of the Senate and the 

18 Committee on Ways and Means and the Committee 

19 on Energy and Commerce of the House of Rep20 resentatives a report on the findings of the study 

21 under paragraph (1) and shall include in such report 

22 recommendations on the privacy and security re23 quirements described in such paragraph. 

24 (c) GUIDANCE ON IMPLEMENTATION SPECIFICATION

25 TO DE-IDENTIFY PROTECTED HEALTH INFORMATION.— 


pwalker on PROD1PC71 with BILLS
324 

•HR 598 IH

1 Not later than 12 months after the date of the enactment 

2 of this title, the Secretary shall, in consultation with stake3 holders, issue guidance on how best to implement the re4 quirements for the de-identification of protected health in5 formation under section 164.514(b) of title 45, Code of 

6 Federal Regulations. 

7 (d) GAO REPORT ON TREATMENT DISCLOSURES.— 

8 Not later than one year after the date of the enactment 

9 of this title, the Comptroller General of the United States 

10 shall submit to the Committee on Health, Education, 

11 Labor, and Pensions of the Senate and the Committee on 

12 Ways and Means and the Committee on Energy and Com13 merce of the House of Representatives a report on the 

14 best practices related to the disclosure among health care 

15 providers of protected health information of an individual 

16 for purposes of treatment of such individual. Such report 

17 shall include an examination of the best practices imple18 mented by States and by other entities, such as health 

19 information exchanges and regional health information or20 ganizations, an examination of the extent to which such 

21 best practices are successful with respect to the quality 

22 of the resulting health care provided to the individual and 

23 with respect to the ability of the health care provider to 

24 manage such best practices, and an examination of the 

25 use of electronic informed consent for disclosing protected 


pwalker on PROD1PC71 with BILLS
325 

•HR 598 IH

1 health information for treatment, payment, and health 

2 care operations. 

3 Subtitle E—Miscellaneous 

4 Medicare Provisions 

5 SEC. 4501. MORATORIA ON CERTAIN MEDICARE REGULA6 TIONS. 

7 (a) DELAY IN PHASE OUT OF MEDICARE HOSPICE

8 BUDGET NEUTRALITY ADJUSTMENT FACTOR DURING

9 FISCAL YEAR 2009.—Notwithstanding any other provi10 sion of law, including the final rule published on August 

11 8, 2008, 73 Federal Register 46464 et seq., relating to 

12 Medicare Program; Hospice Wage Index for Fiscal Year 

13 2009, the Secretary of Health and Human Services shall 

14 not phase out or eliminate the budget neutrality adjust15 ment factor in the Medicare hospice wage index before Oc16 tober 1, 2009, and the Secretary shall recompute and 

17 apply the final Medicare hospice wage index for fiscal year 

18 2009 as if there had been no reduction in the budget neu19 trality adjustment factor. 

20 (b) NON-APPLICATION OF PHASED-OUT INDIRECT

21 MEDICAL EDUCATION (IME) ADJUSTMENT FACTOR FOR

22 FISCAL YEAR 2009.— 

23 (1) IN GENERAL.—Section 412.322 of title 42, 

24 Code of Federal Regulations, shall be applied with25 out regard to paragraph (c) of such section, and the 


pwalker on PROD1PC71 with BILLS
326 

•HR 598 IH

1 Secretary of Health and Human Services shall re2 compute payments for discharges occurring on or 

3 after October 1, 2008, as if such paragraph had 

4 never been in effect. 

5 (2) NO EFFECT ON SUBSEQUENT YEARS.— 

6 Nothing in paragraph (1) shall be construed as hav7 ing any effect on the application of paragraph (d) of 

8 section 412.322 of title 42, Code of Federal Regula9 tions. 

10 (c) FUNDING FOR IMPLEMENTATION.—In addition to 

11 funds otherwise available, for purposes of implementing 

12 the provisions of subsections (a) and (b), including costs 

13 incurred in reprocessing claims in carrying out such provi14 sions, the Secretary of Health and Human Services shall 

15 provide for the transfer from the Federal Hospital Insur16 ance Trust Fund established under section 1817 of the 

17 Social Security Act (42 U.S.C. 1395i) to the Centers for 

18 Medicare & Medicaid Services Program Management Ac19 count of $2,000,000 for fiscal year 2009. 

20 SEC. 4502. LONG-TERM CARE HOSPITAL TECHNICAL COR21 RECTIONS. 

22 (a) PAYMENT.—Subsection (c) of section 114 of the 

23 Medicare, Medicaid, and SCHIP Extension Act of 2007 

24 (Public Law 110–173) is amended— 

25 (1) in paragraph (1)— 


pwalker on PROD1PC71 with BILLS
327 

•HR 598 IH

1 (A) by amending the heading to read as 

2 follows: ‘‘DELAY IN APPLICATION OF 25 PER3 CENT PATIENT THRESHOLD PAYMENT ADJUST4 MENT’’; 

5 (B) by striking ‘‘the date of the enactment 

6 of this Act’’ and inserting ‘‘July 1, 2007,’’; and 

7 (C) in subparagraph (A), by inserting ‘‘or 

8 to a long-term care hospital, or satellite facility, 

9 that as of December 29, 2007, was co-located 

10 with an entity that is a provider-based, off-cam11 pus location of a subsection (d) hospital which 

12 did not provide services payable under section 

13 1886(d) of the Social Security Act at the off14 campus location’’ after ‘‘freestanding long-term 

15 care hospitals’’; and 

16 (2) in paragraph (2)— 

17 (A) in subparagraph (B)(ii), by inserting 

18 ‘‘or that is described in section 412.22(h)(3)(i) 

19 of such title’’ before the period; and 

20 (B) in subparagraph (C), by striking ‘‘the 

21 date of the enactment of this Act’’ and insert22 ing ‘‘October 1, 2007 (or July 1, 2007, in the 

23 case of a satellite facility described in section 

24 412.22(h)(3)(i) of title 42, Code of Federal 

25 Regulations)’’. 


pwalker on PROD1PC71 with BILLS
328 

•HR 598 IH

1 (b) MORATORIUM.—Subsection (d)(3)(A) of such sec2 tion is amended by striking ‘‘if the hospital or facility’’ 

3 and inserting ‘‘if the hospital or facility obtained a certifi4 cate of need for an increase in beds that is in a State 

5 for which such certificate of need is required and that was 

6 issued on or after April 1, 2005, and before December 

7 29, 2007, or if the hospital or facility’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall be effective and apply as if included in 

10 the enactment of the Medicare, Medicaid, and SCHIP Ex11 tension Act of 2007 (Public Law 110–173). 

Æ 


pwalker on PROD1PC71 with BILLS