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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 1099 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                S. 1099

 To provide comprehensive solutions for the health care system of the 
                 United States, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 20, 2009

  Mr. Coburn (for himself, Mr. Burr, Mr. Bunning, Mr. Chambliss, Mr. 
  Alexander, and Mr. Inhofe) introduced the following bill; which was 
          read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To provide comprehensive solutions for the health care system of the 
                 United States, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Patients' Choice 
Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
                    TITLE I--INVESTING IN PREVENTION

Sec. 101. Strategic approach to outcome-based prevention.
Sec. 102. State grants for outcome-based prevention effort.
Sec. 103. Focusing the food stamp program on nutrition.
Sec. 104. Immunizations.
              TITLE II--STATE-BASED HEALTH CARE EXCHANGES

Sec. 201. State-based health care exchanges.
Sec. 202. Requirements.
Sec. 203. State Exchange incentives.
 TITLE III--FAIR TAX TREATMENT FOR ALL AMERICANS TO AFFORD HEALTH CARE

Sec. 300. Reference.
   Subtitle A--Refundable and Advanceable Credit for Certain Health 
                           Insurance Coverage

Sec. 301. Refundable and advanceable credit for certain health 
                            insurance coverage.
Sec. 302. Requiring employer transparency about employee benefits.
Sec. 303. Changes to existing tax preferences for medical coverage, 
                            etc., for individuals eligible for 
                            qualified health insurance credit.
                  Subtitle B--Health Savings Accounts

Sec. 311. Improvements to health savings accounts.
Sec. 312. Exception to requirement for employers to make comparable 
                            health savings account contributions.
             TITLE IV--FAIRNESS FOR EVERY AMERICAN PATIENT

                   Subtitle A--Medicaid Modernization

Sec. 401. Medicaid modernization.
Sec. 402. Outreach.
Sec. 403. Transition rules; miscellaneous provisions.
Subtitle B--Supplemental Health Care Assistance for Low-Income Families

Sec. 411. Supplemental Health Care Assistance for Low-Income Families.
             TITLE V--FIXING MEDICARE FOR AMERICAN SENIORS

     Subtitle A--Increasing Programmatic Efficiency, Economy, and 
                             Accountability

Sec. 501. Eliminating inefficiencies and increasing choice in Medicare 
                            Advantage.
Sec. 502. Medicare Accountable Care Organization demonstration program.
Sec. 503. Reducing government handouts to wealthier seniors.
Sec. 504. Rewarding prevention.
Sec. 505. Promoting healthcare provider transparency.
Sec. 506. Availability of Medicare and Medicaid claims and patient 
                            encounter data.
                  Subtitle B--Reducing Fraud and Abuse

Sec. 511. Requiring the Secretary of Health and Human Services to 
                            change the Medicare beneficiary identifier 
                            used to identify Medicare beneficiaries 
                            under the Medicare program.
Sec. 512. Use of technology for real-time data review.
Sec. 513. Detection of medicare fraud and abuse.
Sec. 514. Edits on 855S Medicare enrollment application and exemption 
                            of pharmacists from surety bond 
                            requirement.
Sec. 515. GAO study and report on effectiveness of surety bond 
                            requirements for suppliers of durable 
                            medical equipment in combating fraud.
                     TITLE VI--ENDING LAWSUIT ABUSE

Sec. 601. State grants to create health court solutions.
           TITLE VII--PROMOTING HEALTH INFORMATION TECHNOLOGY

 Subtitle A--Assisting the Development of Health Information Technology

Sec. 701. Purpose.
Sec. 702. Health record banking.
Sec. 703. Application of Federal and State security and confidentiality 
                            standards.
    Subtitle B--Removing Barriers to the Use of Health Information 
              Technology to Better Coordinate Health Care

Sec. 711. Safe harbors to antikickback civil penalties and criminal 
                            penalties for provision of health 
                            information technology and training 
                            services.
Sec. 712. Exception to limitation on certain physician referrals (under 
                            Stark) for provision of health information 
                            technology and training services to health 
                            care professionals.
Sec. 713. Rules of construction regarding use of consortia.
              TITLE VIII--HEALTH CARE SERVICES COMMISSION

              Subtitle A--Establishment and General Duties

Sec. 801. Establishment.
Sec. 802. General authorities and duties.
Sec. 803. Dissemination.
     Subtitle B--Forum for Quality and Effectiveness in Health Care

Sec. 811. Establishment of office.
Sec. 812. Membership.
Sec. 813. Duties.
Sec. 814. Adoption and enforcement of guidelines and standards.
Sec. 815. Additional requirements.
                     Subtitle C--General Provisions

Sec. 821. Certain administrative authorities.
Sec. 822. Funding.
Sec. 823. Definitions.
                Subtitle D--Terminations and Transition

Sec. 831. Termination of Agency for Healthcare Research and Quality.
Sec. 832. Transition.
              Subtitle E--Independent Health Record Trust

Sec. 841. Short title.
Sec. 842. Purpose.
Sec. 843. Definitions.
Sec. 844. Establishment, certification, and membership of Independent 
                            Health Record Trusts.
Sec. 845. Duties of IHRT to IHRT participants.
Sec. 846. Availability and use of information from records in IHRT 
                            consistent with privacy protections and 
                            agreements.
Sec. 847. Voluntary nature of trust participation and information 
                            sharing.
Sec. 848. Financing of activities.
Sec. 849. Regulatory oversight.
                        TITLE IX--MISCELLANEOUS

Sec. 901. Health care choice for veterans.
Sec. 902. Health care choice for Indians.
Sec. 903. Termination of Federal Coordinating Council for Comparative 
                            Effectiveness Research.
Sec. 904. HHS and GAO joint study and report on costs of the 5 medical 
                            conditions that have the greatest impact.

                    TITLE I--INVESTING IN PREVENTION

SEC. 101. STRATEGIC APPROACH TO OUTCOME-BASED PREVENTION.

    (a) Interagency Coordinating Committee.--
            (1) In general.--The Secretary of Health and Human Services 
        (referred to in this title as the ``Secretary'') shall convene 
        an interagency coordinating committee to develop a national 
        strategic plan for prevention. The Secretary shall serve as the 
        chairperson of the committee.
            (2) Composition.--In carrying out paragraph (1), the 
        Secretary shall include the participation of--
                    (A) the Director of the National Institutes of 
                Health;
                    (B) the Director of the Centers for Disease Control 
                and Prevention;
                    (C) the Administrator of the Agency for Healthcare 
                Research and Quality;
                    (D) the Administrator of the Substance Abuse and 
                Mental Health Services Administration;
                    (E) the Administrator of the Health Resources and 
                Services Administration;
                    (F) the Secretary of Agriculture;
                    (G) the Director of the Centers for Medicare & 
                Medicaid Services;
                    (H) the Administrator of the Environmental 
                Protection Agency;
                    (I) the Director of the Indian Health Service;
                    (J) the Administrator of the Administration on 
                Aging;
                    (K) the Secretary of Veterans Affairs;
                    (L) the Secretary of Defense;
                    (M) the Secretary of Education; and
                    (N) the Secretary of Labor.
            (3) Report and plan.--Not later than 1 year after the date 
        of enactment of this Act, the Secretary, acting through the 
        coordinating committee convened under paragraph (1), shall 
        submit to Congress a report concerning the recommendation of 
        the committee for health promotion and disease prevention 
        activities. Such report shall include a specific strategic plan 
        that shall include--
                    (A) a list of national priorities on health 
                promotion and disease prevention to address lifestyle 
                behavior modification (smoking cessation, proper 
                nutrition, and appropriate exercise) and the prevention 
                measures for the 5 leading disease killers in the 
                United States;
                    (B) specific science-based initiatives to achieve 
                the measurable goals of Healthy People 2010 regarding 
                nutrition, exercise, and smoking cessation, and 
                targeting the 5 leading disease killers in the United 
                States;
                    (C) specific plans for consolidating Federal health 
                programs and Centers that exist to promote healthy 
                behavior and reduce disease risk (including eliminating 
                programs and offices determined to be ineffective in 
                meeting the priority goals of Healthy People 2010), 
                that include transferring the nutrition guideline 
                development responsibility from the Secretary of 
                Agriculture to the Director of the Centers for Disease 
                Control and Prevention;
                    (D) specific plans to ensure that all Federal 
                health care programs are fully coordinated with 
                science-based prevention recommendations promulgated by 
                the Director of the Centers for Disease Control and 
                Prevention;
                    (E) specific plans to ensure that all non-
                Department of Health and Human Services prevention 
                programs are based on the science-based guidelines 
                developed by the Centers for Disease Control and 
                Prevention under subparagraph (D); and
                    (F) a list of new non-Federal and non-government 
                partners identified by the committee to build Federal 
                capacity in health promotion and disease prevention 
                efforts.
            (4) Annual request to give testimony.--The Secretary shall 
        annually request an opportunity to testify before Congress 
        concerning the progress made by the United States in meeting 
        the outcome-based standards of Healthy People 2010 with respect 
        to disease prevention and measurable outcomes and effectiveness 
        of Federal programs related to this goal.
            (5) Periodic reviews.--The Secretary shall conduct periodic 
        reviews, not less than every 5 years, and grading of every 
        Federal disease prevention and health promotion initiatives, 
        programs, and agencies. Such reviews shall be evaluated based 
        on effectiveness in meeting metrics-based goals with an 
        analysis posted on such agencies' public Internet websites.
    (b) Federal Messaging on Health Promotion and Disease Prevention.--
            (1) Media campaigns.--
                    (A) In general.--Not later than 1 year after the 
                date of enactment of this Act, the Secretary, acting 
                through the Director of the Centers for Disease Control 
                and Prevention, shall establish and implement a 
                national science-based media campaign on health 
                promotion and disease prevention.
                    (B) Requirements of campaign.--The campaign 
                implemented under subparagraph (A)--
                            (i) shall be designed to address proper 
                        nutrition, regular exercise, smoking cessation, 
                        obesity reduction, the 5 leading disease 
                        killers in the United States, and secondary 
                        prevention through disease screening promotion;
                            (ii) shall be carried out through 
                        competitively bid contracts awarded to entities 
                        providing for the professional production and 
                        design of such campaign;
                            (iii) may include the use of television, 
                        radio, Internet, and other commercial marketing 
                        venues and may be targeted to specific age 
                        groups based on peer-reviewed social research;
                            (iv) shall not be duplicative of any other 
                        Federal efforts relating to health promotion 
                        and disease prevention; and
                            (v) may include the use of humor and 
                        nationally recognized positive role models.
                    (C) Evaluation.--The Secretary shall ensure that 
                the campaign implemented under subparagraph (A) is 
                subject to an independent evaluation every 2 years and 
                shall report every 2 years to Congress on the 
                effectiveness of such campaigns towards meeting 
                science-based metrics.
            (2) Website.--The Secretary, in consultation with private-
        sector experts, shall maintain or enter into a contract to 
        maintain an Internet website to provide science-based 
        information on guidelines for nutrition, regular exercise, 
        obesity reduction, smoking cessation, and specific chronic 
        disease prevention. Such website shall be designed to provide 
        information to health care providers and consumers.
            (3) Dissemination of information through providers.--The 
        Secretary, acting through the Centers for Disease Control and 
        Prevention, shall develop and implement a plan for the 
        dissemination of health promotion and disease prevention 
        information consistent with national priorities described in 
        the strategic and implementing plan under subsection (a)(3)(A), 
        to health care providers who participate in Federal programs, 
        including programs administered by the Indian Health Service, 
        the Department of Veterans Affairs, the Department of Defense, 
        and the Health Resources and Services Administration, and the 
        Medicare and Medicaid Programs.
            (4) Personalized prevention plans.--
                    (A) Contract.--The Secretary, acting through the 
                Director of the Centers for Disease Control and 
                Prevention, shall enter into a contract with a 
                qualified entity for the development and operation of a 
                Federal Internet website personalized prevention plan 
                tool.
                    (B) Use.--The website developed under subparagraph 
                (A) shall be designed to be used as a source of the 
                most up-to-date scientific evidence relating to disease 
                prevention for use by individuals. Such website shall 
                contain a component that enables an individual to 
                determine their disease risk (based on personal health 
                and family history, BMI, and other relevant 
                information) relating to the 5 leading diseases in the 
                United States, and obtain personalized suggestions for 
                preventing such diseases.
            (5) Internet portal.--The Secretary shall establish an 
        Internet portal for accessing risk-assessment tools developed 
        and maintained by private and academic entities.
            (6) Priority funding.--Funding for the activities 
        authorized under this section shall take priority over funding 
        from the Centers for Disease Control and Prevention provided 
        for grants to States and other entities for similar purposes 
        and goals as provided for in this section. Not to exceed 
        $500,000,000 shall be expended on the campaigns and activities 
        required under this Act.

SEC. 102. STATE GRANTS FOR OUTCOME-BASED PREVENTION EFFORT.

    (a) In General.--If the Secretary determines that it is essential 
to meeting the national priorities described in the plan required under 
section 101(a)(3)(A), the Secretary may award grants to States for the 
conduct of specific health promotion and disease prevention activities.
    (b) Eligibility.--To be eligible to receive a grant under 
subsection (a), a State shall submit to the Secretary an application at 
such time, in such manner, and containing such information as the 
Secretary may require, including a strategic plan that shall--
            (1) describe the specific health promotion and disease 
        prevention activities to be carried out under this grant;
            (2) include a list of the barriers that exist within the 
        State to meeting specific goals of Healthy People 2010;
            (3) include targeted demographic indicators and measurable 
        objectives with respect to health promotion and disease 
        prevention;
            (4) contain a set of process outcomes and milestones, based 
        on the process outcomes and milestones developed by the 
        Secretary, for measuring the effectiveness of activities 
        carried out under the grant in the State; and
            (5) outline the manner in which interventions to be carried 
        out under this grant will reduce morbidity and mortality within 
        the State over a 5-year period (or over a 10-year period, if 
        the Secretary determines such period appropriate for adequately 
        measuring progress).
    (c) Process Outcomes and Milestones.--
            (1) In general.--The Secretary shall develop process 
        outcomes and milestones to be used to measure the effectiveness 
        of activities carried out under a grant under this section by a 
        State.
            (2) Determinations.--If, beginning 2 years after the date 
        on which a grant is awarded to a State under this section, the 
        Secretary determines that the State is failing to make adequate 
        progress in meeting the outcomes and milestones contained in 
        the State plan under subsection (b)(4), the Secretary shall 
        provide the State with technical assistance on how to make such 
        progress. Such technical assistance shall continue for a period 
        of 2 years.
            (3) Continued failure to meet objectives.--If after the 
        expiration of the 2-year period described in paragraph (2), the 
        Secretary determines that the State is failing to make adequate 
        progress in meeting the outcomes and milestones contained in 
        the State plan under subsection (b)(4) over a 5-year period, 
        the Secretary shall terminate all funding to the State under a 
        grant under this section.
    (d) Regional Activities.--A State may use an amount, not to exceed 
15 percent of the total grant amount to such State, to carry out 
regional activities in conjunction with other States.
    (e) Targeted Activities.--A State may use grant funds to target 
specific populations within the State to achieve specific outcomes 
described in Healthy People 2010.
    (f) Innovative Incentive Structures.--The Secretary may award 
grants to States for the purposes of developing innovative incentive 
structures to encourage individuals to adopt specific prevention 
behaviors such as reducing their body mass index or for smoking 
cessation.
    (g) Wellness Bonuses.--
            (1) In general.--The Secretary shall award wellness bonus 
        payments to at least 5, but not more than 10, States that 
        demonstrate the greatest progress in reducing disease rates and 
        risk factors and increasing heathy behaviors.
            (2) Requirement.--To be eligible to receive a bonus payment 
        under paragraph (1), a State shall demonstrate--
                    (A) the progress described in paragraph (1); and
                    (B) that the State has met a specific floor for 
                progress outlined in the science-based metrics of 
                Healthy People 2010.
            (3) Use of payments.--Bonus payments under this subsection 
        may only be used by a State for the purposes of health 
        promotion and disease prevention.
            (4) Funding.--Out of funds appropriated to the Director of 
        the Centers for Disease Control and Prevention for each fiscal 
        year beginning with fiscal year 2010, the Director shall give 
        priority to using $50,000,000 of such funds to make bonus 
        payments under this subsection.
    (h) Administrative Expenses.--A State may use not more than 5 
percent of the amount of a grant under this section to carry out 
administrative activities.
    (i) State.--In this section, the term ``State'' means the 50 
States, the District of Columbia, the Commonwealth of Puerto Rico, 
Guam, Samoa, the United States Virgin Islands, and the Commonwealth of 
the Northern Mariana Islands.
    (j) Authorization of Appropriations.--Funding for the activities 
authorized under this section shall take priority over funding from the 
Centers for Disease Control and Prevention provided for grants to 
States and other entities for similar purposes and goals as provided 
for in this section, not to exceed $300,000,000 for each fiscal year.

SEC. 103. FOCUSING THE FOOD STAMP PROGRAM ON NUTRITION.

    (a) Counseling Brochure.--The Director of the Centers for Disease 
Control and Prevention shall develop, and the Secretary of Agriculture 
shall distribute to each individual and family enrolled in the Food 
Stamp Program under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), 
a science-based nutrition counseling brochure.
    (b) Limitations on Food Stamp Purchases.--
            (1) In general.--Not later than 6 months after the date of 
        enactment of this Act, the Secretary of Agriculture shall, 
        based on scientific, peer-reviewed recommendations provided by 
        a Commission that includes public health, medical, and 
        nutrition experts and the Director of the Centers for Disease 
        Control and Prevention, develop lists of foods that do not meet 
        science-based standards for proper nutrition and that may not 
        be purchased under the food stamp program. Such list shall be 
        updated on an annual basis to ensure the most current science-
        based recommendations are applied to the food stamp program.
            (2) Automated enforcement.--The Secretary of Agriculture 
        shall, through regulations, ensure that the limitations on food 
        purchases under paragraph (1) is enforced through the food 
        stamp program's automated system.
            (3) Implementation.--The Secretary of Agriculture shall 
        promulgate the regulations described in paragraph (2) by the 
        date that is not later than 1 year after the date of enactment 
        of this section.

SEC. 104. IMMUNIZATIONS.

    (a) Purchase of Vaccines.--Notwithstanding any other provision of 
law, a State may use amounts provided under section 317 of the Public 
Health Service Act (42 U.S.C. 247b) for immunization programs to 
purchase vaccines for use in health care provider offices and schools.
    (b) Technical Assistance and Reduction in Funding.--If a State does 
not achieve a benchmark of 80 percent coverage within the State for 
Centers for Disease Control and Prevention-recommended vaccines, the 
Director of the Centers shall provide technical assistance to the State 
for a period of 2 years. If after the expiration of such 2-year period 
the State continues to fail to achieve such benchmark, the Secretary 
shall reduce funding provided under section 317 of the Public Health 
Service Act to such State by 5 percent.
    (c) Bonus Grant.--A State achieving a benchmark of 90 percent or 
greater coverage within the State for Centers for Disease Control and 
Prevention-recommended vaccines shall be eligible for a bonus grant 
from amounts appropriated under subsection (d).
    (d) Authorization of Appropriations.--Out of funds appropriated to 
the Director of the Centers for Disease Control and Prevention for each 
fiscal year beginning with fiscal year 2010, there shall be made 
available to carry out this section, $50,000,000 for each fiscal year.
    (e) Funding for Section 317.--Section 317(j)(1) of the Public 
Health Service Act (42 U.S.C. 247b(j)(1)) is amended by striking 
``2005'' and inserting ``2012''.

              TITLE II--STATE-BASED HEALTH CARE EXCHANGES

SEC. 201. STATE-BASED HEALTH CARE EXCHANGES.

    (a) In General.--The Secretary of Health and Human Services 
(referred to in this title as the ``Secretary'') shall establish a 
process for the review of applications submitted by States for the 
establishment and implementation of State-based health care Exchanges 
(referred to in this title as a ``State Exchange'') and for the 
certification of such Exchanges. The Secretary shall certify a State 
Exchange if the Secretary determines that such Exchange meets the 
requirements of this title.
    (b) Continued Certification.--The certification of a State Exchange 
under subsection (a) shall remain in effect until the Secretary 
determines that the Exchange has failed to meet any of the requirements 
under this title.

SEC. 202. REQUIREMENTS.

    (a) General Requirements for Certification.--An application for 
certification under section 201(a) shall demonstrate compliance with 
the following:
            (1) Purpose.--The primary purpose of a State Exchange shall 
        be the facilitation of the individual purchase of innovative 
        private health insurance and the creation of a market where 
        private health plans compete for enrollees based on price and 
        quality.
            (2) Administration.--A State shall ensure the operation of 
        the State Exchange through direct contracts with the health 
        insurance plans that are participating in the State Exchange or 
        through a contract with a third party administrator for the 
        operation of the Exchange.
            (3) Plan participation.--A State shall not restrict or 
        otherwise limit the ability of a health insurance plan to 
        participate in, and offer health insurance coverage through, 
        the State Exchange, so long as the health insurance issuers 
        involved are duly licensed under State insurance laws 
        applicable to all health insurance issuers in the State and 
        otherwise comply with the requirements of this title.
            (4) Premiums.--
                    (A) Amount.--A State shall not determine premium or 
                cost sharing amounts for health insurance coverage 
                offered through the State Exchange.
                    (B) Collection method.--A State shall ensure the 
                existence of an effective and efficient method for the 
                collection of premiums for health insurance coverage 
                offered through the State Exchange.
    (b) Benefit Parity With Members of Congress.--With respect to 
health insurance issuers offering health insurance coverage through the 
State Exchange, the State shall not impose any requirement that such 
issuers provide coverage that includes benefits different than 
requirements on plans offered to Members of Congress under chapter 89 
of title 5, United States Code.
    (c) Facilitating Universal Coverage for Americans.--
            (1) Automatic enrollment.--The State Exchange shall ensure 
        that health insurance coverage offered through the Exchange 
        provides for the application of uniform mechanisms that are 
        designed to encourage and facilitate the enrollment of all 
        eligible individuals in Exchange-based health insurance 
        coverage. Such mechanisms shall include automatic enrollment 
        through various venues, which may include emergency rooms, the 
        submission of State tax forms, places of employment in the 
        State, and State departments of motor vehicles.
            (2) Other enrollment opportunities.--
                    (A) In general.--The State Exchange shall ensure 
                that health insurance coverage offered through the 
                Exchange permits enrollment, and changes in enrollment, 
                of individuals at the time such individuals become 
                eligible individuals in the State.
                    (B) Annual open enrollment periods.--The State 
                Exchange shall ensure that health insurance coverage 
                offered through the Exchange permits eligible 
                individuals to annually change enrollment among the 
                coverage offered through the Exchange, subject to 
                subparagraph (A).
                    (C) Incentives for continuous annual coverage.--The 
                State Exchange shall include an incentive for eligible 
                individuals to remain insured from plan year to plan 
                year, and may include incentives such as State tax 
                incentives or premium-based incentives.
            (3) Guaranteed access for individuals.--The State Exchange 
        shall ensure that, with respect to health insurance coverage 
        offered through the Exchange, all eligible individuals are able 
        to enroll in the coverage of their choice provided that such 
        individuals agree to make applicable premium and cost sharing 
        payments.
            (4) Limitation on pre-existing condition exclusions.--The 
        State Exchange shall ensure that health insurance coverage 
        offered through the Exchange meets the requirements of section 
        9801 of the Internal Revenue Code of 1986 in the same manner as 
        if such coverage was a group health plan.
            (5) Opt-out.--Nothing in this title shall be construed to 
        require that an individual be enrolled in health insurance 
        coverage.
    (d) Limitation on Exorbitant Premiums.--
            (1) Establishment of mechanism.--With respect to health 
        insurance coverage offered through the State Exchange, the 
        Exchange shall establish a mechanisms to protect enrollees from 
        the imposition of excessive premiums, to reduce adverse 
        selection, and to share risk.
            (2) Mechanism options.--The mechanisms referred to in 
        paragraph (1) may include the following:
                    (A) Independent risk adjustment.--The 
                implementation of risk-adjustment among health 
                insurance coverage offered through the State Exchange 
                through a contract entered into with a private, 
                independent board. Such board shall include 
                representation of health insurance issuers and State 
                officials but shall be independently controlled. The 
                State Exchange shall ensure that risk-adjustment 
                implemented under this subparagraph shall be based on a 
                blend of patient diagnoses and estimated costs.
                    (B) Health security pools.--The establishment (or 
                continued operation under section 2745 of the Public 
                Health Service Act) of a health security pool to 
                guarantee high-risk individuals access to affordable, 
                quality health care.
                    (C) Reinsurance.--The implementation of a 
                successful reinsurance mechanisms to guarantee high-
                risk individuals access to affordable, quality health 
                care.
    (e) Medicaid and SCHIP Beneficiaries.--The State Exchange shall 
include procedures to permit eligible individuals who are receiving (or 
who are eligible to receive) health care under title XIX or XXI of the 
Social Security Act to enroll in health insurance coverage offered 
through the Exchange.
    (f) Dissemination of Coverage Information.--The State Exchange 
shall ensure that each health insurance issuer that provides health 
insurance coverage through the Exchange disseminate to eligible 
individuals and employers within the State information concerning 
health insurance coverage options, including the plans offered and 
premiums and benefits for such plans.
    (g) Regional Options.--
            (1) Interstate compacts.--Two or more States that establish 
        a State Exchange may enter into interstate compacts providing 
        for the regulations of health insurance coverage offered within 
        such States.
            (2) Model legislation.--States adopting model legislation 
        as developed by the National Association of Insurance 
        Commissioners shall be eligible to enter into an interstate 
        compact as provided for in this section.
            (3) Multi-state pooling arrangements.--State Exchanges may 
        implement a multi-state health care coverage pooling 
        arrangement under this title.
    (h) Eligible Individual.--In this title, the term ``eligible 
individual'' means an individual who is--
            (1) a citizen or national of the United States or an alien 
        lawfully admitted to the United States for permanent residence 
        or otherwise residing in the United States under color of law;
            (2) a resident of the State involved;
            (3) not incarcerated; and
            (4) not eligible for coverage under parts A and B (or C) of 
        the Medicare program under title XVIII of the Social Security 
        Act.

SEC. 203. STATE EXCHANGE INCENTIVES.

    (a) Grants.--The Secretary may award grants, pursuant to subsection 
(b), to States for the development, implementation, and evaluation of 
certified State Exchanges and to provide more options and choice for 
individuals purchasing health insurance coverage.
    (b) One-Time Increase in Medicaid Payment.--In the case of a State 
awarded a grant to carry out this section, the total amount of the 
Federal payment determined for the State under section 1913 of the 
Social Security Act (as amended by section 401) for fiscal year 2011 
shall be increased by an amount equal to 1 percent of the total amount 
of payments made to the State for fiscal year 2010 under section 
1903(a) of the Social Security Act (42 U.S.C. 1396b(a)) for purposes of 
carrying out a grant awarded under this section. Amounts paid to a 
State pursuant to this subsection shall remain available until 
expended.

 TITLE III--FAIR TAX TREATMENT FOR ALL AMERICANS TO AFFORD HEALTH CARE

SEC. 300. REFERENCE.

    Except as otherwise expressly provided, whenever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Internal Revenue Code of 
1986.

   Subtitle A--Refundable and Advanceable Credit for Certain Health 
                           Insurance Coverage

SEC. 301. REFUNDABLE AND ADVANCEABLE CREDIT FOR CERTAIN HEALTH 
              INSURANCE COVERAGE.

    (a) Advanceable Credit.--Subpart A of part IV of subchapter A of 
chapter 1 (relating to nonrefundable personal credits) is amended by 
adding at the end the following new section:

``SEC. 25E. QUALIFIED HEALTH INSURANCE CREDIT.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year the sum of the monthly limitations determined 
under subsection (b) for the taxpayer and the taxpayer's spouse and 
dependents.
    ``(b) Monthly Limitation.--
            ``(1) In general.--The monthly limitation for each month 
        during the taxable year for an eligible individual is \1/12\th 
        of--
                    ``(A) the applicable adult amount, in the case that 
                the eligible individual is the taxpayer or the 
                taxpayer's spouse,
                    ``(B) the applicable adult amount, in the case that 
                the eligible individual is an adult dependent, and
                    ``(C) the applicable child amount, in the case that 
                the eligible individual is a child dependent.
            ``(2) Limitation on aggregate amount.--Notwithstanding 
        paragraph (1), the aggregate monthly limitations for the 
        taxpayer and the taxpayer's spouse and dependents for any month 
        shall not exceed \1/12\th of the applicable aggregate amount.
            ``(3) No credit for ineligible months.--With respect to any 
        individual, the monthly limitation shall be zero for any month 
        for which such individual is not an eligible individual.
            ``(4) Applicable amount.--
                    ``(A) In general.--For purposes of this section--
                            ``(i) Applicable adult amount.--The 
                        applicable adult amount is $2,290.
                            ``(ii) Applicable child amount.--The 
                        applicable child amount is $1,710.
                            ``(iii) Applicable aggregate amount.--The 
                        applicable aggregate amount is $5,710.
                    ``(B) Cost-of-living adjustments.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning in a calendar year after 
                        2011, each dollar amount contained in 
                        subparagraph (A) shall be increased by an 
                        amount equal to such dollar amount multiplied 
                        by the blended cost-of-living adjustment.
                            ``(ii) Blended cost-of-living adjustment.--
                        For purposes of clause (i), the blended cost-
                        of-living adjustment means one-half of the sum 
                        of--
                                    ``(I) the cost-of-living adjustment 
                                determined under section 1(f)(3) for 
                                the calendar year in which the taxable 
                                year begins by substituting `calendar 
                                year 2010' for `calendar year 1992' in 
                                subparagraph (B) thereof, plus
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                213(d)(10)(B)(ii) for the calendar year 
                                in which the taxable year begins by 
                                substituting `2010' for `1996' in 
                                subclause (II) thereof.
                            ``(iii) Rounding.--Any increase determined 
                        under clause (i) shall be rounded to the 
                        nearest multiple of $10.
                    ``(C) Revenue neutrality adjustments.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning in a calendar year after 
                        2011, each dollar amount contained in 
                        subparagraph (A), as adjusted under 
                        subparagraph (B), shall be further adjusted (if 
                        necessary) such that the aggregate of such 
                        dollar amounts allowed as credits under this 
                        section for such taxable year equals but does 
                        not exceed the total increase in revenues in 
                        the Treasury resulting from the amendments made 
                        by sections 303 and 401 of the Patients' Choice 
                        Act for such taxable year as estimated by the 
                        Secretary.
                            ``(ii) Date of adjustment.--The Secretary 
                        shall announce the adjustments for any taxable 
                        year under this subparagraph not later than the 
                        preceding October 1.
    ``(c) Limitation Based on Amount of Tax.--In the case of a taxable 
year to which section 26(a)(2) does not apply, the credit allowed under 
subsection (a) for the taxable year shall not exceed the excess of--
            ``(1) the sum of the regular tax liability (as defined in 
        section 26(b)) plus the tax imposed by section 55, over
            ``(2) the sum of the credits allowable under this subpart 
        (other than this section) and section 27 for the taxable year.
    ``(d) Excess Credit Refundable to Certain Tax-Favored Accounts.--
If--
            ``(1) the credit which would be allowable under subsection 
        (a) if only qualified refund eligible health insurance were 
        taken into account under this section, exceeds
            ``(2) the limitation imposed by section 26 or subsection 
        (c) for the taxable year,
such excess shall be paid by the Secretary into the designated account 
of the taxpayer.
    ``(e) Eligible Individual.--For purposes of this section--
            ``(1) In general.--The term `eligible individual' means, 
        with respect to any month, an individual who--
                    ``(A) is the taxpayer, the taxpayer's spouse, or 
                the taxpayer's dependent, and
                    ``(B) is covered under qualified health insurance 
                as of the 1st day of such month.
            ``(2) Medicare coverage, medicaid disability coverage, and 
        military coverage.--The term `eligible individual' shall not 
        include any individual who for any month is--
                    ``(A) entitled to benefits under part A of title 
                XVIII of the Social Security Act or enrolled under part 
                B of such title, and the individual is not a 
                participant or beneficiary in a group health plan or 
                large group health plan that is a primary plan (as 
                defined in section 1862(b)(2)(A) of such Act),
                    ``(B) enrolled by reason of disability in the 
                program under title XIX of such Act, or
                    ``(C) entitled to benefits under chapter 55 of 
                title 10, United States Code, including under the 
                TRICARE program (as defined in section 1072(7) of such 
                title).
            ``(3) Identification requirements.--The term `eligible 
        individual' shall not include any individual for any month 
        unless the policy number associated with the qualified health 
        insurance and the TIN of each eligible individual covered under 
        such health insurance for such month are included on the return 
        of tax for the taxable year in which such month occurs.
            ``(4) Prisoners.--The term `eligible individual' shall not 
        include any individual for a month if, as of the first day of 
        such month, such individual is imprisoned under Federal, State, 
        or local authority.
            ``(5) Aliens.--The term `eligible individual' shall not 
        include any alien individual who is not a lawful permanent 
        resident of the United States.
    ``(f) Health Insurance.--For purposes of this section--
            ``(1) Qualified health insurance.--The term `qualified 
        health insurance' means any insurance constituting medical care 
        which (as determined under regulations prescribed by the 
        Secretary)--
                    ``(A) has a reasonable annual and lifetime benefit 
                maximum, and
                    ``(B) provides coverage for inpatient and 
                outpatient care, emergency benefits, and physician 
                care.
        Such term does not include any insurance substantially all of 
        the coverage of which is coverage described in section 
        223(c)(1)(B).
            ``(2) Qualified refund eligible health insurance.--The term 
        `qualified refund eligible health insurance' means any 
        qualified health insurance which is coverage under a group 
        health plan (as defined in section 5000(b)(1)).
    ``(g) Designated Accounts.--
            ``(1) Designated account.--For purposes of this section, 
        the term `designated account' means any specified account 
        established and maintained by the provider of the taxpayer's 
        qualified refund eligible health insurance--
                    ``(A) which is designated by the taxpayer (in such 
                form and manner as the Secretary may provide) on the 
                return of tax for the taxable year,
                    ``(B) which, under the terms of the account, 
                accepts the payment described in subsection (d) on 
                behalf of the taxpayer, and
                    ``(C) which, under such terms, provides for the 
                payment of expenses by the taxpayer or on behalf of 
                such taxpayer by the trustee or custodian of such 
                account, including payment to such provider.
            ``(2) Specified account.--For purposes of this paragraph, 
        the term `specified account' means--
                    ``(A) any health savings account under section 223 
                or Archer MSA under section 220, or
                    ``(B) any health insurance reserve account.
            ``(3) Health insurance reserve account.--For purposes of 
        this subsection, the term `health insurance reserve account' 
        means a trust created or organized in the United States as a 
        health insurance reserve account exclusively for the purpose of 
        paying the qualified medical expenses (within the meaning of 
        section 223(d)(2)) of the account beneficiary (as defined in 
        section 223(d)(3)), but only if the written governing 
        instrument creating the trust meets the requirements described 
        in subparagraphs (B), (C), (D), and (E) of section 223(d)(1). 
        Rules similar to the rules under subsections (g) and (h) of 
        section 408 shall apply for purposes of this subparagraph.
            ``(4) Treatment of payment.--Any payment under subsection 
        (d) to a designated account shall not be taken into account 
        with respect to any dollar limitation which applies with 
        respect to contributions to such account (or to tax benefits 
        with respect to such contributions).
    ``(h) Other Definitions.--For purposes of this section--
            ``(1) Dependent.--The term `dependent' has the meaning 
        given such term by section 152 (determined without regard to 
        subsections (b)(1), (b)(2), and (d)(1)(B) thereof). An 
        individual who is a child to whom section 152(e) applies shall 
        be treated as a dependent of the custodial parent for a 
        coverage month unless the custodial and noncustodial parent 
        provide otherwise.
            ``(2) Adult.--The term `adult' means an individual who is 
        not a child.
            ``(3) Child.--The term `child' means a qualifying child (as 
        defined in section 152(c)).
    ``(i) Special Rules.--
            ``(1) Coordination with medical deduction.--Any amount paid 
        by a taxpayer for insurance which is taken into account for 
        purposes of determining the credit allowable to the taxpayer 
        under subsection (a) shall not be taken into account in 
        computing the amount allowable to the taxpayer as a deduction 
        under section 213(a) or 162(l).
            ``(2) Coordination with health care tax credit.--No credit 
        shall be allowed under subsection (a) for any taxable year to 
        any taxpayer and qualifying family members with respect to whom 
        a credit under section 35 is allowed for such taxable year.
            ``(3) Denial of credit to dependents.--No credit shall be 
        allowed under this section to any individual with respect to 
        whom a deduction under section 151 is allowable to another 
        taxpayer for a taxable year beginning in the calendar year in 
        which such individual's taxable year begins.
            ``(4) Married couples must file joint return.--
                    ``(A) In general.--If the taxpayer is married at 
                the close of the taxable year, the credit shall be 
                allowed under subsection (a) only if the taxpayer and 
                his spouse file a joint return for the taxable year.
                    ``(B) Marital status; certain married individuals 
                living apart.--Rules similar to the rules of paragraphs 
                (3) and (4) of section 21(e) shall apply for purposes 
                of this paragraph.
            ``(5) Verification of coverage, etc.--No credit shall be 
        allowed under this section with respect to any individual 
        unless such individual's coverage (and such related information 
        as the Secretary may require) is verified in such manner as the 
        Secretary may prescribe.
            ``(6) Insurance which covers other individuals; treatment 
        of payments.--Rules similar to the rules of paragraphs (7) and 
        (8) of section 35(g) shall apply for purposes of this section.
    ``(j) Coordination With Advance Payments.--
            ``(1) Reduction in credit for advance payments.--With 
        respect to any taxable year, the amount which would (but for 
        this subsection) be allowed as a credit to the taxpayer under 
        subsection (a) shall be reduced (but not below zero) by the 
        aggregate amount paid on behalf of such taxpayer under section 
        7527A for months beginning in such taxable year.
            ``(2) Recapture of excess advance payments.--If the 
        aggregate amount paid on behalf of the taxpayer under section 
        7527A for months beginning in the taxable year exceeds the sum 
        of the monthly limitations determined under subsection (b) for 
        the taxpayer and the taxpayer's spouse and dependents for such 
        months, then the tax imposed by this chapter for such taxable 
        year shall be increased by the sum of--
                    ``(A) such excess, plus
                    ``(B) interest on such excess determined at the 
                underpayment rate established under section 6621 for 
                the period from the date of the payment under section 
                7527A to the date such excess is paid.
        For purposes of subparagraph (B), an equal part of the 
        aggregate amount of the excess shall be deemed to be 
        attributable to payments made under section 7527A on the first 
        day of each month beginning in such taxable year, unless the 
        taxpayer establishes the date on which each such payment giving 
        rise to such excess occurred, in which case subparagraph (B) 
        shall be applied with respect to each date so established. The 
        Secretary may rescind or waive all or any portion of any amount 
        imposed by reason of subparagraph (B) if such excess was not 
        the result of the actions of the taxpayer.''.
    (b) Advance Payment of Credit.--Chapter 77 (relating to 
miscellaneous provisions) is amended by inserting after section 7527 
the following new section:

``SEC. 7527A. ADVANCE PAYMENT OF CREDIT FOR QUALIFIED REFUND ELIGIBLE 
              HEALTH INSURANCE.

    ``(a) In General.--The Secretary shall establish a program for 
making payments on behalf of individuals to providers of qualified 
refund eligible health insurance (as defined in section 25E(f)(2)) for 
such individuals.
    ``(b) Limitation.--The Secretary may make payments under subsection 
(a) only to the extent that the Secretary determines that the amount of 
such payments made on behalf of any taxpayer for any month does not 
exceed the sum of the monthly limitations determined under section 
25E(b) for the taxpayer and taxpayer's spouse and dependents for such 
month.''.
    (c) Information Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 (relating to information concerning transactions 
        with other persons) is amended by inserting after section 6050W 
        the following new section:

``SEC. 6050X. RETURNS RELATING TO CREDIT FOR QUALIFIED REFUND ELIGIBLE 
              HEALTH INSURANCE.

    ``(a) Requirement of Reporting.--Every person who is entitled to 
receive payments for any month of any calendar year under section 7527A 
(relating to advance payment of credit for qualified refund eligible 
health insurance) with respect to any individual shall, at such time as 
the Secretary may prescribe, make the return described in subsection 
(b) with respect to each such individual.
    ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains, with respect to each individual referred to 
        in subsection (a)--
                    ``(A) the name, address, and TIN of each such 
                individual,
                    ``(B) the months for which amounts payments under 
                section 7527A were received,
                    ``(C) the amount of each such payment,
                    ``(D) the type of insurance coverage provided by 
                such person with respect to such individual and the 
                policy number associated with such coverage,
                    ``(E) the name, address, and TIN of the spouse and 
                each dependent covered under such coverage, and
                    ``(F) such other information as the Secretary may 
                prescribe.
    ``(c) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Required.--Every person required to make a return 
under subsection (a) shall furnish to each individual whose name is 
required to be set forth in such return a written statement showing--
            ``(1) the contact information of the person required to 
        make such return, and
            ``(2) the information required to be shown on the return 
        with respect to such individual.
The written statement required under the preceding sentence shall be 
furnished on or before January 31 of the year following the calendar 
year for which the return under subsection (a) is required to be made.
    ``(d) Returns Which Would Be Required To Be Made by 2 or More 
Persons.--Except to the extent provided in regulations prescribed by 
the Secretary, in the case of any amount received by any person on 
behalf of another person, only the person first receiving such amount 
shall be required to make the return under subsection (a).''.
            (2) Assessable penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) 
                (relating to definitions) is amended by striking ``or'' 
                at the end of clause (xxii), by striking ``and'' at the 
                end of clause (xxiii) and inserting ``or'', and by 
                inserting after clause (xxiii) the following new 
                clause:
                            ``(xxiv) section 6050X (relating to returns 
                        relating to credit for qualified refund 
                        eligible health insurance), and''.
                    (B) Paragraph (2) of section 6724(d) is amended by 
                striking ``or'' at the end of subparagraph (EE), by 
                striking the period at the end of subparagraph (FF) and 
                inserting ``, or'' and by inserting after subparagraph 
                (FF) the following new subparagraph:
                    ``(GG) section 6050X (relating to returns relating 
                to credit for qualified refund eligible health 
                insurance).''.
    (d) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``25E,'' before ``35,''.
            (2)(A) Section 24(b)(3)(B) is amended by inserting ``, 
        25E,'' after ``25D''.
            (B) Section 25(e)(1)(C)(ii) is amended by inserting 
        ``25E,'' after ``25D,''.
            (C) Section 25B(g)(2) is amended by inserting ``25E,'' 
        after ``25D,''.
            (D) Section 26(a)(1) is amended by inserting ``25E,'' after 
        ``25D,''.
            (E) Section 30(c)(2)(B)(ii) is amended by inserting 
        ``25E,'' after ``25D,''.
            (F) Section 30D(c)(2)(B)(ii) is amended by striking ``and 
        25D'' and inserting ``, 25D, and 25E''.
            (G) Section 904(i) is amended by inserting ``25E,'' after 
        ``25B,''.
            (H) Section 1400C(d)(2) is amended by inserting ``25E,'' 
        after ``25D,''.
            (3) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 25D the following new item:

``Sec. 25E. Qualified health insurance credit.''.
            (4) The table of sections for chapter 77 is amended by 
        inserting after the item relating to section 7527 the following 
        new item:

``Sec. 7527A. Advance payment of credit for qualified refund eligible 
                            health insurance.''.
            (5) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 is amended by adding at the end the 
        following new item:

``Sec. 6050X. Returns relating to credit for qualified refund eligible 
                            health insurance.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2010.

SEC. 302. REQUIRING EMPLOYER TRANSPARENCY ABOUT EMPLOYEE BENEFITS.

    (a) In General.--Section 6051(a) (relating to W-2 requirement) is 
amended by striking ``and'' at the end of paragraph (12), by striking 
the period at the end of paragraph (13) and inserting ``, and'' and by 
inserting after paragraph (13) the following new paragraph:
            ``(14) the aggregate cost (within the meaning of section 
        4980B(f)(4)) for coverage of the employee under an accident or 
        health plan which is excludable from the gross income of the 
        employee under section 106(a) (other than coverage under a 
        health flexible spending arrangement).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to statements for calendar years beginning after 2009.

SEC. 303. CHANGES TO EXISTING TAX PREFERENCES FOR MEDICAL COVERAGE, 
              ETC., FOR INDIVIDUALS ELIGIBLE FOR QUALIFIED HEALTH 
              INSURANCE CREDIT.

    (a) Exclusion for Contributions by Employer to Accident and Health 
Plans.--
            (1) In general.--Section 106 (relating to contributions by 
        employer to accident and health plans) is amended by adding at 
        the end the following new subsection:
    ``(f) No Exclusion for Individuals Eligible for Qualified Health 
Insurance Credit.--Subsection (a) shall not apply with respect to any 
employer-provided coverage under an accident or health plan for any 
individual for any month unless such individual is described in 
paragraph (2) or (5) of section 25E(e) for such month. The amount 
includible in gross income by reason of this subsection shall be 
determined under rules similar to the rules of section 4980B(f)(4).''.
            (2) Conforming amendments.--
                    (A) Section 106(b)(1) is amended--
                            (i) by inserting ``gross income does not 
                        include'' before ``amounts contributed'', and
                            (ii) by striking ``shall be treated as 
                        employer-provided coverage for medical expenses 
                        under an accident or health plan''.
                    (B) Section 106(d)(1) is amended--
                            (i) by inserting ``gross income does not 
                        include'' before ``amounts contributed'', and
                            (ii) by striking ``shall be treated as 
                        employer-provided coverage for medical expenses 
                        under an accident or health plan''.
    (b) Amounts Received Under Accident and Health Plans.--Section 105 
(relating to amounts received under accident and health plans) is 
amended by adding at the end the following new subsection:
    ``(f) No Exclusion for Individuals Eligible for Qualified Health 
Insurance Credit.--Subsection (b) shall not apply with respect to any 
employer-provided coverage under an accident or health plan for any 
individual for any month unless such individual is described in 
paragraph (2) or (5) of section 25E(e) for such month.''.
    (c) Special Rules for Health Insurance Costs of Self-Employed 
Individuals.--Subsection (l) of section 162 (relating to special rules 
for health insurance costs of self-employed individuals) is amended by 
adding at the end the following new paragraph:
            ``(6) No deduction to individuals eligible for qualified 
        health insurance.--Paragraph (1) shall not apply for any 
        individual for any month unless such individual is described in 
        paragraph (2) or (5) of section 25E(e) for such month.''.
    (d) Earned Income Credit Unaffected by Repealed Exclusions.--
Subparagraph (B) of section 32(c)(2) is amended by redesignating 
clauses (v) and (vi) as clauses (vi) and (vii), respectively, and by 
inserting after clause (iv) the following new clause:
                            ``(v) the earned income of an individual 
                        shall be computed without regard to sections 
                        105(f) and 106(f),''.
    (e) Modification of Deduction for Medical Expenses.--Subsection (d) 
of section 213 is amended by adding at the end the following new 
paragraph:
            ``(12) Premiums for qualified health insurance.--The term 
        `medical care' does not include any amount paid as a premium 
        for coverage of an eligible individual (as defined in section 
        25E(e)) under qualified health insurance (as defined in section 
        25E(f)) for any month.''.
    (f) Reporting Requirement.--Subsection (a) of section 6051 is 
amended by striking ``and'' at the end of paragraph (12), by striking 
the period at the end of paragraph (13) and inserting ``and'', and by 
inserting after paragraph (13) the following new paragraph:
            ``(14) the total amount of employer-provided coverage under 
        an accident or health plan which is includible in gross income 
        by reason of sections 105(f) and 106(f).''.
    (g) Retired Public Safety Officers.--Section 402(l)(4)(D) is 
amended by adding at the end the following: ``Such term shall not 
include any premium for coverage by an accident or health insurance 
plan for any month unless such individual is described in paragraph (2) 
or (5) of section 25E(e) for such month.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2010.
    (i) No Intent To Encourage State Taxation of Health Benefits.--No 
intent to encourage any State to treat health benefits as taxable 
income for the purpose of increasing State income taxes may be inferred 
from the provisions of, and amendments made by, this section.

                  Subtitle B--Health Savings Accounts

SEC. 311. IMPROVEMENTS TO HEALTH SAVINGS ACCOUNTS.

    (a) Increase in Monthly Contribution Limit.--
            (1) In general.--Paragraph (2) of section 223(b) (relating 
        to limitations) is amended to read as follows:
            ``(2) Monthly limitation.--
                    ``(A) In general.--In the case of an eligible 
                individual who has coverage under a high deductible 
                health plan, the monthly limitation for any month of 
                such coverage is \1/12\ of the sum of--
                            ``(i) the greater of--
                                    ``(I) the sum of the annual 
                                deductible and the other annual out-of-
                                pocket expenses (other than for 
                                premiums) required to be paid under the 
                                plan by the eligible individual for 
                                covered benefits, or
                                    ``(II) in the case of an eligible 
                                individual who has--
                                            ``(aa) self-only coverage 
                                        under a high deductible health 
                                        plan as of the first day of 
                                        such month, $3,000, or
                                            ``(bb) family coverage 
                                        under a high deductible health 
                                        plan as of the first day of 
                                        such month, $5,950, and
                            ``(ii) in the case of an eligible 
                        individual who has coverage under a qualified 
                        long-term care insurance contract (as defined 
                        in section 7702B(b)), the lesser of--
                                    ``(I) the annual premium for such 
                                coverage, or
                                    ``(II) $1,000.
                    ``(B) Special rules relating to out-of-pocket 
                expenses.--
                            ``(i) Reduction for separate plan.--The 
                        annual out-of-pocket expenses taken into 
                        account under subparagraph (A)(i)(I) with 
                        respect to any eligible individual shall be 
                        reduced by any out-of-pocket expense payable 
                        under a separate plan covering the individual.
                            ``(ii) Secretarial authority.--The 
                        Secretary may by regulations provide that 
                        annual out-of-pocket expenses will not be taken 
                        into account under subparagraph (A)(i)(I) to 
                        the extent that there is only a remote 
                        likelihood that such amounts will be required 
                        to be paid.''.
            (2) Application of special rules for married individuals.--
        Paragraph (5) of section 223(b) (relating to limitations) is 
        amended to read as follows:
            ``(5) Special rules for married individuals.--
                    ``(A) In general.--In the case of individuals who 
                are married to each other and who are both eligible 
                individuals, the limitation under paragraph (1) for 
                each spouse shall be equal to the spouse's applicable 
                share of the combined marital limit.
                    ``(B) Combined marital limit.--For purposes of 
                subparagraph (A), the combined marital limit is the 
                excess (if any) of--
                            ``(i) the lesser of--
                                    ``(I) subject to subparagraph (C), 
                                the sum of the limitations computed 
                                separately under paragraph (1) for each 
                                spouse (including any additional 
                                contribution amount under paragraph 
                                (3)), or
                                    ``(II) the dollar amount in effect 
                                under subsection (c)(2)(A)(ii)(II), 
                                over
                            ``(ii) the aggregate amount paid to Archer 
                        MSAs of such spouses for the taxable year.
                    ``(C) Special rule where both spouses have family 
                coverage.--For purposes of subparagraph (B)(i)(I), if 
                either spouse has family coverage which covers both 
                spouses, both spouses shall be treated as having only 
                such coverage (and if both spouses each have such 
                coverage under different plans, shall be treated as 
                having only family coverage with the plan with respect 
                to which the lowest amount is determined under 
                paragraph (2)(A)(i)(I)).
                    ``(D) Applicable share.--For purposes of 
                subparagraph (A), a spouse's applicable share is \1/2\ 
                of the combined marital limit unless both spouses agree 
                on a different division.
                    ``(E) Couples not married entire year.--The 
                Secretary shall prescribe rules for the application of 
                this paragraph in the case of any taxable year for 
                which the individuals were not married to each other 
                during all months included in the taxable year, 
                including rules which allow individuals in appropriate 
                cases to take into account coverage prior to marriage 
                in computing the combined marital limit for purposes of 
                this paragraph.''.
            (3) Self-only coverage.--Paragraph (4) of section 223(c) 
        (relating to definitions and special rules) is amended to read 
        as follows:
            ``(4) Coverage.--
                    ``(A) Family coverage.--The term `family coverage' 
                means any coverage other than self-only coverage.
                    ``(B) Self-only coverage.--If more than 1 
                individual is covered by a high deductible health plan 
                but only 1 of the individuals is an eligible 
                individual, the coverage shall be treated as self-only 
                coverage.''.
            (4) Conforming amendments.--
                    (A) Section 223(b)(3)(A) is amended by striking 
                ``subparagraphs (A) and (B) of''.
                    (B) Section 223(c)(2)(A) is amended--
                            (i) by striking ``$1,000'' in clause (i)(I) 
                        and inserting ``$1,150'', and
                            (ii) by striking ``$5,000'' in clause 
                        (ii)(I) and inserting ``$5,800''.
                    (C) Section 223(d)(1)(A)(ii)(I) is amended by 
                striking ``subsection (b)(2)(B)(ii)'' and inserting 
                ``subsection (c)(2)(A)(ii)(II)''.
                    (D) Clause (ii) of section 223(c)(2)(D) is amended 
                to read as follows:
                            ``(ii) Certain items disregarded in 
                        computing monthly limitation.--Such plan's 
                        annual deductible, and such plan's annual out-
                        of-pocket limitation, for services provided 
                        outside of such network shall not be taken into 
                        account for purposes of subsection (b)(2).''
                    (E) Subsection (g) of section 223 is amended to 
                read as follows:
    ``(g) Cost-of-Living Adjustments.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 2009, each dollar amount 
        contained in subsections (b)(2)(A) and (c)(2)(A) shall be 
        increased by an amount equal to such dollar amount multiplied 
        by the blended cost-of-living adjustment.
            ``(2) Blended cost-of-living adjustment.--For purposes of 
        paragraph (1), the blended cost-of-living adjustment means one-
        half of the sum of--
                    ``(A) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins by substituting `calendar year 
                2008' for `calendar year 1992' in subparagraph (B) 
                thereof, plus
                    ``(B) the cost-of-living adjustment determined 
                under section 213(d)(10)(B)(ii) for the calendar year 
                in which the taxable year begins by substituting `2008' 
                for `1996' in subclause (II) thereof.
            ``(3) Rounding.--Any increase determined under paragraph 
        (2) shall be rounded to the nearest multiple of $50.''.
    (b) Use of Account for Individual High Deductible Health Plan 
Premiums.--Section 223(d)(2)(C) (relating to exceptions) is amended by 
striking ``or'' at the end of clause (iii), by striking the period at 
the end of clause (iv) and inserting ``, or'', and by adding at the end 
the following new clause:
                            ``(v) a high deductible health plan, but 
                        only if--
                                    ``(I) the plan is not a group 
                                health plan (as defined in section 
                                5000(b)(1) without regard to section 
                                5000(d)), and
                                    ``(II) the expenses are for 
                                coverage for a month with respect to 
                                which the account beneficiary is an 
                                eligible individual by reason of the 
                                coverage under the plan.
                For purposes of clause (v), an arrangement which 
                constitutes individual health insurance shall not be 
                treated as a group health plan, notwithstanding that an 
                employer or employee organization negotiates the cost 
                of benefits of such arrangement.''.
    (c) Safe Harbor for Absence of Maintenance of Chronic Disease.--
Section 223(c)(2)(C) (safe harbor for absence of preventive care 
deductible) is amended--
            (1) by inserting ``or maintenance of chronic disease, or 
        both'' after ``the Secretary)'', and
            (2) by inserting ``or maintenance of chronic disease'' in 
        the heading after ``preventive care''.
    (d) Clarification of Treatment of Capitated Primary Care Payments 
as Amounts Paid for Medical Care.--Section 213(d) (relating to 
definitions) is amended by adding at the end the following new 
paragraph:
            ``(12) Treatment of capitated primary care payments.--
        Capitated primary care payments shall be treated as amounts 
        paid for medical care.''.
    (e) Special Rule for Individuals Eligible for Veterans or Indian 
Health Benefits.--Section 223(c)(1) (defining eligible individual) is 
amended by adding at the end the following new subparagraph:
                    ``(C) Special rule for individuals eligible for 
                veterans or indian health benefits.--For purposes of 
                subparagraph (A)(ii), an individual shall not be 
                treated as covered under a health plan described in 
                such subparagraph merely because the individual 
                receives periodic hospital care or medical services 
                under any law administered by the Secretary of Veterans 
                Affairs or the Bureau of Indian Affairs.''.
    (f) Certain Physician Fees To Be Treated as Medical Care.--
            (1) In general.--Section 213(d), is amended by adding at 
        the end the following new paragraph:
            ``(12) Pre-paid physician fees.--The term `medical care' 
        shall include amounts paid by patients to their primary 
        physician in advance for the right to receive medical services 
        on an as-needed basis.''.
            (2) Effective date.--The amendment made by this section 
        shall apply to taxable years beginning after the date of the 
        enactment of this Act.
    (g) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2009.
            (2) Capitated primary care payments.--The amendment made by 
        subsection (d) shall apply to amounts paid before, on, or after 
        the date of the enactment of this Act.

SEC. 312. EXCEPTION TO REQUIREMENT FOR EMPLOYERS TO MAKE COMPARABLE 
              HEALTH SAVINGS ACCOUNT CONTRIBUTIONS.

    (a) Greater Employer-Provided Contributions to HSAs for Chronically 
Ill Employees Treated as Meeting Comparability Requirements.--
Subsection (b) of section 4980G (relating to failure of employer to 
make comparable health savings account contributions) is amended to 
read as follows:
    ``(b) Rules and Requirements.--
            ``(1) In general.--Except as provided in paragraph (2), 
        rules and requirements similar to the rules and requirements of 
        section 4980E shall apply for purposes of this section.
            ``(2) Treatment of employer-provided contributions to hsas 
        for chronically ill employees.--For purposes of this section--
                    ``(A) In general.--Any contribution by an employer 
                to a health savings account of an employee who is (or 
                the spouse or any dependent of the employee who is) a 
                chronically ill individual in an amount which is 
                greater than a contribution to a health savings account 
                of a comparable participating employee who is not a 
                chronically ill individual shall not fail to be 
                considered a comparable contribution.
                    ``(B) Nondiscrimination requirement.--Subparagraph 
                (A) shall not apply unless the excess employer 
                contributions described in subparagraph (A) are the 
                same for all chronically ill individuals who are 
                similarly situated.
                    ``(C) Chronically ill individual.--For purposes of 
                this paragraph, the term `chronically ill individual' 
                means any individual whose qualified medical expenses 
                for any taxable year are more than 50 percent greater 
                than the average qualified medical expenses of all 
                employees of the employer for such year.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2009.

             TITLE IV--FAIRNESS FOR EVERY AMERICAN PATIENT

                   Subtitle A--Medicaid Modernization

SEC. 401. MEDICAID MODERNIZATION.

    (a) In General.--Effective January 1, 2011, title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.) is amended to read as follows:

     ``TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS

                      ``TABLE OF CONTENTS OF TITLE

``Sec. 1900. References to pre-modernized Medicaid provisions; 
                            continuity for commonwealths and 
                            territories.
    ``Part A--Grants to States for Acute Care for Individuals With 
            Disabilities and Certain Low-Income Individuals

``Sec. 1901. Purpose; Appropriation.
``Sec. 1902. Payments to States for acute care medical assistance.
``Sec. 1903. Definitions of eligible individuals and acute care medical 
                            assistance.
``Sec. 1904. State plan requirements for acute care medical assistance.
``Sec. 1905. Definitions.
``Sec. 1906. Enrollment of individuals under group health plans and 
                            other arrangements.
``Sec. 1907. Drug rebates.
``Sec. 1908. Managed care.
``Sec. 1909. Annual reports.
  ``Part B--Grants to States for Long-Term Care Services and Supports

``Sec. 1911. Purpose.
``Sec. 1912. State plan.
``Sec. 1913. State allotments.
``Sec. 1914. Use of grants.
``Sec. 1915. Administrative provisions.
``Sec. 1916. Definition of long-term care services and supports.
``Sec. 1917. Provision requirements for long-term care services and 
                            supports, including option for self-
                            directed services and supports.
``Sec. 1918. Treatment of income and resources for certain 
                            institutionalized spouses.
``Sec. 1919. Annual reports.
  ``Part C--Grants to States for Survey and Certification of Medical 
                   Facilities and Other Requirements

``Sec. 1931. Authorization of appropriations.
``Sec. 1932. Application of certain requirements under pre-modernized 
                            Medicaid.
            ``Part D--Grants to States for Program Integrity

``Sec. 1941. Authorization of appropriations.
``Sec. 1942. Application of certain requirements under pre-modernized 
                            Medicaid.
             ``Part E--Grants to States for Administration

``Sec. 1951. Authorization of appropriations; payments to states.
``Sec. 1952. Cost-sharing protections.
``Sec. 1953. Application of certain requirements under pre-modernized 
                            Medicaid.
                       ``Part F--Other Provisions

``Sec. 1961. Application of certain requirements under pre-modernized 
                            Medicaid.

``SEC. 1900. REFERENCES TO PRE-MODERNIZED MEDICAID PROVISIONS; 
              CONTINUITY FOR COMMONWEALTHS AND TERRITORIES.

    ``(a) In General.--In this title, if a reference to this title or 
to a provision of this title is prefaced by the term `old', such 
reference is to this title or a provision of this title as in effect on 
December 31, 2010.
    ``(b) Regulations.--The Secretary shall promulgate regulations to 
bring requirements imposed under an old provision of this title that 
applies under this title after December 31, 2010, into conformity with 
the policies embodied in this title as in effect on and after January 
1, 2011.
    ``(c) Continuity for Commonwealths and Territories.--In the case of 
Puerto Rico, the United States Virgin Islands, Guam, the Northen 
Mariana Islands, and American Samoa, this title as in effect on and 
after January 1, 2011, shall not apply to such commonwealths and 
territories, and old title XIX shall apply to a Medicaid program 
operated by such commonwealths or territories on and after that date.

    ``PART A--GRANTS TO STATES FOR ACUTE CARE FOR INDIVIDUALS WITH 
            DISABILITIES AND CERTAIN LOW-INCOME INDIVIDUALS

``SEC. 1901. PURPOSE; APPROPRIATION.

    ``(a) Purpose.--It is the purpose of this part to enable each 
State, as far as practicable under the conditions in the State, to 
provide acute care medical assistance to eligible individuals described 
in section 1903 whose income and resources are insufficient to meet the 
costs of necessary medical services, and (2) rehabilitation and other 
services to help such individuals attain or retain capability for 
independence or self-care.
    ``(b) Appropriation.--For the purpose of making payments to States 
under this part, there is appropriated out of any money in the Treasury 
not otherwise appropriated, such sums as are necessary for fiscal year 
2011 and each fiscal year thereafter.

``SEC. 1902. PAYMENTS TO STATES FOR ACUTE CARE MEDICAL ASSISTANCE.

    ``(a) In General.--From the amounts appropriated under section 1901 
for a fiscal year, the Secretary shall pay to each State which has a 
plan approved under this part, for each quarter, beginning with the 
quarter commencing January 1, 2011, an amount equal to the Federal 
medical assistance percentage (as defined in section 1905(b)) of the 
total amount expended during such quarter as acute care medical 
assistance under the State plan under this part.
    ``(b) Administrative Expenses.--Each State with a plan approved 
under this part shall receive a payment determined in accordance with 
part E for administrative expenses incurred in carrying out the plan 
under this part and part B (if the State has a plan approved under that 
part).

``SEC. 1903. DEFINITIONS OF ELIGIBLE INDIVIDUALS AND ACUTE CARE MEDICAL 
              ASSISTANCE.

    ``(a) Eligible Individuals.--
            ``(1) In general.--In this part, the term `eligible 
        individual' means an individual--
                    ``(A) who is--
                            ``(i) a blind or disabled individual; or
                            ``(ii) an individual described in paragraph 
                        (2); and
                    ``(B) who the State determines satisfies--
                            ``(i) the income and resources eligibility 
                        requirements established by the State under the 
                        State plan under this part; and
                            ``(ii) such other requirements for 
                        assistance as are imposed under this title, 
                        including documentation of citizenship or 
                        status as a qualified alien under title IV of 
                        the Personal Responsibility and Work 
                        Opportunity Reconciliation Act of 1996.
            ``(2) Individuals described.--For purposes of paragraph 
        (1)(A)(ii), the following individuals are described in this 
        paragraph:
                    ``(A) A child in foster care under the 
                responsibility of the State.
                    ``(B) A low-income woman with breast or cervical 
                cancer described in old section 1902(aa).
                    ``(C) Certain TB-infected individuals described in 
                old section 1902(z)(1).
            ``(3) Grandfathered individuals.--An individual shall be an 
        eligible individual under the State plan under this part if--
                    ``(A) the individual is described in paragraph 
                (1)(A);
                    ``(B) the individual satisfies the documentation 
                requirements referred to in paragraph (1)(B)(ii); and
                    ``(C) the State would have provided medical 
                assistance under the State plan under old title XIX to 
                the individual, but only so long as the individual 
                continues to satisfy such old eligibility requirements.
            ``(4) Concurrent eligibility for part b.--An eligible 
        individual under this part may be eligible under part B, but 
        only if the individual satisfies the eligibility requirements 
        of part B in addition to satisfying the requirements for 
        eligibility under this part.
            ``(5) Presumptive eligibility for certain breast or 
        cervical cancer patients.--Old section 1920B (relating to 
        presumptive eligibility for certain breast or cervical cancer 
        patients) shall apply under this part.
    ``(b) Benefits.--Subject to paragraph (3), in this part, the term 
`acute care medical assistance' means the following:
            ``(1) Mandatory benefits.--The care and services listed in 
        paragraphs (1) through (5), (17), and (21) of old section 
        1905(a) (but, in the case of paragraph (4)(A) of such section, 
        without regard to any limitation based on age or services in an 
        institution for mental diseases).
            ``(2) Optional benefits.--Any care or services listed in a 
        paragraph of old section 1905(a) (other than paragraph (16)).
            ``(3) Exceptions.--
                    ``(A) Certain services limited to part b.--Services 
                described in paragraphs (15), (22), (23), (24), and 
                (26) of old section 1905(a) shall only be provided 
                under the State plan under part B.
                    ``(B) Limit on provision of long-term care services 
                and supports.--A care or service that the Secretary 
                determines is a long-term care service and support 
                (including nursing facility services described in old 
                section 1905(a)(4)(A)) shall not be provided to an 
                individual under the State plan under this part for 
                more than 30 days within any 12-month period.
                    ``(C) Exclusions.--Such term shall not include any 
                payments with respect to care or services for any 
                individual who is an inmate of a public institution or 
                a patient in an institution for mental diseases 
                (regardless of age).

``SEC. 1904. STATE PLAN REQUIREMENTS FOR ACUTE CARE MEDICAL ASSISTANCE.

    ``(a) In General.--In order to receive payments under this part, a 
State shall have an approved State plan for acute care medical 
assistance. For purposes of this part, such assistance includes 
payments for preventive care, primary care, diagnosis and treatment of 
acute and chronic health conditions, emergency care, diagnosis and 
treatment of mental illnesses and related conditions, and 
rehabilitation and other services to help eligible individuals attain 
or retain capability for independence or self-care. A State medical 
assistance plan shall include a description, consistent with the 
requirements of this part of--
            ``(1) eligibility standards, including income and asset 
        standards;
            ``(2) benefits, including the amount, duration, and scope 
        of covered items and services;
            ``(3) strategies for improving access and quality of care; 
        and
            ``(4) methods of service delivery.
    ``(b) Public Availability of State Plan.--The State shall make 
available to the public the State plan under this part and any 
amendments submitted by the State to the plan.
    ``(c) Amount, Duration, and Scope.--The State plan shall provide 
that the acute care medical assistance made available to any eligible 
individual shall not be less in amount, duration, or scope than the 
acute care medical assistance made available to any other eligible 
individual.
    ``(d) Application of Certain Pre-Modernized Medicaid 
Requirements.--
            ``(1) Old state plan requirements.--The following 
        provisions of old section 1902 shall apply to the State plans 
        under this part:
                    ``(A) Old section 1902(a)(10)(C) (relating to 
                certain eligibility and other requirements).
                    ``(B) Old section 1902(a)(10)(D) (relating to home 
                health services).
                    ``(C) Old section 1902(a)(10)(G) (relating to 
                nonapplication of certain supplemental security income 
                eligibility criteria).
                    ``(D) The subclauses in the flush matter following 
                old section 1902(a)(10)(G) (relating to the provision 
                of certain services) other than subclauses (V), (VII), 
                (VIII), and (IX).
                    ``(E) Old section 1902(a)(17) (relating to 
                reasonable standards for determining eligibility).
                    ``(F) Old section 1902(a)(19) (relating to 
                eligibility safeguards).
                    ``(G) Old section 1902(a)(34) (relating to 
                eligibility beginning with the third month prior to the 
                month of application).
                    ``(H) Subparagraphs (A), (B), and (C) of old 
                section 1902(a)(43) (relating to early and periodic 
                screening, diagnostic, and treatment services).
                    ``(I) Old section 1902(a)(46)(A) (relating to 
                compliance with section 1137 requirements).
                    ``(J) The fourth and sixth sentences of old section 
                1902(a) (relating to eligibility for certain 
                individuals).
            ``(2) Other old title xix requirements.--
                    ``(A) Old section 1902(e)(3) (relating to optional 
                eligibility for certain disabled individuals).
                    ``(B) Old section 1902(e)(9) (relating to optional 
                respiratory care services).
                    ``(C) Old section 1902(f) (relating to eligibility 
                of certain aged, blind, or disabled individuals).
                    ``(D) Old section 1902(m) (relating to eligibility 
                of certain aged or disabled individuals), other than 
                paragraph (4).
                    ``(E) Old section 1902(o) (relating to disregard of 
                certain supplemental security income benefits).
                    ``(F) Old section 1902(v) (relating to eligibility 
                determinations of blind or disabled individuals).
    ``(e) Other Requirements.--The State plan under this part shall--
            ``(1) comply with the requirements of the other parts of 
        this title; and
            ``(2) provide that the State will make the contributions 
        specified under section 340A-1(e) of the Public Health Service 
        Act .

``SEC. 1905. DEFINITIONS.

    ``(a) In General.--The definitions specified in this section shall 
apply for purposes of this part and, to the extent applicable and 
consistent with the policy embodied in such part, parts B, C, D, E, and 
F.
    ``(b) Federal Medical Assistance Percentage.--The term `Federal 
medical assistance percentage' for any State shall be 100 percent less 
the State percentage; and the State percentage shall be that percentage 
which bears the same ratio to 45 percent as the square of the per 
capita income of such State bears to the square of the per capita 
income of the continental United States (including Alaska) and Hawaii, 
except that the Federal medical assistance percentage shall in no case 
be less than 50 percent or more than 83 percent. The Federal medical 
assistance percentage for any State shall be determined and promulgated 
in accordance with the provisions of section 1101(a)(8)(B).
    ``(c) Application of Certain Pre-Modernized Medicaid Provisions.--
The following old provisions shall apply under this part:
            ``(1) Old section 1905 provisions.--The following 
        provisions of old section 1905:
                    ``(A) Old section 1905(d) (relating to the 
                definition of an intermediate care facility for the 
                mentally retarded).
                    ``(B) Old section 1905(e) (relating to the 
                definition of physicians services).
                    ``(C) Old section 1905(f) (relating to the 
                definition of nursing facility services).
                    ``(D) Old section 1905(g) (relating to the 
                provision of chiropractors' services).
                    ``(E) Old section 1905(j) (relating to State 
                supplementary payments).
                    ``(F) Old section 1905(k) (relating to supplemental 
                security income benefits payable pursuant to section 
                211 of Public Law 93-66).
                    ``(G) Old section 1905(l)(1) (relating to rural 
                health clinic services).
                    ``(H) Old section 1905(o) (relating to hospice 
                care).
                    ``(I) Old section 1905(q) (relating to the 
                definition of a qualified severely impaired 
                individual).
                    ``(J) Old section 1905(r) (relating to the 
                definition of early and periodic screening, diagnostic, 
                and treatment services).
                    ``(K) Old section 1905(s) (relating to the 
                definition of a qualified disabled and working 
                individual).
                    ``(L) Old section 1905(t) (relating to the 
                definition of primary care case management services).
                    ``(M) Old section 1905(v) (relating to the 
                definition of an employed individual with a medically 
                improved disability).
                    ``(N) Paragraphs (1) and (3) of old section 1905(w) 
                (relating to the definition of an independent foster 
                care adolescent).
                    ``(O) Old section 1905(x) (relating to strategies, 
                treatment, and services for individuals with Sickle 
                Cell Disease).
            ``(2) Other old provisions.--
                    ``(A) Old section 1903(m) (relating to the 
                definition of a medicaid managed care organization).

``SEC. 1906. ENROLLMENT OF INDIVIDUALS UNDER GROUP HEALTH PLANS AND 
              OTHER ARRANGEMENTS.

    ``The following old provisions shall apply under this part:
            ``(1) Old section 1906 (relating to enrollment of 
        individuals under group health plans).
            ``(2) Old section 1902(a)(70) (relating to State option to 
        establish a non-emergency medical transportation brokerage 
        program).
            ``(3) Paragraphs (2) and (11) of old section 1902(e) 
        (relating to eligibility for individuals enrolled with a group 
        health plan or under a managed care arrangement during a 
        minimum enrollment period).

``SEC. 1907. DRUG REBATES.

    ``Old sections 1902(a)(54) and 1927 (relating to payment for 
covered outpatient drugs and rebates) shall apply under this part.

``SEC. 1908. MANAGED CARE.

    ``The following old provisions shall apply under this part:
            ``(1) Old section 1932 (relating to managed care), other 
        than subsection (a)(2) of such section.
            ``(2) Old section 1903(k) (relating to technical and 
        actuarial assistance for States).

``SEC. 1909. ANNUAL REPORTS.

    ``(a) In General.--Each State that receives payments under this 
part shall submit an annual report to the Secretary, in such form and 
manner as the Secretary shall specify.
    ``(b) Application of Old EPSDT Reporting Requirements.--Each annual 
report shall include the information required to be reported under old 
section 1902(a)(43)(D)(iv).

  ``PART B--GRANTS TO STATES FOR LONG-TERM CARE SERVICES AND SUPPORTS

``SEC. 1911. PURPOSE.

    ``(a) In General.--The purpose of this part is to increase the 
flexibility of States in operating a system of long-term care services 
and supports designed to--
            ``(1) provide assistance to needy families so that 
        individuals with disabilities and low-income senior citizens 
        may be served and supported in their own homes and communities;
            ``(2) emphasize the independence and dignity of the person 
        served by public programs;
            ``(3) end the institutional bias that existed under the 
        Medicaid program prior to January 1, 2011;
            ``(4) provide stable and predictable funding for States as 
        they rebalance their long-term care systems from institutions 
        to communities;
            ``(5) provide flexibility to States to adopt new and 
        innovative service delivery methods; and
            ``(6) promote independence and support activities that will 
        enable individuals to return or maintain ties to the community, 
        including through employment.
    ``(b) No Individual Entitlement.--No individual determined eligible 
for long-term care services and supports under this part shall be 
entitled to a specific service or type of delivery of service.

``SEC. 1912. STATE PLAN.

    ``(a) In General.--In order to receive payments under this part, a 
State must have an approved State plan for long-term care services and 
supports. A State long term care services and supports plan shall 
include a description, consistent with the requirements of this part, 
of--
            ``(1) income and assets eligibility standards and spousal 
        impoverishment protections consistent with subsection (b);
            ``(2) the standardized assessments tools used to determine 
        eligibility for specific long-term care services and supports;
            ``(3) the person-centered plans used to provide such 
        services and supports;
            ``(4) the proposed uses of funding, if applicable, to 
        provide targeted methods to meet individual level of support 
        needs including tiering (preventive, emergency, low, medium, 
        high); and
            ``(5) the long-term care services and supports to be 
        available under the plan based on individual assessment of need 
        in accordance with sections 1916 and 1917.
    ``(b) Minimum Eligibility Standards.--
            ``(1) Populations covered.--The State plan shall specify 
        the disabled and elderly populations who are eligible for long-
        term care services and supports.
            ``(2) Needs-based criteria.--The plan shall include a 
        description of the needs-based criteria the State will use to 
        assess an individual's need for specific services and supports 
        available under the State plan.
            ``(3) Other eligibility requirements.--
                    ``(A) Income and assets.--A State may use different 
                income and asset standards and methodologies for 
                determining eligibility than those used for determining 
                eligibility for acute care medical assistance under 
                part A. A State may not make eligibility standards 
                related to income, asset, and spousal impoverishment 
                protection more restrictive than the Federal minimum 
                requirements of December 31, 2008.
                    ``(B) Application of spousal impoverishment 
                protections.--The State plan shall provide that the 
                State shall comply with the requirements of section 
                1918 (relating to spousal impoverishment protections).
                    ``(C) Statewideness.--The State plan shall provide 
                that, except with respect to methods used for 
                determining homestead exemptions, the income and asset 
                standards and methodologies shall be in effect in all 
                political subdivisions of the State.
            ``(4) Transition assistance.--The State plan shall specify 
        how the State will provide transition assistance for 
        individuals who, on December 31, 2010, are enrolled under the 
        State plan under old title XIX (or under a waiver of that plan) 
        and receiving long-term care services or supports on that date. 
        The State shall provide such assistance to individuals who are 
        and are not likely to be determined eligible for long-term care 
        services and supports under the State plan under this part, as 
        in effect on January 1, 2011 (or the first day on which the 
        State plan is in effect under this part).
    ``(c) Payment Methodologies to Providers.--
            ``(1) In general.--The State plan shall describe the 
        methodologies used to determine payments to providers. Such 
        methodologies--
                    ``(A) may be varied to assist in transitioning from 
                facilities-based to community-based care; and
                    ``(B) shall not be subject to Secretarial approval.
            ``(2) Transparency.--The State plan shall provide that the 
        State shall make publicly available--
                    ``(A) the payment methodologies applicable under 
                the plan; and
                    ``(B) the name of any provider that receives 
                $1,000,000 or more in any 12-month period and the 
                actual amount paid to the provider during that period.
    ``(d) Coordination of Effort With Other Related Public and Private 
Programs.--The plan shall include a description of the State's efforts 
to coordinate the delivery of services and supports under the plan with 
other related public and private programs that serve individuals with 
disabilities or aged populations that need or may be at risk of needing 
long term care.
    ``(e) Public Availability of State Plan.--The State shall make 
available to the public the State plan under this part and any 
amendments submitted by the State to the plan.
    ``(f) Application of Old Title XIX Requirements.--The following old 
title XIX provisions shall apply to a State plan under this part:
            ``(1) Subsections (a)(50) and (q) of old section 1902 
        (relating to a monthly personal needs allowance for certain 
        institutionalized individuals and couples).
            ``(2) Old section 1902(a)(67) (relating to payment for 
        certain services furnished to a PACE program eligible 
        individual).
            ``(3) Paragraph (1) of old section 1902(r) (relating to the 
        post-eligibility treatment of income for certain individuals) 
        and paragraph (2) of such section (relating to methodologies 
        for determining income and resource eligibility for 
        individuals, but only with respect to individuals who are 
        eligible under this part on or after January 1, 2011).
            ``(4) Old section 1905(i) (relating to the definition of an 
        institution for mental diseases).
    ``(g) Other Requirements of Other Parts.--The State plan under this 
part shall--
            ``(1) comply with the requirements of the other parts of 
        this title; and
            ``(2) provide that the State will make the contributions 
        specified under section 340A-1(e) of the Public Health Service 
        Act.

``SEC. 1913. STATE ALLOTMENTS.

    ``(a) Appropriation.--For the purpose of providing allotments to 
States under this section, there is appropriated out of any money in 
the Treasury not otherwise appropriated--
            ``(1) for fiscal year 2011, $65,274,560,000;
            ``(2) for fiscal year 2012, $67,885,540,000;
            ``(3) for fiscal year 2013, $70,600,964,100;
            ``(4) for fiscal year 2014, $73,425,000,000;
            ``(5) for fiscal year 2015, $76,362,000,000;
            ``(6) for fiscal year 2016, $79,416,480,000;
            ``(7) for fiscal year 2017, $82,593,140,000;
            ``(8) for fiscal year 2018, $85,896,870,000; and
            ``(9) for fiscal year 2019, $89,332,743,000.
    ``(b) Allotments to 50 States and the District of Columbia.--
            ``(1) Fiscal year 2011 allotments.--Subject to subsection 
        (e), the Secretary shall allot to each State with a long term 
        care plan approved under this title an amount in fiscal year 
        2011 equal to the Federal expenditures made by the State for 
        long-term care as defined in section 1916 in fiscal year 2008, 
        increased by 8 percent.
            ``(2) Subsequent fiscal year allotments.--For fiscal year 
        2012 and each subsequent fiscal year through fiscal year 2019, 
        the allotment for a State under this section is equal to the 
        allotment for the State determined for the preceding fiscal 
        year, increased by 4 percent.
    ``(c) Limitation.--
            ``(1) In general.--Except as provided in paragraph (2), no 
        other Federal funds are available under this title for 
        expenditures incurred for long-term care services and supports 
        after December 31, 2010, except as provided under a State plan 
        approved under this part.
            ``(2) Exception.--
                    ``(A) In general.--If a State does not have an 
                approved State plan by October 1, 2010, the Secretary 
                may make payments equal to 85 percent of the State's 
                estimated quarterly allotment until June 30, 2011.
                    ``(B) Full funding.--A State shall receive 100 
                percent of its allotment for fiscal year 2011 if the 
                State has a plan approved under this part by June 30, 
                2011.
    ``(d) Maintenance of Effort.--In order to qualify for the grant 
payable under this section, the State must demonstrate in each fiscal 
year that it made long-term care service and supports expenditures 
(including funding from local government sources) equal to the amount 
of not less than 95 percent of the nonfederal share amount spent in 
fiscal year 2009 under the State plan under old title XIX on long term 
care services and supports (as defined in section 1916). Expenditures 
not made under this part shall not be recognized by the Secretary for 
purposes of this requirement.
    ``(e) Grants Reduced if Insufficient Appropriations.--
            ``(1) In general.--If the amount appropriated for fiscal 
        year 2011 under subsection (a)(1) is less than the amount 
        necessary to fund each State's allotment for that fiscal year, 
        the Secretary shall reduce the allotment for each State for 
        that fiscal year based on the applicable percentage determined 
        for the State under paragraph (2).
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage determined with respect to a 
        State is as follows:

``If the ratio of the State's non-       The applicable percentage is:
 institutional spending to total long-
 term care spending for fiscal year
 2009 is:
  50 percent or greater................  100
  at least 46, but less than 50 percent  99
  at least 40, but less than 46 percent  98
  at least 36, but less than 40........  97
  at least 30, but less than 36........  96
  less than 30 percent.................  95.
 

    ``(f) Administrative Expenses.--
            ``(1) In general.--Each State with a plan approved under 
        this part shall receive a payment determined in accordance with 
        amounts appropriated for part E for administrative expenses 
        incurred in carrying out the plan under this part and part A.
            ``(2) Assessment-related costs.--Costs attributable to 
        providing an individualized needs-based assessment for purposes 
        of identifying the long-term care services and supports to be 
        provided under the State plan to an individual shall be 
        considered a long-term care service and support and shall not 
        be treated as an administrative expense.

``SEC. 1914. USE OF GRANTS.

    ``(a) In General.--A State shall use funds for long-term care 
services and supports as defined in section 1916.
    ``(b) Self-Direction.--A State shall offer individuals the 
opportunity to self-direct their long-term care services and supports.

``SEC. 1915. ADMINISTRATIVE PROVISIONS.

    ``(a) Funding on a Quarterly Basis.--The Secretary shall make 
payments to States in equal amounts of a State's annual allotment on a 
quarterly basis. Each quarterly payment shall remain available for use 
by the State for twelve succeeding fiscal year quarters.
    ``(b) Publication.--The Secretary shall publish each State's 
allotment--
            ``(1) for fiscal year 2011 not later than December 15, 
        2009; and
            ``(2) for each subsequent fiscal year, not later than 
        December 15 of the calendar year preceding the calendar year in 
        which the fiscal year begins.

``SEC. 1916. DEFINITION OF LONG-TERM CARE SERVICES AND SUPPORTS.

    ``(a) Definition.--
            ``(1) In general.--Subject to subsection (e), in this part, 
        the term `long-term care services and supports' means any of 
        the services or supports specified in paragraphs (2) or (3) 
        that may be provided in a nursing facility, an institution, a 
        home, or other setting.
            ``(2) Services and supports described.--For purposes of 
        paragraph (1), the services and supports described in this 
        paragraph include assistive technology, adaptive equipment, 
        remote monitoring equipment, case management for the aged, case 
        management for individuals with disabilities, nursing home 
        services, long-term rehabilitative services necessary to 
        restore functional abilities, services provided in intermediate 
        care facilities for people with disabilities, habilitation 
        services (including adult day care programs), community 
        treatment teams for individuals with mental illness, home 
        health services, services provided in an institution for mental 
        disease, a Program of All-Inclusive Care for the Elderly 
        (PACE), personal care (including personal assistance services), 
        recovery support including peer counseling, supportive 
        employment, training skills necessary to assist the individual 
        in achieving or maintaining independence, training of family 
        members including foster parents in supportive and behavioral 
        modification skills, ongoing and periodic training to maintain 
        life skills, transitional care including room and board not to 
        exceed 60 days within a 12-month period.
            ``(3) Inclusion of certain benefits under old title xix.--
        Such services and supports may include any of the following 
        services:
                    ``(A) Old section 1905(a)(15) (relating to services 
                in an intermediate care facility for the mentally 
                retarded).
                    ``(B) Services described in subsections (a)(16) and 
                (h) of old section 1905, but without regard to any 
                restriction on such services on the basis of age 
                (relating to inpatient psychiatric hospital services).
                    ``(C) Old section 1905(a)(22) (relating to home and 
                community care (to the extent allowed and as defined in 
                old section 1929) for functionally disabled elderly 
                individuals).
                    ``(D) Old section 1905(a)(23) (relating to 
                community supported living arrangements services (to 
                the extent allowed and as defined in old section 
                1930)).
                    ``(E) Subject to subsection (e), old section 
                1905(a)(24) but without regard to any restriction on 
                furnishing services to patients or residents of 
                facilities or institutions (relating to personal care 
                services).
                    ``(F) Old sections 1905(a)(26) and 1934 (relating 
                to services furnished under a PACE program under old 
                section 1934 to PACE program eligible individuals 
                enrolled under the program under such old section).
                    ``(G) Old section 1915(c)(5) (relating to the 
                definition of habilitation services).
            ``(4) Limitation.--Long-term care services and supports 
        cannot be used for services and administrative costs provided 
        through the foster care (with the exception of training of 
        foster care parents), child welfare, adult protective services, 
        juvenile justice, public guardianship, or correctional systems.
    ``(b) Rehabilitative Care.--For purposes of rehabilitation due to 
acute care medical needs, a State may claim rehabilitative services 
provided in an institutional setting, nursing home, or as part of home 
health expenditures as acute care benefits under the State plan under 
part A rather than under the State plan under this part for a 
cumulative period of 30 days within a 12-month period if such care is 
directly related to the onset of an acute care need. A State shall 
demonstrate the services were provided as a direct result of an acute 
care need.
    ``(c) Managed Care.--If a State provides long-term care services 
and supports through managed care, the State shall submit a methodology 
for determining the level of expenditures attributed to long term care 
for approval by the Secretary.
    ``(d) Application of Part A Definitions.--A definition specified in 
section 1905 shall apply to the same term used in this part, unless the 
Secretary determines that the application of such definition would be 
inconsistent with the purpose of this part.
    ``(e) Exclusion.--No payments shall be made under the State plan 
under this part with respect to long-term care supports and services 
provided for any individual who is an inmate of a public institution. 
Nothing in the preceding sentence shall be construed as precluding the 
provision of long-term care services and supports under the State plan 
under this part to an individual who is a patient in an institution for 
mental diseases.

``SEC. 1917. PROVISION REQUIREMENTS FOR LONG-TERM CARE SERVICES AND 
              SUPPORT, INCLUDING OPTION FOR SELF-DIRECTED SERVICES AND 
              SUPPORTS.

    ``(a) Requirements for the Provision of Long-Term Care Services and 
Supports.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, a State may provide through a State plan 
        amendment for the provision of long-term care services and 
        supports for individuals eligible under the State plan under 
        this part, subject to the following requirements:
                    ``(A) Needs-based criteria for eligibility for, and 
                receipt of, long-term care services and supports.--The 
                State establishes needs-based criteria for determining 
                an individual's eligibility under the State plan for 
                medical assistance for such long-term care services and 
                supports, and if the individual is eligible for such 
                services and supports, the specific services and 
                supports that will be available under the State plan to 
                the individual.
                    ``(B) Criteria for institutionalized versus non-
                institutionalized services.--In establishing needs-
                based criteria, the State may establish criteria for 
                determining eligibility for, and receipt of, services 
                and supports provided in a facility or institution that 
                are more stringent that the criteria established for 
                eligibility and receipt of services and supports in a 
                non-facility or non-institutionalized setting.
                    ``(C) Authority to limit number of eligible 
                individuals.--A State may limit the number of 
                individuals who are eligible for such services and 
                supports and may establish waiting lists for the 
                receipt of such services and supports.
                    ``(D) Criteria based on individual assessment.--
                            ``(i) In general.--The criteria established 
                        by the State shall require an assessment of an 
                        individual's support needs and capabilities, 
                        and may take into account the inability of the 
                        individual to perform 2 or more activities of 
                        daily living (as defined in section 
                        7702B(c)(2)(B) of the Internal Revenue Code of 
                        1986) or the need for significant assistance to 
                        perform such activities, and such other risk 
                        factors as the State determines to be 
                        appropriate.
                            ``(ii) Adjustment authority.--The State 
                        plan amendment provides the State with the 
                        option to modify the criteria established under 
                        subparagraph (A) (without having to obtain 
                        prior approval from the Secretary) in the event 
                        that the enrollment of individuals eligible for 
                        services exceeds the projected enrollment, but 
                        only if--
                                    ``(I) the State provides at least 
                                60 days notice to the Secretary and the 
                                public of the proposed modification;
                                    ``(II) the State deems an 
                                individual receiving long-term care 
                                services and supports on the basis of 
                                the most recent version of the criteria 
                                in effect prior to the effective date 
                                of the modification to be eligible for 
                                such services and supports for a period 
                                of at least 12 months beginning on the 
                                date the individual first received 
                                medical assistance for such services 
                                and supports; and
                                    ``(III) after the effective date of 
                                such modification, the State, at a 
                                minimum, applies the criteria for 
                                determining whether an individual 
                                requires the level of care provided in 
                                a facility or institutionalized setting 
                                which applied under the State plan 
                                immediately prior to the application of 
                                the modified criteria.
                    ``(E) Independent evaluation and assessment.--
                            ``(i) Eligibility determination.--The State 
                        uses an independent evaluation for making the 
                        determinations described in subparagraph (A).
                            ``(ii) Assessment.--In the case of an 
                        individual who is determined to be eligible for 
                        long-term care services and supports, the State 
                        uses an independent assessment, based on the 
                        needs of the individual to--
                                    ``(I) determine a necessary level 
                                of services and supports to be 
                                provided, consistent with an 
                                individual's physical and mental 
                                capacity;
                                    ``(II) prevent the provision of 
                                unnecessary or inappropriate care; and
                                    ``(III) establish an individualized 
                                care plan for the individual in 
                                accordance with subparagraph (G).
                    ``(F) Assessment.--The independent assessment 
                required under subparagraph (E)(ii) shall include the 
                following:
                            ``(i) An objective evaluation of an 
                        individual's inability to perform 2 or more 
                        activities of daily living (as defined in 
                        section 7702B(c)(2)(B) of the Internal Revenue 
                        Code of 1986) or the need for significant 
                        assistance to perform such activities.
                            ``(ii) A face-to-face evaluation of the 
                        individual by an individual trained in the 
                        assessment and evaluation of individuals whose 
                        physical or mental conditions trigger a 
                        potential need for long-term care services and 
                        supports.
                            ``(iii) Where appropriate, consultation 
                        with the individual's family, spouse, guardian, 
                        or other responsible individual.
                            ``(iv) Consultation with appropriate 
                        treating and consulting health and support 
                        professionals caring for the individual.
                            ``(v) An examination of the individual's 
                        relevant history, medical records, and care and 
                        support needs, guided by best practices and 
                        research on effective strategies that result in 
                        improved health and quality of life outcomes.
                            ``(vi) An evaluation of the ability of the 
                        individual or the individual's representative 
                        to self-direct the purchase of, or control the 
                        receipt of, such services and supports if the 
                        individual so elects.
                    ``(G) Individualized care plan.--
                            ``(i) In general.--In the case of an 
                        individual who is determined to be eligible for 
                        long-term care services and supports, the State 
                        uses the independent assessment required under 
                        subparagraph (E)(ii) to establish a written 
                        individualized care plan for the individual.
                            ``(ii) Plan requirements.--The State 
                        ensures that the individualized care plan for 
                        an individual--
                                    ``(I) is developed--
                                            ``(aa) in consultation with 
                                        the individual, the 
                                        individual's treating 
                                        physician, health care or 
                                        support professional, or other 
                                        appropriate individuals, as 
                                        defined by the State, and, 
                                        where appropriate the 
                                        individual's family, caregiver, 
                                        or representative; and
                                            ``(bb) taking into account 
                                        the extent of, and need for, 
                                        any family or other supports 
                                        for the individual;
                                    ``(II) identifies the long-term 
                                care services and supports to be 
                                furnished to the individual (or, if the 
                                individual elects to self-direct the 
                                purchase of, or control the receipt of, 
                                such services and supports, funded for 
                                the individual); and
                                    ``(III) is reviewed at least 
                                annually and as needed when there is a 
                                significant change in the individual's 
                                circumstances.
                            ``(iii) State requirement to offer election 
                        for self-directed services and supports.--
                                    ``(I) Individual choice.--The State 
                                shall allow an individual or the 
                                individual's representative the 
                                opportunity to elect to receive self-
                                directed long-term care services and 
                                supports in a manner which gives them 
                                the most control over such services and 
                                supports consistent with the 
                                individual's abilities and the 
                                requirements of subclauses (II) and 
                                (III).
                                    ``(II) Self-directed.--The term 
                                `self-directed' means, with respect to 
                                the long-term care services and 
                                supports offered under the State plan 
                                amendment, such services and supports 
                                for the individual which are planned 
                                and purchased under the direction and 
                                control of such individual or the 
                                individual's authorized representative, 
                                including the amount, duration, scope, 
                                provider, and location of such services 
                                and supports, under the State plan 
                                consistent with the following 
                                requirements:
                                            ``(aa) Assessment.--There 
                                        is an assessment of the needs, 
                                        capabilities, and preferences 
                                        of the individual with respect 
                                        to such services and supports.
                                            ``(bb) Service plan.--Based 
                                        on such assessment, there is 
                                        developed jointly with such 
                                        individual or the individual's 
                                        authorized representative a 
                                        plan for such services and 
                                        supports for such individual 
                                        that is approved by the State 
                                        and that satisfies the 
                                        requirements of subclause 
                                        (III).
                                    ``(III) Plan requirements.--For 
                                purposes of subclause (II)(bb), the 
                                requirements of this subclause are that 
                                the plan--
                                            ``(aa) specifies those 
                                        services and supports which the 
                                        individual or the individual's 
                                        authorized representative would 
                                        be responsible for directing;
                                            ``(bb) identifies the 
                                        methods by which the individual 
                                        or the individual's authorized 
                                        representative will select, 
                                        manage, and dismiss providers 
                                        of such services and supports;
                                            ``(cc) specifies the role 
                                        of family members and others 
                                        whose participation is sought 
                                        by the individual or the 
                                        individual's authorized 
                                        representative with respect to 
                                        such services and supports;
                                            ``(dd) is developed through 
                                        a person-centered process that 
                                        is directed by the individual 
                                        or the individual's authorized 
                                        representative, builds upon the 
                                        individual's capacity to engage 
                                        in activities that promote 
                                        community life and that 
                                        respects the individual's 
                                        preferences, choices, and 
                                        abilities, and involves 
                                        families, friends, and 
                                        professionals as desired or 
                                        required by the individual or 
                                        the individual's authorized 
                                        representative;
                                            ``(ee) includes appropriate 
                                        risk management techniques that 
                                        recognize the roles and sharing 
                                        of responsibilities in 
                                        obtaining services and supports 
                                        in a self-directed manner and 
                                        assure the appropriateness of 
                                        such plan based upon the 
                                        resources and capabilities of 
                                        the individual or the 
                                        individual's authorized 
                                        representative; and
                                            ``(ff) may include an 
                                        individualized budget which 
                                        identifies the dollar value of 
                                        the services and supports under 
                                        the control and direction of 
                                        the individual or the 
                                        individual's authorized 
                                        representative.
                                    ``(IV) Budget process.--With 
                                respect to individualized budgets 
                                described in subclause (III)(ff), the 
                                State plan amendment--
                                            ``(aa) describes the method 
                                        for calculating the dollar 
                                        values in such budgets based on 
                                        reliable costs and service 
                                        utilization;
                                            ``(bb) defines a process 
                                        for making adjustments in such 
                                        dollar values to reflect 
                                        changes in individual 
                                        assessments and service plans; 
                                        and
                                            ``(cc) provides a procedure 
                                        to evaluate expenditures under 
                                        such budgets.
                    ``(H) Quality assurance; conflict of interest 
                standards.--
                            ``(i) Quality assurance.--The State ensures 
                        that the provision of long-term care services 
                        and supports meets Federal and State guidelines 
                        for quality assurance.
                            ``(ii) Conflict of interest standards.--The 
                        State establishes standards for the conduct of 
                        the independent evaluation and the independent 
                        assessment to safeguard against conflicts of 
                        interest.
                    ``(I) Redeterminations and appeals.--The State 
                allows for at least annual redeterminations of 
                eligibility, and appeals in accordance with the 
                frequency of, and manner in which, redeterminations and 
                appeals of eligibility are made under the State plan.
                    ``(J) Presumptive eligibility for assessment.--The 
                State, at its option, elects to provide for a period of 
                presumptive eligibility (not to exceed a period of 60 
                days) only for those individuals that the State has 
                reason to believe may be eligible for long-term care 
                services and supports. Such presumptive eligibility 
                shall be limited to medical assistance for carrying out 
                the independent evaluation and assessment under 
                subparagraph (E) to determine an individual's 
                eligibility for such services and if the individual is 
                so eligible, the specific long-term care services and 
                supports that the individual will receive.
            ``(2) Definition of individual's representative.--In this 
        section, the term `individual's representative' means, with 
        respect to an individual, a parent, a family member, or a 
        guardian of the individual, an advocate for the individual, or 
        any other individual who is authorized to represent the 
        individual.
    ``(b) Self-Directed Personal Assistance Services.--If a State 
includes personal care or personal assistance services in the long-term 
care services and supports available under the State plan, the State 
shall comply with the requirements of old section 1915(j) in the case 
of an individual who elects to self-direct the receipt of such care or 
services.

``SEC. 1918. TREATMENT OF INCOME AND RESOURCES FOR CERTAIN 
              INSTITUTIONALIZED SPOUSES.

    ``Old section 1924 (relating to treatment of income and resources 
for certain institutionalized spouses), other than paragraphs (2) and 
(4)(A) of subsection (a) of such section, shall apply under this part.

``SEC. 1919. ANNUAL REPORTS.

    ``(a) In General.--Each State that receives payments under this 
part shall submit an annual report to the Secretary, in such form and 
manner as the Secretary shall specify.
    ``(b) Requirements.--The report shall include the following with 
respect to the most recent fiscal year ended:
            ``(1) The number of individuals served under the plan.
            ``(2) The number of individuals served by tier (preventive, 
        emergency, low, medium, and high needs).
            ``(3) The number of individuals known to the State on 
        waiting list for services (if any) and type of disability 
        (physical, developmental, mental health) or aged.
            ``(4) Expenditures by service category.

  ``PART C--GRANTS TO STATES FOR SURVEY AND CERTIFICATION OF MEDICAL 
                   FACILITIES AND OTHER REQUIREMENTS

``SEC. 1931. AUTHORIZATION OF APPROPRIATIONS.

    ``For the purpose of carrying our Federal activities and providing 
grants to States for expenses necessary to carry out this part, there 
is authorized to be appropriated--
            ``(1) for fiscal year 2011, $300,000,000; and
            ``(2) for each succeeding fiscal year, the amount 
        authorized under this section for the preceding fiscal year, 
        increased by 5 percent.

``SEC. 1932. APPLICATION OF CERTAIN REQUIREMENTS UNDER PRE-MODERNIZED 
              MEDICAID.

    ``The following old provisions shall apply under this part:
            ``(1) Old section 1902(a)(9) (relating to health standards 
        and applicable requirements for laboratory services).
            ``(2) Old section 1902(a)(28) (relating to nursing 
        facilities and nursing facility services).
            ``(3) Old sections 1902(a)(29) and 1908 (relating to a 
        State program for the licensing of administrators of nursing 
        homes).
            ``(4) Old section 1902(a)(33)(B) (relating to licensing 
        health institutions).
            ``(5) Old section 1902(d) (relating to medical or 
        utilization review functions).
            ``(6) Old section 1902(i) (relating to intermediate care 
        facilities for the mentally retarded).
            ``(7) Old section 1902(y) (relating to psychiatric 
        hospitals).
            ``(8) Paragraphs (2) and (6) of old section 1903(g) 
        (relating to the Secretarial requirement to conduct sample 
        onsite surveys of private and public institutions and 
        recertifications for the need for certain services).
            ``(9) Old section 1903(q)(4)(B) (relating to the definition 
        of a board and care facility).
            ``(10) Old section 1910 (relating to certification and 
        approval of rural health clinics and intermediate care 
        facilities for the mentally retarded).
            ``(11) Old section 1911 (relating to Indian Health Service 
        facilities).
            ``(12) Old section 1913 (relating to hospital providers of 
        nursing facility services).
            ``(13) Old section 1919 (relating to requirements for 
        nursing facilities).

            ``PART D--GRANTS TO STATES FOR PROGRAM INTEGRITY

``SEC. 1941. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) In General.--For the purpose of carrying out Federal 
activities under this part and providing grants to States for expenses 
necessary to carry out this part, there is authorized to be 
appropriated--
            ``(1) for fiscal year 2011, $100,000,000; and
            ``(2) for each succeeding fiscal year, the amount 
        authorized under this section for the preceding fiscal year, 
        increased by 5 percent.
    ``(b) Availability; Authority for Use of Funds.--
            ``(1) Availability.--Amounts appropriated pursuant to 
        subsection (a) shall remain available until expended.
            ``(2) Authority for use of funds for transportation and 
        travel expenses for attendees at education, training, or 
        consultative activities.--
                    ``(A) In general.--The Secretary may use amounts 
                appropriated pursuant to subsection (a) to pay for 
                transportation and the travel expenses, including per 
                diem in lieu of subsistence, at rates authorized for 
                employees of agencies under subchapter I of chapter 57 
                of title 5, United States Code, while away from their 
                homes or regular places of business, of individuals 
                described in subsection (b)(4) who attend education, 
                training, or consultative activities conducted under 
                the authority of that subsection.
                    ``(B) Public disclosure.--The Secretary shall make 
                available on a website of the Centers for Medicare & 
                Medicaid Services that is accessible to the public--
                            ``(i) the total amount of funds expended 
                        for each conference conducted under the 
                        authority of subsection (b)(4); and
                            ``(ii) the amount of funds expended for 
                        each such conference that were for 
                        transportation and for travel expenses.
    ``(c) Annual Report.--Not later than 180 days after the end of each 
fiscal year, the Secretary shall submit a report to Congress which 
identifies--
            ``(1) the use of funds appropriated pursuant to subsection 
        (a); and
            ``(2) the effectiveness of the use of such funds.

``SEC. 1942. APPLICATION OF CERTAIN REQUIREMENTS UNDER PRE-MODERNIZED 
              MEDICAID.

    ``The following old provisions shall apply under this part:
            ``(1) Old subsections (a)(25) (other than subparagraph (E)) 
        and (g) of section 1902 and section 1903(o) (relating to third 
        party liability).
            ``(2) Old section 1902(a)(30)(B) (relating to hospital, 
        intermediate care facility for the mentally retarded, or 
        hospital for mental diseases admission screening and review 
        requirements).
            ``(3) Old section 1902(a)(32) (relating to certain payment 
        requirements).
            ``(4) Old section 1902(a)(35) (relating to disclosing 
        entities under section 1124).
            ``(5) Old section 1902(a)(37) and the fifth sentence 
        (relating to claims payment procedures).
            ``(6) Old section 1902(a)(44) (relating to payment for 
        inpatient hospital services, services in an intermediate care 
        facility for the mentally retarded, or inpatient mental 
        hospital services).
            ``(7) Old sections 1902(a)(45) and 1912 (relating to 
        assignment of rights of payment).
            ``(8) Old sections 1902(a)(49) and 1921 (relating to 
        information and access to information concerning sanctions 
        taken by State licensing authorities against health care 
        practitioners and providers).
            ``(9) Old sections 1902(a)(61) and 1903(q) (relating to 
        requirements for a medicaid fraud and abuse control unit).
            ``(10) Old section 1902(a)(64) (relating to reports from 
        beneficiaries and others and data compilation requirements 
        concerning alleged instances of waste, fraud, and abuse).
            ``(11) Old section 1902(a)(65) (relating to provider number 
        and surety bond requirement for suppliers of durable medical 
        equipment).
            ``(12) Old section 1902(a)(68) (relating to requirements 
        for certain entities).
            ``(13) Old sections 1902(a)(69) and 1936 (relating to the 
        Medicaid Integrity Program) other than paragraphs (1), (2)(A), 
        and (3) of old section 1936(e).
            ``(14) Old section 1902(a)(70)(B)(iv) (relating to 
        prohibitions on referrals and conflict of interest for certain 
        brokers of non-emergency medical transportation).
            ``(15) Old sections 1902(a)(71) and 1940 (relating to a 
        required asset verification program).
            ``(16) Old section 1902(p) (relating to exclusion of 
        certain individuals or entities).
            ``(17) Old section 1902(x) (relating to unique identifiers 
        for physicians).
            ``(18) Old section 1903(p) (relating to interstate 
        collection of rights of support).
            ``(19) Old section 1903(r)(2) (relating to requirements for 
        mechanized claims processing and information retrieval 
        systems).
            ``(20) Old section 1903(u) (relating to erroneous excess 
        payments), other than clause (v) of paragraph (1)(D).
            ``(21) Old section 1903(v) and the seventh sentence of old 
        section 1902(a) (relating to limitations on payments for 
        services furnished to aliens), other than subparagraphs (A) and 
        (B) of paragraph (4).
            ``(22) Old section 1903(x) (relating to citizenship 
        documentation).
            ``(23) Old section 1909 (relating to State false claims act 
        requirements for increased State share of recoveries).
            ``(24) Old section 1914 (relating to withholding of Federal 
        share of payments for certain Medicare providers).
            ``(25) Old section 1917 (relating to liens, adjustments and 
        recoveries, and transfers of assets).
            ``(26) Old section 1922 (relating to correction and 
        reduction plans for intermediate care facilities for the 
        mentally retarded).

             ``PART E--GRANTS TO STATES FOR ADMINISTRATION

``SEC. 1951. AUTHORIZATION OF APPROPRIATIONS; PAYMENTS TO STATES.

    ``(a) In General.--For the purpose of providing grants to States 
for administrative expenses necessary to carry out parts A and B, there 
is authorized to be appropriated--
            ``(1) for fiscal year 2011, $7,000,000,000; and
            ``(2) for each succeeding fiscal year, the amount 
        authorized under this subsection for the preceding fiscal year, 
        increased by 3 percent.
    ``(b) Payments to States.--
            ``(1) In general.--From the amount appropriated pursuant to 
        subsection (a) for a fiscal year, the Secretary shall pay each 
        State with approved plans under parts A and B for the fiscal 
        year an amount equal to the product of the amount appropriated 
        for the fiscal year and the ratio of the total amount of 
        payments made to the State under paragraphs (2) through (7) of 
        section 1903(a) for fiscal year 2008 (as such section was in 
        effect for that fiscal year) to the total amount of such 
        payments made to all States for such fiscal year.
            ``(2) Pro rata adjustment.--The Secretary shall make pro 
        rata adjustments to the amounts determined under paragraph (1) 
        for a fiscal year as necessary so as to not exceed the amount 
        appropriated pursuant to subsection (a) for the fiscal year.

``SEC. 1952. COST-SHARING PROTECTIONS.

    ``(a) In General.--A State may impose cost-sharing for individuals 
provided acute care medical assistance under a State plan under part A 
or long-term care services and supports under a State plan under part B 
consistent with the following:
            ``(1) The State may (in a uniform manner) require payment 
        of monthly premiums or other cost-sharing set on a sliding 
        scale based on family income.
            ``(2) A premium or other cost-sharing requirement imposed 
        under paragraph (1) may only apply to the extent that, in the 
        case of an individual whose family income--
                    ``(A) exceeds 150 percent of the poverty line, the 
                aggregate annual amount of such premium and other cost-
                sharing charges imposed under the plan does not exceed 
                5 percent of the individual's annual income; and
                    ``(B) exceeds 250 percent of the poverty line, the 
                aggregate annual amount of such premium and other cost-
                sharing charges do not exceed 7.5 percent of the 
                individual's annual income.
            ``(3) A State shall not require prepayment of any premium 
        or cost-sharing imposed pursuant to paragraph (1) and shall not 
        terminate eligibility of an individual under the State plan on 
        the basis of failure to pay any such premium or cost-sharing 
        until such failure continues for a period of at least 60 days 
        from the date on which the premium or cost-sharing became past 
        due. The State may waive payment of any such premium or cost-
        sharing in any case where the State determines that requiring 
        such payment would create an undue hardship.
    ``(b) Application to Institutionalized Individuals.--A State may 
impose cost-sharing consistent with subsection (a) to individuals who 
are patients in, or residents of, a medical institution or nursing 
facility except that rules relating to the post-eligibility treatment 
of income (including a minium monthly personal needs allowance) 
applicable to institutionalized individuals under old title XIX shall 
apply in the same manner to individuals eligible for long-term care 
services and supports under a State plan under part B.
    ``(c) Poverty Line Defined.--In this section, the term `poverty 
line' has the meaning given such term in section 673(2) of the 
Community Services Block Grant Act (42 U.S.C. 9902(2)), including any 
revision required by such section.

``SEC. 1953. APPLICATION OF CERTAIN REQUIREMENTS UNDER PRE-MODERNIZED 
              MEDICAID.

    ``The following old provisions shall apply to the State plans under 
this title:
            ``(1) Old state plan requirements.--
                    ``(A) Old section 1902(a)(1) (relating to the 
                requirement for plans to be in effect in all political 
                subdivisions of the State).
                    ``(B) Old section 1902(a)(2) (relating to State 
                financial participation).
                    ``(C) Old section 1902(a)(3) (relating to 
                opportunity for a fair hearing).
                    ``(D) Old section 1902(a)(4) (relating to 
                administration).
                    ``(E) Old section 1902(a)(5) (relating to 
                designation of a single State agency).
                    ``(F) Old section 1902(a)(6) (relating to reporting 
                requirements).
                    ``(G) Old section 1902(a)(7) (relating to 
                restrictions on the use or disclosure of information).
                    ``(H) Old section 1902(a)(8) (relating to 
                applications for assistance).
                    ``(I) Old section 1902(a)(11) (relating to 
                cooperative agreements with other State agencies).
                    ``(J) Old section 1902(a)(12) (relating to 
                determinations of blindness).
                    ``(K) Old section 1902(a)(13) (relating to 
                determination of rates of payment for certain 
                services), other than clause (iv) of subparagraph (A).
                    ``(L) Subsections (a)(15) and (bb) of old section 
                1902(a) (relating to payment for services provided by 
                rural health clinics and federally qualified health 
                centers).
                    ``(M) Old section 1902(a)(16) (relating to 
                furnishing services to individuals when absent from the 
                State).
                    ``(N) Old section 1902(a)(22) (relating to certain 
                administrative provisions).
                    ``(O) Paragraphs (23) and (25)(D) of old section 
                1902(a) (relating to any willing provider 
                requirements).
                    ``(P) Old section 1902(a)(24) (relating to 
                consultative services by other agencies).
                    ``(Q) Old section 1902(a)(26) (relating to review 
                of need for inpatient mental hospital services and 
                written plan of care requirements).
                    ``(R) Old section 1902(a)(27) (relating to provider 
                record keeping requirements).
                    ``(S) Old section 1902(a)(30)(A) (relating to 
                utilization review).
                    ``(T) Old section 1902(a)(31) (relating to written 
                plan of care for services and review for intermediate 
                care facility for the mentally retarded services).
                    ``(U) Old section 1902(a)(33)(A) (relating to 
                quality review requirements).
                    ``(V) Old section 1902(a)(36) (relating to public 
                availability of facility surveys).
                    ``(W) Old section 1902(a)(38) (relating to the 
                provision of information described in section 
                1128(b)(9) by certain entities).
                    ``(X) Old section 1902(a)(39) (relating to the 
                exclusion of certain entities).
                    ``(Y) Old section 1902(a)(40) (relating to 
                requirement for uniform reporting systems).
                    ``(Z) Old section 1902(a)(41) (relating to notice 
                to State medical licensing boards).
                    ``(AA) Old section 1902(a)(42) (relating to certain 
                audit requirements).
                    ``(BB) Old section 1902(a)(48) (relating to 
                eligibility cards).
                    ``(CC) Old section 1902(a)(55) (relating to the 
                receipt and initial processing of applications, but 
                only to the extent such section is consistent with the 
                policy embodied in the State plans under parts A and 
                B).
                    ``(DD) Subsections (a)(56) and (s) of old section 
                1902 (relating to adjusted payments for certain 
                inpatient hospital services).
                    ``(EE) Old section 1902(a)(59) (relating to 
                maintenance of list of participating physicians).
                    ``(FF) The second sentence of old section 1902 
                (relating to designation of certain State agencies).
                    ``(GG) Old section 1902(b) (relating to limitations 
                on approval of plans).
                    ``(HH) Old section 1902(j) (relating to application 
                of requirements to American Samoa and the Northern 
                Mariana Islands).
            ``(2) Other old title xix requirements.--
                    ``(A) Old section 1903(b)(4) (relating to 
                limitations on payments to enrollment brokers).
                    ``(B) Old section 1903(c) (relating to furnishing 
                of services included in a program or plan under part B 
                or C of the Individuals with Disabilities Education 
                Act).
                    ``(C) Old section 1903(d) (relating to payments).
                    ``(D) Old section 1903(e) (relating to costs with 
                respect to certain hospital services).
                    ``(E) Old section 1903(i) (relating to limitations 
                on payments).
                    ``(F) Old section 1903(r) (relating to requirements 
                for mechanized claims processing and information 
                retrieval systems).
                    ``(G) Subsections (b)(5) and (w) of old section 
                1903 (relating to limitations on payments related to 
                provider taxes).
                    ``(H) Old section 1904 (relating to operation of 
                State plans).
                    ``(I) Old sections 1902(a)(60) and 1908A (relating 
                to medical child support).
                    ``(J) Paragraphs (32)(D) and (62) of old section 
                1902(a) and section 1928 (relating to program for 
                distribution of pediatric vaccines).

                       ``PART F--OTHER PROVISIONS

``SEC. 1961. APPLICATION OF CERTAIN REQUIREMENTS UNDER PRE-MODERNIZED 
              MEDICAID.

    ``The following old provisions shall apply under this part:
            ``(1) The third sentence of old section 1902 (relating to 
        nonapplication of certain old provisions to a religious 
        nonmedical health care institution).
            ``(2) Old section 1918 (relating to application of 
        provisions of title II relating to subpoenas).
            ``(3) Old section 1939 (relating to references to laws 
        directly affecting the Medicaid program.''.
    (b) Repeal of Title XXI.--Effective January 1, 2011, title XXI of 
the Social Security Act (42 U.S.C. 1397aa et seq.) is repealed.

SEC. 402. OUTREACH.

    (a) Authorization of Appropriations.--The following amounts are 
authorized to be appropriated to the Secretary of Health and Human 
Services:
            (1) For fiscal year 2009, $100,000,000 for the design and 
        implementation of a public outreach campaign to inform the 
        public about the changes to the programs under such titles that 
        take effect on January 1, 2011, as a result of the amendment 
        made by section 401.
            (2) For each of fiscal years 2010 and 2011, $200,000,000 to 
        carry out such public outreach campaign.
            (3) For fiscal year 2012, $50,000,000 to carry out such 
        public outreach campaign.
    (b) Availability.--Funds appropriated under subsection (a) shall 
remain available for expenditure through September 30, 2012.
    (c) Authority for Use of Funds.--The Secretary may use funds made 
available under paragraphs (2) and (3) of subsection (a) to award 
grants to, or enter into contracts with, public or private entities, 
including States, local governments, schools, churches, and community 
groups.

SEC. 403. TRANSITION RULES; MISCELLANEOUS PROVISIONS.

    (a) In General.--
            (1) Not later than June 30, 2010, a State that is one of 
        the 50 States or the District of Columbia shall inform all 
        individuals enrolled in a State plan under title XIX or XXI of 
        the Social Security Act on such date (and any new enrollees 
        after such date) of the changes to the programs under such 
        titles that take effect on January 1, 2011, as a result of the 
        amendment made by section 401.
            (2) No State that is one of the 50 States or the District 
        of Columbia shall approve any applications for medical 
        assistance or child health assistance under a State plan under 
        title XIX or XXI (as in effect for fiscal year 2010) after 
        December 31, 2010.
    (b) Submission of Legislative Proposal for Technical and Conforming 
Amendments.--Not later than 6 months after the date of enactment of 
this Act, the Secretary of Health and Human Services shall submit to 
Congress a legislative proposal for such technical and conforming 
amendments as are necessary to carry out the amendments made by this 
Act.

Subtitle B--Supplemental Health Care Assistance for Low-Income Families

SEC. 411. SUPPLEMENTAL HEALTH CARE ASSISTANCE FOR LOW-INCOME FAMILIES.

    Part D of title III of the Public Health Service Act (42 U.S.C. 
254b et seq.) is amended by adding at the end the following:

      ``Subpart XI--Health Care Assistance to Low-Income Families

``SEC. 340A-1. FINANCIAL ASSISTANCE TO LOW-INCOME FAMILIES.

    ``(a) In General.--The Secretary shall supplement the costs of 
private health insurance for eligible low-income families through the 
distribution of supplemental debit cards to eligible families, which 
may be used to pay for costs associated with health care for the 
members of such eligible families and provide direct support to such 
families in accessing health care.
    ``(b) Eligibility.--
            ``(1) Eligible families.--To be eligible for financial 
        assistance under this section--
                    ``(A) a family shall--
                            ``(i) consist of 2 or more individuals 
                        living together who are related by marriage, 
                        birth, adoption, or guardianship;
                            ``(ii) have a gross income that does not 
                        exceed 200 percent of the poverty line, as 
                        applicable to a family of the size involved; 
                        and
                            ``(iii) include at least 1 individual who 
                        is a dependent under the age of 19; and
                    ``(B) no member of the family shall be covered by 
                private health insurance.
            ``(2) Determination of gross income.--The gross income of a 
        family shall be determined by taking the sum of the income of 
        each family member who is at least age 21 but not older than 
        age 65, except that the income of any member of the family who 
        qualifies for coverage under Medicaid Part A or B shall not be 
        counted.
            ``(3) Limitation on individual eligibility; assistance.--
                    ``(A) In general.--No individual who is a member of 
                an eligible family under paragraph (1) is eligible to 
                qualify separately for financial assistance under this 
                section.
                    ``(B) Aliens.--The Secretary shall ensure that 
                financial assistance under this section is not provided 
                for costs associated with health care for any member of 
                an eligible family who is an alien individual who is 
                not a lawful permanent resident of the United States.
    ``(c) Supplemental Debit Card for Health Care Expenditures.--
            ``(1) In general.--The Secretary shall issue to each 
        eligible family that enrolls in the program in accordance with 
        subsection (f) a supplemental debit card with a dollar-amount 
        value, in accordance with subsection (d), that may be used to 
        pay for qualifying health care expenses.
            ``(2) Use of the debit card.--
                    ``(A) Qualifying health care expenses.--A 
                supplemental debit card issued under this section may 
                be used by members of the eligible family to pay for--
                            ``(i) the purchase of health care insurance 
                        for any member of the family;
                            ``(ii) cost sharing expenses related to 
                        health care, including deductibles, copayments, 
                        and coinsurance, for any member of the family; 
                        and
                            ``(iii) the direct purchase of health care 
                        services and supplies for any member of the 
                        family.
                    ``(B) Geographic range.--Each supplemental debit 
                card may be used to pay for qualifying health care 
                expenses incurred anywhere in the 50 States or the 
                District of Columbia.
                    ``(C) Limitations.--No supplemental debit card 
                shall be used to make a payment for any cost--
                            ``(i) incurred prior to the determination 
                        of the family's eligibility for assistance 
                        under this section; or
                            ``(ii) that is not a health-related 
                        expense.
            ``(3) Rollover of unused amounts.--Not more than one-
        quarter of the annual dollar amount of a supplemental debit 
        card that is unexpended at the end of each 12-month period may 
        rollover--
                    ``(A) to the family's supplemental debit card for 
                expenditure during the subsequent 12-month period, 
                provided that the family to which the supplemental 
                debit card was issued in the previous 12-month period 
                is eligible to receive a supplemental debit card in the 
                subsequent 12-month period; or
                    ``(B) to the family's health savings account (as 
                defined in section 223(g)(2) of the Internal Revenue 
                Code of 1986).
            ``(4) Monthly statements.--The Secretary shall issue a 
        monthly statement to each family to which a supplemental debit 
        card has been issued under this section, which shall state each 
        payment made with the family's supplemental debit card during 
        the month covered by the statement, the dollar amount of each 
        such payment, and the provider to which each such payment was 
        made.
    ``(d) Amount of Financial Assistance.--
            ``(1) Amounts for calendar year 2011.--Subject to paragraph 
        (5), the amount of financial assistance available to each 
        eligible family during the calendar year 2011 shall be 
        determined as follows:
                    ``(A) Each family whose annual income does not 
                exceed 100 percent of the poverty level, as applicable 
                to a family of the size involved, shall receive $5,000.
                    ``(B) Each family whose annual income exceeds 100 
                percent, but does not exceed 200 percent, of the 
                poverty level, as applicable to a family of the size 
                involved, shall receive an amount as follows:
                            ``(i) For families whose annual income 
                        exceeds 100 percent but does not exceed 120 
                        percent, of the poverty level, $4,000.
                            ``(ii) For families whose annual income 
                        exceeds 120 percent but does not exceed 140 
                        percent, of the poverty level, $3,500.
                            ``(iii) For families whose annual income 
                        exceeds 140 percent but does not exceed 160 
                        percent, of the poverty level, $3,000.
                            ``(iv) For families whose annual income 
                        exceeds 160 percent but does not exceed 180 
                        percent, of the poverty level, $2,500.
                            ``(v) For families whose annual income 
                        exceeds 180 percent but does not exceed 200 
                        percent, of the poverty level, $2,000.
            ``(2) Additional amounts.--In addition to the amounts under 
        paragraph (1), subject to paragraph (5), the following amounts 
        shall be added to the supplemental debit cards of qualifying 
        families:
                    ``(A) For each pregnancy during which a pregnant 
                woman's family is eligible for assistance under this 
                section, an additional amount of $1,000 shall be added 
                to the family's supplemental debit card, except that no 
                family shall receive such additional $1,000 for any 
                pregnancy for which the family received such amount in 
                the previous 12-month period.
                    ``(B) For each member of an eligible family who is 
                less than 1 year old on any day within the calendar 
                year in which the family is eligible for assistance, an 
                additional amount of $500 shall be added to the 
                family's supplemental debit card.
            ``(3) Cost of living adjustments.--In the case of any 
        taxable year beginning in a calendar year after 2011, each 
        dollar amount contained in paragraphs (1) and (2) shall be 
        increased in the same manner as the dollar amounts specified in 
        section 25E(b)(3) of the Internal Revenue Code of 1986 are 
        increased by the blended cost-of-living adjustment determined 
        under subsection (k)(2) of section 25E of the Internal Revenue 
        Code for the taxable year involved.
            ``(4) State option to increase amounts.--At the option of 
        each State, amounts in excess of the annual dollar amounts 
        under paragraphs (1) and (2) may be provided through the 
        supplemental debit card to eligible families in that State, but 
        no Federal funds shall be paid to any State for any amount 
        provided in excess of such annual dollar amount.
            ``(5) Risk adjustment.--The Secretary may adjust the amount 
        of financial assistance available to an eligible family for a 
        calendar year under this section based on age, health 
        indicators, and other factors that represent distinct patterns 
        of health care services utilization and costs.
    ``(e) Contributions of States.--
            ``(1) In general.--As a condition for receiving Federal 
        funds under Part A or Part B of Medicaid, each State shall 
        contribute 50 percent of the total amount expended under the 
        supplemental debit card program by the participating families 
        that reside within the State during the time that the family 
        resides in that State. For purposes of this section, the 
        residency of a family is determined by the residency the 
        legally responsible head of the household.
            ``(2) Payments from states.--
                    ``(A) Billing notification.--
                            ``(i) Timing.--On June 30th and December 
                        31st of each year, the Secretary shall send 
                        written notification to each State of that 
                        State's 50 percent share of expenses, as 
                        described in paragraph (1), for the 6-month 
                        period ending on the last day of the month 
                        previous to such notification.
                            ``(ii) Contents.--Each such notification to 
                        a State shall clearly state--
                                    ``(I) the payment amount due from 
                                the State;
                                    ``(II) the name of each individual 
                                for whom payment was made through the 
                                supplemental debit card program;
                                    ``(III) the health care provider to 
                                whom each payment was made;
                                    ``(IV) the amount of each payment; 
                                and
                                    ``(V) any other information, as the 
                                Secretary requires.
                    ``(B) Payments.--Each State shall make a payment to 
                the Secretary, in the amount billed, not later than 30 
                days after the billing notification date, in accordance 
                with subparagraph (A)(i).
                    ``(C) Penalties.--If a State fails to pay to the 
                Secretary an amount required under subparagraph (B), 
                interest shall accrue on such amount at the rate 
                provided under old section 1903(d)(5) of the Social 
                Security Act. The amount so owed and applicable 
                interest shall be immediately offset against amounts 
                otherwise payable to the State under this section, in 
                accordance with the Federal Claims Collection Act of 
                1996 and applicable regulations.
    ``(f) Enrollment.--
            ``(1) In general.--The Secretary shall establish procedures 
        and times for enrollment in the supplemental debit card 
        program. Open enrollment shall be available not less than 4 
        times per calendar year.
            ``(2) Transition of individuals enrolled in medicaid or the 
        state children's health insurance program.--
                    ``(A) Information from the states.--Each State 
                shall--
                            ``(i) not later than June 30, 2010, inform 
                        all individuals then enrolled in Medicaid or 
                        the State Children's Health Insurance Program 
                        (SCHIP), of the changes in effect beginning on 
                        January 1, 2011; and
                            ``(ii) not later than October 31, 2010, 
                        redetermine the eligibility of each individual 
                        enrolled in Medicaid or SCHIP, other than those 
                        individuals who qualify for Medicaid or SCHIP 
                        as disabled, elderly, or a special population, 
                        for the supplemental debit card program, 
                        according to the eligibility criteria under 
                        subsection (b).
                    ``(B) Automatic enrollment.--The Secretary shall 
                provide for the automatic enrollment in the 
                supplemental debit card program of all individuals who 
                are enrolled in Medicaid or SCHIP and who have been 
                redetermined by a State under subparagraph (A) to be 
                eligible for Medicaid or SCHIP. Any individual who is 
                determined by a State not to qualify for the 
                supplemental debit card program may retain coverage 
                under Medicaid or SCHIP until June 30, 2011.
            ``(3) Assistance with qualified health insurance credit.--
        Each State shall, to the extent practicable, provide 
        individuals residing within the State with information 
        regarding the qualified health insurance credit described in 
        section 25E of the Internal Revenue Code of 1986, including 
        information regarding eligibility for, and how to claim, such 
        credit.
    ``(g) Administration.--
            ``(1) National system.--The Secretary may enter into 
        contracts or agreements with a State, a consortium of States, 
        or a private entity, including a bank, enrollment broker, or 
        similar entity, to establish and maintain a unified national 
        system to support the processes and transactions necessary to 
        administer this section.
            ``(2) Automated system.--The Secretary shall establish an 
        automated means, such as an electronic benefit transfer system, 
        by which the benefits under this section shall be transferred 
        to eligible families.
            ``(3) Verification of applicant information.--The Secretary 
        may verify information provided by applicants with the 
        appropriate Federal, State, and local agencies, including the 
        Internal Revenue Service, the Social Security Administration, 
        the Department of Labor, and child support enforcement 
        agencies.
            ``(4) Choice counseling.--The Secretary may enter into 
        contracts or agreements with a State, a consortium of a State, 
        or a private entity, including an enrollment broker or 
        community organization or other organization, to educate 
        eligible families about their options and to assist in their 
        enrollment in the supplemental debit card plan.
            ``(5) Appeals.--The Secretary shall establish an 
        independent appeals process, to be administered by an entity 
        separate from the entity that makes initial eligibility 
        determinations, which shall be available to individuals who are 
        denied benefits under the supplemental debit card program.
            ``(6) Resolution of errors.--The Secretary shall provide 
        for a reconciliation process with the States to resolve any 
        errors and adjudicate disputes due to incomplete or false 
        information in a family's application or in the billing process 
        described in subsection (e).
            ``(7) Penalties for false information.--Any person who 
        provides false information to qualify for the supplemental 
        debit card program shall pay a penalty in the amount of 110 
        percent of the amount of assistance paid on behalf of such 
        person and all members of such person's family.
    ``(h) Implementation Plan.--Not later than 6 months after the date 
of enactment of this section, the Secretary shall submit to Congress a 
plan for implementing this program during fiscal years 2009-2012.
    ``(i) Authorization of Appropriations.--
            ``(1) Administration of the supplemental debit card 
        program.--To administer the program under this section, there 
        are authorized to be appropriated--
                    ``(A) for fiscal year 2009, $300,000,000, for the 
                design of a unified, national system of conducting the 
                supplemental debit card program;
                    ``(B) for fiscal year 2010, $1,000,000,000 for 
                start-up costs, including, contracting, hiring and 
                training employees, and testing the program; and
                    ``(C) for fiscal year 2011 and each subsequent 
                fiscal year, $3,000,000,000.
            ``(2) Authorization of benefits under the supplemental 
        debit card program.--To provide the supplemental debit card 
        benefits described in this section, there are authorized to be 
        appropriated--
                    ``(A) for fiscal year 2011, $24,020,000,000;
                    ``(B) for fiscal year 2012, $25,220,000,000;
                    ``(C) for fiscal year 2013, $26,480,000,000;
                    ``(D) for fiscal year 2014, $27,810,000,000; and
                    ``(E) for fiscal year 2015, $29,200,000,000.''.

             TITLE V--FIXING MEDICARE FOR AMERICAN SENIORS

     Subtitle A--Increasing Programmatic Efficiency, Economy, and 
                             Accountability

SEC. 501. ELIMINATING INEFFICIENCIES AND INCREASING CHOICE IN MEDICARE 
              ADVANTAGE.

    Part C of title XVIII of the Social Security Act is amended by 
adding at the end the following new section:

                ``medicare advantage competitive bidding

    ``Sec. 1860C-2.  (a) Competitive Bidding.--
            ``(1) In general.--In order to promote competition among 
        Medicare Advantage plans and to increase the quality of care 
        furnished under such plans, the Secretary shall establish and 
        implement a competitive bidding mechanism under this part.
            ``(2) Mechanism to begin in 2011.--The mechanism 
        established under paragraph (1) shall apply to all MA 
        organizations and plans beginning in 2011.
            ``(3) No effect on part d benefits.--The mechanism 
        established under paragraph (1) shall not affect the provisions 
        of this part relating to benefits under part D, including the 
        bidding mechanism used for benefits under such part.
    ``(b) Rules for Competitive Bidding Mechanism.--Notwithstanding any 
other provision of this part, the following rules shall apply under the 
competitive bidding mechanism established under subsection (a).
            ``(1) Benchmark.--Benchmark amounts for an area for a year 
        shall be established solely through the competitive bids of MA 
        plans. The benchmark amount for each area for a year shall be 
        the average bid of the plans in that area for that year. In 
        establishing the benchmark for an area for a year under the 
        preceding sentence, the Secretary shall exclude the highest and 
        lowest bid for that area and year. The benchmark amount for an 
        area for a year may not exceed the benchmark amount for that 
        area and year that would have applied if this section had not 
        been enacted.
            ``(2) Bids.--The MA plan bid shall reflect the per capita 
        payments that the MA plan will accept for providing a benefit 
        package that is actuarially equivalent to 106 percent of the 
        value of the original Medicare fee-for-service program option. 
        MA plan bid submissions shall include data on plan average 
        provider network contract rates compared to the rates under the 
        original Medicare fee-for-service program option for the top 5 
        most common claim submissions per provider type.
            ``(3) Risk adjustment.--The benchmark under paragraph (1) 
        and the MA plan bid shall be risk adjusted using the risk 
        adjustment requirements under this part.
            ``(4) Beneficiary premiums.--The MA monthly basic 
        beneficiary premium for a beneficiary who enrolls in an MA plan 
        whose plan bid is at or below the benchmark shall be zero and 
        the beneficiary shall receive the full difference (if any) 
        between the bid and the benchmark in the form of additional 
        benefits or as a rebate on their premiums under this title. The 
        MA monthly basic beneficiary premium for a beneficiary who 
        enrolls in an MA plan whose plan bid is above the benchmark 
        shall be equal to the amount by which the bid exceeds the 
        benchmark.
            ``(5) Benchmark amounts for rural counties.--The Secretary 
        may adjust the benchmark amount established under paragraph (1) 
        for any rural county (as identified by the Secretary after 
        consultation with the Secretary of Commerce) to encourage plan 
        participation in such county.
            ``(6) Existing requirements.--Requirements relating to 
        licensure, quality, and beneficiary protections that would 
        otherwise apply under this part shall apply under the 
        competitive bidding mechanism established under subsection (a).
    ``(c) Waiver.--In order to implement the competitive bidding 
mechanism under established subsection (a), the Secretary may waive or 
modify requirements under this part.''.

SEC. 502. MEDICARE ACCOUNTABLE CARE ORGANIZATION DEMONSTRATION PROGRAM.

    (a) Establishment.--
            (1) In general.--In order to promote innovative care 
        coordination and delivery that is cost-effective, the Secretary 
        of Health and Human Services (in this section referred to as 
        the ``Secretary'') shall conduct a demonstration program under 
        the Medicare program under which--
                    (A) groups of providers meeting certain criteria 
                may work together to manage and coordinate care for 
                Medicare fee-for-service beneficiaries through an 
                Accountable Care Organization (in this section referred 
                to as an ``ACO''); and
                    (B) providers in participating ACOs are eligible 
                for bonuses based on performance.
            (2) Medicare fee-for-service beneficiary defined.--In this 
        section, the term ``Medicare fee-for-service beneficiary'' 
        means an individual who is enrolled in the original medicare 
        fee-for-service program under parts A and B of title XVIII of 
        the Social Security Act and not enrolled in an MA plan under 
        part C of such title.
    (b) Eligible ACOs.--
            (1) In general.--Subject to paragraph (2), the following 
        provider groups are eligible to participate as ACOs under the 
        demonstration program under this section:
                    (A) Physicians in group practice arrangements.
                    (B) Networks of individual physician practices.
                    (C) Partnerships or joint venture arrangements 
                between hospitals and physicians.
                    (D) Partnerships or joint ventures, which may 
                include pharmacists providing medication therapy 
                management.
                    (E) Hospitals employing physicians.
                    (F) Integrated delivery systems.
                    (G) Community-based coalitions of providers.
            (2) Requirements.--An ACO shall meet the following 
        requirements:
                    (A) The ACO shall have a formal legal structure 
                that would allow the organization to receive and 
                distribute bonuses to participating providers.
                    (B) The ACO shall include the primary care 
                providers of at least 5,000 Medicare fee-for-service 
                beneficiaries.
                    (C) The ACO shall be willing to become accountable 
                for the overall care of the Medicare fee-for-service 
                beneficiaries.
                    (D) The ACO shall provide the Secretary with a list 
                of primary care and specialist physicians participating 
                in the ACO to support the beneficiary assignment, 
                implementation of performance measures, and the 
                determination of bonus payments under the demonstration 
                program.
                    (E) The ACO shall have in place contracts with a 
                core group of key specialist physicians, a leadership 
                and management structure, and processes to promote 
                evidence-based medicine and to coordinate care.
    (c) Assignment of Medicare Fee-for-Service Beneficiaries.--
            (1) In general.--Under the demonstration program under this 
        section, each Medicare fee-for-service Medicare beneficiary 
        shall be automatically assigned to a primary care provider. 
        Such assignment shall be based on the physician from whom the 
        beneficiary received the most primary care in the preceding 
        year.
            (2) Beneficiaries may continue to see providers outside of 
        the aco.--Under the demonstration program under this section, a 
        Medicare fee-for-service Medicare beneficiary may continue to 
        see providers in and outside of the ACO to which they have been 
        assigned.
    (d) Bonus Payments.--
            (1) In general.--Under the demonstration program, Medicare 
        payments shall continue to be made to providers under the 
        original Medicare fee-for-service program in the same manner as 
        they would otherwise be made except that a participating ACO is 
        eligible for bonuses if--
                    (A) it meets certain quality performance measures; 
                and
                    (B) spending for their Medicare fee-for-service 
                beneficiaries meets the requirement under paragraph 
                (3).
            (2) Quality.--Under the demonstration program under this 
        section, providers meet the requirement under paragraph (1)(A) 
        if they generally follow consensus-based guidelines established 
        by non-government professional medical societies. Patient 
        satisfaction and risk-adjusted outcomes shall be determined 
        through an independent entity with medical expertise.
            (3) Requirement relating to spending.--
                    (A) In general.--An ACO shall only be eligible to 
                receive a bonus payment if the average Medicare 
                expenditures under the ACO for Medicare fee-for-service 
                beneficiaries over a two-year period is at least 2 
                percent below the average benchmark for the 
                corresponding two-year period. The benchmark for each 
                ACO shall be set using the most recent three years of 
                total per-beneficiary spending for Medicare fee-for-
                service beneficiaries assigned to the ACO. Such 
                benchmark shall be updated by the projected rate of 
                growth in national per capita spending for the original 
                medicare fee-for-service program, as projected (using 
                the most recent three years of data) by the Chief 
                Actuary of the Centers for Medicare & Medicaid 
                Services.
            (4) Amount of bonus payments.--The amount of the bonus 
        payment to a participating ACO shall be one-half of the 
        percentage point difference between the two-year average of 
        their patients' Medicare expenditures and 98 percent of the 
        two-year average benchmark. The bonus amount, in dollars, shall 
        be equal to the bonus share multiplied by the benchmark for the 
        most recent year.
            (5) Limitation.--Bonus payments may only be made to an ACO 
        if the primary care provider to which the Medicare fee-for-
        service beneficiary has been assigned under subsection (c) 
        elects to participate in such ACO.
    (e) Waiver Authority.--The Secretary may waive such requirements of 
titles XI and XVIII of the Social Security Act (42 U.S.C. 1301 et seq.; 
1395 et seq.) as may be appropriate for the purpose of carrying out the 
demonstration program under this section.
    (f) Report.--Upon completion of the demonstration program under 
this section, the Secretary shall submit to Congress a report on the 
program together with such recommendations as the Secretary determines 
appropriate.

SEC. 503. REDUCING GOVERNMENT HANDOUTS TO WEALTHIER SENIORS.

    (a) Elimination of Annual Indexing of Income Thresholds for Reduced 
Part B Premium Subsidies.--
            (1) In general.--Paragraph (5) of section 1839(i) of the 
        Social Security Act (42 U.S.C. 1395r(i)) is repealed.
            (2) Effective date.--The repeal made by paragraph (1) shall 
        apply to premiums for months beginning after December 2010.
    (b) Income-Related Reduction in Part D Premium Subsidy.--
            (1) Income-related reduction in part d premium subsidy.--
                    (A) In general.--Section 1860D-13(a) of the Social 
                Security Act (42 U.S.C. 1395w-113(a)) is amended by 
                adding at the end the following new paragraph:
            ``(7) Reduction in premium subsidy based on income.--
                    ``(A) In general.--In the case of an individual 
                whose modified adjusted gross income exceeds the 
                threshold amount applicable under paragraph (2) of 
                section 1839(i) (including application of paragraph (5) 
                of such section) for the calendar year, the monthly 
                amount of the premium subsidy applicable to the premium 
                under this section for a month after December 2010 
                shall be reduced (and the monthly beneficiary premium 
                shall be increased) by the monthly adjustment amount 
                specified in subparagraph (B).
                    ``(B) Monthly adjustment amount.--The monthly 
                adjustment amount specified in this subparagraph for an 
                individual for a month in a year is equal to the 
                product of--
                            ``(i) the quotient obtained by dividing--
                                    ``(I) the applicable percentage 
                                determined under paragraph (3)(C) of 
                                section 1839(i) (including application 
                                of paragraph (5) of such section) for 
                                the individual for the calendar year 
                                reduced by 25.5 percent; by
                                    ``(II) 25.5 percent; and
                            ``(ii) the base beneficiary premium (as 
                        computed under paragraph (2)).
                    ``(C) Modified adjusted gross income.--For purposes 
                of this paragraph, the term `modified adjusted gross 
                income' has the meaning given such term in subparagraph 
                (A) of section 1839(i)(4), determined for the taxable 
                year applicable under subparagraphs (B) and (C) of such 
                section.
                    ``(D) Determination by commissioner of social 
                security.--The Commissioner of Social Security shall 
                make any determination necessary to carry out the 
                income-related reduction in premium subsidy under this 
                paragraph.
                    ``(E) Procedures to assure correct income-related 
                reduction in premium subsidy.--
                            ``(i) Disclosure of base beneficiary 
                        premium.--Not later than September 15 of each 
                        year beginning with 2010, the Secretary shall 
                        disclose to the Commissioner of Social Security 
                        the amount of the base beneficiary premium (as 
                        computed under paragraph (2)) for the purpose 
                        of carrying out the income-related reduction in 
                        premium subsidy under this paragraph with 
                        respect to the following year.
                            ``(ii) Additional disclosure.--Not later 
                        than October 15 of each year beginning with 
                        2010, the Secretary shall disclose to the 
                        Commissioner of Social Security the following 
                        information for the purpose of carrying out the 
                        income-related reduction in premium subsidy 
                        under this paragraph with respect to the 
                        following year:
                                    ``(I) The modified adjusted gross 
                                income threshold applicable under 
                                paragraph (2) of section 1839(i) 
                                (including application of paragraph (5) 
                                of such section).
                                    ``(II) The applicable percentage 
                                determined under paragraph (3)(C) of 
                                section 1839(i) (including application 
                                of paragraph (5) of such section).
                                    ``(III) The monthly adjustment 
                                amount specified in subparagraph (B).
                                    ``(IV) Any other information the 
                                Commissioner of Social Security 
                                determines necessary to carry out the 
                                income-related reduction in premium 
                                subsidy under this paragraph.
                    ``(F) Rule of construction.--The formula used to 
                determine the monthly adjustment amount specified under 
                subparagraph (B) shall only be used for the purpose of 
                determining such monthly adjustment amount under such 
                subparagraph.''.
                    (B) Collection of monthly adjustment amount.--
                Section 1860D-13(c) of the Social Security Act (42 
                U.S.C. 1395w-113(c)) is amended--
                            (i) in paragraph (1), by striking ``(2) and 
                        (3)'' and inserting ``(2), (3), and (4)''; and
                            (ii) by adding at the end the following new 
                        paragraph:
            ``(4) Collection of monthly adjustment amount.--
                    ``(A) In general.--Notwithstanding any provision of 
                this subsection or section 1854(d)(2), subject to 
                subparagraph (B), the amount of the income-related 
                reduction in premium subsidy for an individual for a 
                month (as determined under subsection (a)(7)) shall be 
                paid through withholding from benefit payments in the 
                manner provided under section 1840.
                    ``(B) Agreements.--In the case where the monthly 
                benefit payments of an individual that are withheld 
                under subparagraph (A) are insufficient to pay the 
                amount described in such subparagraph, the Commissioner 
                of Social Security shall enter into agreements with the 
                Secretary, the Director of the Office of Personnel 
                Management, and the Railroad Retirement Board as 
                necessary in order to allow other agencies to collect 
                the amount described in subparagraph (A) that was not 
                withheld under such subparagraph.''.
            (2) Conforming amendments.--
                    (A) Medicare.--Part D of title XVIII of the Social 
                Security Act (42 U.S.C. 1395w-101 et seq.) is amended--
                            (i) in section 1860D-13(a)(1)--
                                    (I) by redesignating subparagraph 
                                (F) as subparagraph (G);
                                    (II) in subparagraph (G), as 
                                redesignated by subparagraph (A), by 
                                striking ``(D) and (E)'' and inserting 
                                ``(D), (E), and (F)''; and
                                    (III) by inserting after 
                                subparagraph (E) the following new 
                                subparagraph:
                    ``(F) Increase based on income.--The monthly 
                beneficiary premium shall be increased pursuant to 
                paragraph (7).''; and
                            (ii) in section 1860D-15(a)(1)(B), by 
                        striking ``paragraph (1)(B)'' and inserting 
                        ``paragraphs (1)(B) and (1)(F)''.
                    (B) Internal revenue code.--Section 6103(l)(20) of 
                the Internal Revenue Code of 1986 (relating to 
                disclosure of return information to carry out Medicare 
                part B premium subsidy adjustment) is amended--
                            (i) in the heading, by striking ``part b 
                        premium subsidy adjustment'' and inserting 
                        ``parts b and d premium subsidy adjustments'';
                            (ii) in subparagraph (A)--
                                    (I) in the matter preceding clause 
                                (i), by inserting ``or 1860D-13(a)(7)'' 
                                after ``1839(i)''; and
                                    (II) in clause (vii), by inserting 
                                after ``subsection (i) of such 
                                section'' the following: ``or under 
                                section 1860D-13(a)(7) of such Act'';
                            (iii) in subparagraph (B)--
                                    (I) by inserting ``or such section 
                                1860D-13(a)(7)'' before the period at 
                                the end;
                                    (II) as amended by clause (i), by 
                                inserting ``or for the purpose of 
                                resolving tax payer appeals with 
                                respect to any such premium 
                                adjustment'' before the period at the 
                                end; and
                                    (III) by adding at the end the 
                                following new sentence: ``Officers, 
                                employees, and contractors of the 
                                Social Security Administration may 
                                disclose such return information to 
                                officers, employees, and contractors of 
                                the Department of Health and Human 
                                Services, the Office of Personnel 
                                Management, the Railroad Retirement 
                                Board, the Department of Justice, and 
                                the courts of the United States to the 
                                extent necessary to carry out the 
                                purposes described in the preceding 
                                sentence.''; and
                            (iv) by adding at the end the following new 
                        subparagraph:
                    ``(C) Timing of disclosure.--Return information 
                shall be disclosed to officers, employees, and 
                contractors of the Social Security Administration under 
                subparagraph (A) not later than the date that is 90 
                days prior to the date on which the taxpayer first 
                becomes entitled to benefits under part A of title 
                XVIII of the Social Security Act or eligible to enroll 
                for benefits under part B of such title.''.

SEC. 504. REWARDING PREVENTION.

    Section 1839 of the Social Security Act (42 U.S.C. 1395r) is 
amended--
            (1) in subsection (a)(2), by striking ``and (i)'' and 
        inserting ``(i), and (j)''; and
            (2) by adding at the end the following new subsection:
    ``(j)(1) With respect to the monthly premium amount for months 
after December 2010, the Secretary may adjust (under procedures 
established by the Secretary) the amount of such premium for an 
individual based on whether or not the individual participates in 
certain healthy behaviors, such as weight management, exercise, 
nutrition counseling, refraining from tobacco use, designating a health 
home, and other behaviors determined appropriate by the Secretary.
    ``(2) In making the adjustments under paragraph (1) for a month, 
the Secretary shall ensure that the total amount of premiums to be paid 
under this part for the month is equal to the total amount of premiums 
that would have been paid under this part for the month if no such 
adjustments had been made, as estimated by the Secretary.''.

SEC. 505. PROMOTING HEALTHCARE PROVIDER TRANSPARENCY.

    (a) Transparency.--Title XVIII of the Social Security Act is 
amended by adding at the end the following new section:

                   ``price transparency requirements

    ``Sec. 1899.  (a) Pre-Treatment Disclosure.--A provider of services 
(as defined in section 1861(u)) and a supplier (as defined in section 
1861(d)) shall provide to each individual (regardless of whether or not 
the individual is a beneficiary under this title) who is scheduled to 
receive a treatment (or to begin a course of treatment) that is not for 
an emergency medical condition the estimated price that the provider of 
services or supplier will charge for the treatment (or course of 
treatment). Such price shall be determined at the time of scheduling.
    ``(b) Post-Treatment Disclosure.--A provider of services (as so 
defined) and a supplier (as so defined) shall include with any bill 
that includes the charges for a treatment with respect to an individual 
(regardless of whether or not the individual is a beneficiary under 
this title), an itemized list of component charges for such treatment, 
including charges for drugs and medical equipment involved, as 
determined at the time of billing. With respect to each item included 
on such list, the provider of services or supplier shall include the 
price charged for the item.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to providers of services and suppliers on and after January 1, 
2011.

SEC. 506. AVAILABILITY OF MEDICARE AND MEDICAID CLAIMS AND PATIENT 
              ENCOUNTER DATA.

    (a) Public Availability.--Not later than 1 year after the date of 
enactment of this Act (and annually thereafter), the Secretary of 
Health and Human Services (in this section referred to as the 
``Secretary''), shall make available to the public (including through 
an Internet website) data on claims and patient encounters under titles 
XVIII and XIX of the Social Security Act during the preceding calendar 
year. Such data shall be appropriately disaggregated and patient 
deidentified, as determined necessary by the Secretary in order to 
comply with the Federal regulations (concerning the privacy of 
individually identifiable health information) promulgated under section 
264(c) of the Health Insurance Portability and Accountability Act of 
1996.
    (b) Provision of Data to State Exchanges and Health Insurance 
Issuers Under the State Exchange.--The Secretary shall submit such data 
directly to a State Exchange under title II and health insurance 
issuers under such Exchange (in a form and manner determined 
appropriate by the Secretary).
    (c) Matching of Data.--The Secretary shall ensure that the total 
amount of claims under such titles during the preceding year for which 
data is made available under subsection (a) is equal to the reported 
outlays from the Federal government and the States under such titles 
during the preceding years.

                  Subtitle B--Reducing Fraud and Abuse

SEC. 511. REQUIRING THE SECRETARY OF HEALTH AND HUMAN SERVICES TO 
              CHANGE THE MEDICARE BENEFICIARY IDENTIFIER USED TO 
              IDENTIFY MEDICARE BENEFICIARIES UNDER THE MEDICARE 
              PROGRAM.

    (a) Procedures.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, in order to protect beneficiaries from 
        identity theft, the Secretary of Health and Human Services (in 
        this section referred to as the ``Secretary'') shall establish 
        and implement procedures to change the Medicare beneficiary 
        identifier used to identify individuals entitled to benefits 
        under part A of title XVIII of the Social Security Act or 
        enrolled under part B of such title so that such an 
        individual's social security account number is not used. Such 
        procedures shall provide that the new Medicare beneficiary 
        identifier includes biometric identification protections.
            (2) Maintaining existing hicn structure.--In order to 
        minimize the impact of the change under paragraph (1) on 
        systems that communicate with Medicare beneficiary eligibility 
        systems, the procedures under paragraph (1) shall provide that 
        the new Medicare beneficiary identifier maintain the existing 
        Health Insurance Claim Number structure.
            (3) Protection against fraud.--The procedures under 
        paragraph (1) shall provide for a process for changing the 
        Medicare beneficiary identifier for an individual to a 
        different identifier in the case of the discovery of fraud, 
        including identity theft.
            (4) Phase-in authority.--
                    (A) In general.--Subject to subparagraphs (B) and 
                (C), the Secretary may phase in the change under 
                paragraph (1) in such manner as the Secretary 
                determines appropriate.
                    (B) Limit.--The phase-in period under subparagraph 
                (A) shall not exceed 10 years.
                    (C) Newly entitled and enrolled individuals.--The 
                Secretary shall ensure that the change under paragraph 
                (1) is implemented not later than January 1, 2010, with 
                respect to any individual who first becomes entitled to 
                benefits under part A of title XVIII of the Social 
                Security Act or enrolled under part B of such title on 
                or after such date.
    (b) Education and Outreach.--The Secretary shall establish a 
program of education and outreach for individuals entitled to, or 
enrolled for, benefits under part A of title XVIII of the Social 
Security Act or enrolled under part B of such title, providers of 
services (as defined in subsection (u) of section 1861 of such Act (42 
U.S.C. 1395x)), and suppliers (as defined in subsection (d) of such 
section) on the change under paragraph (1).
    (c) Data Matching.--
            (1) Access to certain information.--Section 205(r) of the 
        Social Security Act (42 U.S.C. 405(r)) is amended by adding at 
        the end the following new paragraph:
            ``(9)(A) The Commissioner of Social Security shall, upon 
        the request of the Secretary--
                    ``(i) enter into an agreement with the Secretary 
                for the purpose of matching data in the system of 
                records of the Commissioner with data in the system of 
                records of the Secretary, so long as the requirements 
                of subparagraphs (A) and (B) of paragraph (3) are met, 
                in order to determine--
                            ``(I) whether a beneficiary under the 
                        program under title XVIII, XIX, or XXI is dead, 
                        imprisoned, or otherwise not eligible for 
                        benefits under such program; and
                            ``(II) whether a provider of services or a 
                        supplier under the program under title XVIII, 
                        XIX, or XXI is dead, imprisoned, or otherwise 
                        not eligible to furnish or receive payment for 
                        furnishing items and services under such 
                        program; and
                    ``(ii) include in such agreement safeguards to 
                assure the maintenance of the confidentiality of any 
                information disclosed and procedures to permit the 
                Secretary to use such information for the purpose 
                described in clause (i).
            ``(B) Information provided pursuant to an agreement under 
        this paragraph shall be provided at such time, in such place, 
        and in such manner as the Commissioner determines appropriate.
            ``(C) Information provided pursuant to an agreement under 
        this paragraph shall include information regarding whether--
                    ``(i) the name (including the first name and any 
                family name or surname), the date of birth (including 
                the month, day, and year), and social security number 
                of an individual provided to the Commissioner match the 
                information contained in the Commissioner's records, 
                and
                    ``(ii) such individual is shown on the records of 
                the Commissioner as being deceased.''.
            (2) Investigation based on certain information.--Title XI 
        of the Social Security Act (42 U.S.C. 1301 et seq.) is amended 
        by inserting after section 1128F the following new section:

``SEC. 1128G. ACCESS TO CERTAIN DATA AND INVESTIGATION OF CLAIMS 
              INVOLVING INDIVIDUALS WHO ARE NOT ELIGIBLE FOR BENEFITS 
              OR ARE NOT ELIGIBLE PROVIDERS OF SERVICES OR SUPPLIERS.

    ``(a) Data Agreement.--The Secretary shall enter into an agreement 
with the Commissioner of Social Security pursuant to section 205(r)(9).
    ``(b) Investigation of Claims Involving Certain Individuals Who Are 
Not Eligible for Benefits or Are Not Eligible Providers of Services or 
Suppliers.--
            ``(1) In general.--The Secretary shall, in the case where a 
        provider of services or a supplier under the program under 
        title XVIII, XIX, or XXI submits a claim for payment for items 
        or services furnished to an individual who the Secretary 
        determines, as a result of information provided pursuant to 
        such agreement, is not eligible for benefits under such 
        program, or where the Secretary determines, as a result of such 
        information, that such provider of services or supplier is not 
        eligible to furnish or receive payment for furnishing such 
        items or services, conduct an investigation with respect to the 
        provider of services or supplier. If the Secretary determines 
        further action is appropriate, the Secretary shall refer the 
        investigation to the Inspector General of the Department of 
        Health and Human Services as soon as practicable.
            ``(2) Assessment of implementation and effectiveness by the 
        oig.--The Inspector General of the Department of Health and 
        Human Services shall test the implementation of the provisions 
        of this section (including the implementation of the agreement 
        under section 205(r)(9)) and conduct such period assessments of 
        such implementation as the Inspector General determines 
        necessary to determine the effectiveness of such 
        implementation.''.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section.

SEC. 512. USE OF TECHNOLOGY FOR REAL-TIME DATA REVIEW.

    Title XVIII of the Social Security Act, as amended by this Act, is 
amended by adding at the end the following new section:

             ``use of technology for real-time data review

    ``Sec. 1899A.  (a) In General.--The Secretary shall establish 
procedures for the use of technology (including front-end, pre-payment 
technology similar to that used by hedge funds, investment funds, and 
banks) to provide real-time data analysis of claims for payment under 
this title to identify and investigate unusual billing or order 
practices under this title that could indicate fraud or abuse.
    ``(b) Competitive Bidding.--The procedures established under 
subsection (a) shall ensure that the implementation of such technology 
is conducted through a competitive bidding process.''.

SEC. 513. DETECTION OF MEDICARE FRAUD AND ABUSE.

    (a) In General.--Section 1893 of the Social Security Act (42 U.S.C. 
1395ddd) is amended--
            (1) in subsection (b), by adding at the end the following 
        new paragraph:
            ``(7) Implementation of fraud and abuse detection methods 
        under subsection (i).'';
            (2) in subsection (c), by adding at the end of the flush 
        matter following paragraph (4), the following new sentence ``In 
        the case of an activity described in subsection (b)(8), an 
        entity shall only be eligible to enter into a contract under 
        the Program to carry out the activity if the entity is selected 
        through a competitive bidding process in accordance with 
        subsection (i)(3).''; and
            (3) by adding at the end the following new subsection:
    ``(i) Detection of Medicare Fraud and Abuse.--
            ``(1) Establishment of system to identify counties most 
        vulnerable to fraud.--Not later than 6 months after the date of 
        enactment of this subsection, the Secretary shall establish a 
        system to identify the 50 counties most vulnerable to fraud 
        with respect to items and services furnished by providers of 
        services (other than hospitals and critical access hospitals) 
        and suppliers based on the degree of county-specific 
        reimbursement and analysis of payment trends under this title. 
        The Secretary shall designate the counties identified under the 
        preceding sentence as `high risk areas'.
            ``(2) Fraud and abuse detection.--
                    ``(A) Initial implementation.--The Secretary shall 
                establish procedures for the implementation of fraud 
                and abuse detection methods under this title with 
                respect to items and services furnished by such 
                providers of services and suppliers in high risk areas 
                designated under paragraph (1) (and, beginning not 
                later than 18 months after the date of enactment of 
                this subsection, with respect to items and services 
                furnished by such providers of services and suppliers 
                in areas not so designated) including the following:
                            ``(i) Data analysis to establish prepayment 
                        claim edits designed to target the claims for 
                        payment under this title for such items and 
                        services that are most likely to be fraudulent.
                            ``(ii) Prepayment benefit integrity reviews 
                        for claims for payment under this title for 
                        such items and services that are suspended as a 
                        result of such edits.
                    ``(B) Requirement for participation.--In no case 
                may a provider of services or supplier who does not 
                meet the requirements under subparagraph (A) 
                participate in the program under this title.
                    ``(C) Expanded implementation.--Not later than 24 
                months after the date of enactment of this subsection, 
                the Secretary shall establish procedures for the 
                implementation of such fraud and abuse detection 
                methods under this title with respect to items and 
                services furnished by all providers of services and 
                suppliers, including those not in high risk areas 
                designated under paragraph (1).
            ``(3) Competitive bidding.--In selecting entities to carry 
        out this subsection, the Secretary shall use a competitive 
        bidding process.
            ``(4) Report to congress.--The Secretary shall submit to 
        Congress an annual report on the effectiveness of activities 
        conducted under this subsection, including a description of any 
        savings to the program under this title as a result of such 
        activities and the overall administrative cost of such 
        activities and a determination as to the amount of funding 
        needed to carry out this subsection for subsequent fiscal 
        years, together with recommendations for such legislation and 
        administrative action as the Secretary determines 
        appropriate.''.
    (b) Authorization of Appropriations.--To carry out the amendments 
made by this section, there are authorized to be appropriated--
            (1) such sums as may be necessary, not to exceed 
        $50,000,000, for each of fiscal years 2010 through 2014; and
            (2) such sums as may be necessary, not to exceed an amount 
        the Secretary determines appropriate in the most recent report 
        submitted to Congress under section 1893(j)(4) of the Social 
        Security Act, as added by subsection (a), for each subsequent 
        fiscal year.

SEC. 514. EDITS ON 855S MEDICARE ENROLLMENT APPLICATION AND EXEMPTION 
              OF PHARMACISTS FROM SURETY BOND REQUIREMENT.

    (a) Edits on 855S Medicare Enrollment Application.--Section 1834(a) 
of the Social Security Act (42 U.S.C. 1395m(a)) is amended by adding at 
the end the following new paragraphs:
            ``(22) Confirmation with national supplier clearinghouse 
        prior to payment.--
                    ``(A) In general.--Not later than 1 year after the 
                date of enactment of this paragraph, the Secretary 
                shall establish procedures to require carriers, prior 
                to paying a claim for payment for durable medical 
                equipment, prosthetics, orthotics, and supplies under 
                this title, to confirm with the National Supplier 
                Clearinghouse--
                            ``(i) that the National Provider Identifier 
                        of the physician or practitioner prescribing or 
                        ordering the item or service is valid and 
                        active;
                            ``(ii) that the Medicare identification 
                        number of the supplier is valid and active; and
                            ``(iii) that the item or service for which 
                        the claim for payment is submitted was properly 
                        identified on the CMS-855S Medicare enrollment 
                        application.
                    ``(B) Online database for implementation.--Not 
                later than 18 months after the date of enactment of 
                this paragraph, the Secretary shall establish an online 
                database similar to that used for the National Provider 
                Identifier to enable providers of services, 
                accreditors, carriers, and the National Supplier 
                Clearinghouse to view information on specialties and 
                the types of items and services each supplier has 
                indicated on the CMS-855S Medicare enrollment 
                application submitted by the supplier.
                    ``(C) Notification of claim denial and 
                resubmission.--In the case where a claim for payment 
                for durable medical equipment, prosthetics, orthotics, 
                and supplies under this title is denied because the 
                item or service furnished does not correctly match up 
                with the information on file with the National Supplier 
                Clearinghouse--
                            ``(i) the National Supplier Clearinghouse 
                        shall--
                                    ``(I) provide the supplier written 
                                notification of the reason for such 
                                denial; and
                                    ``(II) allow the supplier 60 days 
                                to provide the National Supplier 
                                Clearinghouse with appropriate 
                                certification, licensing, or 
                                accreditation; and
                            ``(ii) the Secretary shall waive applicable 
                        requirements relating to the time frame for the 
                        submission of claims for payment under this 
                        title in order to permit the resubmission of 
                        such claim if payment of such claim would 
                        otherwise be allowed under this title.
                    ``(D) Improvements to medicare enrollment 
                application.--The Secretary shall establish procedures 
                under which a prospective supplier of durable medical 
                equipment, prosthetics, orthotics, and supplies under 
                this title shall certify, as part of the CMS-855S 
                Medicare enrollment application submitted by such 
                supplier, under penalty of perjury, that the 
                information provided by the supplier on such 
                application is accurate to the best of the supplier's 
                knowledge.
            ``(23) Termination of participation for submission of 
        fraudulent claims.--If the Secretary finds that a supplier of 
        durable medical equipment, prosthetics, orthotics, and supplies 
        under this title has submitted fraudulent claims for payment 
        under this title, the Secretary shall terminate the suppliers 
        participation under this title. Not later than 1 year after the 
        date of enactment of this paragraph, the Secretary shall 
        establish a process under which a supplier whose participation 
        has been terminated under the preceding sentence may appeal 
        such termination and such appeal shall be resolved not later 
        than 60 days after the date on which the appeal was made.''.
    (b) Exemption of Pharmacists From Surety Bond Requirement.--Section 
1834(a)(16) of the Social Security Act (42 U.S.C. 1395m(a)(16)) is 
amended, in the second sentence, by inserting ``and shall waive such 
requirement in the case of a pharmacist'' before the period at the end.

SEC. 515. GAO STUDY AND REPORT ON EFFECTIVENESS OF SURETY BOND 
              REQUIREMENTS FOR SUPPLIERS OF DURABLE MEDICAL EQUIPMENT 
              IN COMBATING FRAUD.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study on the effectiveness of the surety bond requirement 
under section 1834(a)(16) of the Social Security Act (42 U.S.C. 
1395m(a)(16)) in combating fraud.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Comptroller General shall submit to Congress a report 
containing the results of the study conducted under subsection (a), 
together with recommendations for such legislation and administrative 
action as the Comptroller General determines appropriate.

                     TITLE VI--ENDING LAWSUIT ABUSE

SEC. 601. STATE GRANTS TO CREATE HEALTH COURT SOLUTIONS.

    Part P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.) is amended by adding at the end the following:

``SEC. 399R. STATE GRANTS TO CREATE HEALTH COURT SOLUTIONS.

    ``(a) In General.--The Secretary may award grants to States for the 
development, implementation, and evaluation of alternatives to current 
tort litigation that comply with this section, for the resolution of 
disputes concerning injuries allegedly caused by health care providers 
or health care organizations.
    ``(b) Conditions for Demonstration Grants.--
            ``(1) Application.--To be eligible to receive a grant under 
        this section, a State shall submit to the Secretary an 
        application at such time, in such manner, and containing such 
        information as may be required by the Secretary. A grant shall 
        be awarded under this section on such terms and conditions as 
        the Secretary determines appropriate.
            ``(2) State requirements.--To be eligible to receive a 
        grant under this section, a State shall--
                    ``(A) develop and implement an alternative to 
                current tort litigation for resolving disputes over 
                injuries allegedly caused by health care providers or 
                health care organizations based on one or more of the 
                models described in subsection (d); and
                    ``(B) implement policies that provide for a 
                reduction in health care errors through the collection 
                and analysis by organizations that engage in voluntary 
                efforts to improve patient safety and the quality of 
                health care delivery, of patient safety data related to 
                disputes resolved under the alternatives under 
                subparagraph (A).
            ``(3) Demonstration of effectiveness.--To be eligible to 
        receive a grant under subsection (a), a State shall demonstrate 
        how the proposed alternative to be implemented under paragraph 
        (2)(A) will--
                    ``(A) make the medical liability system of the 
                State more reliable through the prompt and fair 
                resolution of disputes;
                    ``(B) encourage the early disclosure of health care 
                errors;
                    ``(C) enhance patient safety; and
                    ``(D) maintain access to medical liability 
                insurance.
            ``(4) Sources of compensation.--To be eligible to receive a 
        grant under subsection (a), a State shall identify the sources 
        from, and methods by which, compensation would be paid for 
        medical liability claims resolved under the proposed 
        alternative to current tort litigation implemented under 
        paragraph (2)(A). Funding methods shall, to the extent 
        practicable, provide financial incentives for activities that 
        improve patient safety.
            ``(5) Scope.--
                    ``(A) In general.--To be eligible to receive a 
                grant under subsection (a), a State shall utilize the 
                proposed alternative identified under paragraph (2)(A) 
                for the resolution of all types of disputes concerning 
                injuries allegedly caused by health care providers or 
                health care organizations.
                    ``(B) Current state efforts to establish 
                alternative to tort litigation.--
                            ``(i) In general.--Nothing in this section 
                        shall be construed to limit the efforts that 
                        any State has made prior to the date of 
                        enactment of this section to establish any 
                        alternative to tort litigation.
                            ``(ii) Alternative for practice areas or 
                        injuries.--In the case of a State that has 
                        established an alternative to tort litigation 
                        for a certain area of health care practice or a 
                        category of injuries, the alternative selected 
                        as provided for in this section shall 
                        supplement not replace or invalidate such 
                        established alternative unless the State 
                        intends otherwise.
            ``(6) Notification of patients.--To be eligible to receive 
        a grant under subsection (a), the State shall demonstrate how 
        patients will be notified when they are receiving health care 
        services that fall within the scope of the alternative selected 
        under this section by the State to current tort litigation.
    ``(c) Representation by Counsel.--A State that receives a grant 
under this section may not preclude any party to a dispute that falls 
within the jurisdiction of the alternative to current tort litigation 
that is implemented under the grant from obtaining legal representation 
at any point during the consideration of the claim under such 
alternative.
    ``(d) Models.--
            ``(1) In general.--The models in this section are the 
        following:
            ``(2) Expert panel review and early offer guidelines.--
                    ``(A) In general.--A State may use amounts received 
                under a grant under this section to develop and 
                implement an expert panel and early offer review system 
                that meets the requirements of this paragraph.
                    ``(B) Establishment of panel.--Under the system 
                under this paragraph, the State shall establish an 
                expert panel to review any disputes concerning injuries 
                allegedly caused by health care providers or health 
                care organizations according to the guidelines 
                described in this paragraph.
                    ``(C) Composition.--
                            ``(i) In general.--An expert panel under 
                        this paragraph shall be composed of 3 medical 
                        experts (either physicians or health care 
                        professionals) and 3 attorneys to be appointed 
                        by the head of the State agency responsible for 
                        health.
                            ``(ii) Licensure and expertise.--Each 
                        physician or health care professional appointed 
                        to an expert panel under clause (i) shall--
                                    ``(I) be appropriately credentialed 
                                or licensed in the State in which the 
                                dispute takes place to deliver health 
                                care services; and
                                    ``(II) typically treat the 
                                condition, make the diagnosis, or 
                                provide the type of treatment that is 
                                under review.
                            ``(iii) Independence.--
                                    ``(I) In general.--Subject to 
                                subclause (II), each individual 
                                appointed to an expert panel under this 
                                paragraph shall--
                                            ``(aa) not have a material 
                                        familial, financial, or 
                                        professional relationship with 
                                        a party involved in the dispute 
                                        reviewed by the panel; and
                                            ``(bb) not otherwise have a 
                                        conflict of interest with such 
                                        a party.
                                    ``(II) Exception.--Nothing in 
                                subclause (I) shall be construed to 
                                prohibit an individual who has staff 
                                privileges at an institution where the 
                                treatment involved in the dispute was 
                                provided from serving as a member of an 
                                expert panel merely on the basis of 
                                such affiliation, if the affiliation is 
                                disclosed to the parties and neither 
                                party objects.
                            ``(iv) Practicing health care professional 
                        in same field.--
                                    ``(I) In general.--In a dispute 
                                before an expert panel that involves 
                                treatment, or the provision of items or 
                                services--
                                            ``(aa) by a physician, the 
                                        medical experts on the expert 
                                        panel shall be practicing 
                                        physicians (allopathic or 
                                        osteopathic) of the same or 
                                        similar specialty as a 
                                        physician who typically treats 
                                        the condition, makes the 
                                        diagnosis, or provides the type 
                                        of treatment under review; or
                                            ``(bb) by a health care 
                                        professional other than a 
                                        physician, at least two medical 
                                        experts on the expert panel 
                                        shall be practicing physicians 
                                        (allopathic or osteopathic) of 
                                        the same or similar specialty 
                                        as the health care professional 
                                        who typically treats the 
                                        condition, makes the diagnosis, 
                                        or provides the type of 
                                        treatment under review, and, if 
                                        determined appropriate by the 
                                        State agency, the third medical 
                                        expert shall be a practicing 
                                        health care professional (other 
                                        than such a physician) of such 
                                        a same or similar specialty.
                                    ``(II) Practicing defined.--In this 
                                paragraph, the term `practicing' means, 
                                with respect to an individual who is a 
                                physician or other health care 
                                professional, that the individual 
                                provides health care services to 
                                individual patients on average at least 
                                2 days a week.
                            ``(v) Pediatric expertise.--In the case of 
                        dispute relating to a child, at least 1 medical 
                        expert on the expert panel shall have expertise 
                        described in clause (iv)(I) in pediatrics.
                    ``(D) Determination.--After a review, an expert 
                panel shall make a determination as to the liability of 
                the parties involved and compensation based on a 
                schedule of compensation that is developed by the 
                panel. Such a schedule shall at least include--
                            ``(i) payment for the net economic loss 
                        incurred by the patient, on a periodic basis, 
                        reduced by any payments received by the patient 
                        under--
                                    ``(I) any health or accident 
                                insurance;
                                    ``(II) any wage or salary 
                                continuation plan; or
                                    ``(III) any disability income 
                                insurance;
                            ``(ii) payment for the non-economic damages 
                        incurred by the patient, if appropriate for the 
                        injury, based on a defined payment schedule 
                        developed by the State, in consultation with 
                        relevant experts and with the Secretary;
                            ``(iii) reasonable attorney's fees; and
                            ``(iv) regular updates of the schedule 
                        under clause (ii) as necessary.
                    ``(E) Acceptance.--If the parties to a dispute who 
                come before an expert panel under this paragraph accept 
                the determination of the expert panel concerning 
                liability and compensation, such compensation shall be 
                paid to the claimant and the claimant shall agree to 
                forgo any further action against the health care 
                providers or health care organizations involved.
                    ``(F) Failure to accept.--If any party decides not 
                to accept the expert panel's determination under this 
                paragraph, the State may choose whether to allow the 
                panel to review the determination de novo, with 
                deference, or to provide an opportunity for parties to 
                reject the determination of the panel.
                    ``(G) Review by state court after exhaustion of 
                administrative remedies.--
                            ``(i) Right to file.--If the State elects 
                        not to permit the expert panel under this 
                        paragraph to conduct its own reviews of 
                        determinations, or if the State elects to 
                        permit such reviews but a party is not 
                        satisfied with the final decision of the panel 
                        after such a review, the party shall have the 
                        right to file a claim relating to the injury 
                        involved in a State court of competent 
                        jurisdiction.
                            ``(ii) Forfeit of awards.--Any party filing 
                        an action in a State court under clause (i) 
                        shall forfeit any compensation award made under 
                        subparagraph (C).
                            ``(iii) Admissibility.--The determinations 
                        of the expert panel pursuant to a review under 
                        subparagraph (C) shall be admissible into 
                        evidence in any State court proceeding under 
                        this subparagraph.
            ``(3) Administrative health care tribunals.--
                    ``(A) In general.--A State may use amounts received 
                under a grant under this section to develop and 
                implement an administrative health care tribunal system 
                under which the parties involved shall have the right 
                to request a hearing to review any dispute concerning 
                injuries allegedly caused by health care providers or 
                health care organizations before an administrative 
                health care tribunal established by the State involved.
                    ``(B) Requirements.--In establishing an 
                administrative health care tribunal under this 
                paragraph, a State shall--
                            ``(i) ensure that such tribunals are 
                        presided over by special judges with health 
                        care expertise who meet applicable State 
                        standards for judges and who agree to preside 
                        over such court voluntarily;
                            ``(ii) provide authority to such judges to 
                        make binding rulings, rendered in written 
                        decisions, on standards of care, causation, 
                        compensation, and related issues with reliance 
                        on independent expert witnesses commissioned by 
                        the tribunal;
                            ``(iii) establish a legal standard for the 
                        tribunal that shall be the same as the standard 
                        that would apply in the State court of 
                        competent jurisdiction which would otherwise 
                        handle the claim; and
                            ``(iv) provide for an appeals process to 
                        allow for review of decisions by State courts.
                    ``(C) Determination.--After a tribunal conducts a 
                review under this paragraph, the tribunal shall make a 
                determination as to the liability of the parties 
                involved and the amount of compensation that should be 
                paid based on a schedule of compensation developed by 
                the tribunal. Such a schedule shall at a minimum 
                include--
                            ``(i) payment for the net economic loss 
                        incurred by the patient, on a periodic basis, 
                        reduced by any payments received by the patient 
                        under--
                                    ``(I) any health or accident 
                                insurance;
                                    ``(II) any wage or salary 
                                continuation plan; or
                                    ``(III) any disability income 
                                insurance;
                            ``(ii) payment for the non-economic damages 
                        incurred by the patient, if appropriate for the 
                        injury, based on a defined payment schedule 
                        developed by the State in consultation with 
                        relevant experts and with the Secretary;
                            ``(iii) reasonable attorney's fees; and
                            ``(iv) regular updates of the schedule 
                        under clause (ii) as necessary.
                    ``(D) Review by state court after exhaustion of 
                administrative remedies.--
                            ``(i) Right to file.--Nothing in this 
                        paragraph shall be construed to prohibit any 
                        individual who is not satisfied with the 
                        determinations of a tribunal under this 
                        paragraph, from filing a claim for the injury 
                        involved in a State court of competent 
                        jurisdiction.
                            ``(ii) Forfeit of award.--Any party filing 
                        an action in a State court under clause (i) 
                        shall forfeit any compensation award made under 
                        subparagraph (C).
                            ``(iii) Admissibility.--The determinations 
                        of the tribunal under subparagraph (C) shall be 
                        admissible into evidence in any State court 
                        proceeding under this subparagraph.
            ``(4) Expert panel review and administrative health care 
        tribunal combination model.--
                    ``(A) In general.--A State may use amounts received 
                under a grant under this section to develop and 
                implement an expert panel review and administrative 
                health care tribunal combination system to review any 
                dispute concerning injuries allegedly caused by health 
                care providers or health care organizations. Under such 
                system, a dispute concerning injuries allegedly caused 
                by health care providers or health care organizations 
                shall proceed through the procedures described in this 
                subparagraph prior to the submission of such dispute to 
                a State court.
                    ``(B) General procedure.--
                            ``(i) Establishment of expert panel.--Prior 
                        to submitting any dispute described in 
                        subparagraph (A) to an administrative health 
                        care tribunal under the system established 
                        under this paragraph, the State shall establish 
                        an expert panel (in accordance with 
                        subparagraph (C)) to review the allegations 
                        involved in such dispute.
                            ``(ii) Referral to tribunal.--If either 
                        party to a dispute described in clause (i) 
                        fails to accept the determination of the expert 
                        panel, the dispute shall then be referred to an 
                        administrative health care tribunal (in 
                        accordance with subparagraph (D).
                    ``(C) Expert review panel.--
                            ``(i) In general.--The provisions of 
                        paragraph (2) shall apply with respect to the 
                        establishment and operation of an expert review 
                        panel under this subparagraph, except that the 
                        subparagraphs (F) and (G) of such paragraph 
                        shall not apply.
                            ``(ii) Failure to accept determination of 
                        panel.--If any party to a dispute before an 
                        expert panel under this subparagraph refuses to 
                        accept the panel's determination, the dispute 
                        shall be referred to an administrative health 
                        care tribunal under subparagraph (D).
                    ``(D) Administrative health care tribunals.--
                            ``(i) In general.--Upon the failure of any 
                        party to accept the determination of an expert 
                        panel under subparagraph (C), the parties shall 
                        request a hearing concerning the liability or 
                        compensation involved by an administrative 
                        health care tribunal established by the State 
                        involved under this subparagraph.
                            ``(ii) Requirements.--The provisions of 
                        paragraph (3) shall apply with respect to the 
                        establishment and operation of an 
                        administrative health care tribunal under this 
                        subparagraph.
                            ``(iii) Forfeit of awards.--Any party 
                        proceeding to the second step-administrative 
                        health care tribunal-under this model shall 
                        forfeit any compensation awarded by the expert 
                        panel.
                            ``(iv) Admissibility.--The determinations 
                        of the expert panel under subparagraph (C) 
                        shall be admissible into evidence in any 
                        administrative health care tribunal proceeding 
                        under this subparagraph.
                    ``(E) Right to file.--Nothing in this paragraph 
                shall be construed to prohibit any individual who is 
                not satisfied with the determination of the tribunal 
                (after having proceeded through both the expert panel 
                under subparagraph (C) and the tribunal under 
                subparagraph (D)) from filing a claim for the injury 
                involved in a State court of competent jurisdiction.
                    ``(F) Admissibility.--The determinations of both 
                the expert panel and the tribunal under this paragraph 
                shall be admissible into evidence in any State court 
                proceeding under this paragraph.
                    ``(G) Forfeit of awards.--Any party filing an 
                action in State court under subparagraph (E) shall 
                forfeit any compensation award made by both the expert 
                panel and the administrative health care tribunal under 
                this paragraph.
    ``(e) Definitions.--In this section:
            ``(1) Current tort litigation.--The term `current tort 
        litigation' means the tort litigation system existing in the 
        State on the date on which the State submits an application 
        under subsection (b)(1), for the resolution of disputes 
        concerning injuries allegedly caused by health care providers 
        or health care organizations.
            ``(2) Health care organization.--The term `health care 
        organization' means any individual or entity that is obligated 
        to provide, pay for, or administer health benefits under any 
        health plan.
            ``(3) Net economic loss.--The term `net economic loss' 
        means--
                    ``(A) reasonable expenses incurred for products, 
                services and accommodations needed for health care, 
                training and other remedial treatment and care of an 
                injured individual;
                    ``(B) reasonable and appropriate expenses for 
                rehabilitation treatment and occupational training;
                    ``(C) 100 percent of the loss of income from work 
                that an injured individual would have performed if not 
                injured, reduced by any income from substitute work 
                actually performed; and
                    ``(D) reasonable expenses incurred in obtaining 
                ordinary and necessary services to replace services an 
                injured individual would have performed for the benefit 
                of the individual or the family of such individual if 
                the individual had not been injured.
            ``(4) Non-economic damages.--The term `non-economic 
        damages' means losses for physical and emotional pain, 
        suffering, inconvenience, physical impairment, mental anguish, 
        disfigurement, loss of enjoyment of life, loss of society and 
        companionship, loss of consortium (other than loss of domestic 
        service), injury to reputation, and all other non-pecuniary 
        losses of any kind or nature, to the extent permitted under 
        State law.
    ``(f) Funding.--
            ``(1) One-time increase in medicaid payment.--In the case 
        of a State awarded a grant to carry out this section, the total 
        amount of the Federal payment determined for the State under 
        section 1913 of the Social Security Act (as amended by section 
        401) for fiscal year 2011 (in addition to the any increase 
        applicable for that fiscal year under section 203(b) but 
        determined without regard to any such increase) shall be 
        increased by an amount equal to 1 percent of the total amount 
        of payments made to the State for fiscal year 2010 under 
        section 1903(a) of the Social Security Act (42 U.S.C. 1396b(a)) 
        for purposes of carrying out a grant awarded under this 
        section. Amounts paid to a State pursuant to this subsection 
        shall remain available until expended.
            ``(2) Authorization of appropriations.--There are 
        authorized to be appropriated for any fiscal year such sums as 
        may be necessary for purposes of making payments to States 
        pursuant to paragraph (1).''.

           TITLE VII--PROMOTING HEALTH INFORMATION TECHNOLOGY

 Subtitle A--Assisting the Development of Health Information Technology

SEC. 701. PURPOSE.

    It is the purpose of this subtitle to promote the utilization of 
health record banking by improving the coordination of health 
information through an infrastructure for the secure and authorized 
exchange and use of healthcare information.

SEC. 702. HEALTH RECORD BANKING.

    (a) Establishment.--Not later than 1 year after the date of 
enactment of this Act, the Secretary of Health and Human Services shall 
promulgate regulations to provide for the certification and auditing of 
the banking of electronic medical records.
    (b) General Rights.--An individual who has a health record 
contained in a health record bank shall maintain ownership over the 
health record and shall have the right to review the contents of the 
record.

SEC. 703. APPLICATION OF FEDERAL AND STATE SECURITY AND CONFIDENTIALITY 
              STANDARDS.

    (a) In General.--Current Federal security and confidentiality 
standards and State security and confidentiality laws shall apply to 
this subtitle until such time as Congress acts to amend such standards.
    (b) Definitions.--In this section:
            (1) Current federal security and confidentiality 
        standards.--The term ``current Federal security and 
        confidentiality standards'' means the Federal privacy standards 
        established pursuant to section 264(c) of the Health Insurance 
        Portability and Accountability Act of 1996 (42 U.S.C. 1320d-2 
        note) and security standards established under section 1173(d) 
        of the Social Security Act (42 U.S.C. 1320d-2(d)).
            (2) State security and confidentiality laws.--The term 
        ``State security and confidentiality laws'' means State laws 
        and regulations relating to the privacy and confidentiality of 
        individually identifiable health information or to the security 
        of such information.
            (3) State.--The term ``State'' has the meaning given such 
        term for purposes of title XI of the Social Security Act, as 
        provided under section 1101(a) of such Act (42 U.S.C. 1301(a)).

    Subtitle B--Removing Barriers to the Use of Health Information 
              Technology to Better Coordinate Health Care

SEC. 711. SAFE HARBORS TO ANTIKICKBACK CIVIL PENALTIES AND CRIMINAL 
              PENALTIES FOR PROVISION OF HEALTH INFORMATION TECHNOLOGY 
              AND TRAINING SERVICES.

    (a) For Civil Penalties.--Section 1128A of the Social Security Act 
(42 U.S.C. 1320a-7a) is amended--
            (1) in subsection (b), by adding at the end the following 
        new paragraph:
    ``(4) For purposes of this subsection, inducements to reduce or 
limit services described in paragraph (1) shall not include the 
practical or other advantages resulting from health information 
technology or related installation, maintenance, support, or training 
services.''; and
            (2) in subsection (i), by adding at the end the following 
        new paragraph:
            ``(8) The term `health information technology' means 
        hardware, software, license, right, intellectual property, 
        equipment, or other information technology (including new 
        versions, upgrades, and connectivity) designed or provided 
        primarily for the electronic creation, maintenance, or exchange 
        of health information to better coordinate care or improve 
        health care quality, efficiency, or research.''.
    (b) For Criminal Penalties.--Section 1128B of such Act (42 U.S.C. 
1320a-7b) is amended--
            (1) in subsection (b)(3)--
                    (A) in subparagraph (G), by striking ``and'' at the 
                end;
                    (B) in the subparagraph (H) added by section 237(d) 
                of the Medicare Prescription Drug, Improvement, and 
                Modernization Act of 2003 (Public Law 108-173; 117 
                Stat. 2213)--
                            (i) by moving such subparagraph 2 ems to 
                        the left; and
                            (ii) by striking the period at the end and 
                        inserting a semicolon;
                    (C) in the subparagraph (H) added by section 431(a) 
                of such Act (117 Stat. 2287)--
                            (i) by redesignating such subparagraph as 
                        subparagraph (I);
                            (ii) by moving such subparagraph 2 ems to 
                        the left; and
                            (iii) by striking the period at the end and 
                        inserting ``; and''; and
                    (D) by adding at the end the following new 
                subparagraph:
            ``(J) any nonmonetary remuneration (in the form of health 
        information technology, as defined in section 1128A(i)(8), or 
        related installation, maintenance, support or training 
        services) made to a person by a specified entity (as defined in 
        subsection (g)) if--
                    ``(i) the provision of such remuneration is without 
                an agreement between the parties or legal condition 
                that--
                            ``(I) limits or restricts the use of the 
                        health information technology to services 
                        provided by the physician to individuals 
                        receiving services at the specified entity;
                            ``(II) limits or restricts the use of the 
                        health information technology in conjunction 
                        with other health information technology; or
                            ``(III) conditions the provision of such 
                        remuneration on the referral of patients or 
                        business to the specified entity;
                    ``(ii) such remuneration is arranged for in a 
                written agreement that is signed by the parties 
                involved (or their representatives) and that specifies 
                the remuneration solicited or received (or offered or 
                paid) and states that the provision of such 
                remuneration is made for the primary purpose of better 
                coordination of care or improvement of health quality, 
                efficiency, or research; and
                    ``(iii) the specified entity providing the 
                remuneration (or a representative of such entity) has 
                not taken any action to disable any basic feature of 
                any hardware or software component of such remuneration 
                that would permit interoperability.''; and
            (2) by adding at the end the following new subsection:
    ``(g) Specified Entity Defined.--For purposes of subsection 
(b)(3)(J), the term `specified entity' means an entity that is a 
hospital, group practice, prescription drug plan sponsor, a Medicare 
Advantage organization, or any other such entity specified by the 
Secretary, considering the goals and objectives of this section, as 
well as the goals to better coordinate the delivery of health care and 
to promote the adoption and use of health information technology.''.
    (c) Effective Date and Effect on State Laws.--
            (1) Effective date.--The amendments made by subsections (a) 
        and (b) shall take effect on the date that is 120 days after 
        the date of the enactment of this Act.
            (2) Preemption of state laws.--No State (as defined in 
        section 1101(a) of the Social Security Act (42 U.S.C. 1301(a)) 
        for purposes of title XI of such Act) shall have in effect a 
        State law that imposes a criminal or civil penalty for a 
        transaction described in section 1128A(b)(4) or section 
        1128B(b)(3)(J) of such Act, as added by subsections (a)(1) and 
        (b), respectively, if the conditions described in the 
        respective provision, with respect to such transaction, are 
        met.
    (d) Study and Report To Assess Effect of Safe Harbors on Health 
System.--
            (1) In general.--The Secretary of Health and Human Services 
        shall conduct a study to determine the impact of each of the 
        safe harbors described in paragraph (3). In particular, the 
        study shall examine the following:
                    (A) The effectiveness of each safe harbor in 
                increasing the adoption of health information 
                technology.
                    (B) The types of health information technology 
                provided under each safe harbor.
                    (C) The extent to which the financial or other 
                business relationships between providers under each 
                safe harbor have changed as a result of the safe harbor 
                in a way that adversely affects or benefits the health 
                care system or choices available to consumers.
                    (D) The impact of the adoption of health 
                information technology on health care quality, cost, 
                and access under each safe harbor.
            (2) Report.--Not later than 3 years after the effective 
        date described in subsection (c)(1), the Secretary of Health 
        and Human Services shall submit to Congress a report on the 
        study under paragraph (1).
            (3) Safe harbors described.--For purposes of paragraphs (1) 
        and (2), the safe harbors described in this paragraph are--
                    (A) the safe harbor under section 1128A(b)(4) of 
                such Act (42 U.S.C. 1320a-7a(b)(4)), as added by 
                subsection (a)(1); and
                    (B) the safe harbor under section 1128B(b)(3)(J) of 
                such Act (42 U.S.C. 1320a-7b(b)(3)(J)), as added by 
                subsection (b).

SEC. 712. EXCEPTION TO LIMITATION ON CERTAIN PHYSICIAN REFERRALS (UNDER 
              STARK) FOR PROVISION OF HEALTH INFORMATION TECHNOLOGY AND 
              TRAINING SERVICES TO HEALTH CARE PROFESSIONALS.

    (a) In General.--Section 1877(b) of the Social Security Act (42 
U.S.C. 1395nn(b)) is amended by adding at the end the following new 
paragraph:
            ``(6) Information technology and training services.--
                    ``(A) In general.--Any nonmonetary remuneration (in 
                the form of health information technology or related 
                installation, maintenance, support or training 
                services) made by a specified entity to a physician 
                if--
                            ``(i) the provision of such remuneration is 
                        without an agreement between the parties or 
                        legal condition that--
                                    ``(I) limits or restricts the use 
                                of the health information technology to 
                                services provided by the physician to 
                                individuals receiving services at the 
                                specified entity;
                                    ``(II) limits or restricts the use 
                                of the health information technology in 
                                conjunction with other health 
                                information technology; or
                                    ``(III) conditions the provision of 
                                such remuneration on the referral of 
                                patients or business to the specified 
                                entity;
                            ``(ii) such remuneration is arranged for in 
                        a written agreement that is signed by the 
                        parties involved (or their representatives) and 
                        that specifies the remuneration made and states 
                        that the provision of such remuneration is made 
                        for the primary purpose of better coordination 
                        of care or improvement of health quality, 
                        efficiency, or research; and
                            ``(iii) the specified entity (or a 
                        representative of such entity) has not taken 
                        any action to disable any basic feature of any 
                        hardware or software component of such 
                        remuneration that would permit 
                        interoperability.
                    ``(B) Health information technology defined.--For 
                purposes of this paragraph, the term `health 
                information technology' means hardware, software, 
                license, right, intellectual property, equipment, or 
                other information technology (including new versions, 
                upgrades, and connectivity) designed or provided 
                primarily for the electronic creation, maintenance, or 
                exchange of health information to better coordinate 
                care or improve health care quality, efficiency, or 
                research.
                    ``(C) Specified entity defined.--For purposes of 
                this paragraph, the term `specified entity' means an 
                entity that is a hospital, group practice, prescription 
                drug plan sponsor, a Medicare Advantage organization, 
                or any other such entity specified by the Secretary, 
                considering the goals and objectives of this section, 
                as well as the goals to better coordinate the delivery 
                of health care and to promote the adoption and use of 
                health information technology.''.
    (b) Effective Date; Effect on State Laws.--
            (1) Effective date.--The amendment made by subsection (a) 
        shall take effect on the date that is 120 days after the date 
        of the enactment of this Act.
            (2) Preemption of state laws.--No State (as defined in 
        section 1101(a) of the Social Security Act (42 U.S.C. 1301(a)) 
        for purposes of title XI of such Act) shall have in effect a 
        State law that imposes a criminal or civil penalty for a 
        transaction described in section 1877(b)(6) of such Act, as 
        added by subsection (a), if the conditions described in such 
        section, with respect to such transaction, are met.
    (c) Study and Report To Assess Effect of Exception on Health 
System.--
            (1) In general.--The Secretary of Health and Human Services 
        shall conduct a study to determine the impact of the exception 
        under section 1877(b)(6) of such Act (42 U.S.C. 1395nn(b)(6)), 
        as added by subsection (a). In particular, the study shall 
        examine the following:
                    (A) The effectiveness of the exception in 
                increasing the adoption of health information 
                technology.
                    (B) The types of health information technology 
                provided under the exception.
                    (C) The extent to which the financial or other 
                business relationships between providers under the 
                exception have changed as a result of the exception in 
                a way that adversely affects or benefits the health 
                care system or choices available to consumers.
                    (D) The impact of the adoption of health 
                information technology on health care quality, cost, 
                and access under the exception.
            (2) Report.--Not later than 3 years after the effective 
        date described in subsection (b)(1), the Secretary of Health 
        and Human Services shall submit to Congress a report on the 
        study under paragraph (1).

SEC. 713. RULES OF CONSTRUCTION REGARDING USE OF CONSORTIA.

    (a) Application to Safe Harbor From Criminal Penalties.--Section 
1128B(b)(3) of the Social Security Act (42 U.S.C. 1320a-7b(b)(3)) is 
amended by adding after and below subparagraph (J), as added by section 
711(b)(1), the following: ``For purposes of subparagraph (J), nothing 
in such subparagraph shall be construed as preventing a specified 
entity, consistent with the specific requirements of such subparagraph, 
from forming a consortium composed of health care providers, payers, 
employers, and other interested entities to collectively purchase and 
donate health information technology, or from offering health care 
providers a choice of health information technology products in order 
to take into account the varying needs of such providers receiving such 
products.''.
    (b) Application to Stark Exception.--Paragraph (6) of section 
1877(b) of the Social Security Act (42 U.S.C. 1395nn(b)), as added by 
section 712(a), is amended by adding at the end the following new 
subparagraph:
                    ``(D) Rule of construction.--For purposes of 
                subparagraph (A), nothing in such subparagraph shall be 
                construed as preventing a specified entity, consistent 
                with the specific requirements of such subparagraph, 
                from--
                            ``(i) forming a consortium composed of 
                        health care providers, payers, employers, and 
                        other interested entities to collectively 
                        purchase and donate health information 
                        technology; or
                            ``(ii) offering health care providers a 
                        choice of health information technology 
                        products in order to take into account the 
                        varying needs of such providers receiving such 
                        products.''.

              TITLE VIII--HEALTH CARE SERVICES COMMISSION

              Subtitle A--Establishment and General Duties

SEC. 801. ESTABLISHMENT.

    (a) In General.--There is hereby established a Health Care Services 
Commission (in this title, referred to as the ``Commission'') to be 
composed of 5 commissioners (in this title referred to as the 
``Commissioners'') to be appointed by the President by and with the 
advice and consent of the Senate. Not more than 3 of such Commissioners 
shall be members of the same political party, and in making 
appointments members of different political parties shall be appointed 
alternately as nearly as may be practicable. No Commissioner shall 
engage in any other business, vocation, or employment than that of 
serving as Commissioner. Each Commissioner shall hold office for a term 
of 5 years and until a successor is appointed and has qualified, except 
that--
            (1) such Commissioner shall not so continue to serve beyond 
        the expiration of the next session of Congress subsequent to 
        the expiration of said fixed term of office;
            (2) any Commissioner appointed to fill a vacancy occurring 
        prior to the expiration of the term for which a predecessor was 
        appointed shall be appointed for the remainder of such term; 
        and
            (3) the terms of office of the Commissioners first taking 
        office after the date of the enactment of this Act shall expire 
        as designated by the President at the time of nomination, 1 at 
        the end of 1 year, 1 at the end of 2 years, 1 at the end of 3 
        years, 1 at the end of 4 years, and 1 at the end of 5 years, 
        after the date of the enactment of this Act.
    (b) Purpose.--The purpose of the Commission is to enhance the 
quality, appropriateness, and effectiveness of health care services, 
and access to such services, through the establishment of a broad base 
of scientific research and through the promotion of improvements in 
clinical practice and in the organization, financing, and delivery of 
health care services.
    (c) Appointment of Chairman.--The President shall, from among the 
Commissioners appointed under subsection (a), designate an individual 
to serve as the Chairman of the Commission.

SEC. 802. GENERAL AUTHORITIES AND DUTIES.

    (a) In General.--In carrying out section 801(b), the Commissioners 
shall conduct and support research, demonstration projects, 
evaluations, training, guideline development, and the dissemination of 
information, on health care services and on systems for the delivery of 
such services, including activities with respect to--
            (1) the effectiveness, efficiency, and quality of health 
        care services;
            (2) the outcomes of health care services and procedures;
            (3) clinical practice, including primary care and practice-
        oriented research;
            (4) health care technologies, facilities, and equipment;
            (5) health care costs, productivity, and market forces;
            (6) health promotion and disease prevention;
            (7) health statistics and epidemiology; and
            (8) medical liability.
    (b) Requirements With Respect to Rural Areas and Underserved 
Populations.--In carrying out subsection (a), the Commissioners shall 
undertake and support research, demonstration projects, and evaluations 
with respect to--
            (1) the delivery of health care services in rural areas 
        (including frontier areas); and
            (2) the health of low-income groups, minority groups, and 
        the elderly.

SEC. 803. DISSEMINATION.

    (a) In General.--The Commissioners shall--
            (1) promptly publish, make available, and otherwise 
        disseminate, in a form understandable and on as broad a basis 
        as practicable so as to maximize its use, the results of 
        research, demonstration projects, and evaluations conducted or 
        supported under this title and the guidelines, standards, and 
        review criteria developed under this title;
            (2) promptly make available to the public data developed in 
        such research, demonstration projects, and evaluations; and
            (3) as appropriate, provide technical assistance to State 
        and local government and health agencies and conduct liaison 
        activities to such agencies to foster dissemination.
    (b) Prohibition Against Restrictions.--Except as provided in 
subsection (c), the Commissioners may not restrict the publication or 
dissemination of data from, or the results of, projects conducted or 
supported under this title.
    (c) Limitation on Use of Certain Information.--No information, if 
an establishment or person supplying the information or described in it 
is identifiable, obtained in the course of activities undertaken or 
supported under this title may be used for any purpose other than the 
purpose for which it was supplied unless such establishment or person 
has consented (as determined under regulations of the Secretary) to its 
use for such other purpose. Such information may not be published or 
released in other form if the person who supplied the information or 
who is described in it is identifiable unless such person has consented 
(as determined under regulations of the Secretary) to its publication 
or release in other form.
    (d) Certain Interagency Agreement.--The Commissioners and the 
Director of the National Library of Medicine shall enter into an 
agreement providing for the implementation of subsection (a)(1).

     Subtitle B--Forum for Quality and Effectiveness in Health Care

SEC. 811. ESTABLISHMENT OF OFFICE.

    There is established within the Commission an office to be known as 
the Office of the Forum for Quality and Effectiveness in Health Care. 
The office shall be headed by a director (referred to in this title as 
the ``Director'') who shall be appointed by the Commissioners.

SEC. 812. MEMBERSHIP.

    (a) In General.--The Office of the Forum for Quality and 
Effectiveness in Health Care shall be composed of 15 individuals 
nominated by private sector health care organizations and appointed by 
the Commission and shall include representation from at least the 
following:
            (1) Health insurance industry.
            (2) Health care provider groups.
            (3) Non-profit organizations.
            (4) Rural health organizations.
    (b) Terms.--
            (1) In general.--Except as provided in paragraph (2), 
        members of the Office of the Forum for Quality and 
        Effectiveness in Health Care shall serve for a term of 5 years.
            (2) Staggered rotation.--Of the members first appointed to 
        the Office of the Forum for Quality and Effectiveness in Health 
        Care, the Commission shall appoint 5 members to serve for a 
        term of 2 years, 5 members to serve for a term of 3 years, and 
        5 members to serve for a term of 4 years.
    (c) Treatment of Other Employment.--Each member of the Office of 
the Forum for Quality and Effectiveness in Health Care shall serve the 
Office independently from any other position of employment.

SEC. 813. DUTIES.

    (a) Establishment of Forum Program.--The Commissioners, acting 
through the Director, shall establish a program to be known as the 
Forum for Quality and Effectiveness in Health Care. For the purpose of 
promoting transparency in price, quality, appropriateness, and 
effectiveness of health care, the Director, using the process set forth 
in section 814, shall arrange for the development and periodic review 
and updating of standards of quality, performance measures, and medical 
review criteria through which health care providers and other 
appropriate entities may assess or review the provision of health care 
and assure the quality of such care.
    (b) Certain Requirements.--Guidelines, standards, performance 
measures, and review criteria under subsection (a) shall--
            (1) be based on the best available research and 
        professional judgment regarding the effectiveness and 
        appropriateness of health care services and procedures; and
            (2) be presented in formats appropriate for use by 
        physicians, health care practitioners, providers, medical 
        educators, and medical review organizations and in formats 
        appropriate for use by consumers of health care.
    (c) Authority for Contracts.--In carrying out this subtitle, the 
Director may enter into contracts with public or nonprofit private 
entities.
    (d) Public Disclosure of Recommendations.--For each fiscal year 
beginning with 2010, the Director shall make publicly available the 
following:
            (1) Quarterly reports for public comment that include 
        proposed recommendations for guidelines, standards, performance 
        measures, and review criteria under subsection (a) and any 
        updates to such guidelines, standards, performance measures, 
        and review criteria.
            (2) After consideration of such comments, a final report 
        that contains final recommendations for such guidelines, 
        standards, performance measures, review criteria, and updates.
    (e) Date Certain for Initial Guidelines and Standards.--The 
Commissioners, by not later than January 1, 2012, shall assure the 
development of an initial set of guidelines, standards, performance 
measures, and review criteria under subsection (a).

SEC. 814. ADOPTION AND ENFORCEMENT OF GUIDELINES AND STANDARDS.

    (a) Adoption of Recommendations of Forum for Quality and 
Effectiveness in Health Care.--For each fiscal year, the Commissioners 
shall adopt the recommendations made for such year in the final report 
under subsection (d)(2) of section 813 for guidelines, standards, 
performance measures, and review criteria described in subsection (a) 
of such section.
    (b) Enforcement Authority.--The Commissioners, in consultation with 
the Secretary of Health and Human Services, have the authority to make 
recommendations to the Secretary to enforce compliance of health care 
providers with the guidelines, standards, performance measures, and 
review criteria adopted under subsection (a). Such recommendations may 
include the following, with respect to a health care provider who is 
not in compliance with such guidelines, standards, measures, and 
criteria:
            (1) Exclusion from participation in Federal health care 
        programs (as defined in section 1128B(f) of the Social Security 
        Act (42 U.S.C. 1320a-7b(f))).
            (2) Imposition of a civil money penalty on such provider.

SEC. 815. ADDITIONAL REQUIREMENTS.

    (a) Program Agenda.--The Commissioners shall provide for an agenda 
for the development of the guidelines, standards, performance measures, 
and review criteria described in section 813(a), including with respect 
to the standards, performance measures, and review criteria, 
identifying specific aspects of health care for which the standards, 
performance measures, and review criteria are to be developed and those 
that are to be given priority in the development of the standards, 
performance measures, and review criteria.

                     Subtitle C--General Provisions

SEC. 821. CERTAIN ADMINISTRATIVE AUTHORITIES.

    The Commissioners, in carrying out this title, may accept voluntary 
and uncompensated services.

SEC. 822. FUNDING.

    For the purpose of carrying out this title, there are authorized to 
be appropriated such sums as may be necessary for fiscal years 2010 
through 2014.

SEC. 823. DEFINITIONS.

    For purposes of this title:
            (1) The term ``Commissioners'' means the Commissioners of 
        the Health Care Services Commission.
            (2) The term ``Commission'' means the Health Care Services 
        Commission.
            (3) The term ``Director'' means the Director of the Office 
        of the Forum for Quality and Effectiveness in Health Care.
            (4) The term ``Secretary'' means the Secretary of Health 
        and Human Services.

                Subtitle D--Terminations and Transition

SEC. 831. TERMINATION OF AGENCY FOR HEALTHCARE RESEARCH AND QUALITY.

    As of the date of the enactment of this Act, the Agency for 
Healthcare Research and Quality is terminated, and title IX of the 
Public Health Service Act is repealed.

SEC. 832. TRANSITION.

    All orders, grants, contracts, privileges, and other determinations 
or actions of the Agency for Healthcare Research and Quality that are 
effective as of the date before the date of the enactment of this Act, 
shall be transferred to the Secretary and shall continue in effect 
according to their terms unless changed pursuant to law.

              Subtitle E--Independent Health Record Trust

SEC. 841. SHORT TITLE.

    This subtitle may be cited as the ``Independent Health Record Trust 
Act of 2009''.

SEC. 842. PURPOSE.

    It is the purpose of this subtitle to provide for the establishment 
of a nationwide health information technology network that--
            (1) improves health care quality, reduces medical errors, 
        increases the efficiency of care, and advances the delivery of 
        appropriate, evidence-based health care services;
            (2) promotes wellness, disease prevention, and the 
        management of chronic illnesses by increasing the availability 
        and transparency of information related to the health care 
        needs of an individual;
            (3) ensures that appropriate information necessary to make 
        medical decisions is available in a usable form at the time and 
        in the location that the medical service involved is provided;
            (4) produces greater value for health care expenditures by 
        reducing health care costs that result from inefficiency, 
        medical errors, inappropriate care, and incomplete information;
            (5) promotes a more effective marketplace, greater 
        competition, greater systems analysis, increased choice, 
        enhanced quality, and improved outcomes in health care 
        services;
            (6) improves the coordination of information and the 
        provision of such services through an effective infrastructure 
        for the secure and authorized exchange and use of health 
        information; and
            (7) ensures that the health information privacy, security, 
        and confidentiality of individually identifiable health 
        information is protected.

SEC. 843. DEFINITIONS.

    In this subtitle:
            (1) Access.--The term ``access'' means, with respect to an 
        electronic health record, entering information into such 
        account as well as retrieving information from such account.
            (2) Account.--The term ``account'' means an electronic 
        health record of an individual contained in an independent 
        health record trust.
            (3) Affirmative consent.--The term ``affirmative consent'' 
        means, with respect to an electronic health record of an 
        individual contained in an IHRT, express consent given by the 
        individual for the use of such record in response to a clear 
        and conspicuous request for such consent or at the individual's 
        own initiative.
            (4) Authorized ehr data user.--The term ``authorized EHR 
        data user'' means, with respect to an electronic health record 
        of an IHRT participant contained as part of an IHRT, any entity 
        (other than the participant) authorized (in the form of 
        affirmative consent) by the participant to access the 
        electronic health record.
            (5) Confidentiality.--The term ``confidentiality'' means, 
        with respect to individually identifiable health information of 
        an individual, the obligation of those who receive such 
        information to respect the health information privacy of the 
        individual.
            (6) Electronic health record.--The term ``electronic health 
        record'' means a longitudinal collection of information 
        concerning a single individual, including medical records and 
        personal health information, that is stored electronically.
            (7) Health information privacy.--The term ``health 
        information privacy'' means, with respect to individually 
        identifiable health information of an individual, the right of 
        such individual to control the acquisition, uses, or 
        disclosures of such information.
            (8) Health plan.--The term ``health plan'' means a group 
        health plan (as defined in section 2208(1) of the Public Health 
        Service Act (42 U.S.C. 300bb-8(1))) as well as a plan that 
        offers health insurance coverage in the individual market.
            (9) HIPAA privacy regulations.--The term ``HIPAA privacy 
        regulations'' means the regulations promulgated under section 
        264(c) of the Health Insurance Portability and Accountability 
        Act of 1996 (42 U.S.C. 1320d-2 note).
            (10) Independent health record trust; ihrt.--The terms 
        ``independent health record trust'' and ``IHRT'' mean a legal 
        arrangement under the administration of an IHRT operator that 
        meets the requirements of this subtitle with respect to 
        electronic health records of individuals participating in the 
        trust or IHRT.
            (11) IHRT operator.--The term ``IHRT operator'' means, with 
        respect to an IHRT, the organization that is responsible for 
        the administration and operation of the IHRT in accordance with 
        this subtitle.
            (12) IHRT participant.--The term ``IHRT participant'' 
        means, with respect to an IHRT, an individual who has a 
        participation agreement in effect with respect to the 
        maintenance of the individual's electronic health record by the 
        IHRT.
            (13) Individually identifiable health information.--The 
        term ``individually identifiable health information'' has the 
        meaning given such term in section 1171(6) of the Social 
        Security Act (42 U.S.C. 1320d(6)).
            (14) Security.--The term ``security'' means, with respect 
        to individually identifiable health information of an 
        individual, the physical, technological, or administrative 
        safeguards or tools used to protect such information from 
        unwarranted access or disclosure.

SEC. 844. ESTABLISHMENT, CERTIFICATION, AND MEMBERSHIP OF INDEPENDENT 
              HEALTH RECORD TRUSTS.

    (a) Establishment.--Not later than one year after the date of the 
enactment of this Act, the Federal Trade Commission, in consultation 
with the National Committee on Vital and Health Statistics, shall 
prescribe standards for the establishment, certification, operation, 
and interoperability of IHRTs to carry out the purposes described in 
section 842 in accordance with the provisions of this subtitle.
    (b) Certification.--
            (1) Certification by ftc.--The Federal Trade Commission 
        shall provide for the certification of IHRTs. No IHRT may be 
        certified unless the IHRT is determined to meet the standards 
        for certification established under subsection (a).
            (2) Decertification.--The Federal Trade Commission shall 
        establish a process for the revocation of certification of an 
        IHRT under this section in the case that the IHRT violates the 
        standards established under subsection (a).
    (c) Membership.--
            (1) In general.--To be eligible to be a participant in an 
        IHRT, an individual shall--
                    (A) submit to the IHRT information as required by 
                the IHRT to establish an electronic health record with 
                the IHRT; and
                    (B) enter into a privacy protection agreement 
                described in section 846(b)(1) with the IHRT.
        The process to determine eligibility of an individual under 
        this subsection shall allow for the establishment by such 
        individual of an electronic health record as expeditiously as 
        possible if such individual is determined so eligible.
            (2) No limitation on membership.--Nothing in this 
        subsection shall be construed to permit an IHRT to restrict 
        membership, including on the basis of health condition.

SEC. 845. DUTIES OF IHRT TO IHRT PARTICIPANTS.

    (a) Fiduciary Duty of IHRT; Penalties for Violations of Fiduciary 
Duty.--
            (1) Fiduciary duty.--With respect to the electronic health 
        record of an IHRT participant maintained by an IHRT, the IHRT 
        shall have a fiduciary duty to act for the benefit and in the 
        interests of such participant and of the IHRT as a whole. Such 
        duty shall include obtaining the affirmative consent of such 
        participant prior to the release of information in such 
        participant's electronic health record in accordance with the 
        requirements of this subtitle.
            (2) Penalties.--If the IHRT knowingly or recklessly 
        breaches the fiduciary duty described in paragraph (1), the 
        IHRT shall be subject to the following penalties:
                    (A) Loss of certification of the IHRT.
                    (B) A fine that is not in excess of $50,000.
                    (C) A term of imprisonment for the individuals 
                involved of not more than 5 years.
    (b) Electronic Health Record Deemed To Be Held in Trust by IHRT.--
With respect to an individual, an electronic health record maintained 
by an IHRT shall be deemed to be held in trust by the IHRT for the 
benefit of the individual and the IHRT shall have no legal or equitable 
interest in such electronic health record.

SEC. 846. AVAILABILITY AND USE OF INFORMATION FROM RECORDS IN IHRT 
              CONSISTENT WITH PRIVACY PROTECTIONS AND AGREEMENTS.

    (a) Protected Electronic Health Records Use and Access.--
            (1) General rights regarding uses of information.--
                    (A) In general.--With respect to the electronic 
                health record of an IHRT participant maintained by an 
                IHRT, subject to paragraph (2)(C), primary uses and 
                secondary uses (described in subparagraphs (B) and (C), 
                respectively) of information within such record (other 
                than by such participant) shall be permitted only upon 
                the authorization of such use, prior to such use, by 
                such participant.
                    (B) Primary uses.--For purposes of subparagraph (A) 
                and with respect to an electronic health record of an 
                individual, a primary use is a use for purposes of the 
                individual's self-care or care by health care 
                professionals.
                    (C) Secondary uses.--For purposes of subparagraph 
                (B) and with respect to an electronic health record of 
                an individual, a secondary use is any use not described 
                in subparagraph (B) and includes a use for purposes of 
                public health research or other related activities. 
                Additional authorization is required for a secondary 
                use extending beyond the original purpose of the 
                secondary use authorized by the IHRT participant 
                involved. Nothing in this paragraph shall be construed 
                as requiring authorization for every secondary use that 
                is within the authorized original purpose.
            (2) Rules for primary use of records for health care 
        purposes.--With respect to the electronic health record of an 
        IHRT participant (or specified parts of such electronic health 
        record) maintained by an IHRT standards for access to such 
        record shall provide for the following:
                    (A) Access by ihrt participants to their electronic 
                health records.--
                            (i) Ownership.--The participant maintains 
                        ownership over the entire electronic health 
                        record (and all portions of such record) and 
                        shall have the right to electronically access 
                        and review the contents of the entire record 
                        (and any portion of such record) at any time, 
                        in accordance with this subparagraph.
                            (ii) Addition of personal information.--The 
                        participant may add personal health information 
                        to the health record of that participant, 
                        except that such participant shall not alter 
                        information that is entered into the electronic 
                        health record by any authorized EHR data user. 
                        Such participant shall have the right to 
                        propose an amendment to information that is 
                        entered by an authorized EHR data user pursuant 
                        to standards prescribed by the Federal Trade 
                        Commission for purposes of amending such 
                        information.
                            (iii) Identification of information entered 
                        by participant.--Any additions or amendments 
                        made by the participant to the health record 
                        shall be identified and disclosed within such 
                        record as being made by such participant.
                    (B) Access by entities other than ihrt 
                participant.--
                            (i) Authorized access only.--Except as 
                        provided under subparagraph (C) and paragraph 
                        (4), access to the electronic health record (or 
                        any portion of the record)--
                                    (I) may be made only by authorized 
                                EHR data users and only to such 
                                portions of the record as specified by 
                                the participant; and
                                    (II) may be limited by the 
                                participant for purposes of entering 
                                information into such record, 
                                retrieving information from such 
                                record, or both.
                            (ii) Identification of entity that enters 
                        information.--Any information that is added by 
                        an authorized EHR data user to the health 
                        record shall be identified and disclosed within 
                        such record as being made by such user.
                            (iii) Satisfaction of hipaa privacy 
                        regulations.--In the case of a record of a 
                        covered entity (as defined for purposes of 
                        HIPAA privacy regulations), with respect to an 
                        individual, if such individual is an IHRT 
                        participant with an independent health record 
                        trust and such covered entity is an authorized 
                        EHR data user, the requirement under the HIPAA 
                        privacy regulations for such entity to provide 
                        the record to the participant shall be deemed 
                        met if such entity, without charge to the IHRT 
                        or the participant--
                                    (I) forwards to the trust an 
                                appropriately formatted electronic copy 
                                of the record (and updates to such 
                                records) for inclusion in the 
                                electronic health record of the 
                                participant maintained by the trust;
                                    (II) enters such record into the 
                                electronic health record of the 
                                participant so maintained; or
                                    (III) otherwise makes such record 
                                available for electronic access by the 
                                IHRT or the individual in a manner that 
                                permits such record to be included in 
                                the account of the individual contained 
                                in the IHRT.
                            (iv) Notification of sensitive 
                        information.--Any information, with respect to 
                        the participant, that is sensitive information, 
                        as specified by the Federal Trade Commission, 
                        shall not be forwarded or entered by an 
                        authorized EHR data user into the electronic 
                        health record of the participant maintained by 
                        the trust unless the user certifies that the 
                        participant has been notified of such 
                        information.
                    (C) Deemed authorization for access for emergency 
                health care.--
                            (i) Findings.--Congress finds that--
                                    (I) given the size and nature of 
                                visits to emergency departments in the 
                                United States, readily available health 
                                information could make the difference 
                                between life and death; and
                                    (II) because of the case mix and 
                                volume of patients treated, emergency 
                                departments are well positioned to 
                                provide information for public health 
                                surveillance, community risk 
                                assessment, research, education, 
                                training, quality improvement, and 
                                other uses.
                            (ii) Use of information.--With respect to 
                        the electronic health record of an IHRT 
                        participant (or specified parts of such 
                        electronic health record) maintained by an 
                        IHRT, the participant shall be deemed as 
                        providing authorization (in the form of 
                        affirmative consent) for health care providers 
                        to access, in connection with providing 
                        emergency care services to the participant, a 
                        limited, authenticated information set 
                        concerning the participant for emergency 
                        response purposes, unless the participant 
                        specifies that such information set (or any 
                        portion of such information set) may not be so 
                        accessed. Such limited information set may 
                        include information--
                                    (I) patient identification data, as 
                                determined appropriate by the 
                                participant;
                                    (II) provider identification that 
                                includes the use of unique provider 
                                identifiers;
                                    (III) payment information;
                                    (IV) information related to the 
                                individual's vitals, allergies, and 
                                medication history;
                                    (V) information related to existing 
                                chronic problems and active clinical 
                                conditions of the participant; and
                                    (VI) information concerning 
                                physical examinations, procedures, 
                                results, and diagnosis data.
            (3) Rules for secondary uses of records for research and 
        other purposes.--
                    (A) In general.--With respect to the electronic 
                health record of an IHRT participant (or specified 
                parts of such electronic health record) maintained by 
                an IHRT, the IHRT may sell such record (or specified 
                parts of such record) only if--
                            (i) the transfer is authorized by the 
                        participant pursuant to an agreement between 
                        the participant and the IHRT and is in 
                        accordance with the privacy protection 
                        agreement described in subsection (b)(1) 
                        entered into between such participant and such 
                        IHRT;
                            (ii) such agreement includes parameters 
                        with respect to the disclosure of information 
                        involved and a process for the authorization of 
                        the further disclosure of information in such 
                        record;
                            (iii) the information involved is to be 
                        used for research or other activities only as 
                        provided for in the agreement;
                            (iv) the recipient of the information 
                        provides assurances that the information will 
                        not be further transferred or reused in 
                        violation of such agreement; and
                            (v) the transfer otherwise meets the 
                        requirements and standards prescribed by the 
                        Federal Trade Commission.
                    (B) Treatment of public health reporting.--Nothing 
                in this paragraph shall be construed as prohibiting or 
                limiting the use of health care information of an 
                individual, including an individual who is an IHRT 
                participant, for public health reporting (or other 
                research) purposes prior to the inclusion of such 
                information in an electronic health record maintained 
                by an IHRT.
            (4) Law enforcement clarification.--Nothing in this 
        subtitle shall prevent an IHRT from disclosing information 
        contained in an electronic health record maintained by the IHRT 
        when required for purposes of a lawful investigation or 
        official proceeding inquiring into a violation of, or failure 
        to comply with, any criminal or civil statute or any 
        regulation, rule, or order issued pursuant to such a statute.
            (5) Rule of construction.--Nothing in this section shall be 
        construed to require a health care provider that does not 
        utilize electronic methods or appropriate levels of health 
        information technology on the date of the enactment of this Act 
        to adopt such electronic methods or technology as a requirement 
        for participation or compliance under this subtitle.
    (b) Privacy Protection Agreement; Treatment of State Privacy and 
Security Laws.--
            (1) Privacy protection agreement.--A privacy protection 
        agreement described in this subsection is an agreement, with 
        respect to an electronic health record of an IHRT participant 
        to be maintained by an independent health record trust, between 
        the participant and the trust--
                    (A) that is consistent with the standards described 
                in subsection (a)(2);
                    (B) under which the participant specifies the 
                portions of the record that may be accessed, under what 
                circumstances such portions may be accessed, any 
                authorizations for indicated authorized EHR data users 
                to access information contained in the record, and the 
                purposes for which the information (or portions of the 
                information) in the record may be used;
                    (C) which provides a process for the authorization 
                of the transfer of information contained in the record 
                to a third party, including for the sale of such 
                information for purposes of research, by an authorized 
                EHR data user and reuse of such information by such 
                third party, including a provision requiring that such 
                transfer and reuse is not in violation of any privacy 
                or transfer restrictions placed by the participant on 
                the independent health record of such participant; and
                    (D) under which the trust provides assurances that 
                the trust will not transfer, disclose, or provide 
                access to the record (or any portion of the record) in 
                violation of the parameters established in the 
                agreement or to any person or entity who has not agreed 
                to use and transfer such record (or portion of such 
                record) in accordance with such agreement.
            (2) Treatment of state laws.--
                    (A) In general.--Except as provided under 
                subparagraph (B), the provisions of a privacy 
                protection agreement entered into between an IHRT and 
                an IHRT participant shall preempt any provision of 
                State law (or any State regulation) relating to the 
                privacy and confidentiality of individually 
                identifiable health information or to the security of 
                such health information.
                    (B) Exception for privileged information.--The 
                provisions of a privacy protection agreement shall not 
                preempt any provision of State law (or any State 
                regulation) that recognizes privileged communications 
                between physicians, health care practitioners, and 
                patients of such physicians or health care 
                practitioners, respectively.
                    (C) State defined.--For purposes of this section, 
                the term ``State'' has the meaning given such term when 
                used in title XI of the Social Security Act, as 
                provided under section 1101(a) of such Act (42 U.S.C. 
                1301(a)).

SEC. 847. VOLUNTARY NATURE OF TRUST PARTICIPATION AND INFORMATION 
              SHARING.

    (a) In General.--Participation in an independent health record 
trust, or authorizing access to information from such a trust, is 
voluntary. No employer, health insurance issuer, group health plan, 
health care provider, or other person may require, as a condition of 
employment, issuance of a health insurance policy, coverage under a 
group health plan, the provision of health care services, payment for 
such services, or otherwise, that an individual participate in, or 
authorize access to information from, an independent health record 
trust.
    (b) Enforcement.--The penalties provided for in subsection (a) of 
section 1177 of the Social Security Act (42 U.S.C. 1320d-6) shall apply 
to a violation of subsection (a) in the same manner as such penalties 
apply to a person in violation of subsection (a) of such section.

SEC. 848. FINANCING OF ACTIVITIES.

    (a) In General.--Except as provided in subsection (b), an IHRT may 
generate revenue to pay for the operations of the IHRT through--
            (1) charging IHRT participants account fees for use of the 
        trust;
            (2) charging authorized EHR data users for accessing 
        electronic health records maintained in the trust;
            (3) the sale of information contained in the trust (as 
        provided for in section 846(a)(3)(A)); and
            (4) any other activity determined appropriate by the 
        Federal Trade Commission.
    (b) Prohibition Against Access Fees for Health Care Providers.--For 
purposes of providing incentives to health care providers to access 
information maintained in an IHRT, as authorized by the IHRT 
participants involved, the IHRT may not charge a fee for services 
specified by the IHRT. Such services shall include the transmittal of 
information from a health care provider to be included in an 
independent electronic health record maintained by the IHRT (or 
permitting such provider to input such information into the record), 
including the transmission of or access to information described in 
section 846(a)(2)(C)(ii) by appropriate emergency responders.
    (c) Required Disclosures.--The sources and amounts of revenue 
derived under subsection (a) for the operations of an IHRT shall be 
fully disclosed to each IHRT participant of such IHRT and to the 
public.
    (d) Treatment of Income.--For purposes of the Internal Revenue Code 
of 1986, any revenue described in subsection (a) shall not be included 
in gross income of any IHRT, IHRT participant, or authorized EHR data 
user.

SEC. 849. REGULATORY OVERSIGHT.

    (a) In General.--In carrying out this subtitle, the Federal Trade 
Commission shall promulgate regulations for independent health record 
trusts.
    (b) Establishment of Interagency Steering Committee.--
            (1) In general.--The Secretary of Health and Human Services 
        shall establish an Interagency Steering Committee in accordance 
        with this subsection.
            (2) Chairperson.--The Secretary of Health and Human 
        Services shall serve as the chairperson of the Interagency 
        Steering Committee.
            (3) Membership.--The members of the Interagency Steering 
        Committee shall consist of the Attorney General, the 
        Chairperson of the Federal Trade Commission, the Chairperson 
        for the National Committee for Vital and Health Statistics, a 
        representative of the Federal Reserve, and other Federal 
        officials determined appropriate by the Secretary of Health and 
        Human Services.
            (4) Duties.--The Interagency Steering Committee shall 
        coordinate the implementation of this title, including the 
        implementation of policies described in subsection (d) based 
        upon the recommendations provided under such subsection, and 
        regulations promulgated under this subtitle.
    (c) Federal Advisory Committee.--
            (1) In general.--The National Committee for Vital and 
        Health Statistics shall serve as an advisory committee for the 
        IHRTs. The membership of such advisory committee shall include 
        a representative from the Federal Trade Commission and the 
        chairperson of the Interagency Steering Committee. Not less 
        than 60 percent of such membership shall consist of 
        representatives of nongovernment entities, at least one of whom 
        shall be a representative from an organization representing 
        health care consumers.
            (2) Duties.--The National Committee for Vital and Health 
        Statistics shall issue periodic reports and review policies 
        concerning IHRTs based on each of the following factors:
                    (A) Privacy and security policies.
                    (B) Economic progress.
                    (C) Interoperability standards.
    (d) Policies Recommended by Federal Trade Commission.--The Federal 
Trade Commission, in consultation with the National Committee for Vital 
and Health Statistics, shall recommend policies to--
            (1) provide assistance to encourage the growth of 
        independent health record trusts;
            (2) track economic progress as it pertains to operators of 
        independent health records trusts and individuals receiving 
        nontaxable income with respect to accounts;
            (3) conduct public education activities regarding the 
        creation and usage of the independent health records trusts;
            (4) establish standards for the interoperability of health 
        information technology to ensure that information contained in 
        such record may be shared between the trust involved, the 
        participant, and authorized EHR data users, including for the 
        standardized collection and transmission of individual health 
        records (or portions of such records) to authorized EHR data 
        users through a common interface and for the portability of 
        such records among independent health record trusts; and
            (5) carry out any other activities determined appropriate 
        by the Federal Trade Commission.
    (e) Regulations Promulgated by Federal Trade Commission.--The 
Federal Trade Commission shall promulgate regulations based on, at a 
minimum, the following factors:
            (1) Requiring that an IHRT participant, who has an 
        electronic health record that is maintained by an IHRT, be 
        notified of a security breech with respect to such record, and 
        any corrective action taken on behalf of the participant.
            (2) Requiring that information sent to, or received from, 
        an IHRT that has been designated as high-risk should be 
        authenticated through the use of methods such as the periodic 
        changing of passwords, the use of biometrics, the use of tokens 
        or other technology as determined appropriate by the council.
            (3) Requiring a delay in releasing sensitive health care 
        test results and other similar information to patients directly 
        in order to give physicians time to contact the patient.
            (4) Recommendations for entities operating IHRTs, including 
        requiring analysis of the potential risk of health transaction 
        security breeches based on set criteria.
            (5) The conduct of audits of IHRTs to ensure that they are 
        in compliance with the requirements and standards established 
        under this subtitle.
            (6) Disclosure to IHRT participants of the means by which 
        such trusts are financed, including revenue from the sale of 
        patient data.
            (7) Prevention of certification of an entity seeking 
        independent heath record trust certification based on--
                    (A) the potential for conflicts between the 
                interests of such entity and the security of the health 
                information involved; and
                    (B) the involvement of the entity in any activity 
                that is contrary to the best interests of a patient.
            (8) Prevention of the use of revenue sources that are 
        contrary to a patient's interests.
            (9) Public disclosure of audits in a manner similar to 
        financial audits required for publicly traded stock companies.
            (10) Requiring notification to a participating entity that 
        the information contained in such record may not be 
        representative of the complete or accurate electronic health 
        record of such account holder.
    (f) Compliance Report.--Not later than 1 year after the date of the 
enactment of this Act, and annually thereafter, the Commission shall 
submit to the Committee on Health, Education, Labor, and Pensions and 
the Committee on Finance of the Senate and the Committee on Energy and 
Commerce and the Committee on Ways and Means of the House of 
Representatives, a report on compliance by and progress of independent 
health record trusts with this subtitle. Such report shall describe the 
following:
            (1) The number of complaints submitted about independent 
        health record trusts, which shall be divided by complaints 
        related to security breaches, and complaints not related to 
        security breaches, and may include other categories as the 
        Interagency Steering Committee established under subsection (b) 
        determines appropriate.
            (2) The number of enforcement actions undertaken by the 
        Commission against independent health record trusts in response 
        to complaints under paragraph (1), which shall be divided by 
        enforcement actions related to security breaches and 
        enforcement actions not related to security breaches and may 
        include other categories as the Interagency Steering Committee 
        established under subsection (b) determines appropriate.
            (3) The economic progress of the individual owner or 
        institution operator as achieved through independent health 
        record trust usage and existing barriers to such usage.
            (4) The progress in security auditing as provided for by 
        the Interagency Steering Committee council under subsection 
        (b).
            (5) The other core responsibilities of the Commission as 
        described in subsection (a).
    (g) Interagency Memorandum of Understanding.--The Interagency 
Steering Committee shall ensure, through the execution of an 
interagency memorandum of understanding, that--
            (1) regulations, rulings, and interpretations issued by 
        Federal officials relating to the same matter over which 2 or 
        more such officials have responsibility under this subtitle are 
        administered so as to have the same effect at all times; and
            (2) the memorandum provides for the coordination of 
        policies related to enforcing the same requirements through 
        such officials in order to have coordinated enforcement 
        strategy that avoids duplication of enforcement efforts and 
        assigns priorities in enforcement.

                        TITLE IX--MISCELLANEOUS

SEC. 901. HEALTH CARE CHOICE FOR VETERANS.

    Beginning not later than 2 years after the date of the enactment of 
this Act, the Secretary of Veterans Affairs may--
            (1) permit veterans, and survivors and dependents of 
        veterans, who are eligible for health care and services under 
        the laws administered by the Secretary to receive such care and 
        services through such non-Department of Veterans Affairs 
        providers and facilities as the Secretary may approve for 
        purposes of this section; and
            (2) pursuant to such procedures as the Secretary of Veteran 
        Affairs shall prescribe for purposes of this section, make 
        payments to such providers and facilities for the provision of 
        such care and services to veterans, and such survivors and 
        dependents, at such rates as the Secretary may specify in such 
        procedures and in such manner so that the Secretary ensures 
        that the aggregate payments made by the Secretary to such 
        providers and facilities do not exceed the aggregate amounts 
        which the Secretary would have paid for such care and services 
        if this section had not been enacted.

SEC. 902. HEALTH CARE CHOICE FOR INDIANS.

    (a) In General.--Beginning not later than 2 years after the date of 
enactment of this Act, the Secretary of Health and Human Services 
shall--
            (1) permit Indians who are eligible for health care and 
        services under a health care program operated or financed by 
        the Indian Health Service or by an Indian Tribe, Tribal 
        Organization, or Urban Indian Organization (and any such other 
        individuals who are so eligible as the Secretary may specify), 
        to receive such care and services through such non- Indian 
        Health Service, Indian Tribe, Tribal Organization, or Urban 
        Indian Organization providers and facilities as the Secretary 
        shall approve for purposes of this section; and
            (2) pursuant to such procedures as the Secretary of Health 
        and Human Services shall prescribe for purposes of this 
        section, make payments to such providers and facilities for the 
        provision of such care and services to Indians and individuals 
        described in paragraph (1), at such rates as the Secretary 
        shall specify in such procedures and in such manner so that the 
        Secretary ensures that the aggregate payments made by the 
        Secretary to such providers and facilities do not exceed the 
        aggregate amounts which the Secretary would have paid for such 
        care and services if this section had not been enacted.
    (b) Definitions.--In this section, the terms ``Indian'', ``Indian 
Health Program'', ``Indian Tribe'', ``Tribal Organization'', and 
``Urban Indian Organization'' have the meanings given those terms in 
section 4 of the Indian Health Care Improvement Act.

SEC. 903. TERMINATION OF FEDERAL COORDINATING COUNCIL FOR COMPARATIVE 
              EFFECTIVENESS RESEARCH.

    The Federal Coordinating Council for Comparative Effectiveness 
Research is hereby terminated and section 804 of the American Recovery 
and Reinvestment Act of 2009 establishing and funding such Council is 
hereby repealed.

SEC. 904. HHS AND GAO JOINT STUDY AND REPORT ON COSTS OF THE 5 MEDICAL 
              CONDITIONS THAT HAVE THE GREATEST IMPACT.

    (a) Study.--The Secretary of Health and Human Services (in this 
section referred to as the ``Secretary'') and the Comptroller General 
of the United States (in this section referred to as the ``Comptroller 
General'') shall jointly conduct a study on the costs of the top 5 
medical conditions facing the public which have the greatest impact in 
terms of morbidity, mortality, and financial cost. Such study shall 
include--
            (1) current estimates as well as a ``generational score'' 
        to capture the financial cost and health toll certain medical 
        conditions will inflict on the baby boomer generation and on 
        other individuals; and
            (2) a careful review of certain medical conditions, 
        including heart disease, obesity, diabetes, stroke, cancer, 
        Alzheimers, and other medical conditions the Secretary and 
        Comptroller General determine appropriate.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary and the Comptroller General shall jointly 
submit to Congress a report containing the results of the study 
conducted under subsection (a), together with recommendations for such 
legislation and administrative action as the Secretary and the 
Comptroller General determine appropriate.
    (c) Targeting of Prevention and Wellness Efforts.--The Secretary 
shall target prevention and wellness efforts conducted under the 
provisions of and amendments made by this Act in order to combat 
medical conditions identified in the report submitted under subsection 
(b), including such medical conditions identified as the top 5 medical 
conditions facing the public which have the greatest impact in terms of 
morbidity, mortality, and financial cost as of or after the date of 
enactment of this Act.
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