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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 350 Placed on Calendar Senate (PCS)]

<DOC>

                                                        Calendar No. 20
111th CONGRESS
  1st Session
                                 S. 350

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

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            January 29, 2009

   Mr. Baucus, from the Committee on Finance, reported the following 
     original bill; which was read twice and placed on the calendar

_______________________________________________________________________

                                 A BILL

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

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Recovery and Reinvestment 
Act of 2009''.

                        TITLE I--TAX PROVISIONS

SEC. 1000. SHORT TITLE, ETC.

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

                        TITLE I--TAX PROVISIONS

Sec. 1000. Short title, etc.
          Subtitle A--Tax Relief for Individuals and Families

                       PART I--General Tax Relief

Sec. 1001. Making work pay credit.
Sec. 1002. Temporary increase in earned income tax credit.
Sec. 1003. Temporary increase of refundable portion of child credit.
Sec. 1004. American opportunity tax credit.
Sec. 1005. Computer technology and equipment allowed as a qualified 
                            higher education expense for section 529 
                            accounts in 2009 and 2010.
Sec. 1006. Extension of first-time homebuyer credit; waiver of 
                            requirement to repay.
Sec. 1007. Suspension of tax on portion of unemployment compensation.
                PART II--Alternative Minimum Tax Relief

Sec. 1011. Extension of alternative minimum tax relief for 
                            nonrefundable personal credits.
Sec. 1012. Extension of increased alternative minimum tax exemption 
                            amount.
                     Subtitle B--Energy Incentives

                  PART I--Renewable Energy Incentives

Sec. 1101. Extension of credit for electricity produced from certain 
                            renewable resources.
Sec. 1102. Election of investment credit in lieu of production credit.
Sec. 1103. Repeal of certain limitations on credit for renewable energy 
                            property.
PART II--Increased Allocations of New Clean Renewable Energy Bonds and 
                  Qualified Energy Conservation Bonds

Sec. 1111. Increased limitation on issuance of new clean renewable 
                            energy bonds.
Sec. 1112. Increased limitation on issuance of qualified energy 
                            conservation bonds.
                PART III--Energy Conservation Incentives

Sec. 1121. Extension and modification of credit for nonbusiness energy 
                            property.
Sec. 1122. Modification of credit for residential energy efficient 
                            property.
Sec. 1123. Temporary increase in credit for alternative fuel vehicle 
                            refueling property.
                  PART IV--Energy Research Incentives

Sec. 1131. Increased research credit for energy research.
                    PART V--General Business Credit

Sec. 1141. 5-year carryback of general business credits.
Sec. 1142. Temporary provision allowing general business credits to 
                            offset 100 percent of Federal income tax 
                            liability.
    PART VI--Modification of Credit for Carbon Dioxide Sequestration

Sec. 1151. Application of monitoring requirements to carbon dioxide 
                            used as a tertiary injectant.
            PART VII--Plug-In Electric Drive Motor Vehicles

Sec. 1161. Modification of credit for qualified plug-in electric motor 
                            vehicles.
                Subtitle C--Tax Incentives for Business

                PART I--Temporary Investment Incentives

Sec. 1201. Special allowance for certain property acquired during 2009.
Sec. 1202. Temporary increase in limitations on expensing of certain 
                            depreciable business assets.
             PART II--5-Year Carryback of Operating Losses

Sec. 1211. 5-year carryback of operating losses.
Sec. 1212. Exception for TARP recipients.
                   PART III--Incentives for New Jobs

Sec. 1221. Incentives to hire unemployed veterans and disconnected 
                            youth.
                 PART IV--Cancellation of Indebtedness

Sec. 1231. Deferral and ratable inclusion of income arising from 
                            indebtedness discharged by the repurchase 
                            of a debt instrument.
                 PART V--Qualified Small Business Stock

Sec. 1241. Special rules applicable to qualified small business stock 
                            for 2009 and 2010.
           PART VI--Parity for Transportation Fringe Benefits

Sec. 1251. Increased exclusion amount for commuter transit benefits and 
                            transit passes.
                        PART VII--S Corporations

Sec. 1261. Temporary reduction in recognition period for built-in gains 
                            tax.
                    PART VIII--Broadband Incentives

Sec. 1271. Broadband Internet access tax credit.
PART IX--Clarification of Regulations Related to Limitations on Certain 
             Built-In Losses Following an Ownership Change

Sec. 1281. Clarification of regulations related to limitations on 
                            certain built-in losses following an 
                            ownership change.
             Subtitle D--Manufacturing Recovery Provisions

Sec. 1301. Temporary expansion of availability of industrial 
                            development bonds to facilities 
                            manufacturing intangible property.
Sec. 1302. Credit for investment in advanced energy facilities.
                  Subtitle E--Economic Recovery Tools

Sec. 1401. Recovery zone bonds.
Sec. 1402. Tribal economic development bonds.
Sec. 1403. Modifications to new markets tax credit.
               Subtitle F--Infrastructure Financing Tools

          PART I--Improved Marketability for Tax-Exempt Bonds

Sec. 1501. De minimis safe harbor exception for tax-exempt interest 
                            expense of financial institutions.
Sec. 1502. Modification of small issuer exception to tax-exempt 
                            interest expense allocation rules for 
                            financial institutions.
Sec. 1503. Temporary modification of alternative minimum tax 
                            limitations on tax-exempt bonds.
Sec. 1504. Modification to high speed intercity rail facility bonds.
    PART II--Delay in Application of Withholding Tax on Government 
                              Contractors

Sec. 1511. Delay in application of withholding tax on government 
                            contractors.
                 PART III--Tax Credit Bonds for Schools

Sec. 1521. Qualified school construction bonds.
Sec. 1522. Extension and expansion of qualified zone academy bonds.
                      PART IV--Build America Bonds

Sec. 1531. Build America bonds.
     Subtitle G--Economic Recovery Payments to Certain Individuals

Sec. 1601. Economic recovery payment to recipients of Social Security, 
                            supplemental security income, railroad 
                            retirement benefits, and veterans 
                            disability compensation or pension 
                            benefits.
                Subtitle H--Trade Adjustment Assistance

Sec. 1701. Temporary extension of Trade Adjustment Assistance program.
 Subtitle I--Prohibition on Collection of Certain Payments Made Under 
          the Continued Dumping and Subsidy Offset Act of 2000

Sec. 1801. Prohibition on collection of certain payments made under the 
                            Continued Dumping and Subsidy Offset Act of 
                            2000.
                      Subtitle J--Other Provisions

Sec. 1901. Application of certain labor standards to projects financed 
                            with certain tax-favored bonds.
Sec. 1902. Increase in public debt limit.

          Subtitle A--Tax Relief for Individuals and Families

                       PART I--GENERAL TAX RELIEF

SEC. 1001. MAKING WORK PAY CREDIT.

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

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

    ``(a) Allowance of Credit.--In the case of an eligible individual, 
there shall be allowed as a credit against the tax imposed by this 
subtitle for the taxable year an amount equal to the lesser of--
            ``(1) 6.2 percent of earned income of the taxpayer, or
            ``(2) $500 ($1,000 in the case of a joint return).
    ``(b) Limitation Based on Modified Adjusted Gross Income.--
            ``(1) In general.--The amount allowable as a credit under 
        subsection (a) (determined without regard to this paragraph and 
        subsection (c)) for the taxable year shall be reduced (but not 
        below zero) by 4 percent of so much of the taxpayer's modified 
        adjusted gross income as exceeds $75,000 ($150,000 in the case 
        of a joint return).
            ``(2) Modified adjusted gross income.--For purposes of 
        subparagraph (A), the term `modified adjusted gross income' 
        means the adjusted gross income of the taxpayer for the taxable 
        year increased by any amount excluded from gross income under 
        section 911, 931, or 933.
    ``(c) Reduction for Certain Other Payments.--The credit allowed 
under subsection (a) for any taxable year shall be reduced by the 
amount of any payments received by the taxpayer during such taxable 
year under section 1601 of the American Recovery and Reinvestment Tax 
Act of 2009.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Eligible individual.--The term `eligible individual' 
        means any individual other than--
                    ``(A) any nonresident alien individual,
                    ``(B) any individual with respect to whom a 
                deduction under section 151 is allowable to another 
                taxpayer for a taxable year beginning in the calendar 
                year in which the individual's taxable year begins, and
                    ``(C) an estate or trust.
        Such term shall not include any individual unless the 
        requirements of section 32(c)(1)(E) are met with respect to 
        such individual.
            ``(2) Earned income.--The term `earned income' has the 
        meaning given such term by section 32(c)(2), except that such 
        term shall not include net earnings from self-employment which 
        are not taken into account in computing taxable income. For 
        purposes of the preceding sentence, any amount excluded from 
        gross income by reason of section 112 shall be treated as 
        earned income which is taken into account in computing taxable 
        income for the taxable year.
    ``(e) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2010.''.
    (b)  Treatment of Possessions.--
            (1) Payments to possessions.--
                    (A) Mirror code possession.--The Secretary of the 
                Treasury shall pay to each possession of the United 
                States with a mirror code tax system amounts equal to 
                the loss to that possession by reason of the amendments 
                made by this section with respect to taxable years 
                beginning in 2009 and 2010. Such amounts shall be 
                determined by the Secretary of the Treasury based on 
                information provided by the government of the 
                respective possession.
                    (B) Other possessions.--The Secretary of the 
                Treasury shall pay to each possession of the United 
                States which does not have a mirror code tax system 
                amounts estimated by the Secretary of the Treasury as 
                being equal to the aggregate benefits that would have 
                been provided to residents of such possession by reason 
                of the amendments made by this section for taxable 
                years beginning in 2009 and 2010 if a mirror code tax 
                system had been in effect in such possession. The 
                preceding sentence shall not apply with respect to any 
                possession of the United States unless such possession 
                has a plan, which has been approved by the Secretary of 
                the Treasury, under which such possession will promptly 
                distribute such payments to the residents of such 
                possession.
            (2) Coordination with credit allowed against united states 
        income taxes.--No credit shall be allowed against United States 
        income taxes for any taxable year under section 36A of the 
        Internal Revenue Code of 1986 (as added by this section) to any 
        person--
                    (A) to whom a credit is allowed against taxes 
                imposed by the possession by reason of the amendments 
                made by this section for such taxable year, or
                    (B) who is eligible for a payment under a plan 
                described in paragraph (1)(B) with respect to such 
                taxable year.
            (3) Definitions and special rules.--
                    (A) Possession of the united states.--For purposes 
                of this subsection, the term ``possession of the United 
                States'' includes the Commonwealth of Puerto Rico and 
                the Commonwealth of the Northern Mariana Islands.
                    (B) Mirror code tax system.--For purposes of this 
                subsection, the term ``mirror code tax system'' means, 
                with respect to any possession of the United States, 
                the income tax system of such possession if the income 
                tax liability of the residents of such possession under 
                such system is determined by reference to the income 
                tax laws of the United States as if such possession 
                were the United States.
                    (C) Treatment of payments.--For purposes of section 
                1324(b)(2) of title 31, United States Code, the 
                payments under this subsection shall be treated in the 
                same manner as a refund due from the credit allowed 
                under section 36A of the Internal Revenue Code of 1986 
                (as added by this section).
    (c) Refunds Disregarded in the Administration of Federal Programs 
and Federally Assisted Programs.--Any credit or refund allowed or made 
to any individual by reason of section 36A of the Internal Revenue Code 
of 1986 (as added by this section) or by reason of subsection (b) of 
this section shall not be taken into account as income and shall not be 
taken into account as resources for the month of receipt and the 
following 2 months, for purposes of determining the eligibility of such 
individual or any other individual for benefits or assistance, or the 
amount or extent of benefits or assistance, under any Federal program 
or under any State or local program financed in whole or in part with 
Federal funds.
    (d) Authority Relating to Clerical Errors.--Section 6213(g)(2) is 
amended by striking ``and'' at the end of subparagraph (L)(ii), by 
striking the period at the end of subparagraph (M) and inserting ``, 
and'', and by adding at the end the following new subparagraph:
                    ``(N) an omission of the reduction required under 
                section 36A(c) with respect to the credit allowed under 
                section 36A or an omission of the correct TIN required 
                under section 36A(d)(1).''.
    (e) Conforming Amendments.--
            (1) Section 6211(b)(4)(A) is amended by inserting ``36A,'' 
        after ``36,''.
            (2) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting ``36A,'' after ``36,''.
            (3) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 36 the following new item:

``Sec. 36A. Making work pay credit.''.
    (f) Effective Date.--This section, and the amendments made by this 
section, shall apply to taxable years beginning after December 31, 
2008.

SEC. 1002. TEMPORARY INCREASE IN EARNED INCOME TAX CREDIT.

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

SEC. 1003. TEMPORARY INCREASE OF REFUNDABLE PORTION OF CHILD CREDIT.

    (a) In General.--Paragraph (4) of section 24(d) is amended to read 
as follows:
            ``(4) Special rule for 2009 and 2010.--Notwithstanding 
        paragraph (3), in the case of any taxable year beginning in 
        2009 or 2010, the dollar amount in effect for such taxable year 
        under paragraph (1)(B)(i) shall be $6,000.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

SEC. 1004. AMERICAN OPPORTUNITY TAX CREDIT.

    (a) In General.--Section 25A (relating to Hope scholarship credit) 
is amended by redesignating subsection (i) as subsection (j) and by 
inserting after subsection (h) the following new subsection:
    ``(i) American Opportunity Tax Credit.--In the case of any taxable 
year beginning in 2009 or 2010--
            ``(1) Increase in credit.--The Hope Scholarship Credit 
        shall be an amount equal to the sum of--
                    ``(A) 100 percent of so much of the qualified 
                tuition and related expenses paid by the taxpayer 
                during the taxable year (for education furnished to the 
                eligible student during any academic period beginning 
                in such taxable year) as does not exceed $2,000, plus
                    ``(B) 25 percent of such expenses so paid as 
                exceeds $2,000 but does not exceed $4,000.
            ``(2) Credit allowed for first 4 years of post-secondary 
        education.--Subparagraphs (A) and (C) of subsection (b)(2) 
        shall be applied by substituting `4' for `2'.
            ``(3) Qualified tuition and related expenses to include 
        required course materials.--Subsection (f)(1)(A) shall be 
        applied by substituting `tuition, fees, and course materials' 
        for `tuition and fees'.
            ``(4) Increase in agi limits for hope scholarship credit.--
        In lieu of applying subsection (d) with respect to the Hope 
        Scholarship Credit, such credit (determined without regard to 
        this paragraph) shall be reduced (but not below zero) by the 
        amount which bears the same ratio to such credit (as so 
        determined) as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income (as defined in subsection (d)(3)) 
                        for such taxable year, over
                            ``(ii) $80,000 ($160,000 in the case of a 
                        joint return), bears to
                    ``(B) $10,000 ($20,000 in the case of a joint 
                return).
            ``(5) Credit allowed against alternative minimum tax.--In 
        the case of a taxable year to which section 26(a)(2) does not 
        apply, so much of the credit allowed under subsection (a) as is 
        attributable to the Hope Scholarship Credit shall not exceed 
        the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this subsection and sections 23, 
                25D, and 30D) and section 27 for the taxable year.
        Any reference in this section or section 24, 25, 26, 25B, 904, 
        or 1400C to a credit allowable under this subsection shall be 
        treated as a reference to so much of the credit allowable under 
        subsection (a) as is attributable to the Hope Scholarship 
        Credit.
            ``(6) Portion of credit made refundable.--30 percent of so 
        much of the credit allowed under subsection (a) as is 
        attributable to the Hope Scholarship Credit (determined after 
        application of paragraph (4) and without regard to this 
        paragraph and section 26(a)(2) or paragraph (5), as the case 
        may be) shall be treated as a credit allowable under subpart C 
        (and not allowed under subsection (a)). The preceding sentence 
        shall not apply to any taxpayer for any taxable year if such 
        taxpayer is a child to whom subsection (g) of section 1 applies 
        for such taxable year.
            ``(7) Coordination with midwestern disaster area 
        benefits.--In the case of a taxpayer with respect to whom 
        section 702(a)(1)(B) of the Heartland Disaster Tax Relief Act 
        of 2008 applies for any taxable year, such taxpayer may elect 
        to waive the application of this subsection to such taxpayer 
        for such taxable year.''.
    (b) Conforming Amendments.--
            (1) Section 24(b)(3)(B) is amended by inserting ``25A(i),'' 
        after ``23,''.
            (2) Section 25(e)(1)(C)(ii) is amended by inserting 
        ``25A(i),'' after ``24,''.
            (3) Section 26(a)(1) is amended by inserting ``25A(i),'' 
        after ``24,''.
            (4) Section 25B(g)(2) is amended by inserting ``25A(i),'' 
        after ``23,''.
            (5) Section 904(i) is amended by inserting ``25A(i),'' 
        after ``24,''.
            (6) Section 1400C(d)(2) is amended by inserting ``25A(i),'' 
        after ``24,''.
            (7) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting ``25A,'' before ``35''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.
    (d) Application of EGTRRA Sunset.--The amendment made by subsection 
(b)(1) shall be subject to title IX of the Economic Growth and Tax 
Relief Reconciliation Act of 2001 in the same manner as the provision 
of such Act to which such amendment relates.
    (e) Treasury Studies Regarding Education Incentives.--
            (1) Study regarding coordination with non-tax educational 
        incentives.--The Secretary of the Treasury, or the Secretary's 
        delegate, shall study how to coordinate the credit allowed 
        under section 25A of the Internal Revenue Code of 1986 with the 
        Federal Pell Grant program under section 401 of the Higher 
        Education Act of 1965.
            (2) Study regarding imposition of community service 
        requirements.--The Secretary of the Treasury, or the 
        Secretary's delegate, shall study the feasibility of requiring 
        students to perform community service as a condition of taking 
        their tuition and related expenses into account under section 
        25A of the Internal Revenue Code of 1986.
            (3) Report.--Not later than 1 year after the date of the 
        enactment of this Act, the Secretary of the Treasury, or the 
        Secretary's delegate, shall report to Congress on the results 
        of the studies conducted under this paragraph.

SEC. 1005. COMPUTER TECHNOLOGY AND EQUIPMENT ALLOWED AS A QUALIFIED 
              HIGHER EDUCATION EXPENSE FOR SECTION 529 ACCOUNTS IN 2009 
              AND 2010.

    (a) In General.--Section 529(e)(3)(A) is amended by striking 
``and'' at the end of clause (i), by striking the period at the end of 
clause (ii), and by adding at the end the following:
                            ``(iii) expenses paid or incurred in 2009 
                        or 2010 for the purchase of any computer 
                        technology or equipment (as defined in section 
                        170(e)(6)(F)(i)) or Internet access and related 
                        services, if such technology, equipment, or 
                        services are to be used by the beneficiary and 
                        the beneficiary's family during any of the 
                        years the beneficiary is enrolled at an 
                        eligible educational institution.
                Clause (iii) shall not include expenses for computer 
                software designed for sports, games, or hobbies unless 
                the software is predominantly educational in nature.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to expenses paid or incurred after December 31, 2008.

SEC. 1006. EXTENSION OF FIRST-TIME HOMEBUYER CREDIT; WAIVER OF 
              REQUIREMENT TO REPAY.

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

SEC. 1007. SUSPENSION OF TAX ON PORTION OF UNEMPLOYMENT COMPENSATION.

    (a) In General.--Section 85 of the Internal Revenue Code of 1986 
(relating to unemployment compensation) is amended by adding at the end 
the following new subsection:
    ``(c) Special Rule for 2009.--In the case of any taxable year 
beginning in 2009, gross income shall not include so much of the 
unemployment compensation received by an individual as does not exceed 
$2,400.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2008.

                PART II--ALTERNATIVE MINIMUM TAX RELIEF

SEC. 1011. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR 
              NONREFUNDABLE PERSONAL CREDITS.

    (a) In General.--Paragraph (2) of section 26(a) (relating to 
special rule for taxable years 2000 through 2008) is amended--
            (1) by striking ``or 2008'' and inserting ``2008, or 
        2009'', and
            (2) by striking ``2008'' in the heading thereof and 
        inserting ``2009''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

SEC. 1012. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX EXEMPTION 
              AMOUNT.

    (a) In General.--Paragraph (1) of section 55(d) (relating to 
exemption amount) is amended--
            (1) by striking ``($69,950 in the case of taxable years 
        beginning in 2008)'' in subparagraph (A) and inserting 
        ``($70,950 in the case of taxable years beginning in 2009)'', 
        and
            (2) by striking ``($46,200 in the case of taxable years 
        beginning in 2008)'' in subparagraph (B) and inserting 
        ``($46,700 in the case of taxable years beginning in 2009)''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

                     Subtitle B--Energy Incentives

                  PART I--RENEWABLE ENERGY INCENTIVES

SEC. 1101. EXTENSION OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN 
              RENEWABLE RESOURCES.

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

SEC. 1102. ELECTION OF INVESTMENT CREDIT IN LIEU OF PRODUCTION CREDIT.

    (a) In General.--Subsection (a) of section 48 is amended by adding 
at the end the following new paragraph:
            ``(5) Election to treat qualified facilities as energy 
        property.--
                    ``(A) In general.--In the case of any qualified 
                investment credit facility--
                            ``(i) such facility shall be treated as 
                        energy property for purposes of this section, 
                        and
                            ``(ii) the energy percentage with respect 
                        to such property shall be 30 percent.
                    ``(B) Denial of production credit.--No credit shall 
                be allowed under section 45 for any taxable year with 
                respect to any qualified investment credit facility.
                    ``(C) Qualified investment credit facility.--For 
                purposes of this paragraph, the term `qualified 
                investment credit facility' means any of the following 
                facilities if no credit has been allowed under section 
                45 with respect to such facility and the taxpayer makes 
                an irrevocable election to have this paragraph apply to 
                such facility:
                            ``(i) Wind facilities.--Any facility 
                        described in paragraph (1) of section 45(d) if 
                        such facility is placed in service in 2009, 
                        2010, 2011, or 2012.
                            ``(ii) Other facilities.--Any facility 
                        described in paragraph (2), (3), (4), (6), (7), 
                        (9), or (11) of section 45(d) if such facility 
                        is placed in service in 2009, 2010, 2011, 2012, 
                        or 2013.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to facilities placed in service after December 31, 2008.

SEC. 1103. REPEAL OF CERTAIN LIMITATIONS ON CREDIT FOR RENEWABLE ENERGY 
              PROPERTY.

    (a) Repeal of Limitation on Credit for Qualified Small Wind Energy 
Property.--Paragraph (4) of section 48(c) is amended by striking 
subparagraph (B) and by redesignating subparagraphs (C) and (D) as 
subparagraphs (B) and (C).
    (b) Repeal of Limitation on Property Financed by Subsidized Energy 
Financing.--
            (1) In general.--Section 48(a)(4) is amended by adding at 
        the end the following new subparagraph:
                    ``(D) Termination.--This paragraph shall not apply 
                to periods after December 31, 2008, under rules similar 
                to the rules of section 48(m) (as in effect on the day 
                before the date of the enactment of the Revenue 
                Reconciliation Act of 1990).''.
            (2) Conforming amendments.--
                    (A) Section 25C(e)(1) is amended by striking ``(8), 
                and (9)'' and inserting ``and (8)''.
                    (B) Section 25D(e) is amended by striking paragraph 
                (9).
                    (C) Section 48A(b)(2) is amended by inserting 
                ``(without regard to subparagraph (D) thereof)'' after 
                ``section 48(a)(4)''.
                    (D) Section 48B(b)(2) is amended by inserting 
                ``(without regard to subparagraph (D) thereof)'' after 
                ``section 48(a)(4)''.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendment made by this section shall apply to periods after 
        December 31, 2008, under rules similar to the rules of section 
        48(m) of the Internal Revenue Code of 1986 (as in effect on the 
        day before the date of the enactment of the Revenue 
        Reconciliation Act of 1990).
            (2) Conforming amendments.--The amendments made by 
        subsection (b)(2) shall apply to taxable years beginning after 
        December 31, 2008.

PART II--INCREASED ALLOCATIONS OF NEW CLEAN RENEWABLE ENERGY BONDS AND 
                  QUALIFIED ENERGY CONSERVATION BONDS

SEC. 1111. INCREASED LIMITATION ON ISSUANCE OF NEW CLEAN RENEWABLE 
              ENERGY BONDS.

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

SEC. 1112. INCREASED LIMITATION ON ISSUANCE OF QUALIFIED ENERGY 
              CONSERVATION BONDS.

    Section 54D(d) is amended by striking ``800,000,000'' and inserting 
``$3,200,000,000''.

                PART III--ENERGY CONSERVATION INCENTIVES

SEC. 1121. EXTENSION AND MODIFICATION OF CREDIT FOR NONBUSINESS ENERGY 
              PROPERTY.

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

SEC. 1122. MODIFICATION OF CREDIT FOR RESIDENTIAL ENERGY EFFICIENT 
              PROPERTY.

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

SEC. 1123. TEMPORARY INCREASE IN CREDIT FOR ALTERNATIVE FUEL VEHICLE 
              REFUELING PROPERTY.

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

                  PART IV--ENERGY RESEARCH INCENTIVES

SEC. 1131. INCREASED RESEARCH CREDIT FOR ENERGY RESEARCH.

    (a) In General.--Section 41 is amended by redesignating subsection 
(h) as subsection (i) and by inserting after subsection (g) the 
following new subsection:
    ``(h) Energy Research Credit.--In the case of any taxable year 
beginning in 2009 or 2010--
            ``(1) In general.--The credit determined under subsection 
        (a)(1) shall be increased by 20 percent of the qualified energy 
        research expenses for the taxable year.
            ``(2) Qualified energy research expenses.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `qualified energy 
                research expenses' means so much of the taxpayer's 
                qualified research expenses as are related to the 
                fields of fuel cells and battery technology, renewable 
                energy and renewable fuels, energy conservation 
                technology, efficient transmission and distribution of 
                electricity, and carbon capture and sequestration.
                    ``(B) Coordination with qualifying advanced energy 
                project credit.--Such term shall not include 
                expenditures taken into account in determining the 
                amount of the credit under section 48 or 48C.
            ``(3) Coordination with other research credits.--
                    ``(A) In general.--The amount of qualified energy 
                research expenses taken into account under subsection 
                (a)(1)(A) shall not exceed the base amount.
                    ``(B) Alternative simplified credit.--For purposes 
                of subsection (c)(5), the amount of qualified energy 
                research expenses taken into account for the taxable 
                year for which the credit is being determined shall not 
                exceed--
                            ``(i) in the case of subsection (c)(5)(A), 
                        50 percent of the average qualified research 
                        expenses for the 3 taxable years preceding the 
                        taxable year for which the credit is being 
                        determined, and
                            ``(ii) in the case of subsection 
                        (c)(5)(B)(ii), zero.
                    ``(C) Basic research and energy research consortium 
                payments.--Any amount taken into account under 
                paragraph (1) shall not be taken into account under 
                paragraph (2) or (3) of subsection (a).''.
    (b) Conforming Amendment.--Subparagraph (B) of section 41(i)(1)(B), 
as redesignated by subsection (a), is amended by inserting ``(in the 
case of the increase in the credit determined under subsection (h), 
December 31, 2010)'' after ``December 31, 2009''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

                    PART V--GENERAL BUSINESS CREDIT

SEC. 1141. 5-YEAR CARRYBACK OF GENERAL BUSINESS CREDITS.

    (a) In General.--Subsection (a) of section 39 is amended by adding 
at the end the following new paragraph:
            ``(4) Special rule for 2008 and 2009 business credits.--In 
        the case of any current year business credit for a taxable year 
        ending in 2008 or 2009--
                    ``(A) paragraph (1)(A) shall be applied by 
                substituting `each of the 5 taxable years' for `the 
                taxable year' in subparagraph (A) thereof, and
                    ``(B) paragraph (2) shall be applied--
                            ``(i) by substituting `25 taxable years' 
                        for `21 taxable years', and
                            ``(ii) by substituting `24 taxable years' 
                        for `20 taxable years'.''.
    (b) Effective Date.--The amendment made by this subsection shall 
apply to taxable years ending after December 31, 2007, and to 
carrybacks of business credits from such taxable years.

SEC. 1142. TEMPORARY PROVISION ALLOWING GENERAL BUSINESS CREDITS TO 
              OFFSET 100 PERCENT OF FEDERAL INCOME TAX LIABILITY.

    (a) In General.--Subsection (c) of section 38 is amended by adding 
at the end the following new paragraph:
            ``(6) Temporary provision allowing general business credits 
        to offset 100 percent of federal income tax liability.--
                    ``(A) In general.--In the case of a taxable year 
                ending in 2008 or 2009--
                            ``(i) the limitation under paragraph (1) 
                        shall be the net income tax (as defined in 
                        paragraph (1)) for purposes of determining the 
                        amount of the credit allowed under subsection 
                        (a) for such taxable year, and
                            ``(ii) the excess credit for such taxable 
                        year shall, solely for purposes of determining 
                        the amount of such excess credit which may be 
                        carried back to a preceding taxable year, be 
                        increased by the amount of business credit 
                        carryforwards which are carried to such taxable 
                        year and which are not allowed for such taxable 
                        year by reason of the limitation under 
                        paragraph (1) (as modified by clause (i)).
                    ``(B) Increase in limitation for taxable years to 
                which excess credits for 2008 and 2009 are carried 
                back.--
                            ``(i) In general.--Solely for purposes of 
                        determining the portion of any excess credit 
                        described in subparagraph (A)(ii) for which 
                        credit will be allowed under subsection (a)(3) 
                        for any preceding taxable year, the limitation 
                        under paragraph (1) for such preceding taxable 
                        year shall be the net income tax (as defined in 
                        paragraph (1)).
                            ``(ii) Ordering rule.--If the excess credit 
                        described in subparagraph (A)(ii) includes 
                        business credit carryforwards from preceding 
                        taxable years, such excess credit shall be 
                        treated as allowed for any preceding taxable 
                        year on a first-in first-out basis.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years ending after December 31, 2007, and to carrybacks of 
credits from such taxable years.

    PART VI--MODIFICATION OF CREDIT FOR CARBON DIOXIDE SEQUESTRATION

SEC. 1151. APPLICATION OF MONITORING REQUIREMENTS TO CARBON DIOXIDE 
              USED AS A TERTIARY INJECTANT.

    (a) In General.--Section 45Q(a)(2) is amended by striking ``and'' 
at the end of subparagraph (A), by striking the period at the end of 
subparagraph (B) and inserting ``, and'', and by adding at the end the 
following new subparagraph:
                    ``(C) disposed of by the taxpayer in secure 
                geological storage.''.
    (b) Conforming Amendment.--Section 45Q(d)(2) is amended by striking 
``subsection (a)(1)(B)'' and inserting ``paragraph (1)(B) or (2)(C) of 
subsection (a)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to carbon dioxide captured after the date of the enactment of 
this Act.

            PART VII--PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES

SEC. 1161. MODIFICATION OF CREDIT FOR QUALIFIED PLUG-IN ELECTRIC MOTOR 
              VEHICLES.

    (a) Increase in Vehicles Eligible for Credit.--Section 30D(b)(2)(B) 
is amended by striking ``250,000'' and inserting ``500,000''.
    (b) Exclusion of Neighborhood Electric Vehicles From Existing 
Credit.--Section 30D(e)(1) is amended to read as follows:
            ``(1) Motor vehicle.--The term `motor vehicle' means a 
        motor vehicle (as defined in section 30(c)(2)), which is 
        treated as a motor vehicle for purposes of title II of the 
        Clean Air Act.''.
    (c) Credit for Certain Other Vehicles.--Section 30D is amended--
            (1) by redesignating subsections (f) and (g) as subsections 
        (g) and (h), respectively, and
            (2) by inserting after subsection (e) the following new 
        subsection:
    ``(f) Credit for Certain Other Vehicles.--For purposes of this 
section--
            ``(1) In general.--In the case of a specified vehicle, this 
        section shall be applied with the following modifications:
                    ``(A) For purposes of subsection (a)(1), in lieu of 
                the applicable amount determined under subsection 
                (a)(2), the applicable amount shall be 10 percent of so 
                much of the cost of the specified vehicle as does not 
                exceed $40,000.
                    ``(B) Subsection (b) shall not apply and no 
                specified vehicle shall be taken into account under 
                subsection (b)(2).
                    ``(C) Subsection (c)(3) shall not apply.
            ``(2) Specified vehicle.--For purposes of this subsection--
                    ``(A) In general.--The term `specified vehicle' 
                means--
                            ``(i) any 2- or 3-wheeled motor vehicle, or
                            ``(ii) any low-speed motor vehicle,
                which is placed in service after December 31, 2009, and 
                before January 1, 2012.
                    ``(B) 2- or 3-wheeled motor vehicle.--The term `2- 
                or 3-wheeled motor vehicle' means any vehicle--
                            ``(i) which would be described in section 
                        30(c)(2) except that it has 2 or 3 wheels,
                            ``(ii) with motive power having a seat or 
                        saddle for the use of the rider and designed to 
                        travel on not more than 3 wheels in contact 
                        with the ground,
                            ``(iii) which has an electric motor that 
                        produces in excess of 5-brake horsepower,
                            ``(iv) which draws propulsion from 1 or 
                        more traction batteries, and
                            ``(v) which has been certified to the 
                        Department of Transportation pursuant to 
                        section 567 of title 49, Code of Federal 
                        Regulations, as conforming to all applicable 
                        Federal motor vehicle safety standards in 
                        effect on the date of the manufacture of the 
                        vehicle.
                    ``(C) Low-speed motor vehicle.--The term `low-speed 
                motor vehicle' means a motor vehicle (as defined in 
                section 30(c)(2)) which meets the requirements of 
                section 571.500 of title 49, Code of Federal 
                Regulations.''.
    (d) Effective Dates.--
            (1) Increase in vehicles eligible for credit.--The 
        amendment made by subsection (a) shall take effect on the date 
        of the enactment of this Act.
            (2) Other modifications.--The amendments made by 
        subsections (b) and (c) shall apply to property placed in 
        service after December 31, 2009, in taxable years beginning 
        after such date.

                Subtitle C--Tax Incentives for Business

                PART I--TEMPORARY INVESTMENT INCENTIVES

SEC. 1201. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED DURING 2009.

    (a) Extension of Special Allowance.--
            (1) In general.--Paragraph (2) of section 168(k) is 
        amended--
                    (A) by striking ``January 1, 2010'' and inserting 
                ``January 1, 2011'', and
                    (B) by striking ``January 1, 2009'' each place it 
                appears and inserting ``January 1, 2010''.
            (2) Conforming amendments.--
                    (A) The heading for subsection (k) of section 168 
                is amended by striking ``January 1, 2009'' and 
                inserting ``January 1, 2010''.
                    (B) The heading for clause (ii) of section 
                168(k)(2)(B) is amended by striking ``pre-january 1, 
                2009'' and inserting ``pre-january 1, 2010''.
                    (C) Subparagraph (B) of section 168(l)(5) is 
                amended by striking ``January 1, 2009'' and inserting 
                ``January 1, 2010''.
                    (D) Subparagraph (C) of section 168(n)(2) is 
                amended by striking ``January 1, 2009'' and inserting 
                ``January 1, 2010''.
                    (E) Subparagraph (B) of section 1400N(d)(3) is 
                amended by striking ``January 1, 2009'' and inserting 
                ``January 1, 2010''.
            (3) Technical amendment.--Subparagraph (D) of section 
        168(k)(4) is amended--
                    (A) by striking ``and'' at the end of clause (i),
                    (B) by redesignating clause (ii) as clause (iii), 
                and
                    (C) by inserting after clause (i) the following new 
                clause:
                            ``(ii) `April 1, 2008' shall be substituted 
                        for `January 1, 2008' in subparagraph 
                        (A)(iii)(I) thereof, and''.
    (b) Extension of Election To Accelerate the AMT and Research 
Credits in Lieu of Bonus Depreciation.--Section 168(k)(4) (relating to 
election to accelerate the AMT and research credits in lieu of bonus 
depreciation) is amended--
            (1) by striking ``2009'' and inserting ``2010''in 
        subparagraph (D)(iii) (as redesignated by subsection (a)(3)), 
        and
            (2) by adding at the end the following new subparagraph:
                    ``(H) Special rules for extension property.--
                            ``(i) Taxpayers previously electing 
                        acceleration.--In the case of a taxpayer who 
                        made the election under subparagraph (A) for 
                        its first taxable year ending after March 31, 
                        2008--
                                    ``(I) the taxpayer may elect not to 
                                have this paragraph apply to extension 
                                property, but
                                    ``(II) if the taxpayer does not 
                                make the election under subclause (I), 
                                in applying this paragraph to the 
                                taxpayer a separate bonus depreciation 
                                amount, maximum amount, and maximum 
                                increase amount shall be computed and 
                                applied to eligible qualified property 
                                which is extension property and to 
                                eligible qualified property which is 
                                not extension property.
                            ``(ii) Taxpayers not previously electing 
                        acceleration.--In the case of a taxpayer who 
                        did not make the election under subparagraph 
                        (A) for its first taxable year ending after 
                        March 31, 2008--
                                    ``(I) the taxpayer may elect to 
                                have this paragraph apply to its first 
                                taxable year ending after December 31, 
                                2008, and each subsequent taxable year, 
                                and
                                    ``(II) if the taxpayer makes the 
                                election under subclause (I), this 
                                paragraph shall only apply to eligible 
                                qualified property which is extension 
                                property.
                            ``(iii) Extension property.--For purposes 
                        of this subparagraph, the term `extension 
                        property' means property which is eligible 
                        qualified property solely by reason of the 
                        extension of the application of the special 
                        allowance under paragraph (1) pursuant to the 
                        amendments made by section 1201(a) of the 
                        American Recovery and Reinvestment Tax Act of 
                        2009 (and the application of such extension to 
                        this paragraph pursuant to the amendment made 
                        by section 1201(b)(1) of such Act).''.
    (c) Inclusion of Films or Videotape as Qualified Property.--
            (1) In general.--Section 168(k)(2) is amended by adding at 
        the end the following new subparagraph:
                    ``(H) Certain films.--The term `qualified property' 
                includes property--
                            ``(i) which is a motion picture film or 
                        video tape (within the meaning of subsection 
                        (f)(3)) for which a deduction is allowable 
                        under section 167(a) without regard to this 
                        section,
                            ``(ii) the original use of which commences 
                        with the taxpayer after December 31, 2008,
                            ``(iii) which is--
                                    ``(I) acquired by the taxpayer 
                                after December 31, 2008, and before 
                                January 1, 2010, but only if no written 
                                binding contract for the acquisition 
                                was in effect before January 1, 2009, 
                                or
                                    ``(II) acquired by the taxpayer 
                                pursuant to a written binding contract 
                                which was entered into after December 
                                31, 2008, and before January 1, 2010,
                            ``(iv) which is placed in service by the 
                        taxpayer before January 1, 2010, or, in the 
                        case of property described in subparagraph (B), 
                        before January 1, 2011, and
                            ``(v) the production of which is a 
                        qualified film or television production (as 
                        defined in section 181(d) (determined without 
                        regard to paragraph (2)(B)(ii) thereof)) with 
                        respect to which an election is not in effect 
                        under section 181.''.
            (2) Conforming amendments.--
                    (A) Subclause (I) of section 168(k)(2)(B)(i) is 
                amended by inserting ``subparagraph (H) or'' after 
                ``requirements of''.
                    (B) Subclause (II) of section 168(k)(2)(B)(i) is 
                amended by striking ``or is transportation property'' 
                and inserting ``, is transportation property, or is 
                property described in subparagraph (H)''.
                    (C) Clause (iii) of section 168(k)(2)(D) is amended 
                by adding at the end the following new sentence: ``For 
                purposes of the preceding sentence, all property 
                described in subparagraph (H) shall be treated as one 
                class of property.''.
                    (D) Subparagraph (E) of section 168(k)(2) is 
                amended by adding at the end the following new clause:
                            ``(v) Application to film and videotape 
                        property.--In the case of property described in 
                        subparagraph (H), clauses (i), (ii), (iii), and 
                        (iv) of this subparagraph shall be applied--
                                    ``(I) by substituting `December 31, 
                                2008' for `December 31, 2007' each 
                                place it appears, and
                                    ``(II) by treating any reference to 
                                a clause of subparagraph (A) as a 
                                reference to the corresponding clause 
                                of subparagraph (H).''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to property placed 
        in service after December 31, 2008, in taxable years ending 
        after such date.
            (2) Technical amendment.--The amendments made by subsection 
        (a)(3) shall apply to taxable years ending after March 31, 
        2008.

SEC. 1202. TEMPORARY INCREASE IN LIMITATIONS ON EXPENSING OF CERTAIN 
              DEPRECIABLE BUSINESS ASSETS.

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

             PART II--5-YEAR CARRYBACK OF OPERATING LOSSES

SEC. 1211. 5-YEAR CARRYBACK OF OPERATING LOSSES.

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

SEC. 1212. EXCEPTION FOR TARP RECIPIENTS.

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

                   PART III--INCENTIVES FOR NEW JOBS

SEC. 1221. INCENTIVES TO HIRE UNEMPLOYED VETERANS AND DISCONNECTED 
              YOUTH.

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

                 PART IV--CANCELLATION OF INDEBTEDNESS

SEC. 1231. DEFERRAL AND RATABLE INCLUSION OF INCOME ARISING FROM 
              INDEBTEDNESS DISCHARGED BY THE REPURCHASE OF A DEBT 
              INSTRUMENT.

    (a) In General.--Section 108 (relating to income from discharge of 
indebtedness) is amended by adding at the end the following new 
subsection:
    ``(i) Deferral and Ratable Inclusion of Income Arising From 
Indebtedness Discharged by the Repurchase of a Debt Instrument.--
            ``(1) In general.--Notwithstanding section 61, income from 
        the discharge of indebtedness in connection with the repurchase 
        of a debt instrument after December 31, 2008, and before 
        January 1, 2011, shall be includible in gross income ratably 
        over the 8-taxable-year period beginning with--
                    ``(A) in the case of a repurchase occurring in 
                2009, the second taxable year following the taxable 
                year in which the repurchase occurs, and
                    ``(B) in the case of a repurchase occurring in 
                2010, the taxable year following the taxable year in 
                which the repurchase occurs.
            ``(2) Debt instrument.--For purposes of this subsection, 
        the term `debt instrument' means a bond, debenture, note, 
        certificate, or any other instrument or contractual arrangement 
        constituting indebtedness (within the meaning of section 
        1275(a)(1)).
            ``(3) Repurchase.--For purposes of this subsection, the 
        term `repurchase' means, with respect to any debt instrument, a 
        cash purchase of the debt instrument by--
                    ``(A) the debtor which issued the debt instrument, 
                or
                    ``(B) any person related to such debtor.
        For purposes of subparagraph (B), the determination of whether 
        a person is related to another person shall be made in the same 
        manner as under subsection (e)(4).
            ``(4) Authority to prescribe regulations.--The Secretary 
        may prescribe such regulations as may be necessary or 
        appropriate for purposes of applying this subsection.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to discharges in taxable years ending after December 31, 2008.

                 PART V--QUALIFIED SMALL BUSINESS STOCK

SEC. 1241. SPECIAL RULES APPLICABLE TO QUALIFIED SMALL BUSINESS STOCK 
              FOR 2009 AND 2010.

    (a) In General.--Section 1202(a) is amended by adding at the end 
the following new paragraph:
            ``(3) Special rules for 2009 and 2010.--In the case of 
        qualified small business stock acquired after the date of the 
        enactment of this paragraph and before January 1, 2011--
                    ``(A) paragraph (1) shall be applied by 
                substituting `75 percent' for `50 percent', and
                    ``(B) paragraph (2) shall not apply.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to stock acquired after the date of the enactment of this Act.

           PART VI--PARITY FOR TRANSPORTATION FRINGE BENEFITS

SEC. 1251. INCREASED EXCLUSION AMOUNT FOR COMMUTER TRANSIT BENEFITS AND 
              TRANSIT PASSES.

    (a) In General.--Paragraph (2) of section 132(f) is amended by 
adding at the end the following flush sentence:
        ``In the case of any month beginning on or after the date of 
        the enactment of this sentence and before January 1, 2011, 
        subparagraph (A) shall be applied as if the dollar amount 
        therein were the same as the dollar amount under subparagraph 
        (B) (as in effect for such month).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to months beginning on or after the date of the enactment of this 
section.

                        PART VII--S CORPORATIONS

SEC. 1261. TEMPORARY REDUCTION IN RECOGNITION PERIOD FOR BUILT-IN GAINS 
              TAX.

    (a) In General.--Paragraph (7) of section 1374(d) (relating to 
definitions and special rules) is amended to read as follows:
            ``(7) Recognition period.--
                    ``(A) In general.--The term `recognition period' 
                means the 10-year period beginning with the 1st day of 
                the 1st taxable year for which the corporation was an S 
                corporation.
                    ``(B) Special rule for 2009 and 2010.--In the case 
                of any taxable year beginning in 2009 or 2010, no tax 
                shall be imposed on the net unrecognized built-in gain 
                of an S corporation if the 7th taxable year in the 
                recognition period preceded such taxable year. The 
                preceding sentence shall be applied separately with 
                respect to any asset to which paragraph (8) applies.
                    ``(C) Special rule for distributions to 
                shareholders.--For purposes of applying this section to 
                any amount includible in income by reason of 
                distributions to shareholders pursuant to section 
                593(e)--
                            ``(i) subparagraph (A) shall be applied 
                        without regard to the phrase `10-year', and
                            ``(ii) subparagraph (B) shall not apply.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2008.

                    PART VIII--BROADBAND INCENTIVES

SEC. 1271. BROADBAND INTERNET ACCESS TAX CREDIT.

    (a) In General.--Subpart E of part IV of chapter 1 of the Internal 
Revenue Code of 1986 (relating to rules for computing investment 
credit), as amended by this Act, is amended by inserting after section 
48C the following new section:

``SEC. 48D. BROADBAND INTERNET ACCESS CREDIT.

    ``(a) General Rule.--For purposes of section 46, the broadband 
credit for any taxable year is the sum of--
            ``(1) the current generation broadband credit, plus
            ``(2) the next generation broadband credit.
    ``(b) Current Generation Broadband Credit; Next Generation 
Broadband Credit.--For purposes of this section--
            ``(1) Current generation broadband credit.--The current 
        generation broadband credit for any taxable year is equal to 10 
        percent (20 percent in the case of qualified subscribers which 
        are unserved subscribers) of the qualified broadband 
        expenditures incurred with respect to qualified equipment 
        providing current generation broadband services to qualified 
        subscribers and taken into account with respect to such taxable 
        year.
            ``(2) Next generation broadband credit.--The next 
        generation broadband credit for any taxable year is equal to 20 
        percent of the qualified broadband expenditures incurred with 
        respect to qualified equipment providing next generation 
        broadband services to qualified subscribers and taken into 
        account with respect to such taxable year.
    ``(c) When Expenditures Taken Into Account.--For purposes of this 
section--
            ``(1) In general.--Qualified broadband expenditures with 
        respect to qualified equipment shall be taken into account with 
        respect to the first taxable year in which--
                    ``(A) current generation broadband services are 
                provided through such equipment to qualified 
                subscribers, or
                    ``(B) next generation broadband services are 
                provided through such equipment to qualified 
                subscribers.
            ``(2) Limitation.--
                    ``(A) In general.--Qualified broadband expenditures 
                shall be taken into account under paragraph (1) only 
                with respect to qualified equipment--
                            ``(i) the original use of which commences 
                        with the taxpayer, and
                            ``(ii) which is placed in service, after 
                        December 31, 2008, and before January 1, 2011.
                    ``(B) Sale-leasebacks.--For purposes of 
                subparagraph (A), if property--
                            ``(i) is originally placed in service after 
                        December 31, 2008, by any person, and
                            ``(ii) sold and leased back by such person 
                        within 3 months after the date such property 
                        was originally placed in service,
                such property shall be treated as originally placed in 
                service not earlier than the date on which such 
                property is used under the leaseback referred to in 
                clause (ii).
    ``(d) Special Allocation Rules for Current Generation Broadband 
Services.--For purposes of determining the current generation broadband 
credit under subsection (a)(1) with respect to qualified equipment 
through which current generation broadband services are provided, if 
the qualified equipment is capable of serving both qualified 
subscribers and other subscribers, the qualified broadband expenditures 
shall be multiplied by a fraction--
            ``(1) the numerator of which is the sum of the number of 
        potential qualified subscribers within the rural areas and the 
        underserved areas and the unserved areas which the equipment is 
        capable of serving with current generation broadband services, 
        and
            ``(2) the denominator of which is the total potential 
        subscriber population of the area which the equipment is 
        capable of serving with current generation broadband services.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Antenna.--The term `antenna' means any device used to 
        transmit or receive signals through the electromagnetic 
        spectrum, including satellite equipment.
            ``(2) Cable operator.--The term `cable operator' has the 
        meaning given such term by section 602(5) of the Communications 
        Act of 1934 (47 U.S.C. 522(5)).
            ``(3) Commercial mobile service carrier.--The term 
        `commercial mobile service carrier' means any person authorized 
        to provide commercial mobile radio service as defined in 
        section 20.3 of title 47, Code of Federal Regulations.
            ``(4) Current generation broadband service.--The term 
        `current generation broadband service' means the transmission 
        of signals at a rate of at least 5,000,000 bits per second to 
        the subscriber and at least 1,000,000 bits per second from the 
        subscriber (at least 3,000,000 bits per second to the 
        subscriber and at least 768,000 bits per second from the 
        subscriber in the case of service through radio transmission of 
        energy).
            ``(5) Multiplexing or demultiplexing.--The term 
        `multiplexing' means the transmission of 2 or more signals over 
        a single channel, and the term `demultiplexing' means the 
        separation of 2 or more signals previously combined by 
        compatible multiplexing equipment.
            ``(6) Next generation broadband service.--The term `next 
        generation broadband service' means the transmission of signals 
        at a rate of at least 100,000,000 bits per second to the 
        subscriber (or its equivalent when the data rate is measured 
        before being compressed for transmission) and at least 
        20,000,000 bits per second from the subscriber (or its 
        equivalent as so measured).
            ``(7) Nonresidential subscriber.--The term `nonresidential 
        subscriber' means any person who purchases broadband services 
        which are delivered to the permanent place of business of such 
        person.
            ``(8) Open video system operator.--The term `open video 
        system operator' means any person authorized to provide service 
        under section 653 of the Communications Act of 1934 (47 U.S.C. 
        573).
            ``(9) Other wireless carrier.--The term `other wireless 
        carrier' means any person (other than a telecommunications 
        carrier, commercial mobile service carrier, cable operator, 
        open video system operator, or satellite carrier) providing 
        current generation broadband services or next generation 
        broadband service to subscribers through the radio transmission 
        of energy.
            ``(10) Packet switching.--The term `packet switching' means 
        controlling or routing the path of a digitized transmission 
        signal which is assembled into packets or cells.
            ``(11) Provider.--The term `provider' means, with respect 
        to any qualified equipment any--
                    ``(A) cable operator,
                    ``(B) commercial mobile service carrier,
                    ``(C) open video system operator,
                    ``(D) satellite carrier,
                    ``(E) telecommunications carrier, or
                    ``(F) other wireless carrier,
        providing current generation broadband services or next 
        generation broadband services to subscribers through such 
        qualified equipment.
            ``(12) Provision of services.--A provider shall be treated 
        as providing services to 1 or more subscribers if--
                    ``(A) such a subscriber has been passed by the 
                provider's equipment and can be connected to such 
                equipment for a standard connection fee,
                    ``(B) the provider is physically able to deliver 
                current generation broadband services or next 
                generation broadband services, as applicable, to such a 
                subscriber without making more than an insignificant 
                investment with respect to such subscriber,
                    ``(C) the provider has made reasonable efforts to 
                make such subscribers aware of the availability of such 
                services,
                    ``(D) such services have been purchased by 1 or 
                more such subscribers, and
                    ``(E) such services are made available to such 
                subscribers at average prices comparable to those at 
                which the provider makes available similar services in 
                any areas in which the provider makes available such 
                services.
            ``(13) Qualified equipment.--
                    ``(A) In general.--The term `qualified equipment' 
                means property with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable and 
                which provides current generation broadband services or 
                next generation broadband services--
                            ``(i) at least a majority of the time 
                        during periods of maximum demand to each 
                        subscriber who is utilizing such services, and
                            ``(ii) in a manner substantially the same 
                        as such services are provided by the provider 
                        to subscribers through equipment with respect 
                        to which no credit is allowed under subsection 
                        (a)(1).
                    ``(B) Only certain investment taken into account.--
                Except as provided in subparagraph (C) or (D), 
                equipment shall be taken into account under 
                subparagraph (A) only to the extent it--
                            ``(i) extends from the last point of 
                        switching to the outside of the unit, building, 
                        dwelling, or office owned or leased by a 
                        subscriber in the case of a telecommunications 
                        carrier or broadband-over-powerline operator,
                            ``(ii) extends from the customer side of 
                        the mobile telephone switching office to a 
                        transmission/receive antenna (including such 
                        antenna) owned or leased by a subscriber in the 
                        case of a commercial mobile service carrier,
                            ``(iii) extends from the customer side of 
                        the headend to the outside of the unit, 
                        building, dwelling, or office owned or leased 
                        by a subscriber in the case of a cable operator 
                        or open video system operator, or
                            ``(iv) extends from a transmission/receive 
                        antenna (including such antenna) which 
                        transmits and receives signals to or from 
                        multiple subscribers, to a transmission/receive 
                        antenna (including such antenna) on the outside 
                        of the unit, building, dwelling, or office 
                        owned or leased by a subscriber in the case of 
                        a satellite carrier or other wireless carrier, 
                        unless such other wireless carrier is also a 
                        telecommunications carrier.
                    ``(C) Packet switching equipment.--Packet switching 
                equipment, regardless of location, shall be taken into 
                account under subparagraph (A) only if it is deployed 
                in connection with equipment described in subparagraph 
                (B) and is uniquely designed to perform the function of 
                packet switching for current generation broadband 
                services or next generation broadband services, but 
                only if such packet switching is the last in a series 
                of such functions performed in the transmission of a 
                signal to a subscriber or the first in a series of such 
                functions performed in the transmission of a signal 
                from a subscriber.
                    ``(D) Multiplexing and demultiplexing equipment.--
                Multiplexing and demultiplexing equipment shall be 
                taken into account under subparagraph (A) only to the 
                extent it is deployed in connection with equipment 
                described in subparagraph (B) and is uniquely designed 
                to perform the function of multiplexing and 
                demultiplexing packets or cells of data and making 
                associated application adaptions, but only if such 
                multiplexing or demultiplexing equipment is located 
                between packet switching equipment described in 
                subparagraph (C) and the subscriber's premises.
            ``(14) Qualified broadband expenditure.--
                    ``(A) In general.--The term `qualified broadband 
                expenditure' means any amount--
                            ``(i) chargeable to capital account with 
                        respect to the purchase and installation of 
                        qualified equipment (including any upgrades 
                        thereto) for which depreciation is allowable 
                        under section 168, and
                            ``(ii) incurred after December 31, 2008, 
                        and before January 1, 2011.
                    ``(B) Certain satellite expenditures excluded.--
                Such term shall not include any expenditure with 
                respect to the launching of any satellite equipment.
                    ``(C) Leased equipment.--Such term shall include so 
                much of the purchase price paid by the lessor of 
                equipment subject to a lease described in subsection 
                (c)(2)(B) as is attributable to expenditures incurred 
                by the lessee which would otherwise be described in 
                subparagraph (A).
            ``(15) Qualified subscriber.--The term `qualified 
        subscriber' means--
                    ``(A) with respect to the provision of current 
                generation broadband services--
                            ``(i) any nonresidential subscriber 
                        maintaining a permanent place of business in a 
                        rural area, an underserved area, or an unserved 
                        area, or
                            ``(ii) any residential subscriber residing 
                        in a dwelling located in a rural area, an 
                        underserved area, or an unserved area which is 
                        not a saturated market, and
                    ``(B) with respect to the provision of next 
                generation broadband services--
                            ``(i) any nonresidential subscriber 
                        maintaining a permanent place of business in a 
                        rural area, an underserved area, or an unserved 
                        area , or
                            ``(ii) any residential subscriber.
            ``(16) Residential subscriber.--The term `residential 
        subscriber' means any individual who purchases broadband 
        services which are delivered to such individual's dwelling.
            ``(17) Rural area.--The term `rural area' means any census 
        tract which--
                    ``(A) is not within 10 miles of any incorporated or 
                census designated place containing more than 25,000 
                people, and
                    ``(B) is not within a county or county equivalent 
                which has an overall population density of more than 
                500 people per square mile of land.
            ``(18) Rural subscriber.--The term `rural subscriber' means 
        any residential subscriber residing in a dwelling located in a 
        rural area or nonresidential subscriber maintaining a permanent 
        place of business located in a rural area.
            ``(19) Satellite carrier.--The term `satellite carrier' 
        means any person using the facilities of a satellite or 
        satellite service licensed by the Federal Communications 
        Commission and operating in the Fixed-Satellite Service under 
        part 25 of title 47 of the Code of Federal Regulations or the 
        Direct Broadcast Satellite Service under part 100 of title 47 
        of such Code to establish and operate a channel of 
        communications for distribution of signals, and owning or 
        leasing a capacity or service on a satellite in order to 
        provide such point-to-multipoint distribution.
            ``(20) Saturated market.--The term `saturated market' means 
        any census tract in which, as of the date of the enactment of 
        this section--
                    ``(A) current generation broadband services have 
                been provided by a single provider to 85 percent or 
                more of the total number of potential residential 
                subscribers residing in dwellings located within such 
                census tract, and
                    ``(B) such services can be utilized--
                            ``(i) at least a majority of the time 
                        during periods of maximum demand by each such 
                        subscriber who is utilizing such services, and
                            ``(ii) in a manner substantially the same 
                        as such services are provided by the provider 
                        to subscribers through equipment with respect 
                        to which no credit is allowed under subsection 
                        (a)(1).
            ``(21) Subscriber.--The term `subscriber' means any person 
        who purchases current generation broadband services or next 
        generation broadband services.
            ``(22) Telecommunications carrier.--The term 
        `telecommunications carrier' has the meaning given such term by 
        section 3(44) of the Communications Act of 1934 (47 U.S.C. 
        153(44)), but--
                    ``(A) includes all members of an affiliated group 
                of which a telecommunications carrier is a member, and
                    ``(B) does not include any commercial mobile 
                service carrier.
            ``(23) Total potential subscriber population.--The term 
        `total potential subscriber population' means, with respect to 
        any area and based on the most recent census data, the total 
        number of potential residential subscribers residing in 
        dwellings located in such area and potential nonresidential 
        subscribers maintaining permanent places of business located in 
        such area.
            ``(24) Underserved area.--The term `underserved area' means 
        any census tract which is located in--
                    ``(A) an empowerment zone or enterprise community 
                designated under section 1391,
                    ``(B) the District of Columbia Enterprise Zone 
                established under section 1400,
                    ``(C) a renewal community designated under section 
                1400E, or
                    ``(D) a low-income community designated under 
                section 45D.
            ``(25) Underserved subscriber.--The term `underserved 
        subscriber' means any residential subscriber residing in a 
        dwelling located in an underserved area or nonresidential 
        subscriber maintaining a permanent place of business located in 
        an underserved area.
            ``(26) Unserved area.--The term `unserved area' means any 
        census tract in which no current generation broadband services 
        are provided, as certified by the State in which such tract is 
        located not later than September 30, 2009.
            ``(27) Unserved subscriber.--The term `unserved subscriber' 
        means any residential subscriber residing in a dwelling located 
        in an unserved area or nonresidential subscriber maintaining a 
        permanent place of business located in an unserved area.''.
    (b) Credit To Be Part of Investment Credit.--Section 46 (relating 
to the amount of investment credit), as amended by this Act, is amended 
by striking ``and'' at the end of paragraph (4), by striking the period 
at the end of paragraph (5) and inserting ``, and'', and by adding at 
the end the following:
            ``(6) the broadband Internet access credit.''
    (c) Special Rule for Mutual or Cooperative Telephone Companies.--
Section 501(c)(12)(B) (relating to list of exempt organizations) 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) from the sale of property subject to 
                        a lease described in section 48D(c)(2)(B), but 
                        only to the extent such income does not in any 
                        year exceed an amount equal to the credit for 
                        qualified broadband expenditures which would be 
                        determined under section 48D for such year if 
                        the mutual or cooperative telephone company was 
                        not exempt from taxation and was treated as the 
                        owner of the property subject to such lease.''.
    (d) Conforming Amendments.--
            (1) Section 49(a)(1)(C), as amended by this Act, is amended 
        by striking ``and'' at the end of clause (iv), by striking the 
        period at the end of clause (v) and inserting ``, and'', and by 
        adding after clause (v) the following new clause:
                            ``(vi) the portion of the basis of any 
                        qualified equipment attributable to qualified 
                        broadband expenditures under section 48D.''.
            (2) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1, as amended by this Act, is amended 
        by inserting after the item relating to section 48C the 
        following:

``Sec. 48D. Broadband internet access credit.''.
    (e) Designation of Census Tracts.--
            (1) In general.--The Secretary of the Treasury shall, not 
        later than 90 days after the date of the enactment of this Act, 
        designate and publish those census tracts meeting the criteria 
        described in paragraphs (17), (23), (24), and (26) of section 
        48D(e) of the Internal Revenue Code of 1986 (as added by this 
        section). In making such designations, the Secretary of the 
        Treasury shall consult with such other departments and agencies 
        as the Secretary determines appropriate.
            (2) Saturated market.--
                    (A) In general.--For purposes of designating and 
                publishing those census tracts meeting the criteria 
                described in subsection (e)(20) of such section 48D--
                            (i) the Secretary of the Treasury shall 
                        prescribe not later than 30 days after the date 
                        of the enactment of this Act the form upon 
                        which any provider which takes the position 
                        that it meets such criteria with respect to any 
                        census tract shall submit a list of such census 
                        tracts (and any other information required by 
                        the Secretary) not later than 60 days after the 
                        date of the publication of such form, and
                            (ii) the Secretary of the Treasury shall 
                        publish an aggregate list of such census tracts 
                        submitted and the applicable providers not 
                        later than 30 days after the last date such 
                        submissions are allowed under clause (i).
                    (B) No subsequent lists required.--The Secretary of 
                the Treasury shall not be required to publish any list 
                of census tracts meeting such criteria subsequent to 
                the list described in subparagraph (A)(ii).
                    (C) Authority to disregard false submissions.--In 
                addition to imposing any other applicable penalties, 
                the Secretary of the Treasury shall have the discretion 
                to disregard any form described in subparagraph (A)(i) 
                on which a provider knowingly submitted false 
                information.
    (f) Other Regulatory Matters.--
            (1) Prohibition.--No Federal or State agency or 
        instrumentality shall adopt regulations or ratemaking 
        procedures that would have the effect of eliminating or 
        reducing any credit or portion thereof allowed under section 
        48D of the Internal Revenue Code of 1986 (as added by this 
        section) or otherwise subverting the purpose of this section.
            (2) Treasury regulatory authority.--It is the intent of 
        Congress in providing the broadband Internet access credit 
        under section 48D of the Internal Revenue Code of 1986 (as 
        added by this section) to provide incentives for the purchase, 
        installation, and connection of equipment and facilities 
        offering expanded broadband access to the Internet for users in 
        certain low income and rural areas of the United States, as 
        well as to residential users nationwide, in a manner that 
        maintains competitive neutrality among the various classes of 
        providers of broadband services. Accordingly, the Secretary of 
        the Treasury shall prescribe such regulations as may be 
        necessary or appropriate to carry out the purposes of section 
        48D of such Code, including--
                    (A) regulations to determine how and when a 
                taxpayer that incurs qualified broadband expenditures 
                satisfies the requirements of section 48D of such Code 
                to provide broadband services, and
                    (B) regulations describing the information, 
                records, and data taxpayers are required to provide the 
                Secretary to substantiate compliance with the 
                requirements of section 48D of such Code.
    (g) Effective Date.--The amendments made by this section shall 
apply to expenditures incurred after December 31, 2008.

PART IX--CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON CERTAIN 
             BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE

SEC. 1281. CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON 
              CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE.

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

             Subtitle D--Manufacturing Recovery Provisions

SEC. 1301. TEMPORARY EXPANSION OF AVAILABILITY OF INDUSTRIAL 
              DEVELOPMENT BONDS TO FACILITIES MANUFACTURING INTANGIBLE 
              PROPERTY.

    (a) In General.--Subparagraph (C) of section 144(a)(12) is 
amended--
            (1) by striking ``For purposes of this paragraph, the 
        term'' and inserting ``For purposes of this paragraph--
                            ``(i) In general.--The term'', and
            (2) by striking the last sentence and inserting the 
        following new clauses:
                            ``(ii) Certain facilities included.--Such 
                        term includes facilities which are directly 
                        related and ancillary to a manufacturing 
                        facility (determined without regard to this 
                        clause) if--
                                    ``(I) such facilities are located 
                                on the same site as the manufacturing 
                                facility, and
                                    ``(II) not more than 25 percent of 
                                the net proceeds of the issue are used 
                                to provide such facilities.
                            ``(iii) Special rules for bonds issued in 
                        2009 and 2010.--In the case of any issue made 
                        after the date of enactment of this clause and 
                        before January 1, 2011, clause (ii) shall not 
                        apply and the net proceeds from a bond shall be 
                        considered to be used to provide a 
                        manufacturing facility if such proceeds are 
                        used to provide--
                                    ``(I) a facility which is used in 
                                the creation or production of 
                                intangible property which is described 
                                in section 197(d)(1)(C)(iii), or
                                    ``(II) a facility which is 
                                functionally related and subordinate to 
                                a manufacturing facility (determined 
                                without regard to this subclause) if 
                                such facility is located on the same 
                                site as the manufacturing facility.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 1302. CREDIT FOR INVESTMENT IN ADVANCED ENERGY FACILITIES.

    (a) In General.--Section 46 (relating to amount of credit) is 
amended by striking ``and'' at the end of paragraph (3), by striking 
the period at the end of paragraph (4), and by adding at the end the 
following new paragraph:
            ``(5) the qualifying advanced energy project credit.''.
    (b) Amount of Credit.--Subpart E of part IV of subchapter A of 
chapter 1 (relating to rules for computing investment credit) is 
amended by inserting after section 48B the following new section:

``SEC. 48C. QUALIFYING ADVANCED ENERGY PROJECT CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying 
advanced energy project credit for any taxable year is an amount equal 
to 30 percent of the qualified investment for such taxable year with 
respect to any qualifying advanced energy project of the taxpayer.
    ``(b) Qualified Investment.--
            ``(1) In general.--For purposes of subsection (a), the 
        qualified investment for any taxable year is the basis of 
        eligible property placed in service by the taxpayer during such 
        taxable year which is part of a qualifying advanced energy 
        project--
                    ``(A)(i) the construction, reconstruction, or 
                erection of which is completed by the taxpayer after 
                October 31, 2008, or
                    ``(ii) which is acquired by the taxpayer if the 
                original use of such eligible property commences with 
                the taxpayer after October 31, 2008, and
                    ``(B) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable.
            ``(2) Special rule for certain subsidized property.--Rules 
        similar to section 48(a)(4) (without regard to subparagraph (D) 
        thereof) shall apply for purposes of this section.
            ``(3) Certain qualified progress expenditures rules made 
        applicable.--Rules similar to the rules of subsections (c)(4) 
        and (d) of section 46 (as in effect on the day before the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.
            ``(4) Limitation.--The amount which is treated for all 
        taxable years with respect to any qualifying advanced energy 
        project shall not exceed the amount designated by the Secretary 
        as eligible for the credit under this section.
    ``(c) Definitions.--
            ``(1) Qualifying advanced energy project.--
                    ``(A) In general.--The term `qualifying advanced 
                energy project' means a project--
                            ``(i) which re-equips, expands, or 
                        establishes a manufacturing facility for the 
                        production of property which is--
                                    ``(I) designed to be used to 
                                produce energy from the sun, wind, 
                                geothermal deposits (within the meaning 
                                of section 613(e)(2)), or other 
                                renewable resources,
                                    ``(II) designed to manufacture fuel 
                                cells, microturbines, or an energy 
                                storage system for use with electric or 
                                hybrid-electric motor vehicles,
                                    ``(III) designed to manufacture 
                                electric grids to support the 
                                transmission of intermittent sources of 
                                renewable energy,
                                    ``(IV) designed to capture and 
                                sequester carbon dioxide emissions, or
                                    ``(V) designed to refine or blend 
                                renewable fuels or to produce energy 
                                conservation technologies (including 
                                energy-conserving lighting technologies 
                                and smart grid technologies), and
                            ``(ii) any portion of the qualified 
                        investment of which is certified by the 
                        Secretary under subsection (d) as eligible for 
                        a credit under this section.
                    ``(B) Exception.--Such term shall not include any 
                portion of a project for the production of any property 
                which is used in the refining or blending of any 
                transportation fuel (other than renewable fuels).
            ``(2) Eligible property.--The term `eligible property' 
        means any property which is part of a qualifying advanced 
        energy project and is necessary for the production of property 
        described in paragraph (1)(A)(i).
    ``(d) Qualifying Advanced Energy Project Program.--
            ``(1) Establishment.--
                    ``(A) In general.--Not later than 180 days after 
                the date of enactment of this section, the Secretary, 
                in consultation with the Secretary of Energy, shall 
                establish a qualifying advanced energy project program 
                to consider and award certifications for qualified 
                investments eligible for credits under this section to 
                qualifying advanced energy project sponsors.
                    ``(B) Limitation.--The total amount of credits that 
                may be allocated under the program shall not exceed 
                $2,000,000,000.
            ``(2) Certification.--
                    ``(A) Application period.--Each applicant for 
                certification under this paragraph shall submit an 
                application containing such information as the 
                Secretary may require during the 3-year period 
                beginning on the date the Secretary establishes the 
                program under paragraph (1).
                    ``(B) Time to meet criteria for certification.--
                Each applicant for certification shall have 2 years 
                from the date of acceptance by the Secretary of the 
                application during which to provide to the Secretary 
                evidence that the requirements of the certification 
                have been met.
                    ``(C) Period of issuance.--An applicant which 
                receives a certification shall have 5 years from the 
                date of issuance of the certification in order to place 
                the project in service and if such project is not 
                placed in service by that time period then the 
                certification shall no longer be valid.
            ``(3) Selection criteria.--In determining which qualifying 
        advanced energy projects to certify under this section, the 
        Secretary shall take into consideration only those projects 
        where there is a reasonable expectation of commercial 
        viability.
            ``(4) Review and redistribution.--
                    ``(A) Review.--Not later than 6 years after the 
                date of enactment of this section, the Secretary shall 
                review the credits allocated under this section as of 
                the date which is 6 years after the date of enactment 
                of this section.
                    ``(B) Redistribution.--The Secretary may reallocate 
                credits awarded under this section if the Secretary 
                determines that--
                            ``(i) there is an insufficient quantity of 
                        qualifying applications for certification 
                        pending at the time of the review, or
                            ``(ii) any certification made pursuant to 
                        paragraph (2) has been revoked pursuant to 
                        paragraph (2)(B) because the project subject to 
                        the certification has been delayed as a result 
                        of third party opposition or litigation to the 
                        proposed project.
                    ``(C) Reallocation.--If the Secretary determines 
                that credits under this section are available for 
                reallocation pursuant to the requirements set forth in 
                paragraph (2), the Secretary is authorized to conduct 
                an additional program for applications for 
                certification.
            ``(5) Disclosure of allocations.--The Secretary shall, upon 
        making a certification under this subsection, publicly disclose 
        the identity of the applicant and the amount of the credit with 
        respect to such applicant.
    ``(e) Denial of Double Benefit.--A credit shall not be allowed 
under this section for any qualified investment for which a credit is 
allowed under section 48, 48A, or 48B.''.
    (c) Conforming Amendments.--
            (1) Section 49(a)(1)(C) is amended by striking ``and'' at 
        the end of clause (iii), by striking the period at the end of 
        clause (iv) and inserting ``, and'', and by adding after clause 
        (iv) the following new clause:
                            ``(v) the basis of any property which is 
                        part of a qualifying advanced energy project 
                        under section 48C.''.
            (2) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 48B the following new item:

``48C. Qualifying advanced energy project credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act, under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990).

                  Subtitle E--Economic Recovery Tools

SEC. 1401. RECOVERY ZONE BONDS.

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

                    ``PART III--RECOVERY ZONE BONDS

``Sec. 1400U-1. Allocation of recovery zone bonds.
``Sec. 1400U-2. Recovery zone economic development bonds.
``Sec. 1400U-3. Recovery zone facility bonds.

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

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

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

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

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

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

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

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

SEC. 1402. TRIBAL ECONOMIC DEVELOPMENT BONDS.

    (a) In General.--Section 7871 is amended by adding at the end the 
following new subsection:
    ``(f) Tribal Economic Development Bonds.--
            ``(1) Allocation of limitation.--
                    ``(A) In general.--The Secretary shall allocate the 
                national tribal economic development bond limitation 
                among the Indian tribal governments in such manner as 
                the Secretary, in consultation with the Secretary of 
                the Interior, determines appropriate.
                    ``(B) National limitation.--There is a national 
                tribal economic development bond limitation of 
                $2,000,000,000.
            ``(2) Bonds treated as exempt from tax.--In the case of a 
        tribal economic development bond--
                    ``(A) notwithstanding subsection (c), such bond 
                shall be treated for purposes of this title in the same 
                manner as if such bond were issued by a State,
                    ``(B) the Indian tribal government issuing such 
                bond and any instrumentality of such Indian tribal 
                government shall be treated as a State for purposes of 
                section 141, and
                    ``(C) section 146 shall not apply.
            ``(3) Tribal economic development bond.--
                    ``(A) In general.--For purposes of this section, 
                the term `tribal economic development bond' means any 
                bond issued by an Indian tribal government--
                            ``(i) the interest on which would be exempt 
                        from tax under section 103 if issued by a State 
                        or local government, and
                            ``(ii) which is designated by the Indian 
                        tribal government as a tribal economic 
                        development bond for purposes of this 
                        subsection.
                    ``(B) Exceptions.--The term tribal economic 
                development bond shall not include any bond issued as 
                part of an issue if any portion of the proceeds of such 
                issue are used to finance--
                            ``(i) any portion of a building in which 
                        class II or class III gaming (as defined in 
                        section 4 of the Indian Gaming Regulatory Act) 
                        is conducted or housed or any other property 
                        actually used in the conduct of such gaming, or
                            ``(ii) any facility located outside the 
                        Indian reservation (as defined in section 
                        168(j)(6)).
                    ``(C) Limitation on amount of bonds designated.--
                The maximum aggregate face amount of bonds which may be 
                designated by any Indian tribal government under 
                subparagraph (A) shall not exceed the amount of 
                national tribal economic development bond limitation 
                allocated to such government under paragraph (1).''.
    (b) Study.--The Secretary of the Treasury, or the Secretary's 
delegate, shall conduct a study of the effects of the amendment made by 
subsection (a). Not later than 1 year after the date of the enactment 
of this Act, the Secretary of the Treasury, or the Secretary's 
delegate, shall report to Congress on the results of the study 
conducted under this paragraph, including the Secretary's 
recommendations regarding such amendment.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 1403. MODIFICATIONS TO NEW MARKETS TAX CREDIT.

    (a) Increase in National Limitation.--
            (1) In general.--Section 45D(f)(1) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (C),
                    (B) by striking ``, 2007, 2008, and 2009.'' in 
                subparagraph (D), and inserting ``and 2007,'', and
                    (C) by adding at the end the following new 
                subparagraphs:
                    ``(E) $5,000,000,000 for 2008, and
                    ``(F) $5,000,000,000 for 2009.''.
            (2) Special rule for allocation of increased 2008 
        limitation.--The amount of the increase in the new markets tax 
        credit limitation for calendar year 2008 by reason of the 
        amendments made by subsection (a) shall be allocated in 
        accordance with section 45D(f)(2) of the Internal Revenue Code 
        of 1986 to qualified community development entities (as defined 
        in section 45D(c) of such Code) which--
                    (A) submitted an allocation application with 
                respect to calendar year 2008, and
                    (B)(i) did not receive an allocation for such 
                calendar year, or
                    (ii) received an allocation for such calendar year 
                in an amount less than the amount requested in the 
                allocation application.
    (b) Alternative Minimum Tax Relief.--
            (1) In general.--Section 38(c)(4)(B) is amended by 
        redesignating clauses (v) through (viii) as clauses (vi) 
        through (ix), respectively, and by inserting after clause (iv) 
        the following new clause:
                            ``(v) the credit determined under section 
                        45D to the extent that such credit is 
                        attributable to a qualified equity investment 
                        which is designated as such under section 
                        45D(b)(1)(C) pursuant to an allocation of the 
                        new markets tax credit limitation for calendar 
                        year 2009,''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to credits determined under section 45D of the 
        Internal Revenue Code of 1986 in taxable years ending after the 
        date of the enactment of this Act, and to carrybacks of such 
        credits.

               Subtitle F--Infrastructure Financing Tools

          PART I--IMPROVED MARKETABILITY FOR TAX-EXEMPT BONDS

SEC. 1501. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX-EXEMPT INTEREST 
              EXPENSE OF FINANCIAL INSTITUTIONS.

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

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

    (a) In General.--Paragraph (3) of section 265(b) (relating to 
exception for certain tax-exempt obligations) is amended by adding at 
the end the following new subparagraph:
                    ``(G) Special rules for obligations issued during 
                2009 and 2010.--
                            ``(i) Increase in limitation.--In the case 
                        of obligations issued during 2009 or 2010, 
                        subparagraphs (C)(i), (D)(i), and (D)(iii)(II) 
                        shall each be applied by substituting 
                        `$30,000,000' for `$10,000,000'.
                            ``(ii) Qualified 501(c)(3) bonds treated as 
                        issued by exempt organization.--In the case of 
                        a qualified 501(c)(3) bond (as defined in 
                        section 145) issued during 2009 or 2010, this 
                        paragraph shall be applied by treating the 
                        501(c)(3) organization for whose benefit such 
                        bond was issued as the issuer.
                            ``(iii) Special rule for qualified 
                        financings.--In the case of a qualified 
                        financing issue issued during 2009 or 2010--
                                    ``(I) subparagraph (F) shall not 
                                apply, and
                                    ``(II) any obligation issued as a 
                                part of such issue shall be treated as 
                                a qualified tax-exempt obligation if 
                                the requirements of this paragraph are 
                                met with respect to each qualified 
                                portion of the issue (determined by 
                                treating each qualified portion as a 
                                separate issue which is issued by the 
                                qualified borrower with respect to 
                                which such portion relates).
                            ``(iv) Qualified financing issue.--For 
                        purposes of this subparagraph, the term 
                        `qualified financing issue' means any 
                        composite, pooled, or other conduit financing 
                        issue the proceeds of which are used directly 
                        or indirectly to make or finance loans to 1 or 
                        more ultimate borrowers each of whom is a 
                        qualified borrower.
                            ``(v) Qualified portion.--For purposes of 
                        this subparagraph, the term `qualified portion' 
                        means that portion of the proceeds which are 
                        used with respect to each qualified borrower 
                        under the issue.
                            ``(vi) Qualified borrower.--For purposes of 
                        this subparagraph, the term `qualified 
                        borrower' means a borrower which is a State or 
                        political subdivision thereof or an 
                        organization described in section 501(c)(3) and 
                        exempt from taxation under section 501(a).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to obligations issued after December 31, 2008.

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

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

SEC. 1504. MODIFICATION TO HIGH SPEED INTERCITY RAIL FACILITY BONDS.

    (a) In General.--Paragraph (1) of section 142(i) is amended by 
striking ``operate at speeds in excess of'' and inserting ``be capable 
of attaining a maximum speed in excess of''.
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds issued after the date of the enactment of this Act.

    PART II--DELAY IN APPLICATION OF WITHHOLDING TAX ON GOVERNMENT 
                              CONTRACTORS

SEC. 1511. DELAY IN APPLICATION OF WITHHOLDING TAX ON GOVERNMENT 
              CONTRACTORS.

    Subsection (b) of section 511 of the Tax Increase Prevention and 
Reconciliation Act of 2005 is amended by striking ``December 31, 2010'' 
and inserting ``December 31, 2011''.

                 PART III--TAX CREDIT BONDS FOR SCHOOLS

SEC. 1521. QUALIFIED SCHOOL CONSTRUCTION BONDS.

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

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

    ``(a) Qualified School Construction Bond.--For purposes of this 
subchapter, the term `qualified school construction bond' means any 
bond issued as part of an issue if--
            ``(1) 100 percent of the available project proceeds of such 
        issue are to be used for the construction, rehabilitation, or 
        repair of a public school facility or for the acquisition of 
        land on which such a facility is to be constructed with part of 
        the proceeds of such issue,
            ``(2) the bond is issued by a State or local government 
        within the jurisdiction of which such school is located, and
            ``(3) the issuer designates such bond for purposes of this 
        section.
    ``(b) Limitation on Amount of Bonds Designated.--The maximum 
aggregate face amount of bonds issued during any calendar year which 
may be designated under subsection (a) by any issuer shall not exceed 
the limitation amount allocated under subsection (d) for such calendar 
year to such issuer.
    ``(c) National Limitation on Amount of Bonds Designated.--There is 
a national qualified school construction bond limitation for each 
calendar year. Such limitation is--
            ``(1) $5,000,000,000 for 2009,
            ``(2) $5,000,000,000 for 2010, and
            ``(3) except as provided in subsection (e), zero after 
        2010.
    ``(d) Limitation Allocated Among States.--
            ``(1) In general.--The limitation applicable under 
        subsection (c) for any calendar year shall be allocated by the 
        Secretary among the States in proportion to the respective 
        numbers of children in each State who have attained age 5 but 
        not age 18 for the most recent fiscal year ending before such 
        calendar year. The limitation amount allocated to a State under 
        the preceding sentence shall be allocated by the State to 
        issuers within such State.
            ``(2) Minimum allocations to states.--
                    ``(A) In general.--The Secretary shall adjust the 
                allocations under this subsection for any calendar year 
                for each State to the extent necessary to ensure that 
                the amount allocated to such State under this 
                subsection for such year is not less than an amount 
                equal to such State's adjusted minimum percentage of 
                the amount to be allocated under paragraph (1) for the 
                calendar year.
                    ``(B) Minimum percentage.--A State's minimum 
                percentage for any calendar year is equal to the 
                product of--
                            ``(i) the quotient of--
                                    ``(I) the amount the State is 
                                eligible to receive under section 
                                1124(d) of the Elementary and Secondary 
                                Education Act of 1965 (20 U.S.C. 
                                6333(d)) for the most recent fiscal 
                                year ending before such calendar year, 
                                divided by
                                    ``(II) the amount all States are 
                                eligible to receive under section 1124 
                                of such Act (20 U.S.C. 6333) for such 
                                fiscal year, multiplied by
                            ``(ii) 100.
            ``(3) Allocations to certain possessions.--The amount to be 
        allocated under paragraph (1) to any possession of the United 
        States other than Puerto Rico shall be the amount which would 
        have been allocated if all allocations under paragraph (1) were 
        made on the basis of respective populations of individuals 
        below the poverty line (as defined by the Office of Management 
        and Budget). In making other allocations, the amount to be 
        allocated under paragraph (1) shall be reduced by the aggregate 
        amount allocated under this paragraph to possessions of the 
        United States.
            ``(4) Allocations for indian schools.--In addition to the 
        amounts otherwise allocated under this subsection, $200,000,000 
        for calendar year 2009, and $200,000,000 for calendar year 
        2010, shall be allocated by the Secretary of the Interior for 
        purposes of the construction, rehabilitation, and repair of 
        schools funded by the Bureau of Indian Affairs. In the case of 
        amounts allocated under the preceding sentence, Indian tribal 
        governments (as defined in section 7701(a)(40)) shall be 
        treated as qualified issuers for purposes of this subchapter.
    ``(e) Carryover of Unused Limitation.--If for any calendar year--
            ``(1) the amount allocated under subsection (d) to any 
        State, exceeds
            ``(2) the amount of bonds issued during such year which are 
        designated under subsection (a) pursuant to such allocation,
the limitation amount under such subsection for such State for the 
following calendar year shall be increased by the amount of such 
excess. A similar rule shall apply to the amounts allocated under 
subsection (d)(4).''.
    (b) Conforming Amendments.--
            (1) Paragraph (1) of section 54A(d) is amended by striking 
        ``or'' at the end of subparagraph (C), by inserting ``or'' at 
        the end of subparagraph (D), and by inserting after 
        subparagraph (D) the following new subparagraph:
                    ``(E) a qualified school construction bond,''.
            (2) Subparagraph (C) of section 54A(d)(2) is amended by 
        striking ``and'' at the end of clause (iii), by striking the 
        period at the end of clause (iv) and inserting ``, and'', and 
        by adding at the end the following new clause:
                            ``(v) in the case of a qualified school 
                        construction bond, a purpose specified in 
                        section 54F(a)(1).''.
            (3) The table of sections for subpart I of part IV of 
        subchapter A of chapter 1 is amended by adding at the end the 
        following new item:

``Sec. 54F. Qualified school construction bonds.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 1522. EXTENSION AND EXPANSION OF QUALIFIED ZONE ACADEMY BONDS.

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

                      PART IV--BUILD AMERICA BONDS

SEC. 1531. BUILD AMERICA BONDS.

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

                    ``Subpart J--Build America Bonds

``Sec. 54AA. Build America bonds.

``SEC. 54AA. BUILD AMERICA BONDS.

    ``(a) In General.--If a taxpayer holds a build America bond on one 
or more interest payment dates of the bond during any taxable year, 
there shall be allowed as a credit against the tax imposed by this 
chapter for the taxable year an amount equal to the sum of the credits 
determined under subsection (b) with respect to such dates.
    ``(b) Amount of Credit.--The amount of the credit determined under 
this subsection with respect to any interest payment date for a build 
America bond is 35 percent of the amount of interest payable by the 
issuer with respect to such date.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                part (other than subpart C and this subpart).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year 
        (determined before the application of paragraph (1) for such 
        succeeding taxable year).
    ``(d) Build America Bond.--
            ``(1) In general.--For purposes of this section, the term 
        `build America bond' means any obligation (other than a private 
        activity bond) if--
                    ``(A) the interest on such obligation would (but 
                for this section) be excludable from gross income under 
                section 103,
                    ``(B) such obligation is issued before January 1, 
                2012, and
                    ``(C) the issuer makes an irrevocable election to 
                have this section apply.
            ``(2) Applicable rules.--For purposes of applying paragraph 
        (1)--
                    ``(A) a build America bond shall not be treated as 
                federally guaranteed by reason of the credit allowed 
                under subsection (a) or section 6431,
                    ``(B) the yield on a build America bond shall be 
                determined without regard to the credit allowed under 
                subsection (a), and
                    ``(C) a bond shall not be treated as a build 
                America bond if the issue price has more than a de 
                minimis amount (determined under rules similar to the 
                rules of section 1273(a)(3)) of premium over the stated 
                principal amount of the bond.
    ``(e) Interest Payment Date.--For purposes of this section, the 
term `interest payment date' means any date on which the holder of 
record of the build America bond is entitled to a payment of interest 
under such bond.
    ``(f) Special Rules.--
            ``(1) Interest on build america bonds includible in gross 
        income for federal income tax purposes.--For purposes of this 
        title, interest on any build America bond shall be includible 
        in gross income.
            ``(2) Application of certain rules.--Rules similar to the 
        rules of subsections (f), (g), (h), and (i) of section 54A 
        shall apply for purposes of the credit allowed under subsection 
        (a).
    ``(g) Special Rule for Qualified Bonds Issued Before 2011.--In the 
case of a qualified bond issued before January 1, 2011--
            ``(1) Issuer allowed refundable credit.--In lieu of any 
        credit allowed under this section with respect to such bond, 
        the issuer of such bond shall be allowed a credit as provided 
        in section 6431.
            ``(2) Qualified bond.--For purposes of this subsection, the 
        term `qualified bond' means any build America bond issued as 
        part of an issue if--
                    ``(A) 100 percent of the available project proceeds 
                (as defined in section 54A) of such issue are to be 
                used for capital expenditures, and
                    ``(B) the issuer makes an irrevocable election to 
                have this subsection apply.
    ``(h) Regulations.--The Secretary may prescribe such regulations 
and other guidance as may be necessary or appropriate to carry out this 
section and section 6431.''.
    (b) Credit for Qualified Bonds Issued Before 2011.--Subchapter B of 
chapter 65 is amended by adding at the end the following new section:

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

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

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

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

     Subtitle G--Economic Recovery Payments to Certain Individuals

SEC. 1601. ECONOMIC RECOVERY PAYMENT TO RECIPIENTS OF SOCIAL SECURITY, 
              SUPPLEMENTAL SECURITY INCOME, RAILROAD RETIREMENT 
              BENEFITS, AND VETERANS DISABILITY COMPENSATION OR PENSION 
              BENEFITS.

    (a) Authority To Make Payments.--
            (1) Eligibility.--
                    (A) In general.--Subject to paragraph (5)(B), the 
                Secretary of the Treasury shall make a $300 payment to 
                each individual who, for any month during the 3-month 
                period ending with the month which ends prior to the 
                month that includes the date of the enactment of this 
                Act, is entitled to a benefit payment described in 
                clause (i), (ii), or (iii) of subparagraph (B) or is 
                eligible for a SSI cash benefit described in 
                subparagraph (C).
                    (B) Benefit payment described.--For purposes of 
                subparagraph (A):
                            (i) Title ii benefit.--A benefit payment 
                        described in this clause is a monthly insurance 
                        benefit payable (without regard to sections 
                        202(j)(1) and 223(b) of the Social Security Act 
                        (42 U.S.C. 402(j)(1), 423(b)) under--
                                    (I) section 202(a) of such Act (42 
                                U.S.C. 402(a));
                                    (II) section 202(b) of such Act (42 
                                U.S.C. 402(b));
                                    (III) section 202(c) of such Act 
                                (42 U.S.C. 402(c));
                                    (IV) section 202(d)(1)(B)(ii) of 
                                such Act (42 U.S.C. 402(d)(1)(B)(ii));
                                    (V) section 202(e) of such Act (42 
                                U.S.C. 402(e));
                                    (VI) section 202(f) of such Act (42 
                                U.S.C. 402(f));
                                    (VII) section 202(g) of such Act 
                                (42 U.S.C. 402(g));
                                    (VIII) section 202(h) of such Act 
                                (42 U.S.C. 402(h));
                                    (IX) section 223(a) of such Act (42 
                                U.S.C. 423(a));
                                    (X) section 227 of such Act (42 
                                U.S.C. 427); or
                                    (XI) section 228 of such Act (42 
                                U.S.C. 428).
                            (ii) Railroad retirement benefit.--A 
                        benefit payment described in this clause is a 
                        monthly annuity or pension payment payable 
                        (without regard to section 5(a)(ii) of the 
                        Railroad Retirement Act of 1974 (45 U.S.C. 
                        231d(a)(ii)) under--
                                    (I) section 2(a)(1) of such Act (45 
                                U.S.C. 231a(a)(1));
                                    (II) section 2(c) of such Act (45 
                                U.S.C. 231a(c));
                                    (III) section 2(d)(1)(i) of such 
                                Act (45 U.S.C. 231a(d)(1)(i));
                                    (IV) section 2(d)(1)(ii) of such 
                                Act (45 U.S.C. 231a(d)(1)(ii));
                                    (V) section 2(d)(1)(iii)(C) of such 
                                Act to an adult disabled child (45 
                                U.S.C. 231a(d)(1)(iii)(C));
                                    (VI) section 2(d)(1)(iv) of such 
                                Act (45 U.S.C. 231a(d)(1)(iv));
                                    (VII) section 2(d)(1)(v) of such 
                                Act (45 U.S.C. 231a(d)(1)(v)); or
                                    (VIII) section 7(b)(2) of such Act 
                                (45 U.S.C. 231f(b)(2)) with respect to 
                                any of the benefit payments described 
                                in clause (i) of this subparagraph.
                            (iii) Veterans benefit.--A benefit payment 
                        described in this clause is a compensation or 
                        pension payment payable under--
                                    (I) section 1110, 1117, 1121, 1131, 
                                1141, or 1151 of title 38, United 
                                States Code;
                                    (II) section 1310, 1312, 1313, 
                                1315, 1316, or 1318 of title 38, United 
                                States Code;
                                    (III) section 1513, 1521, 1533, 
                                1536, 1537, 1541, 1542, or 1562 of 
                                title 38, United States Code; or
                                    (IV) section 1805, 1815, or 1821 of 
                                title 38, United States Code,
                        to a veteran, surviving spouse, child, or 
                        parent as described in paragraph (2), (3), 
                        (4)(A)(ii), or (5) of section 101, title 38, 
                        United States Code, who received that benefit 
                        during any month within the 3 month period 
                        ending with the month which ends prior to the 
                        month that includes the date of the enactment 
                        of this Act.
                    (C) SSI cash benefit described.--A SSI cash benefit 
                described in this subparagraph is a cash benefit 
                payable under section 1611 (other than under subsection 
                (e)(1)(B) of such section) or 1619(a) of the Social 
                Security Act (42 U.S.C. 1382, 1382h).
            (2) Requirement.--A payment shall be made under paragraph 
        (1) only to individuals who reside in 1 of the 50 States, the 
        District of Columbia, Puerto Rico, Guam, the United States 
        Virgin Islands, American Samoa, or the Northern Mariana 
        Islands. For purposes of the preceding sentence, the 
        determination of the individual's residence shall be based on 
        the current address of record under a program specified in 
        paragraph (1).
            (3) No double payments.--An individual shall be paid only 1 
        payment under this section, regardless of whether the 
        individual is entitled to, or eligible for, more than 1 benefit 
        or cash payment described in paragraph (1).
            (4) Limitation.--A payment under this section shall not be 
        made--
                    (A) in the case of an individual entitled to a 
                benefit specified in paragraph (1)(B)(i) or paragraph 
                (1)(B)(ii)(VIII) if, for the most recent month of such 
                individual's entitlement in the 3-month period 
                described in paragraph (1), such individual's benefit 
                under such paragraph was not payable by reason of 
                subsection (x) or (y) of section 202 the Social 
                Security Act (42 U.S.C. 402) or section 1129A of such 
                Act (42 U.S.C. 1320a-8a);
                    (B) in the case of an individual entitled to a 
                benefit specified in paragraph (1)(B)(iii) if, for the 
                most recent month of such individual's entitlement in 
                the 3-month period described in paragraph (1), such 
                individual's benefit under such paragraph was not 
                payable, or was reduced, by reason of section 1505, 
                5313, or 5313B of title 38, United States Code;
                    (C) in the case of an individual entitled to a 
                benefit specified in paragraph (1)(C) if, for such most 
                recent month, such individual's benefit under such 
                paragraph was not payable by reason of subsection 
                (e)(1)(A) or (e)(4) of section 1611 (42 U.S.C. 1382) or 
                section 1129A of such Act (42 U.S.C. 1320a-8a); or
                    (D) in the case of any individual whose date of 
                death occurs before the date on which the individual is 
                certified under subsection (b) to receive a payment 
                under this section.
            (5) Timing and manner of payments.--
                    (A) In general.--The Secretary of the Treasury 
                shall commence making payments under this section at 
                the earliest practicable date but in no event later 
                than 120 days after the date of enactment of this Act. 
                The Secretary of the Treasury may make any payment 
                electronically to an individual in such manner as if 
                such payment was a benefit payment or cash benefit to 
                such individual under the applicable program described 
                in subparagraph (B) or (C) of paragraph (1).
                    (B) Deadline.--No payments shall be made under this 
                section after December 31, 2010, regardless of any 
                determinations of entitlement to, or eligibility for, 
                such payments made after such date.
    (b) Identification of Recipients.--The Commissioner of Social 
Security, the Railroad Retirement Board, and the Secretary of Veterans 
Affairs shall certify the individuals entitled to receive payments 
under this section and provide the Secretary of the Treasury with the 
information needed to disburse such payments. A certification of an 
individual shall be unaffected by any subsequent determination or 
redetermination of the individual's entitlement to, or eligibility for, 
a benefit specified in subparagraph (B) or (C) of subsection (a)(1).
    (c) Treatment of Payments.--
            (1) Payment to be disregarded for purposes of all federal 
        and federally assisted programs.--A payment under subsection 
        (a) shall not be regarded as income and shall not be regarded 
        as a resource for the month of receipt and the following 9 
        months, for purposes of determining the eligibility of the 
        recipient (or the recipient's spouse or family) for benefits or 
        assistance, or the amount or extent of benefits or assistance, 
        under any Federal program or under any State or local program 
        financed in whole or in part with Federal funds.
            (2) Payment not considered income for purposes of 
        taxation.--A payment under subsection (a) shall not be 
        considered as gross income for purposes of the Internal Revenue 
        Code of 1986.
            (3) Payments protected from assignment.--The provisions of 
        sections 207 and 1631(d)(1) of the Social Security Act (42 
        U.S.C. 407, 1383(d)(1)), section 14(a) of the Railroad 
        Retirement Act of 1974 (45 U.S.C. 231m(a)), and section 5301 of 
        title 38, United States Code, shall apply to any payment made 
        under subsection (a) as if such payment was a benefit payment 
        or cash benefit to such individual under the applicable program 
        described in subparagraph (B) or (C) of subsection (a)(1).
            (4) Payments subject to offset.--Notwithstanding paragraph 
        (3), for purposes of section 3716 of title 31, United States 
        Code, any payment made under this section shall not be 
        considered a benefit payment or cash benefit made under the 
        applicable program described in subparagraph (B) or (C) of 
        subsection (a)(1) and all amounts paid shall be subject to 
        offset to collect delinquent debts.
    (d) Payment to Representative Payees and Fiduciaries.--
            (1) In general.--In any case in which an individual who is 
        entitled to a payment under subsection (a) and whose benefit 
        payment or cash benefit described in paragraph (1) of that 
        subsection is paid to a representative payee or fiduciary, the 
        payment under subsection (a) shall be made to the individual's 
        representative payee or fiduciary and the entire payment shall 
        be used only for the benefit of the individual who is entitled 
        to the payment.
            (2) Applicability.--
                    (A) Payment on the basis of a title ii or ssi 
                benefit.--Section 1129(a)(3) of the Social Security Act 
                (42 U.S.C. 1320a-8(a)(3)) shall apply to any payment 
                made on the basis of an entitlement to a benefit 
                specified in paragraph (1)(B)(i) or (1)(C) of 
                subsection (a) in the same manner as such section 
                applies to a payment under title II or XVI of such Act.
                    (B) Payment on the basis of a railroad retirement 
                benefit.--Section 13 of the Railroad Retirement Act (45 
                U.S.C. 231l) shall apply to any payment made on the 
                basis of an entitlement to a benefit specified in 
                paragraph (1)(B)(ii) of subsection (a) in the same 
                manner as such section applies to a payment under such 
                Act.
                    (C) Payment on the basis of a veterans benefit.--
                Sections 5502, 6106, and 6108 of title 38, United 
                States Code, shall apply to any payment made on the 
                basis of an entitlement to a benefit specified in 
                paragraph (1)(B)(iii) of subsection (a) in the same 
                manner as those sections apply to a payment under that 
                title.
    (e) Appropriation.--Out of any sums in the Treasury of the United 
States not otherwise appropriated, the following sums are appropriated 
for the period of fiscal years 2009 and 2010 to carry out this section:
            (1) For the Secretary of the Treasury--
                    (A) such sums as may be necessary to make payments 
                under this section; and
                    (B) $57,000,000 for administrative costs incurred 
                in carrying out this section and section 36A of the 
                Internal Revenue Code of 1986 (as added by this Act).
            (2) For the Commissioner of Social Security, $90,000,000 
        for the Social Security Administration's Limitation on 
        Administrative Expenses for costs incurred in carrying out this 
        section.
            (3) For the Railroad Retirement Board, $1,000,000 for 
        administrative costs incurred in carrying out this section.
            (4) For the Secretary of Veterans Affairs, $100,000 for the 
        Information Systems Technology account and $7,100,000 for the 
        General Operating Expenses account for administrative costs 
        incurred in carrying out this section.

                Subtitle H--Trade Adjustment Assistance

SEC. 1701. TEMPORARY EXTENSION OF TRADE ADJUSTMENT ASSISTANCE PROGRAM.

    (a) Assistance for Workers.--
            (1) In general.--Section 245(a) of the Trade Act of 1974 
        (19 U.S.C. 2317(a)) is amended by striking ``December 31, 
        2007'' and inserting ``December 31, 2010''.
            (2) Alternative trade adjustment assistance.--Section 
        246(b)(1) of the Trade Act of 1974 (19 U.S.C. 2318(b)(1)) is 
        amended by striking ``5 years'' and inserting ``7 years''.
    (b) Assistance for Firms.--Section 256(b) of the Trade Act of 1974 
(19 U.S.C. 2346(b)) is amended by striking ``2007, and $4,000,000 for 
the 3-month period beginning on October 1, 2007,'' and inserting 
``December 31, 2010''.
    (c) Assistance for Farmers.--Section 298(a) of the Trade Act of 
1974 (19 U.S.C. 2401g(a)) is amended by striking ``through 2007'' and 
all that follows through the end period and inserting ``through 
December 31, 2010 to carry out the purposes of this chapter.''.
    (d) Extension of Termination Dates.--Section 285 of the Trade Act 
of 1974 (19 U.S.C. 2271 note) is amended by striking ``December 31, 
2007'' each place it appears and inserting ``December 31, 2010''.
    (e) Sense of the Senate Regarding Adjustment Assistance for 
Communities.--It is the sense of the Senate that title II of the Trade 
Act of 1974 (19 U.S.C. 2271 et seq.) should be amended to assist any 
community impacted by trade with economic adjustment through--
            (1) the coordination of efforts by State and local 
        governments and economic organizations;
            (2) the coordination of Federal, State, and local 
        resources;
            (3) the creation of community-based development strategies; 
        and
            (4) the development and provision of training programs.
    (f) Effective Date.--The amendments made by this section shall be 
effective as of January 1, 2008.

 Subtitle I--Prohibition on Collection of Certain Payments Made Under 
          the Continued Dumping and Subsidy Offset Act of 2000

SEC. 1801. PROHIBITION ON COLLECTION OF CERTAIN PAYMENTS MADE UNDER THE 
              CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF 2000.

    (a) In General.--Notwithstanding any other provision of law, 
neither the Secretary of Homeland Security nor any other person may--
            (1) require repayment of, or attempt in any other way to 
        recoup, any payments described in subsection (b); or
            (2) offset any past, current, or future distributions of 
        antidumping or countervailing duties assessed with respect to 
        imports from countries that are not parties to the North 
        American Free Trade Agreement in an attempt to recoup any 
        payments described in subsection (b).
    (b) Payments Described.--Payments described in this subsection are 
payments of antidumping or countervailing duties made pursuant to the 
Continued Dumping and Subsidy Offset Act of 2000 (section 754 of the 
Tariff Act of 1930 (19 U.S.C. 1675c; repealed by subtitle F of title 
VII of the Deficit Reduction Act of 2005 (Public Law 109-171; 120 Stat. 
154))) that were--
            (1) assessed and paid on imports of goods from countries 
        that are parties to the North American Free Trade Agreement; 
        and
            (2) distributed on or after January 1, 2001, and before 
        January 1, 2006.
    (c) Payment of Funds Collected or Withheld.--Not later than the 
date that is 60 days after the date of the enactment of this Act, the 
Secretary of Homeland Security shall--
            (1) refund any repayments, or any other recoupment, of 
        payments described in subsection (b); and
            (2) fully distribute any antidumping or countervailing 
        duties that the U.S. Customs and Border Protection is 
        withholding as an offset as described in subsection (a)(2).
    (d) Limitation.--Nothing in this section shall be construed to 
prevent the Secretary of Homeland Security, or any other person, from 
requiring repayment of, or attempting to otherwise recoup, any payments 
described in subsection (b) as a result of--
            (1) a finding of false statements or other misconduct by a 
        recipient of such a payment; or
            (2) the reliquidation of an entry with respect to which 
        such a payment was made.

                      Subtitle J--Other Provisions

SEC. 1901. APPLICATION OF CERTAIN LABOR STANDARDS TO PROJECTS FINANCED 
              WITH CERTAIN TAX-FAVORED BONDS.

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

SEC. 1902. INCREASE IN PUBLIC DEBT LIMIT.

    Subsection (b) of section 3101 of title 31, United States Code, is 
amended by striking out the dollar limitation contained in such 
subsection and inserting ``$12,140,000,000,000''.

  TITLE II--ASSISTANCE FOR UNEMPLOYED WORKERS AND STRUGGLING FAMILIES

SEC. 2000. SHORT TITLE; TABLE OF CONTENTS.

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

  TITLE II--ASSISTANCE FOR UNEMPLOYED WORKERS AND STRUGGLING FAMILIES

Sec. 2000. Short title; table of contents.
                   Subtitle A--Unemployment Insurance

Sec. 2001. Extension of emergency unemployment compensation program.
Sec. 2002. Increase in unemployment compensation benefits.
Sec. 2003. Unemployment compensation modernization.
Sec. 2004. Temporary assistance for States with advances.
           Subtitle B--Assistance for Vulnerable Individuals

Sec. 2101. Emergency fund for TANF program.
Sec. 2102. Extension of TANF supplemental grants.
Sec. 2103. Clarification of authority of States to use TANF funds 
                            carried over from prior years to provide 
                            TANF benefits and services.
Sec. 2104. Temporary reinstatement of authority to provide Federal 
                            matching payments for State spending of 
                            child support incentive payments.

                   Subtitle A--Unemployment Insurance

SEC. 2001. EXTENSION OF EMERGENCY UNEMPLOYMENT COMPENSATION PROGRAM.

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

SEC. 2002. INCREASE IN UNEMPLOYMENT COMPENSATION BENEFITS.

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

SEC. 2003. UNEMPLOYMENT COMPENSATION MODERNIZATION.

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

                 ``Special Transfers for Modernization

    ``(f)(1)(A) In addition to any other amounts, the Secretary of 
Labor shall provide for the making of unemployment compensation 
modernization incentive payments (hereinafter `incentive payments') to 
the accounts of the States in the Unemployment Trust Fund, by transfer 
from amounts reserved for that purpose in the Federal unemployment 
account, in accordance with succeeding provisions of this subsection.
    ``(B) The maximum incentive payment allowable under this subsection 
with respect to any State shall, as determined by the Secretary of 
Labor, be equal to the amount obtained by multiplying $7,000,000,000 by 
the same ratio as would apply under subsection (a)(2)(B) for purposes 
of determining such State's share of any excess amount (as described in 
subsection (a)(1)) that would have been subject to transfer to State 
accounts, as of October 1, 2008, under the provisions of subsection 
(a).
    ``(C) Of the maximum incentive payment determined under 
subparagraph (B) with respect to a State--
            ``(i) one-third shall be transferred to the account of such 
        State upon a certification under paragraph (4)(B) that the 
        State law of such State meets the requirements of paragraph 
        (2); and
            ``(ii) the remainder shall be transferred to the account of 
        such State upon a certification under paragraph (4)(B) that the 
        State law of such State meets the requirements of paragraph 
        (3).
    ``(2) The State law of a State meets the requirements of this 
paragraph if such State law--
            ``(A) uses a base period that includes the most recently 
        completed calendar quarter before the start of the benefit year 
        for purposes of determining eligibility for unemployment 
        compensation; or
            ``(B) provides that, in the case of an individual who would 
        not otherwise be eligible for unemployment compensation under 
        the State law because of the use of a base period that does not 
        include the most recently completed calendar quarter before the 
        start of the benefit year, eligibility shall be determined 
        using a base period that includes such calendar quarter.
    ``(3) The State law of a State meets the requirements of this 
paragraph if such State law includes provisions to carry out at least 2 
of the following subparagraphs:
            ``(A) An individual shall not be denied regular 
        unemployment compensation under any State law provisions 
        relating to availability for work, active search for work, or 
        refusal to accept work, solely because such individual is 
        seeking only part-time (and not full-time) work, except that 
        the State law provisions carrying out this subparagraph may 
        exclude an individual if a majority of the weeks of work in 
        such individual's base period do not include part-time work.
            ``(B) An individual shall not be disqualified from regular 
        unemployment compensation for separating from employment if 
        that separation is for any compelling family reason. For 
        purposes of this subparagraph, the term `compelling family 
        reason' means the following:
                    ``(i) Domestic violence, verified by such 
                reasonable and confidential documentation as the State 
                law may require, which causes the individual reasonably 
                to believe that such individual's continued employment 
                would jeopardize the safety of the individual or of any 
                member of the individual's immediate family (as defined 
                by the Secretary of Labor).
                    ``(ii) The illness or disability of a member of the 
                individual's immediate family (as defined by the 
                Secretary of Labor).
                    ``(iii) The need for the individual to accompany 
                such individual's spouse--
                            ``(I) to a place from which it is 
                        impractical for such individual to commute; and
                            ``(II) due to a change in location of the 
                        spouse's employment.
            ``(C) Weekly unemployment compensation is payable under 
        this subparagraph to any individual who is unemployed (as 
        determined under the State unemployment compensation law), has 
        exhausted all rights to regular unemployment compensation under 
        the State law, and is enrolled and making satisfactory progress 
        in a State-approved training program or in a job training 
        program authorized under the Workforce Investment Act of 1998. 
        Such programs shall prepare individuals who have been separated 
        from a declining occupation, or who have been involuntarily and 
        indefinitely separated from employment as a result of a 
        permanent reduction of operations at the individual's place of 
        employment, for entry into a high-demand occupation. The amount 
        of unemployment compensation payable under this subparagraph to 
        an individual for a week of unemployment shall be equal to the 
        individual's average weekly benefit amount (including 
        dependents' allowances) for the most recent benefit year, and 
        the total amount of unemployment compensation payable under 
        this subparagraph to any individual shall be equal to at least 
        26 times the individual's average weekly benefit amount 
        (including dependents' allowances) for the most recent benefit 
        year.
            ``(D) Dependents' allowances are provided, in the case of 
        any individual who is entitled to receive regular unemployment 
        compensation and who has any dependents (as defined by State 
        law), in an amount equal to at least $15 per dependent per 
        week, subject to any aggregate limitation on such allowances 
        which the State law may establish (but which aggregate 
        limitation on the total allowance for dependents paid to an 
        individual may not be less than $50 for each week of 
        unemployment or 50 percent of the individual's weekly benefit 
        amount for the benefit year, whichever is less).
    ``(4)(A) Any State seeking an incentive payment under this 
subsection shall submit an application therefor at such time, in such 
manner, and complete with such information as the Secretary of Labor 
may within 60 days after the date of the enactment of this subsection 
prescribe (whether by regulation or otherwise), including information 
relating to compliance with the requirements of paragraph (2) or (3), 
as well as how the State intends to use the incentive payment to 
improve or strengthen the State's unemployment compensation program. 
The Secretary of Labor shall, within 30 days after receiving a complete 
application, notify the State agency of the State of the Secretary's 
findings with respect to the requirements of paragraph (2) or (3) (or 
both).
    ``(B)(i) If the Secretary of Labor finds that the State law 
provisions (disregarding any State law provisions which are not then 
currently in effect as permanent law or which are subject to 
discontinuation) meet the requirements of paragraph (2) or (3), as the 
case may be, the Secretary of Labor shall thereupon make a 
certification to that effect to the Secretary of the Treasury, together 
with a certification as to the amount of the incentive payment to be 
transferred to the State account pursuant to that finding. The 
Secretary of the Treasury shall make the appropriate transfer within 7 
days after receiving such certification.
    ``(ii) For purposes of clause (i), State law provisions which are 
to take effect within 12 months after the date of their certification 
under this subparagraph shall be considered to be in effect as of the 
date of such certification.
    ``(C)(i) No certification of compliance with the requirements of 
paragraph (2) or (3) may be made with respect to any State whose State 
law is not otherwise eligible for certification under section 303 or 
approvable under section 3304 of the Federal Unemployment Tax Act.
    ``(ii) No certification of compliance with the requirements of 
paragraph (3) may be made with respect to any State whose State law is 
not in compliance with the requirements of paragraph (2).
    ``(iii) No application under subparagraph (A) may be considered if 
submitted before the date of the enactment of this subsection or after 
the latest date necessary (as specified by the Secretary of Labor) to 
ensure that all incentive payments under this subsection are made 
before October 1, 2010. In the case of a State in which the first day 
of the first regularly scheduled session of the State legislature 
beginning after the date of enactment of this subsection begins after 
December 31, 2010, the preceding sentence shall be applied by 
substituting `October 1, 2011' for `October 1, 2010' .
    ``(5)(A) Except as provided in subparagraph (B), any amount 
transferred to the account of a State under this subsection may be used 
by such State only in the payment of cash benefits to individuals with 
respect to their unemployment (including for dependents' allowances and 
for unemployment compensation under paragraph (3)(C)), exclusive of 
expenses of administration.
    ``(B) A State may, subject to the same conditions as set forth in 
subsection (c)(2) (excluding subparagraph (B) thereof, and deeming the 
reference to `subsections (a) and (b)' in subparagraph (D) thereof to 
include this subsection), use any amount transferred to the account of 
such State under this subsection for the administration of its 
unemployment compensation law and public employment offices.
    ``(6) Out of any money in the Federal unemployment account not 
otherwise appropriated, the Secretary of the Treasury shall reserve 
$7,000,000,000 for incentive payments under this subsection. Any amount 
so reserved shall not be taken into account for purposes of any 
determination under section 902, 910, or 1203 of the amount in the 
Federal unemployment account as of any given time. Any amount so 
reserved for which the Secretary of the Treasury has not received a 
certification under paragraph (4)(B) by the deadline described in 
paragraph (4)(C)(iii) shall, upon the close of fiscal year 2011, become 
unrestricted as to use as part of the Federal unemployment account.
    ``(7) For purposes of this subsection, the terms `benefit year', 
`base period', and `week' have the respective meanings given such terms 
under section 205 of the Federal-State Extended Unemployment 
Compensation Act of 1970 (26 U.S.C. 3304 note).

       ``Special Transfer in Fiscal Year 2009 for Administration

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

SEC. 2004. TEMPORARY ASSISTANCE FOR STATES WITH ADVANCES.

    Section 1202(b) of the Social Security Act (42 U.S.C. 1322(b)) is 
amended by adding at the end the following new paragraph:
    ``(10)(A) With respect to the period beginning on the date of 
enactment of this paragraph and ending on December 31, 2010--
            ``(i) any interest payment otherwise due from a State under 
        this subsection during such period shall be deemed to have been 
        made by the State; and
            ``(ii) no interest shall accrue on any advance or advances 
        made under section 1201 to a State during such period.
    ``(B) The provisions of subparagraph (A) shall have no effect on 
the requirement for interest payments under this subsection after the 
period described in such subparagraph or on the accrual of interest 
under this subsection after such period.''.

           Subtitle B--Assistance for Vulnerable Individuals

SEC. 2101. EMERGENCY FUND FOR TANF PROGRAM.

    (a) Temporary Fund.--
            (1) In general.--Section 403 of the Social Security Act (42 
        U.S.C. 603) is amended by adding at the end the following:
    ``(c) Emergency Fund.--
            ``(1) Establishment.--There is established in the Treasury 
        of the United States a fund which shall be known as the 
        `Emergency Contingency Fund for State Temporary Assistance for 
        Needy Families Programs' (in this subsection referred to as the 
        `Emergency Fund').
            ``(2) Deposits into fund.--
                    ``(A) In general.--Out of any money in the Treasury 
                of the United States not otherwise appropriated, there 
                are appropriated for fiscal year 2009, $3,000,000,000 
                for payment to the Emergency Fund.
                    ``(B) Availability and use of funds.--The amounts 
                appropriated to the Emergency Fund under subparagraph 
                (A) shall remain available through fiscal year 2010 and 
                shall be used to make grants to States in each of 
                fiscal years 2009 and 2010 in accordance with the 
                requirements of paragraph (3).
                    ``(C) Limitation.--In no case may the Secretary 
                make a grant from the Emergency Fund for a fiscal year 
                after fiscal year 2010.
            ``(3) Grants.--
                    ``(A) Grant related to caseload increases.--
                            ``(i) In general.--For each calendar 
                        quarter in fiscal year 2009 or 2010, the 
                        Secretary shall make a grant from the Emergency 
                        Fund to each State that--
                                    ``(I) requests a grant under this 
                                subparagraph for the quarter; and
                                    ``(II) meets the requirement of 
                                clause (ii) for the quarter.
                            ``(ii) Caseload increase requirement.--A 
                        State meets the requirement of this clause for 
                        a quarter if the average monthly assistance 
                        caseload of the State for the quarter exceeds 
                        the average monthly assistance caseload of the 
                        State for the corresponding quarter in the 
                        emergency fund base year of the State.
                            ``(iii) Amount of grant.--Subject to 
                        paragraph (5), the amount of the grant to be 
                        made to a State under this subparagraph for a 
                        quarter shall be 80 percent of the amount (if 
                        any) by which the total expenditures of the 
                        State for basic assistance (as defined by the 
                        Secretary) in the quarter, whether under the 
                        State program funded under this part or as 
                        qualified State expenditures, exceeds the total 
                        expenditures of the State for such assistance 
                        for the corresponding quarter in the emergency 
                        fund base year of the State.
                    ``(B) Grant related to increased expenditures for 
                non-recurrent short term benefits.--
                            ``(i) In general.--For each calendar 
                        quarter in fiscal year 2009 or 2010, the 
                        Secretary shall make a grant from the Emergency 
                        Fund to each State that--
                                    ``(I) requests a grant under this 
                                subparagraph for the quarter; and
                                    ``(II) meets the requirement of 
                                clause (ii) for the quarter.
                            ``(ii) Non-recurrent short-term expenditure 
                        requirement.--A State meets the requirement of 
                        this clause for a quarter if the total 
                        expenditures of the State for non-recurrent 
                        short-term benefits in the quarter, whether 
                        under the State program funded under this part 
                        or as qualified State expenditures, exceeds the 
                        total such expenditures of the State for non-
                        recurrent short-term benefits in the 
                        corresponding quarter in the emergency fund 
                        base year of the State.
                            ``(iii) Amount of grant.--Subject to 
                        paragraph (5), the amount of the grant to be 
                        made to a State under this subparagraph for a 
                        quarter shall be an amount equal to 80 percent 
                        of the excess described in clause (ii).
                    ``(C) Grant related to increased expenditures for 
                subsidized employment.--
                            ``(i) In general.--For each calendar 
                        quarter in fiscal year 2009 or 2010, the 
                        Secretary shall make a grant from the Emergency 
                        Fund to each State that--
                                    ``(I) requests a grant under this 
                                subparagraph for the quarter; and
                                    ``(II) meets the requirement of 
                                clause (ii) for the quarter.
                            ``(ii) Subsidized employment expenditure 
                        requirement.--A State meets the requirement of 
                        this clause for a quarter if the total 
                        expenditures of the State for subsidized 
                        employment in the quarter, whether under the 
                        State program funded under this part or as 
                        qualified State expenditures, exceeds the total 
                        of such expenditures of the State in the 
                        corresponding quarter in the emergency fund 
                        base year of the State.
                            ``(iii) Amount of grant.--Subject to 
                        paragraph (5), the amount of the grant to be 
                        made to a State under this subparagraph for a 
                        quarter shall be an amount equal to 80 percent 
                        of the excess described in clause (ii).
            ``(4) Authority to make necessary adjustments to data and 
        collect needed data.--In determining the size of the caseload 
        of a State and the expenditures of a State for basic 
        assistance, non-recurrent short-term benefits, and subsidized 
        employment, during any period for which the State requests 
        funds under this subsection, and during the emergency fund base 
        year of the State, the Secretary may make appropriate 
        adjustments to the data to ensure that the data reflect 
        expenditures under the State program funded under this part and 
        qualified State expenditures. The Secretary may develop a 
        mechanism for collecting expenditure data, including procedures 
        which allow States to make reasonable estimates, and may set 
        deadlines for making revisions to the data.
            ``(5) Limitation.--The total amount payable to a single 
        State under subsection (b) and this subsection for a fiscal 
        year shall not exceed 25 percent of the State family assistance 
        grant.
            ``(6) Limitations on use of funds.--A State to which an 
        amount is paid under this subsection may use the amount only as 
        authorized by section 404.
            ``(7) Timing of implementation.--The Secretary shall 
        implement this subsection as quickly as reasonably possible, 
        pursuant to appropriate guidance to States.
            ``(8) Definitions.--In this subsection:
                    ``(A) Average monthly assistance caseload 
                defined.--The term `average monthly assistance 
                caseload' means, with respect to a State and a quarter, 
                the number of families receiving assistance during the 
                quarter under the State program funded under this part 
                or as qualified State expenditures, subject to 
                adjustment under paragraph (4).
                    ``(B) Emergency fund base year.--
                            ``(i) In general.--The term `emergency fund 
                        base year' means, with respect to a State and a 
                        category described in clause (ii), whichever of 
                        fiscal year 2007 or 2008 is the fiscal year in 
                        which the amount described by the category with 
                        respect to the State is the lesser.
                            ``(ii) Categories described.--The 
                        categories described in this clause are the 
                        following:
                                    ``(I) The average monthly 
                                assistance caseload of the State.
                                    ``(II) The total expenditures of 
                                the State for non-recurrent short-term 
                                benefits, whether under the State 
                                program funded under this part or as 
                                qualified State expenditures.
                                    ``(III) The total expenditures of 
                                the State for subsidized employment, 
                                whether under the State program funded 
                                under this part or as qualified State 
                                expenditures.
                    ``(C) Qualified state expenditures.--The term 
                `qualified State expenditures' has the meaning given 
                the term in section 409(a)(7).''.
            (2) Repeal.--Effective October 1, 2010, subsection (c) of 
        section 403 of the Social Security Act (42 U.S.C. 603) (as 
        added by paragraph (1)) is repealed.
    (b) Temporary Modification of Caseload Reduction Credit.--Section 
407(b)(3)(A)(i) of such Act (42 U.S.C. 607(b)(3)(A)(i)) is amended by 
inserting ``(or if the immediately preceding fiscal year is fiscal year 
2008, 2009, or 2010, then, at State option, during the emergency fund 
base year of the State with respect to the average monthly assistance 
caseload of the State (within the meaning of section 403(c)(8)(B), 
except that, if a State elects such option for fiscal year 2008, the 
emergency fund base year of the State with respect to such caseload 
shall be fiscal year 2007))'' before ``under the State''.
    (c) Disregard From Limitation on Total Payments to Territories.--
Section 1108(a)(2) of the Social Security Act (42 U.S.C. 1308(a)(2)) is 
amended by inserting ``403(c)(3),'' after ``403(a)(5),''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 2102. EXTENSION OF TANF SUPPLEMENTAL GRANTS.

    (a) Extension Through Fiscal Year 2010.--Section 7101(a) of the 
Deficit Reduction Act of 2005 (Public Law 109-171; 120 Stat. 135), as 
amended by section 301(a) of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110-275), is amended by striking 
``fiscal year 2009'' and inserting ``fiscal year 2010''.
    (b) Conforming Amendment.--Section 403(a)(3)(H)(ii) of the Social 
Security Act (42 U.S.C. 603(a)(3)(H)(ii)) is amended to read as 
follows:
                            ``(ii) subparagraph (G) shall be applied as 
                        if `fiscal year 2010' were substituted for 
                        `fiscal year 2001'; and''.

SEC. 2103. CLARIFICATION OF AUTHORITY OF STATES TO USE TANF FUNDS 
              CARRIED OVER FROM PRIOR YEARS TO PROVIDE TANF BENEFITS 
              AND SERVICES.

    Section 404(e) of the Social Security Act (42 U.S.C. 604(e)) is 
amended to read as follows:
    ``(e) Authority To Carry Over Certain Amounts for Benefits or 
Services or for Future Contingencies.--A State or tribe may use a grant 
made to the State or tribe under this part for any fiscal year to 
provide, without fiscal year limitation, any benefit or service that 
may be provided under the State or tribal program funded under this 
part.''.

SEC. 2104. TEMPORARY REINSTATEMENT OF AUTHORITY TO PROVIDE FEDERAL 
              MATCHING PAYMENTS FOR STATE SPENDING OF CHILD SUPPORT 
              INCENTIVE PAYMENTS.

    During the period that begins on October 1, 2008, and ends on 
December 31, 2010, section 455(a)(1) of the Social Security Act (42 
U.S.C. 655(a)(1)) shall be applied without regard to the amendment made 
by section 7309(a) of the Deficit Reduction Act of 2005 (Public Law 
109-171, 120 Stat. 147).

                 TITLE III--HEALTH INSURANCE ASSISTANCE

SEC. 3000. TABLE OF CONTENTS OF TITLE.

    The table of contents for this title is as follows:

                 TITLE III--HEALTH INSURANCE ASSISTANCE

Sec. 3000. Table of contents of title.
   Subtitle A--Premium Subsidies for COBRA Continuation Coverage for 
                           Unemployed Workers

Sec. 3001. Premium assistance for COBRA benefits.
           Subtitle B--Transitional Medical Assistance (TMA)

Sec. 3101. Extension of transitional medical assistance (TMA).
     Subtitle C--Extension of the Qualified Individual (QI) Program

Sec. 3201. Extension of the qualifying individual (QI) program.
                      Subtitle D--Other Provisions

Sec. 3301. Premiums and cost sharing protections under Medicaid, 
                            eligibility determinations under Medicaid 
                            and CHIP, and protection of certain Indian 
                            property from Medicaid estate recovery.
Sec. 3302. Rules applicable under Medicaid and CHIP to managed care 
                            entities with respect to Indian enrollees 
                            and Indian health care providers and Indian 
                            managed care entities.
Sec. 3303. Consultation on Medicaid, CHIP, and other health care 
                            programs funded under the Social Security 
                            Act involving Indian Health Programs and 
                            Urban Indian Organizations.
Sec. 3304. Application of prompt pay requirements to nursing 
                            facilities.
Sec. 3305. Period of application; sunset.

   Subtitle A--Premium Subsidies for COBRA Continuation Coverage for 
                           Unemployed Workers

SEC. 3001. PREMIUM ASSISTANCE FOR COBRA BENEFITS.

    (a) Table of Contents of Subtitle.--The table of contents of this 
subtitle is as follows:

Sec. 3001. Premium assistance for COBRA benefits.
    (b) Premium Assistance for COBRA Continuation Coverage for 
Unemployed Workers and Their Families.--
            (1) Provision of premium assistance.--
                    (A) Reduction of premiums payable.--In the case of 
                any premium for a month of coverage beginning after the 
                date of the enactment of the Act for COBRA continuation 
                coverage with respect to any assistance eligible 
                individual, such individual shall be treated for 
                purposes of any COBRA continuation provision as having 
                paid the amount of such premium if such individual pays 
                35 percent of the amount of such premium (as determined 
                without regard to this subsection).
                    (B) Plan enrollment option.--
                            (i) In general.--Notwithstanding the COBRA 
                        continuation provisions, an assistance eligible 
                        individual may, not later than 90 days after 
                        the date of notice of the plan enrollment 
                        option described in this subparagraph, elect to 
                        enroll in coverage under a plan offered by the 
                        employer involved, or the employee organization 
                        involved (including, for this purpose, a joint 
                        board of trustees of a multiemployer trust 
                        affiliated with one or more multiemployer 
                        plans), that is different than coverage under 
                        the plan in which such individual was enrolled 
                        at the time the qualifying event occurred, and 
                        such coverage shall be treated as COBRA 
                        continuation coverage for purposes of the 
                        applicable COBRA continuation coverage 
                        provision.
                            (ii) Requirements.--An assistance eligible 
                        individual may elect to enroll in different 
                        coverage as described in clause (i) only if--
                                    (I) the employer involved has made 
                                a determination that such employer will 
                                permit assistance eligible individuals 
                                to enroll in different coverage as 
                                provided for this subparagraph;
                                    (II) the premium for such different 
                                coverage does not exceed the premium 
                                for coverage in which the individual 
                                was enrolled at the time the qualifying 
                                event occurred;
                                    (III) the different coverage in 
                                which the individual elects to enroll 
                                is coverage that is also offered to the 
                                active employees of the employer at the 
                                time at which such election is made; 
                                and
                                    (IV) the different coverage is 
                                not--
                                            (aa) coverage that provides 
                                        only dental, vision, 
                                        counseling, or referral 
                                        services (or a combination of 
                                        such services);
                                            (bb) a health flexible 
                                        spending account or health 
                                        reimbursement arrangement; or
                                            (cc) coverage that provides 
                                        coverage for services or 
                                        treatments furnished in an on-
                                        site medical facility 
                                        maintained by the employer and 
                                        that consists primarily of 
                                        first-aid services, prevention 
                                        and wellness care, or similar 
                                        care (or a combination of such 
                                        care).
                    (C) Premium reimbursement.--For provisions 
                providing the balance of such premium, see section 6432 
                of the Internal Revenue Code of 1986, as added by 
                paragraph (12).
            (2) Limitation of period of premium assistance.--
                    (A) In general.--Paragraph (1)(A) shall not apply 
                with respect to any assistance eligible individual for 
                months of coverage beginning on or after the earlier 
                of--
                            (i) the first date that such individual is 
                        eligible for coverage under any other group 
                        health plan (other than coverage consisting of 
                        only dental, vision, counseling, or referral 
                        services (or a combination thereof), coverage 
                        under a health reimbursement arrangement or a 
                        health flexible spending arrangement, or 
                        coverage of treatment that is furnished in an 
                        on-site medical facility maintained by the 
                        employer and that consists primarily of first-
                        aid services, prevention and wellness care, or 
                        similar care (or a combination thereof)) or is 
                        eligible for benefits under title XVIII of the 
                        Social Security Act; or
                            (ii) the earliest of--
                                    (I) the date which is 9 months 
                                after the first day of first month that 
                                paragraph (1)(A) applies with respect 
                                to such individual,
                                    (II) the date following the 
                                expiration of the maximum period of 
                                continuation coverage required under 
                                the applicable COBRA continuation 
                                coverage provision, or
                                    (III) the date following the 
                                expiration of the period of 
                                continuation coverage allowed under 
                                paragraph (4)(B)(ii).
                    (B) Timing of eligibility for additional 
                coverage.--For purposes of subparagraph (A)(i), an 
                individual shall not be treated as eligible for 
                coverage under a group health plan before the first 
                date on which such individual could be covered under 
                such plan.
                    (C) Notification requirement.--An assistance 
                eligible individual shall notify in writing the group 
                health plan with respect to which paragraph (1)(A) 
                applies if such paragraph ceases to apply by reason of 
                subparagraph (A)(i). Such notice shall be provided to 
                the group health plan in such time and manner as may be 
                specified by the Secretary of Labor.
            (3) Assistance eligible individual.--For purposes of this 
        section, the term ``assistance eligible individual'' means any 
        qualified beneficiary if--
                    (A) at any time during the period that begins with 
                September 1, 2008, and ends with December 31, 2009, 
                such qualified beneficiary is eligible for COBRA 
                continuation coverage,
                    (B) such qualified beneficiary elects such 
                coverage, and
                    (C) the qualifying event with respect to the COBRA 
                continuation coverage consists of the involuntary 
                termination of the covered employee's employment and 
                occurred during such period.
            (4) Extension of election period and effect on coverage.--
                    (A) In general.--Notwithstanding section 605(a) of 
                the Employee Retirement Income Security Act of 1974, 
                section 4980B(f)(5)(A) of the Internal Revenue Code of 
                1986, section 2205(a) of the Public Health Service Act, 
                and section 8905a(c)(2) of title 5, United States Code, 
                in the case of an individual who is a qualified 
                beneficiary described in paragraph (3)(A) as of the 
                date of the enactment of this Act and has not made the 
                election referred to in paragraph (3)(B) as of such 
                date, such individual may elect the COBRA continuation 
                coverage under the COBRA continuation coverage 
                provisions containing such sections during the 60-day 
                period commencing with the date on which the 
                notification required under paragraph (7)(C) is 
                provided to such individual.
                    (B) Commencement of coverage; no reach-back.--Any 
                COBRA continuation coverage elected by a qualified 
                beneficiary during an extended election period under 
                subparagraph (A)--
                            (i) shall commence on the date of the 
                        enactment of this Act, and
                            (ii) shall not extend beyond the period of 
                        COBRA continuation coverage that would have 
                        been required under the applicable COBRA 
                        continuation coverage provision if the coverage 
                        had been elected as required under such 
                        provision.
                    (C) Preexisting conditions.--With respect to a 
                qualified beneficiary who elects COBRA continuation 
                coverage pursuant to subparagraph (A), the period--
                            (i) beginning on the date of the qualifying 
                        event, and
                            (ii) ending with the day before the date of 
                        the enactment of this Act,
                shall be disregarded for purposes of determining the 
                63-day periods referred to in section 701)(2) of the 
                Employee Retirement Income Security Act of 1974, 
                section 9801(c)(2) of the Internal Revenue Code of 
                1986, and section 2701(c)(2) of the Public Health 
                Service Act.
            (5) Expedited review of denials of premium assistance.--In 
        any case in which an individual requests treatment as an 
        assistance eligible individual and is denied such treatment by 
        the group health plan by reason of such individual's 
        ineligibility for COBRA continuation coverage, the Secretary of 
        Labor (or the Secretary of Health and Human services in 
        connection with COBRA continuation coverage which is provided 
        other than pursuant to part 6 of subtitle B of title I of the 
        Employee Retirement Income Security Act of 1974), in 
        consultation with the Secretary of the Treasury, shall provide 
        for expedited review of such denial. An individual shall be 
        entitled to such review upon application to such Secretary in 
        such form and manner as shall be provided by such Secretary. 
        Such Secretary shall make a determination regarding such 
        individual's eligibility within 10 business days after receipt 
        of such individual's application for review under this 
        paragraph.
            (6) Disregard of subsidies for purposes of federal and 
        state programs.--Notwithstanding any other provision of law, 
        any premium reduction with respect to an assistance eligible 
        individual under this subsection shall not be considered income 
        or resources in determining eligibility for, or the amount of 
        assistance or benefits provided under, any other public benefit 
        provided under Federal law or the law of any State or political 
        subdivision thereof.
            (7) Notices to individuals.--
                    (A) General notice.--
                            (i) In general.--In the case of notices 
                        provided under section 606(4) of the Employee 
                        Retirement Income Security Act of 1974 (29 
                        U.S.C. 1166(4)), section 4980B(f)(6)(D) of the 
                        Internal Revenue Code of 1986, section 2206(4) 
                        of the Public Health Service Act (42 U.S.C. 
                        300bb-6(4)), or section 8905a(f)(2)(A) of title 
                        5, United States Code, with respect to 
                        individuals who, during the period described in 
                        paragraph (3)(A), become entitled to elect 
                        COBRA continuation coverage, such notices shall 
                        include an additional notification to the 
                        recipient of--
                                    (I) the availability of premium 
                                reduction with respect to such coverage 
                                under this subsection; and
                                    (II) the option to enroll in 
                                different coverage if an employer that 
                                permits assistance eligible individuals 
                                to elect enrollment in different 
                                coverage (as described in paragraph 
                                (1)(B)).
                            (ii) Alternative notice.--In the case of 
                        COBRA continuation coverage to which the notice 
                        provision under such sections does not apply, 
                        the Secretary of Labor, in consultation with 
                        the Secretary of the Treasury and the Secretary 
                        of Health and Human Services, shall, in 
                        coordination with administrators of the group 
                        health plans (or other entities) that provide 
                        or administer the COBRA continuation coverage 
                        involved, provide rules requiring the provision 
                        of such notice.
                            (iii) Form.--The requirement of the 
                        additional notification under this subparagraph 
                        may be met by amendment of existing notice 
                        forms or by inclusion of a separate document 
                        with the notice otherwise required.
                    (B) Specific requirements.--Each additional 
                notification under subparagraph (A) shall include--
                            (i) the forms necessary for establishing 
                        eligibility for premium reduction under this 
                        subsection,
                            (ii) the name, address, and telephone 
                        number necessary to contact the plan 
                        administrator and any other person maintaining 
                        relevant information in connection with such 
                        premium reduction,
                            (iii) a description of the extended 
                        election period provided for in paragraph 
                        (4)(A),
                            (iv) a description of the obligation of the 
                        qualified beneficiary under paragraph (2)(C) to 
                        notify the plan providing continuation coverage 
                        of eligibility for subsequent coverage under 
                        another group health plan or eligibility for 
                        benefits under title XVIII of the Social 
                        Security Act and the penalty provided for 
                        failure to so notify the plan,
                            (v) a description, displayed in a prominent 
                        manner, of the qualified beneficiary's right to 
                        a reduced premium and any conditions on 
                        entitlement to the reduced premium; and
                            (vi) a description of the option of the 
                        qualified beneficiary to enroll in different 
                        coverage if the employer permits such 
                        beneficiary to elect to enroll in such 
                        different coverage under paragraph (1)(B).
                    (C) Notice relating to retroactive coverage.--In 
                the case of an individual described in paragraph (3)(A) 
                who has elected COBRA continuation coverage as of the 
                date of enactment of this Act or an individual 
                described in paragraph (4)(A), the administrator of the 
                group health plan (or other person) involved shall 
                provide (within 60 days after the date of enactment of 
                this Act) for the additional notification required to 
                be provided under subparagraph (A).
                    (D) Model notices.--Not later than 30 days after 
                the date of enactment of this Act, the Secretary of the 
                Labor, in consultation with the Secretary of the 
                Treasury and the Secretary of Health and Human 
                Services, shall prescribe models for the additional 
                notification required under this paragraph.
            (8) Safeguards.--The Secretary of the Treasury shall 
        provide such rules, procedures, regulations, and other guidance 
        as may be necessary and appropriate to prevent fraud and abuse 
        under this subsection.
            (9) Outreach.--The Secretary of Labor, in consultation with 
        the Secretary of the Treasury and the Secretary of Health and 
        Human Services, shall provide outreach consisting of public 
        education and enrollment assistance relating to premium 
        reduction provided under this subsection. Such outreach shall 
        target employers, group health plan administrators, public 
        assistance programs, States, insurers, and other entities as 
        determined appropriate by such Secretaries. Such outreach shall 
        include an initial focus on those individuals electing 
        continuation coverage who are referred to in paragraph (7)(C). 
        Information on such premium reduction, including enrollment, 
        shall also be made available on website of the Departments of 
        Labor, Treasury, and Health and Human Services.
            (10) Definitions.--For purposes of this subsection--
                    (A) Administrator.--The term ``administrator'' has 
                the meaning given such term in section 3(16) of the 
                Employee Retirement Income Security Act of 1974.
                    (B) COBRA continuation coverage.--The term ``COBRA 
                continuation coverage'' means continuation coverage 
                provided pursuant to part 6 of subtitle B of title I of 
                the Employee Retirement Income Security Act of 1974 
                (other than under section 609), title XXII of the 
                Public Health Service Act, section 4980B of the 
                Internal Revenue Code of 1986 (other than subsection 
                (f)(1) of such section insofar as it relates to 
                pediatric vaccines), or section 8905a of title 5, 
                United States Code, or under a State program that 
                provides continuation coverage comparable to such 
                continuation coverage. Such term does not include 
                coverage under a health flexible spending arrangement.
                    (C) COBRA continuation provision.--The term ``COBRA 
                continuation provision'' means the provisions of law 
                described in subparagraph (B).
                    (D) Covered employee.--The term ``covered 
                employee'' has the meaning given such term in section 
                607(2) of the Employee Retirement Income Security Act 
                of 1974.
                    (E) Qualified beneficiary.--The term ``qualified 
                beneficiary'' has the meaning given such term in 
                section 607(3) of the Employee Retirement Income 
                Security Act of 1974.
                    (F) Group health plan.--The term ``group health 
                plan'' has the meaning given such term in section 
                607(1) of the Employee Retirement Income Security Act 
                of 1974.
                    (G) State.--The term ``State'' includes the 
                District of Columbia, the Commonwealth of Puerto Rico, 
                the Virgin Islands, Guam, American Samoa, and the 
                Commonwealth of the Northern Mariana Islands.
            (11) Reports.--
                    (A) Interim report.--The Secretary of the Treasury 
                shall submit an interim report to the Committee on 
                Education and Labor, the Committee on Ways and Means, 
                and the Committee on Energy and Commerce of the House 
                of Representatives and the Committee on Health, 
                Education, Labor, and Pensions and the Committee on 
                Finance of the Senate regarding the premium reduction 
                provided under this subsection that includes--
                            (i) the number of individuals provided such 
                        assistance as of the date of the report; and
                            (ii) the total amount of expenditures 
                        incurred (with administrative expenditures 
                        noted separately) in connection with such 
                        assistance as of the date of the report.
                    (B) Final report.--As soon as practicable after the 
                last period of COBRA continuation coverage for which 
                premium reduction is provided under this section, the 
                Secretary of the Treasury shall submit a final report 
                to each Committee referred to in subparagraph (A) that 
                includes--
                            (i) the number of individuals provided 
                        premium reduction under this section;
                            (ii) the average dollar amount (monthly and 
                        annually) of premium reductions provided to 
                        such individuals; and
                            (iii) the total amount of expenditures 
                        incurred (with administrative expenditures 
                        noted separately) in connection with premium 
                        reduction under this section.
            (12) COBRA premium assistance.--
                    (A) In general.--Subchapter B of chapter 65 of the 
                Internal Revenue Code of 1986 is amended by adding at 
                the end the following new section:

``SEC. 6432. COBRA PREMIUM ASSISTANCE.

    ``(a) In General.--The person to whom premiums are payable under 
COBRA continuation coverage shall be reimbursed for the amount of 
premiums not paid by plan beneficiaries by reason of section 3001(b) of 
the American Recovery and Reinvestment Act of 2009. Such amount shall 
be treated as a credit against the requirement of such person to make 
deposits of payroll taxes and the liability of such person for payroll 
taxes. To the extent that such amount exceeds the amount of such taxes, 
the Secretary shall pay to such person the amount of such excess. No 
payment may be made under this subsection to a person with respect to 
any assistance eligible individual until after such person has received 
the reduced premium from such individual required under section 
3001(a)(1)(A) of such Act.
    ``(b) Payroll Taxes.--For purposes of this section, the term 
`payroll taxes' means--
            ``(1) amounts required to be deducted and withheld for the 
        payroll period under section 3401 (relating to wage 
        withholding),
            ``(2) amounts required to be deducted for the payroll 
        period under section 3102 (relating to FICA employee taxes), 
        and
            ``(3) amounts of the taxes imposed for the payroll period 
        under section 3111 (relating to FICA employer taxes).
    ``(c) Treatment of Credit.--Except as otherwise provided by the 
Secretary, the credit described in subsection (a) shall be applied as 
though the employer had paid to the Secretary, on the day that the 
qualified beneficiary's premium payment is received, an amount equal to 
such credit.
    ``(d) Treatment of Payment.--For purposes of section 1324(b)(2) of 
title 31, United States Code, any payment under this subsection shall 
be treated in the same manner as a refund of the credit under section 
35.
    ``(e) Reporting.--
            ``(1) In general.--Each person entitled to reimbursement 
        under subsection (a) for any period shall submit such reports 
        as the Secretary may require, including--
                    ``(A) an attestation of involuntary termination of 
                employment for each covered employee on the basis of 
                whose termination entitlement to reimbursement is 
                claimed under subsection (a), and
                    ``(B) a report of the amount of payroll taxes 
                offset under subsection (a) for the reporting period 
                and the estimated offsets of such taxes for the 
                subsequent reporting period in connection with 
                reimbursements under subsection (a).
            ``(2) Timing of reports relating to amount of payroll 
        taxes.--Reports required under paragraph (1)(B) shall be 
        submitted at the same time as deposits of taxes imposed by 
        chapters 21, 22, and 24 or at such time as is specified by the 
        Secretary.
    ``(f) Regulations.--The Secretary may issue such regulations or 
other guidance as may be necessary or appropriate to carry out this 
section, including the requirement to report information or the 
establishment of other methods for verifying the correct amounts of 
payments and credits under this section, and the application of this 
section to group health plans which are multiemployer plans.''.
                    (B) Social security trust funds held harmless.--In 
                determining any amount transferred or appropriated to 
                any fund under the Social Security Act, section 6432 of 
                the Internal Revenue Code of 1986 shall not be taken 
                into account.
                    (C) Clerical amendment.--The table of sections for 
                subchapter B of chapter 65 of the Internal Revenue Code 
                of 1986 is amended by adding at the end the following 
                new item:

``Sec. 6432. COBRA premium assistance.''.
                    (D) Effective date.--The amendments made by this 
                paragraph shall apply to premiums to which subsection 
                (a)(1)(A) applies.
                    (E) Special rule.--
                            (i) In general.--In the case of an 
                        assistance eligible individual who pays the 
                        full premium amount required for COBRA 
                        continuation coverage for any month during the 
                        60-day period beginning on the first day of the 
                        first month after the date of enactment of this 
                        Act, the person to whom such payment is made 
                        shall--
                                    (I) make a reimbursement payment to 
                                such individual for the amount of such 
                                premium paid in excess of the amount 
                                required to be paid under subsection 
                                (b)(1)(A); or
                                    (II) provide credit to the 
                                individual for such amount in a manner 
                                that reduces one or more subsequent 
                                premium payments that the individual is 
                                required to pay under such subsection 
                                for the coverage involved.
                            (ii) Reimbursing employer.--A person to 
                        which clause (i) applies shall be reimbursed as 
                        provided for in section 6432 of the Internal 
                        Revenue Code of 1986 for any payment made, or 
                        credit provided, to the employee under such 
                        clause.
                            (iii) Payment or credits.--Unless it is 
                        reasonable to believe that the credit for the 
                        excess payment in clause (i)(II) will be used 
                        by the assistance eligible individual within 
                        180 days of the date on which the person 
                        receives from the individual the payment of the 
                        full premium amount, a person to which clause 
                        (i) applies shall make the payment required 
                        under such clause to the individual within 60 
                        days of such payment of the full premium 
                        amount. If, as of any day within the 180-day 
                        period, it is no longer reasonable to believe 
                        that the credit will be used during that 
                        period, payment equal to the remainder of the 
                        credit outstanding shall be made to the 
                        individual within 60 days of such day.
            (13) Penalty for failure to notify health plan of cessation 
        of eligibility for premium assistance.--
                    (A) In general.--Part I of subchapter B of chapter 
                68 of the Internal Revenue Code of 1986 is amended by 
                adding at the end the following new section:

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

    ``(a) In General.--Any person required to notify a group health 
plan under section 3001(a)(2)(C) of the American Recovery and 
Reinvestment Act of 2009 who fails to make such a notification at such 
time and in such manner as the Secretary of Labor may require shall pay 
a penalty of 110 percent of the premium reduction provided under such 
section after termination of eligibility under such subsection.
    ``(b) Reasonable Cause Exception.--No penalty shall be imposed 
under subsection (a) with respect to any failure if it is shown that 
such failure is due to reasonable cause and not to willful neglect.''.
                    (B) Clerical amendment.--The table of sections of 
                part I of subchapter B of chapter 68 of such Code is 
                amended by adding at the end the following new item:

``Sec. 6720C. Penalty for failure to notify health plan of cessation of 
                            eligibility for COBRA premium 
                            assistance.''.
                    (C) Effective date.--The amendments made by this 
                paragraph shall apply to failures occurring after the 
                date of the enactment of this Act.
            (14) Coordination with hctc.--
                    (A) In general.--Subsection (g) of section 35 of 
                the Internal Revenue Code of 1986 is amended by 
                redesignating paragraph (9) as paragraph (10) and 
                inserting after paragraph (8) the following new 
                paragraph:
            ``(9) COBRA premium assistance.--In the case of an 
        assistance eligible individual who receives premium reduction 
        for COBRA continuation coverage under section 3001(a) of the 
        American Recovery and Reinvestment Act of 2009 for any month 
        during the taxable year, such individual shall not be treated 
        as an eligible individual, a certified individual, or a 
        qualifying family member for purposes of this section or 
        section 7527 with respect to such month.''.
                    (B) Effective date.--The amendment made by 
                subparagraph (A) shall apply to taxable years ending 
                after the date of the enactment of this Act.
            (15) Exclusion of cobra premium assistance from gross 
        income.--
                    (A) In general.--Part III of subchapter B of 
                chapter 1 of the Internal Revenue Code of 1986 is 
                amended by inserting after section 139B the following 
                new section:

``SEC. 139C. COBRA PREMIUM ASSISTANCE.

    ``In the case of an assistance eligible individual (as defined in 
section 3001 of the American Recovery and Reinvestment Act of 2009), 
gross income does not include any premium reduction provided under 
subsection (a) of such section.''.
                    (B) Clerical amendment.--The table of sections for 
                part III of subchapter B of chapter 1 of such Code is 
                amended by inserting after the item relating to section 
                139B the following new item:

``Sec. 139C. COBRA premium assistance.''.
                    (C) Effective date.--The amendments made by this 
                paragraph shall apply to taxable years ending after the 
                date of the enactment of this Act.

           Subtitle B--Transitional Medical Assistance (TMA)

SEC. 3101. EXTENSION OF TRANSITIONAL MEDICAL ASSISTANCE (TMA).

    (a) 18-Month Extension.--
            (1) In general.--Sections 1902(e)(1)(B) and 1925(f) of the 
        Social Security Act (42 U.S.C. 1396a(e)(1)(B), 1396r-6(f)) are 
        each amended by striking ``September 30, 2003'' and inserting 
        ``December 31, 2010''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect on July 1, 2009.
    (b) State Option of Initial 12-Month Eligibility.--Section 1925 of 
the Social Security Act (42 U.S.C. 1396r-6) is amended--
            (1) in subsection (a)(1), by inserting ``but subject to 
        paragraph (5)'' after ``Notwithstanding any other provision of 
        this title'';
            (2) by adding at the end of subsection (a) the following:
            ``(5) Option of 12-month initial eligibility period.--A 
        State may elect to treat any reference in this subsection to a 
        6-month period (or 6 months) as a reference to a 12-month 
        period (or 12 months). In the case of such an election, 
        subsection (b) shall not apply.''; and
            (3) in subsection (b)(1), by inserting ``but subject to 
        subsection (a)(5)'' after ``Notwithstanding any other provision 
        of this title''.
    (c) Removal of Requirement for Previous Receipt of Medical 
Assistance.--Section 1925(a)(1) of such Act (42 U.S.C. 1396r-6(a)(1)), 
as amended by subsection (b)(1), is further amended--
            (1) by inserting ``subparagraph (B) and'' before 
        ``paragraph (5)'';
            (2) by redesignating the matter after ``Requirement.--'' as 
        a subparagraph (A) with the heading ``In general.--'' and with 
        the same indentation as subparagraph (B) (as added by paragraph 
        (3)); and
            (3) by adding at the end the following:
                    ``(B) State option to waive requirement for 3 
                months before receipt of medical assistance.--A State 
                may, at its option, elect also to apply subparagraph 
                (A) in the case of a family that was receiving such aid 
                for fewer than three months or that had applied for and 
                was eligible for such aid for fewer than 3 months 
                during the 6 immediately preceding months described in 
                such subparagraph.''.
    (d) CMS Report on Enrollment and Participation Rates Under TMA.--
Section 1925 of such Act (42 U.S.C. 1396r-6), as amended by this 
section, is further amended by adding at the end the following new 
subsection:
    ``(g) Collection and Reporting of Participation Information.--
            ``(1) Collection of information from states.--Each State 
        shall collect and submit to the Secretary (and make publicly 
        available), in a format specified by the Secretary, information 
        on average monthly enrollment and average monthly participation 
        rates for adults and children under this section and of the 
        number and percentage of children who become ineligible for 
        medical assistance under this section whose medical assistance 
        is continued under another eligibility category or who are 
        enrolled under the State's child health plan under title XXI. 
        Such information shall be submitted at the same time and 
        frequency in which other enrollment information under this 
        title is submitted to the Secretary.
            ``(2) Annual reports to congress.--Using the information 
        submitted under paragraph (1), the Secretary shall submit to 
        Congress annual reports concerning enrollment and participation 
        rates described in such paragraph.''.
    (e) Effective Date.--The amendments made by subsections (b) through 
(d) shall take effect on July 1, 2009.

     Subtitle C--Extension of the Qualified Individual (QI) Program

SEC. 3201. EXTENSION OF THE QUALIFYING INDIVIDUAL (QI) PROGRAM.

    (a) Extension.--Section 1902(a)(10)(E)(iv) of the Social Security 
Act (42 U.S.C. 1396a(a)(10)(E)(iv)) is amended by striking ``December 
2009'' and inserting ``December 2010''.
    (b) Extending Total Amount Available for Allocation.--Section 
1933(g) of such Act (42 U.S.C. 1396u-3(g)) is amended--
            (1) in paragraph (2)--
                    (A) by striking ``and'' at the end of subparagraph 
                (K);
                    (B) in subparagraph (L), by striking the period at 
                the end and inserting a semicolon; and
                    (C) by adding at the end the following new 
                subparagraphs:
                    ``(M) for the period that begins on January 1, 
                2010, and ends on September 30, 2010, the total 
                allocation amount is $412,500,000; and
                    ``(N) for the period that begins on October 1, 
                2010, and ends on December 31, 2010, the total 
                allocation amount is $150,000,000.''; and
            (2) in paragraph (3), in the matter preceding subparagraph 
        (A), by striking ``or (L)'' and inserting ``(L), or (N)''.

                      Subtitle D--Other Provisions

SEC. 3301. PREMIUMS AND COST SHARING PROTECTIONS UNDER MEDICAID, 
              ELIGIBILITY DETERMINATIONS UNDER MEDICAID AND CHIP, AND 
              PROTECTION OF CERTAIN INDIAN PROPERTY FROM MEDICAID 
              ESTATE RECOVERY.

    (a) Premiums and Cost Sharing Protection Under Medicaid.--
            (1) In general.--Section 1916 of the Social Security Act 
        (42 U.S.C. 1396o) is amended--
                    (A) in subsection (a), in the matter preceding 
                paragraph (1), by striking ``and (i)'' and inserting 
                ``, (i), and (j)''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(j) No Premiums or Cost Sharing for Indians Furnished Items or 
Services Directly by Indian Health Programs or Through Referral Under 
Contract Health Services.--
            ``(1) No cost sharing for items or services furnished to 
        indians through indian health programs.--
                    ``(A) In general.--No enrollment fee, premium, or 
                similar charge, and no deduction, copayment, cost 
                sharing, or similar charge shall be imposed against an 
                Indian who is furnished an item or service directly by 
                the Indian Health Service, an Indian Tribe, Tribal 
                Organization, or Urban Indian Organization or through 
                referral under contract health services for which 
                payment may be made under this title.
                    ``(B) No reduction in amount of payment to indian 
                health providers.--Payment due under this title to the 
                Indian Health Service, an Indian Tribe, Tribal 
                Organization, or Urban Indian Organization, or a health 
                care provider through referral under contract health 
                services for the furnishing of an item or service to an 
                Indian who is eligible for assistance under such title, 
                may not be reduced by the amount of any enrollment fee, 
                premium, or similar charge, or any deduction, 
                copayment, cost sharing, or similar charge that would 
                be due from the Indian but for the operation of 
                subparagraph (A).
            ``(2) Rule of construction.--Nothing in this subsection 
        shall be construed as restricting the application of any other 
        limitations on the imposition of premiums or cost sharing that 
        may apply to an individual receiving medical assistance under 
        this title who is an Indian.''.
            (2) Conforming amendment.--Section 1916A(b)(3) of such Act 
        (42 U.S.C. 1396o-1(b)(3)) is amended--
                    (A) in subparagraph (A), by adding at the end the 
                following new clause:
                            ``(vi) An Indian who is furnished an item 
                        or service directly by the Indian Health 
                        Service, an Indian Tribe, Tribal Organization 
                        or Urban Indian Organization or through 
                        referral under contract health services.''; and
                    (B) in subparagraph (B), by adding at the end the 
                following new clause:
                            ``(ix) Items and services furnished to an 
                        Indian directly by the Indian Health Service, 
                        an Indian Tribe, Tribal Organization or Urban 
                        Indian Organization or through referral under 
                        contract health services.''.
    (b) Treatment of Certain Property From Resources for Medicaid and 
CHIP Eligibility.--
            (1) Medicaid.--Section 1902 of the Social Security Act (42 
        U.S.C. 1396a) is amended by adding at the end the following new 
        subsection:
    ``(dd) Notwithstanding any other requirement of this title or any 
other provision of Federal or State law, a State shall disregard the 
following property from resources for purposes of determining the 
eligibility of an individual who is an Indian for medical assistance 
under this title:
            ``(1) Property, including real property and improvements, 
        that is held in trust, subject to Federal restrictions, or 
        otherwise under the supervision of the Secretary of the 
        Interior, located on a reservation, including any federally 
        recognized Indian Tribe's reservation, pueblo, or colony, 
        including former reservations in Oklahoma, Alaska Native 
        regions established by the Alaska Native Claims Settlement Act, 
        and Indian allotments on or near a reservation as designated 
        and approved by the Bureau of Indian Affairs of the Department 
        of the Interior.
            ``(2) For any federally recognized Tribe not described in 
        paragraph (1), property located within the most recent 
        boundaries of a prior Federal reservation.
            ``(3) Ownership interests in rents, leases, royalties, or 
        usage rights related to natural resources (including extraction 
        of natural resources or harvesting of timber, other plants and 
        plant products, animals, fish, and shellfish) resulting from 
        the exercise of federally protected rights.
            ``(4) Ownership interests in or usage rights to items not 
        covered by paragraphs (1) through (3) that have unique 
        religious, spiritual, traditional, or cultural significance or 
        rights that support subsistence or a traditional lifestyle 
        according to applicable tribal law or custom.''.
            (2) Application to chip.--Section 2107(e)(1) of such Act 
        (42 U.S.C. 1397gg(e)(1)) is amended--
                    (A) by redesignating subparagraphs (B) through (E), 
                as subparagraphs (C) through (F), respectively; and
                    (B) by inserting after subparagraph (A), the 
                following new subparagraph:
                    ``(B) Section 1902(dd) (relating to disregard of 
                certain property for purposes of making eligibility 
                determinations).''.
    (c) Continuation of Current Law Protections of Certain Indian 
Property From Medicaid Estate Recovery.--Section 1917(b)(3) of the 
Social Security Act (42 U.S.C. 1396p(b)(3)) is amended--
            (1) by inserting ``(A)'' after ``(3)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(B) The standards specified by the Secretary 
                under subparagraph (A) shall require that the 
                procedures established by the State agency under 
                subparagraph (A) exempt income, resources, and property 
                that are exempt from the application of this subsection 
                as of April 1, 2003, under manual instructions issued 
                to carry out this subsection (as in effect on such 
                date) because of the Federal responsibility for Indian 
                Tribes and Alaska Native Villages. Nothing in this 
                subparagraph shall be construed as preventing the 
                Secretary from providing additional estate recovery 
                exemptions under this title for Indians.''.

SEC. 3302. RULES APPLICABLE UNDER MEDICAID AND CHIP TO MANAGED CARE 
              ENTITIES WITH RESPECT TO INDIAN ENROLLEES AND INDIAN 
              HEALTH CARE PROVIDERS AND INDIAN MANAGED CARE ENTITIES.

    (a) In General.--Section 1932 of the Social Security Act (42 U.S.C. 
1396u-2) is amended by adding at the end the following new subsection:
    ``(h) Special Rules With Respect to Indian Enrollees, Indian Health 
Care Providers, and Indian Managed Care Entities.--
            ``(1) Enrollee option to select an indian health care 
        provider as primary care provider.--In the case of a non-Indian 
        Medicaid managed care entity that--
                    ``(A) has an Indian enrolled with the entity; and
                    ``(B) has an Indian health care provider that is 
                participating as a primary care provider within the 
                network of the entity,
        insofar as the Indian is otherwise eligible to receive services 
        from such Indian health care provider and the Indian health 
        care provider has the capacity to provide primary care services 
        to such Indian, the contract with the entity under section 
        1903(m) or under section 1905(t)(3) shall require, as a 
        condition of receiving payment under such contract, that the 
        Indian shall be allowed to choose such Indian health care 
        provider as the Indian's primary care provider under the 
        entity.
            ``(2) Assurance of payment to indian health care providers 
        for provision of covered services.--Each contract with a 
        managed care entity under section 1903(m) or under section 
        1905(t)(3) shall require any such entity, as a condition of 
        receiving payment under such contract, to satisfy the following 
        requirements:
                    ``(A) Demonstration of access to indian health care 
                providers and application of alternative payment 
                arrangements.--Subject to subparagraph (C), to--
                            ``(i) demonstrate that the number of Indian 
                        health care providers that are participating 
                        providers with respect to such entity are 
                        sufficient to ensure timely access to covered 
                        Medicaid managed care services for those Indian 
                        enrollees who are eligible to receive services 
                        from such providers; and
                            ``(ii) agree to pay Indian health care 
                        providers, whether such providers are 
                        participating or nonparticipating providers 
                        with respect to the entity, for covered 
                        Medicaid managed care services provided to 
                        those Indian enrollees who are eligible to 
                        receive services from such providers at a rate 
                        equal to the rate negotiated between such 
                        entity and the provider involved or, if such a 
                        rate has not been negotiated, at a rate that is 
                        not less than the level and amount of payment 
                        which the entity would make for the services if 
                        the services were furnished by a participating 
                        provider which is not an Indian health care 
                        provider.
                    ``(B) Prompt payment.--To agree to make prompt 
                payment (consistent with rule for prompt payment of 
                providers under section 1932(f)) to Indian health care 
                providers that are participating providers with respect 
                to such entity or, in the case of an entity to which 
                subparagraph (A)(ii) or (C) applies, that the entity is 
                required to pay in accordance with that subparagraph.
                    ``(C) Application of special payment requirements 
                for federally-qualified health centers and for services 
                provided by certain indian health care providers.--
                            ``(i) Federally-qualified health centers.--
                                    ``(I) Managed care entity payment 
                                requirement.--To agree to pay any 
                                Indian health care provider that is a 
                                federally-qualified health center under 
                                this title but not a participating 
                                provider with respect to the entity, 
                                for the provision of covered Medicaid 
                                managed care services by such provider 
                                to an Indian enrollee of the entity at 
                                a rate equal to the amount of payment 
                                that the entity would pay a federally-
                                qualified health center that is a 
                                participating provider with respect to 
                                the entity but is not an Indian health 
                                care provider for such services.
                                    ``(II) Continued application of 
                                state requirement to make supplemental 
                                payment.--Nothing in subclause (I) or 
                                subparagraph (A) or (B) shall be 
                                construed as waiving the application of 
                                section 1902(bb)(5) regarding the State 
                                plan requirement to make any 
                                supplemental payment due under such 
                                section to a federally-qualified health 
                                center for services furnished by such 
                                center to an enrollee of a managed care 
                                entity (regardless of whether the 
                                federally-qualified health center is or 
                                is not a participating provider with 
                                the entity).
                            ``(ii) Payment rate for services provided 
                        by certain indian health care providers.--If 
                        the amount paid by a managed care entity to an 
                        Indian health care provider that is not a 
                        federally-qualified health center for services 
                        provided by the provider to an Indian enrollee 
                        with the managed care entity is less than the 
                        rate that applies to the provision of such 
                        services by the provider under the State plan, 
                        the plan shall provide for payment to the 
                        Indian health care provider, whether the 
                        provider is a participating or nonparticipating 
                        provider with respect to the entity, of the 
                        difference between such applicable rate and the 
                        amount paid by the managed care entity to the 
                        provider for such services.
                    ``(D) Construction.--Nothing in this paragraph 
                shall be construed as waiving the application of 
                section 1902(a)(30)(A) (relating to application of 
                standards to assure that payments are consistent with 
                efficiency, economy, and quality of care).
            ``(3) Special rule for enrollment for indian managed care 
        entities.--Regarding the application of a Medicaid managed care 
        program to Indian Medicaid managed care entities, an Indian 
        Medicaid managed care entity may restrict enrollment under such 
        program to Indians and to members of specific Tribes in the 
        same manner as Indian Health Programs may restrict the delivery 
        of services to such Indians and tribal members.
            ``(4) Definitions.--For purposes of this subsection:
                    ``(A) Indian health care provider.--The term 
                `Indian health care provider' means an Indian Health 
                Program or an Urban Indian Organization.
                    ``(B) Indian medicaid managed care entity.--The 
                term `Indian Medicaid managed care entity' means a 
                managed care entity that is controlled (within the 
                meaning of the last sentence of section 1903(m)(1)(C)) 
                by the Indian Health Service, a Tribe, Tribal 
                Organization, or Urban Indian Organization, or a 
                consortium, which may be composed of 1 or more Tribes, 
                Tribal Organizations, or Urban Indian Organizations, 
                and which also may include the Service.
                    ``(C) Non-indian medicaid managed care entity.--The 
                term `non-Indian Medicaid managed care entity' means a 
                managed care entity that is not an Indian Medicaid 
                managed care entity.
                    ``(D) Covered medicaid managed care services.--The 
                term `covered Medicaid managed care services' means, 
                with respect to an individual enrolled with a managed 
                care entity, items and services for which benefits are 
                available with respect to the individual under the 
                contract between the entity and the State involved.
                    ``(E) Medicaid managed care program.--The term 
                `Medicaid managed care program' means a program under 
                sections 1903(m), 1905(t), and 1932 and includes a 
                managed care program operating under a waiver under 
                section 1915(b) or 1115 or otherwise.''.
    (b) Application to CHIP.--Subject to section _013(d), section 
2107(e)(1) of such Act (42 U.S.C. 1397gg(1)) is amended by adding at 
the end the following new subparagraph:
                    ``(E) Subsections (a)(2)(C) and (h) of section 
                1932.''.

SEC. 3303. CONSULTATION ON MEDICAID, CHIP, AND OTHER HEALTH CARE 
              PROGRAMS FUNDED UNDER THE SOCIAL SECURITY ACT INVOLVING 
              INDIAN HEALTH PROGRAMS AND URBAN INDIAN ORGANIZATIONS.

    (a) Consultation With Tribal Technical Advisory Group (TTAG).--The 
Secretary of Health and Human Services shall maintain within the 
Centers for Medicaid & Medicare Services (CMS) a Tribal Technical 
Advisory Group (TTAG), which was first established in accordance with 
requirements of the charter dated September 30, 2003, and the Secretary 
of Health and Human Services shall include in such Group a 
representative of a national urban Indian health organization and a 
representative of the Indian Health Service. The inclusion of a 
representative of a national urban Indian health organization in such 
Group shall not affect the nonapplication of the Federal Advisory 
Committee Act (5 U.S.C. App.) to such Group.
    (b) Solicitation of Advice Under Medicaid and CHIP.--
            (1) Medicaid state plan amendment.--Subject to subsection 
        (d), section 1902(a) of the Social Security Act (42 U.S.C. 
        1396a(a)) is amended--
                    (A) in paragraph (70), by striking ``and'' at the 
                end;
                    (B) in paragraph (71), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by inserting after paragraph (71), the 
                following new paragraph:
            ``(72) in the case of any State in which 1 or more Indian 
        Health Programs or Urban Indian Organizations furnishes health 
        care services, provide for a process under which the State 
        seeks advice on a regular, ongoing basis from designees of such 
        Indian Health Programs and Urban Indian Organizations on 
        matters relating to the application of this title that are 
        likely to have a direct effect on such Indian Health Programs 
        and Urban Indian Organizations and that--
                    ``(A) shall include solicitation of advice prior to 
                submission of any plan amendments, waiver requests, and 
                proposals for demonstration projects likely to have a 
                direct effect on Indians, Indian Health Programs, or 
                Urban Indian Organizations; and
                    ``(B) may include appointment of an advisory 
                committee and of a designee of such Indian Health 
                Programs and Urban Indian Organizations to the medical 
                care advisory committee advising the State on its State 
                plan under this title.''.
            (2) Application to chip.--Subject to subsection (d), 
        section 2107(e)(1) of such Act (42 U.S.C. 1397gg(e)(1)), as 
        amended by section 3302(b)(2), is amended--
                    (A) by redesignating subparagraphs (B) through (E) 
                as subparagraphs (C) through (F), respectively; and
                    (B) by inserting after subparagraph (A), the 
                following new subparagraph:
                    ``(B) Section 1902(a)(72) (relating to requiring 
                certain States to seek advice from designees of Indian 
                Health Programs and Urban Indian Organizations).''.
    (c) Rule of Construction.--Nothing in the amendments made by this 
section shall be construed as superseding existing advisory committees, 
working groups, guidance, or other advisory procedures established by 
the Secretary of Health and Human Services or by any State with respect 
to the provision of health care to Indians.
    (d) Contingency Rule.--If the Children's Health Insurance Program 
Reauthorization Act of 2009 (in this subsection referred to as 
``CHIPRA'') has been enacted as of the date of enactment of this Act, 
the following shall apply:
            (1) Subparagraph (I) of section 2107(e) of the Social 
        Security Act (as redesignated by CHIPRA) is redesignated as 
        subparagraph (K) and the subparagraph (E) added to section 
        2107(e) of the Social Security Act by section _013(b) is 
        redesignated as subparagraph (J).
            (2) Subparagraphs (D) through (H) of section 2107(e) of the 
        Social Security Act (as added and redesignated by CHIPRA) are 
        redesignated as subparagraphs (E) through (I), respectively and 
        the subparagraph (B) of section 2107(e) of the Social Security 
        Act added by subsection (b)(2) of this section is redesignated 
        as subparagraph (D) and amended by striking ``1902(a)(72)'' and 
        inserting ``1902(a)(73)''.
            (3) Section 1902(a) of the Social Security Act (as amended 
        by CHIPRA) is amended by striking ``and'' at the end of 
        paragraph (71), by striking the period at the end of the 
        paragraph (72) added by CHIPRA and inserting ``; and'' and by 
        redesignated the paragraph (72) added to such section by 
        subsection (b)(1) of this section as paragraph (73).

SEC. 3304. APPLICATION OF PROMPT PAY REQUIREMENTS TO NURSING 
              FACILITIES.

    Section 1902(a)(37)(A) of the Social Security Act (42 U.S.C. 
1396a(a)(37)(A)) is amended by inserting ``, or by nursing 
facilities,'' after ``health facilities''

SEC. 3305. PERIOD OF APPLICATION; SUNSET.

    This subtitle and the amendments made by this subtitle shall be in 
effect only during the period that begins on April 1, 2009, and ends on 
December 31, 2010. On and after January 1, 2011, the Social Security 
Act shall be applied as if this subtitle and the amendments made by 
this subtitle had not been enacted.

                TITLE IV--HEALTH INFORMATION TECHNOLOGY

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

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

                TITLE IV--HEALTH INFORMATION TECHNOLOGY

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

Sec. 4101. ONCHIT; standards development and adoption.
        ``Sec. 3000. Definitions.
        ``Sec. 3001. Office of the National Coordinator for Health 
                            Information Technology.
        ``Sec. 3002. HIT Policy Committee.
        ``Sec. 3003. HIT Standards Committee.
        ``Sec. 3004. Process for adoption of endorsed recommendations; 
                            adoption of initial set of standards, 
                            implementation specifications, and 
                            certification criteria.
        ``Sec. 3005. Transitions.
  Subtitle B--Incentives for the Use of Health Information Technology

                        PART I--Medicare Program

Sec. 4201. Incentives for eligible professionals.
Sec. 4202. Incentives for hospitals.
Sec. 4203. Premium hold harmless and implementation funding.
Sec. 4204. Non-application of phased-out indirect medical education 
                            (IME) adjustment factor for fiscal year 
                            2009.
Sec. 4205. Study on application of EHR payment incentives for providers 
                            not receiving other incentive payments.
Sec. 4206. Study on availability of open source health information 
                            technology systems.
                       PART II--Medicaid Funding

Sec. 4211. Medicaid provider EHR adoption and operation payments; 
                            implementation funding.

         Subtitle A--Promotion of Health Information Technology

SEC. 4101. ONCHIT; STANDARDS DEVELOPMENT AND ADOPTION.

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

         ``TITLE XXX--HEALTH INFORMATION TECHNOLOGY AND QUALITY

``SEC. 3000. DEFINITIONS.

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

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

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

``SEC. 3002. HIT POLICY COMMITTEE.

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

``SEC. 3003. HIT STANDARDS COMMITTEE.

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

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

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

``SEC. 3005. TRANSITIONS.

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

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

                        PART I--MEDICARE PROGRAM

SEC. 4201. INCENTIVES FOR ELIGIBLE PROFESSIONALS.

    (a) Incentive Payments.--Section 1848 of the Social Security Act 
(42 U.S.C. 1395w-4) is amended by adding at the end the following new 
subsection:
    ``(o) Incentives for Adoption and Meaningful Use of Certified EHR 
Technology.--
            ``(1) Incentive payments.--
                    ``(A) In general.--
                            ``(i) In general.--Subject to clause (ii) 
                        and the succeeding subparagraphs of this 
                        paragraph, with respect to covered professional 
                        services furnished by an eligible professional 
                        during a payment year (as defined in 
                        subparagraph (E)), if the eligible professional 
                        is a meaningful EHR user (as determined under 
                        paragraph (2)) for the reporting period with 
                        respect to such year, in addition to the amount 
                        otherwise paid under this part, there also 
                        shall be paid to the eligible professional (or 
                        to an employer or facility in the cases 
                        described in clause (A) of section 1842(b)(6)), 
                        from the Federal Supplementary Medical 
                        Insurance Trust Fund established under section 
                        1841 an amount equal to 75 percent of the 
                        Secretary's estimate (based on claims submitted 
                        not later than 2 months after the end of the 
                        payment year) of the allowed charges under this 
                        part for all such covered professional services 
                        furnished by the eligible professional during 
                        such year.
                            ``(ii) No incentive payments with respect 
                        to years after 2015.--No incentive payments may 
                        be made under this subsection with respect to a 
                        year after 2015.
                    ``(B) Limitations on amounts of incentive 
                payments.--
                            ``(i) In general.--In no case shall the 
                        amount of the incentive payment provided under 
                        this paragraph for an eligible professional for 
                        a payment year exceed the applicable amount 
                        specified under this subparagraph with respect 
                        to such eligible professional and such year.
                            ``(ii) Amount.--Subject to clauses (iii) 
                        through (v), the applicable amount specified in 
                        this subparagraph for an eligible professional 
                        is as follows:
                                    ``(I) For the first payment year 
                                for such professional, $15,000 (or, if 
                                the first payment year for such 
                                eligible professional is 2011 or 2012, 
                                $18,000).
                                    ``(II) For the second payment year 
                                for such professional, $12,000.
                                    ``(III) For the third payment year 
                                for such professional, $8,000.
                                    ``(IV) For the fourth payment year 
                                for such professional, $4,000.
                                    ``(V) For the fifth payment year 
                                for such professional, $2,000.
                                    ``(VI) For any succeeding payment 
                                year for such professional, $0.
                            ``(iii) Phase down for eligible 
                        professionals first adopting ehr in 2014.--If 
                        the first payment year for an eligible 
                        professional is 2014, then the amount specified 
                        in this subparagraph for a payment year for 
                        such professional is the same as the amount 
                        specified in clause (ii) for such payment year 
                        for an eligible professional whose first 
                        payment year is 2013.
                            ``(iv) Increase for certain rural eligible 
                        professionals.--In the case of an eligible 
                        professional who predominantly furnishes 
                        services under this part in a rural area that 
                        is designated by the Secretary (under section 
                        332(a)(1)(A) of the Public Health Service Act) 
                        as a health professional shortage area, the 
                        amount that would otherwise apply for a payment 
                        year for such professional under subclauses (I) 
                        through (V) of clause (ii) shall be increased 
                        by 25 percent. In implementing the preceding 
                        sentence, the Secretary may, as determined 
                        appropriate, apply provisions of subsections 
                        (m) and (u) of section 1833 in a similar manner 
                        as such provisions apply under such subsection.
                            ``(v) No incentive payment if first 
                        adopting after 2014.--If the first payment year 
                        for an eligible professional is after 2014 then 
                        the applicable amount specified in this 
                        subparagraph for such professional for such 
                        year and any subsequent year shall be $0.
                    ``(C) Non-application to hospital-based eligible 
                professionals.--
                            ``(i) In general.--No incentive payment may 
                        be made under this paragraph in the case of a 
                        hospital-based eligible professional.
                            ``(ii) Hospital-based eligible 
                        professional.--For purposes of clause (i), the 
                        term `hospital-based eligible professional' 
                        means, with respect to covered professional 
                        services furnished by an eligible professional 
                        during the reporting period for a payment year, 
                        an eligible professional, such as a 
                        pathologist, anesthesiologist, or emergency 
                        physician, who furnishes substantially all of 
                        such services in a hospital setting (whether 
                        inpatient or outpatient) and through the use of 
                        the facilities and equipment, including 
                        qualified electronic health records, of the 
                        hospital.
                    ``(D) Payment.--
                            ``(i) Form of payment.--The payment under 
                        this paragraph may be in the form of a single 
                        consolidated payment or in the form of such 
                        periodic installments as the Secretary may 
                        specify.
                            ``(ii) Coordination of application of 
                        limitation for professionals in different 
                        practices.--In the case of an eligible 
                        professional furnishing covered professional 
                        services in more than one practice (as 
                        specified by the Secretary), the Secretary 
                        shall establish rules to coordinate the 
                        incentive payments, including the application 
                        of the limitation on amounts of such incentive 
                        payments under this paragraph, among such 
                        practices.
                            ``(iii) Coordination with medicaid.--The 
                        Secretary shall seek, to the maximum extent 
                        practicable, to avoid duplicative requirements 
                        from Federal and State Governments to 
                        demonstrate meaningful use of certified EHR 
                        technology under this title and title XIX. In 
                        doing so, the Secretary may deem satisfaction 
                        of State requirements for such meaningful use 
                        for a payment year under title XIX to be 
                        sufficient to qualify as meaningful use under 
                        this subsection and subsection (a)(7) and vice 
                        versa. The Secretary may also adjust the 
                        reporting periods under such title and such 
                        subsections in order to carry out this clause.
                    ``(E) Payment year defined.--
                            ``(i) In general.--For purposes of this 
                        subsection, the term `payment year' means a 
                        year beginning with 2011.
                            ``(ii) First, second, etc. payment year.--
                        The term `first payment year' means, with 
                        respect to covered professional services 
                        furnished by an eligible professional, the 
                        first year for which an incentive payment is 
                        made for such services under this subsection. 
                        The terms `second payment year', `third payment 
                        year', `fourth payment year', and `fifth 
                        payment year' mean, with respect to covered 
                        professional services furnished by such 
                        eligible professional, each successive year 
                        immediately following the first payment year 
                        for such professional.
            ``(2) Meaningful ehr user.--
                    ``(A) In general.--For purposes of paragraph (1), 
                an eligible professional shall be treated as a 
                meaningful EHR user for a reporting period for a 
                payment year (or, for purposes of subsection (a)(7), 
                for a reporting period under such subsection for a 
                year) if each of the following requirements is met:
                            ``(i) Meaningful use of certified ehr 
                        technology.--The eligible professional 
                        demonstrates to the satisfaction of the 
                        Secretary, in accordance with subparagraph 
                        (C)(i), that during such period the 
                        professional is using certified EHR technology 
                        in a meaningful manner, which shall include the 
                        use of electronic prescribing as determined to 
                        be appropriate by the Secretary.
                            ``(ii) Information exchange.--The eligible 
                        professional demonstrates to the satisfaction 
                        of the Secretary, in accordance with 
                        subparagraph (C)(i), that during such period 
                        such certified EHR technology is connected in a 
                        manner that provides, in accordance with law 
                        and standards applicable to the exchange of 
                        information, for the electronic exchange of 
                        health information to improve the quality of 
                        health care, such as promoting care 
                        coordination.
                            ``(iii) Reporting on measures using ehr.--
                        Subject to subparagraph (B)(ii) and using such 
                        certified EHR technology, the eligible 
                        professional submits information for such 
                        period, in a form and manner specified by the 
                        Secretary, on such clinical quality measures 
                        and such other measures as selected by the 
                        Secretary under subparagraph (B)(i).
                The Secretary may provide for the use of alternative 
                means for meeting the requirements of clauses (i), 
                (ii), and (iii) in the case of an eligible professional 
                furnishing covered professional services in a group 
                practice (as defined by the Secretary). The Secretary 
                shall seek to improve the use of electronic health 
                records and health care quality over time by requiring 
                more stringent measures of meaningful use selected 
                under this paragraph.
                    ``(B) Reporting on measures.--
                            ``(i) Selection.--The Secretary shall 
                        select measures for purposes of subparagraph 
                        (A)(iii) but only consistent with the 
                        following:
                                    ``(I) The Secretary shall provide 
                                preference to clinical quality measures 
                                that have been endorsed by the entity 
                                with a contract with the Secretary 
                                under section 1890(a).
                                    ``(II) Prior to any measure being 
                                selected under this subparagraph, the 
                                Secretary shall publish in the Federal 
                                Register such measure and provide for a 
                                period of public comment on such 
                                measure.
                            ``(ii) Limitation.--The Secretary may not 
                        require the electronic reporting of information 
                        on clinical quality measures under subparagraph 
                        (A)(iii) unless the Secretary has the capacity 
                        to accept the information electronically, which 
                        may be on a pilot basis.
                            ``(iii) Coordination of reporting of 
                        information.--In selecting such measures, and 
                        in establishing the form and manner for 
                        reporting measures under subparagraph (A)(iii), 
                        the Secretary shall seek to avoid redundant or 
                        duplicative reporting otherwise required, 
                        including reporting under subsection (k)(2)(C).
                    ``(C) Demonstration of meaningful use of certified 
                ehr technology and information exchange.--
                            ``(i) In general.--A professional may 
                        satisfy the demonstration requirement of 
                        clauses (i) and (ii) of subparagraph (A) 
                        through means specified by the Secretary, which 
                        may include--
                                    ``(I) an attestation;
                                    ``(II) the submission of claims 
                                with appropriate coding (such as a code 
                                indicating that a patient encounter was 
                                documented using certified EHR 
                                technology);
                                    ``(III) a survey response;
                                    ``(IV) reporting under subparagraph 
                                (A)(iii); and
                                    ``(V) other means specified by the 
                                Secretary.
                            ``(ii) Use of part d data.--Notwithstanding 
                        sections 1860D-15(d)(2)(B) and 1860D-15(f)(2), 
                        the Secretary may use data regarding drug 
                        claims submitted for purposes of section 1860D-
                        15 that are necessary for purposes of 
                        subparagraph (A).
            ``(3) Application.--
                    ``(A) Physician reporting system rules.--Paragraphs 
                (5), (6), and (8) of subsection (k) shall apply for 
                purposes of this subsection in the same manner as they 
                apply for purposes of such subsection.
                    ``(B) Coordination with other payments.--The 
                provisions of this subsection shall not be taken into 
                account in applying the provisions of subsection (m) of 
                this section and of section 1833(m) and any payment 
                under such provisions shall not be taken into account 
                in computing allowable charges under this subsection.
                    ``(C) Limitations on review.--There shall be no 
                administrative or judicial review under section 1869, 
                section 1878, or otherwise of the determination of any 
                incentive payment under this subsection and the payment 
                adjustment under subsection (a)(7), including the 
                determination of a meaningful EHR user under paragraph 
                (2), a limitation under paragraph (1)(B), and the 
                exception under subsection (a)(7)(B).
                    ``(D) Posting on website.--The Secretary shall post 
                on the Internet website of the Centers for Medicare & 
                Medicaid Services, in an easily understandable format, 
                a list of the names, business addresses, and business 
                phone numbers of the eligible professionals who are 
                meaningful EHR users and, as determined appropriate by 
                the Secretary, of group practices receiving incentive 
                payments under paragraph (1).
            ``(4) Certified ehr technology defined.--For purposes of 
        this section, the term `certified EHR technology' means a 
        qualified electronic health record (as defined in 3000(13) of 
        the Public Health Service Act) that is certified pursuant to 
        section 3001(c)(5) of such Act as meeting standards adopted 
        under section 3004 of such Act that are applicable to the type 
        of record involved (as determined by the Secretary, such as an 
        ambulatory electronic health record for office-based physicians 
        or an inpatient hospital electronic health record for 
        hospitals).
            ``(5) Definitions.--For purposes of this subsection:
                    ``(A) Covered professional services.--The term 
                `covered professional services' has the meaning given 
                such term in subsection (k)(3).
                    ``(B) Eligible professional.--The term `eligible 
                professional' means a physician, as defined in section 
                1861(r).
                    ``(C) Reporting period.--The term `reporting 
                period' means any period (or periods), with respect to 
                a payment year, as specified by the Secretary.''.
    (b) Incentive Payment Adjustment.--Section 1848(a) of the Social 
Security Act (42 U.S.C. 1395w-4(a)) is amended by adding at the end the 
following new paragraph:
            ``(7) Incentives for meaningful use of certified ehr 
        technology.--
                    ``(A) Adjustment.--
                            ``(i) In general.--Subject to subparagraphs 
                        (B) and (D), with respect to covered 
                        professional services furnished by an eligible 
                        professional during 2015 or any subsequent 
                        payment year, if the eligible professional is 
                        not a meaningful EHR user (as determined under 
                        subsection (o)(2)) for a reporting period for 
                        the year, the fee schedule amount for such 
                        services furnished by such professional during 
                        the year (including the fee schedule amount for 
                        purposes of determining a payment based on such 
                        amount) shall be equal to the applicable 
                        percent of the fee schedule amount that would 
                        otherwise apply to such services under this 
                        subsection (determined after application of 
                        paragraph (3) but without regard to this 
                        paragraph).
                            ``(ii) Applicable percent.--Subject to 
                        clause (iii), for purposes of clause (i), the 
                        term `applicable percent' means--
                                    ``(I) for 2015, 99 percent (or, in 
                                the case of an eligible professional 
                                who was subject to the application of 
                                the payment adjustment under section 
                                1848(a)(5) for 2014, 98 percent);
                                    ``(II) for 2016, 98 percent; and
                                    ``(III) for 2017 and each 
                                subsequent year, 97 percent.
                            ``(iii) Authority to decrease applicable 
                        percentage for 2018 and subsequent years.--For 
                        2018 and each subsequent year, if the Secretary 
                        finds that the proportion of eligible 
                        professionals who are meaningful EHR users (as 
                        determined under subsection (o)(2)) is less 
                        than 75 percent, the applicable percent shall 
                        be decreased by 1 percentage point from the 
                        applicable percent in the preceding year, but 
                        in no case shall the applicable percent be less 
                        than 95 percent.
                    ``(B) Significant hardship exception.--The 
                Secretary may, on a case-by-case basis, exempt an 
                eligible professional from the application of the 
                payment adjustment under subparagraph (A) if the 
                Secretary determines, subject to annual renewal, that 
                compliance with the requirement for being a meaningful 
                EHR user would result in a significant hardship, such 
                as in the case of an eligible professional who 
                practices in a rural area without sufficient Internet 
                access. In no case may an eligible professional be 
                granted an exemption under this subparagraph for more 
                than 5 years.
                    ``(C) Application of physician reporting system 
                rules.--Paragraphs (5), (6), and (8) of subsection (k) 
                shall apply for purposes of this paragraph in the same 
                manner as they apply for purposes of such subsection.
                    ``(D) Non-application to hospital-based eligible 
                professionals.--No payment adjustment may be made under 
                subparagraph (A) in the case of hospital-based eligible 
                professionals (as defined in subsection (o)(1)(C)(ii)).
                    ``(E) Definitions.--For purposes of this paragraph:
                            ``(i) Covered professional services.--The 
                        term `covered professional services' has the 
                        meaning given such term in subsection (k)(3).
                            ``(ii) Eligible professional.--The term 
                        `eligible professional' means a physician, as 
                        defined in section 1861(r).
                            ``(iii) Reporting period.--The term 
                        `reporting period' means, with respect to a 
                        year, a period specified by the Secretary.''.
    (c) Application to Certain MA-Affiliated Eligible Professionals.--
Section 1853 of the Social Security Act (42 U.S.C. 1395w-23) is amended 
by adding at the end the following new subsection:
    ``(l) Application of Eligible Professional Incentives for Certain 
MA Organizations for Adoption and Meaningful Use of Certified EHR 
Technology.--
            ``(1) In general.--Subject to paragraphs (3) and (4), in 
        the case of a qualifying MA organization, the provisions of 
        sections 1848(o) and 1848(a)(7) shall apply with respect to 
        eligible professionals described in paragraph (2) of the 
        organization who the organization attests under paragraph (6) 
        to be meaningful EHR users in a similar manner as they apply to 
        eligible professionals under such sections. Incentive payments 
        under paragraph (3) shall be made to and payment adjustments 
        under paragraph (4) shall apply to such qualifying 
        organizations.
            ``(2) Eligible professional described.--With respect to a 
        qualifying MA organization, an eligible professional described 
        in this paragraph is an eligible professional (as defined for 
        purposes of section 1848(o)) who--
                    ``(A)(i) is employed by the organization; or
                    ``(ii)(I) is employed by, or is a partner of, an 
                entity that through contract with the organization 
                furnishes at least 80 percent of the entity's patient 
                care services to enrollees of such organization; and
                    ``(II) furnishes at least 75 percent of the 
                professional services of the eligible professional to 
                enrollees of the organization; and
                    ``(B) furnishes, on average, at least 20 hours per 
                week of patient care services.
            ``(3) Eligible professional incentive payments.--
                    ``(A) In general.--In applying section 1848(o) 
                under paragraph (1), instead of the additional payment 
                amount under section 1848(o)(1)(A) and subject to 
                subparagraph (B), the Secretary may substitute an 
                amount determined by the Secretary to the extent 
                feasible and practical to be similar to the estimated 
                amount in the aggregate that would be payable if 
                payment for services furnished by such professionals 
                was payable under part B instead of this part.
                    ``(B) Avoiding duplication of payments.--
                            ``(i) In general.--If an eligible 
                        professional described in paragraph (2) is 
                        eligible for the maximum incentive payment 
                        under section 1848(o)(1)(A) for the same 
                        payment period, the payment incentive shall be 
                        made only under such section and not under this 
                        subsection.
                            ``(ii) Methods.--In the case of an eligible 
                        professional described in paragraph (2) who is 
                        eligible for an incentive payment under section 
                        1848(o)(1)(A) but is not described in clause 
                        (i) for the same payment period, the Secretary 
                        shall develop a process--
                                    ``(I) to ensure that duplicate 
                                payments are not made with respect to 
                                an eligible professional both under 
                                this subsection and under section 
                                1848(o)(1)(A); and
                                    ``(II) to collect data from 
                                Medicare Advantage organizations to 
                                ensure against such duplicate payments.
                    ``(C) Fixed schedule for application of limitation 
                on incentive payments for all eligible professionals.--
                In applying section 1848(o)(1)(B)(ii) under 
                subparagraph (A), in accordance with rules specified by 
                the Secretary, a qualifying MA organization shall 
                specify a year (not earlier than 2011) that shall be 
                treated as the first payment year for all eligible 
                professionals with respect to such organization.
                    ``(D) Cap for economies of scale.--In no case may 
                an incentive payment be made under this subsection, 
                including under subparagraph (A), to a qualifying MA 
                organization with respect to more than 5,000 eligible 
                professionals of the organization.
            ``(4) Payment adjustment.--
                    ``(A) In general.--In applying section 1848(a)(7) 
                under paragraph (1), instead of the payment adjustment 
                being an applicable percent of the fee schedule amount 
                for a year under such section, subject to subparagraph 
                (D), the payment adjustment under paragraph (1) shall 
                be equal to the percent specified in subparagraph (B) 
                for such year of the payment amount otherwise provided 
                under this section for such year.
                    ``(B) Specified percent.--The percent specified 
                under this subparagraph for a year is 100 percent minus 
                a number of percentage points equal to the product of--
                            ``(i) a percentage equal to 100 percent 
                        reduced by the applicable percent (under 
                        section 1848(a)(7)(A)(ii)) for the year; and
                            ``(ii) a percentage equal to the 
                        Secretary's estimate of the proportion for the 
                        year, of the expenditures under parts A and B 
                        that are not attributable to this part, that 
                        are attributable to expenditures for 
                        physicians' services.
                    ``(C) Application of payment adjustment.--In the 
                case that a qualifying MA organization attests that not 
                all eligible professionals of the organization are 
                meaningful EHR users with respect to a year, the 
                Secretary shall apply the payment adjustment under this 
                paragraph based on the proportion of all eligible 
                professionals of the organization that are not 
                meaningful EHR users for such year. If the number of 
                eligible professionals of the organization that are not 
                meaningful EHR users for such year exceeds 5,000, such 
                number shall be reduced to 5,000 for purposes of 
                determining the proportion under the preceding 
                sentence.
            ``(5) Qualifying ma organization defined.--In this 
        subsection and subsection (m), the term `qualifying MA 
        organization' means a Medicare Advantage organization that is 
        organized as a health maintenance organization (as defined in 
        section 2791(b)(3) of the Public Health Service Act).
            ``(6) Meaningful ehr user attestation.--For purposes of 
        this subsection and subsection (m), a qualifying MA 
        organization shall submit an attestation, in a form and manner 
        specified by the Secretary which may include the submission of 
        such attestation as part of submission of the initial bid under 
        section 1854(a)(1)(A)(iv), identifying--
                    ``(A) whether each eligible professional described 
                in paragraph (2), with respect to such organization is 
                a meaningful EHR user (as defined in section 
                1848(o)(2)) for a year specified by the Secretary; and
                    ``(B) whether each eligible hospital described in 
                subsection (m)(1), with respect to such organization, 
                is a meaningful EHR user (as defined in section 
                1886(n)(3)) for an applicable period specified by the 
                Secretary.
            ``(7) Posting on website.--The Secretary shall post on the 
        Internet website of the Centers for Medicare & Medicaid 
        Services, in an easily understandable format, a list of the 
        names, business addresses, and business phone numbers of--
                    ``(A) each qualifying MA organization receiving an 
                incentive payment under this subsection for eligible 
                professionals of the organization; and
                    ``(B) the eligible professionals of such 
                organization for which such incentive payment is 
                based.''.
    (d) Conforming Amendments.--Section 1853 of the Social Security Act 
(42 U.S.C. 1395w-23) is amended--
            (1) in subsection (a)(1)(A), by striking ``and (i)'' and 
        inserting ``(i), and (l)'';
            (2) in subsection (c)--
                    (A) in paragraph (1)(D)(i), by striking ``section 
                1886(h)'' and inserting ``sections 1848(o) and 
                1886(h)''; and
                    (B) in paragraph (6)(A), by inserting after ``under 
                part B,'' the following: ``excluding expenditures 
                attributable to subsections (a)(7) and (o) of section 
                1848,''; and
            (3) in subsection (f), by inserting ``and for payments 
        under subsection (l)'' after ``with the organization''.
    (e) Conforming Amendments to e-Prescribing.--
            (1) Section 1848(a)(5)(A) of the Social Security Act (42 
        U.S.C. 1395w-4(a)(5)(A)) is amended--
                    (A) in clause (i), by striking ``or any subsequent 
                year'' and inserting ``, 2013, or 2014''; and
                    (B) in clause (ii), by striking ``and each 
                subsequent year''.
            (2) Section 1848(m)(2) of such Act (42 U.S.C. 1395w-
        4(m)(2)) is amended--
                    (A) in subparagraph (A), by striking ``For 2009'' 
                and inserting ``Subject to subparagraph (D), for 
                2009''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(D) Limitation with respect to ehr incentive 
                payments.--The provisions of this paragraph shall not 
                apply to an eligible professional (or, in the case of a 
                group practice under paragraph (3)(C), to the group 
                practice) if, for the reporting period the eligible 
                professional (or group practice) receives an incentive 
                payment under subsection (o)(1)(A) with respect to a 
                certified EHR technology (as defined in subsection 
                (o)(4)) that has the capability of electronic 
                prescribing.''.
    (f) Providing Assistance to Eligible Professionals and Certain 
Hospitals.--
            (1) In general.--The Secretary of Health and Human Services 
        shall provide assistance to eligible professionals (as defined 
        in section 1848(o)(5), as added by subsection (a)), Medicaid 
        providers (as defined in section 1903(t)(2) of such Act, as 
        added by section 4211(a)), and eligible hospitals (as defined 
        in section 1886(n)(6)(A) of such Act, as added by section 
        4202(a)) located in rural or other medically underserved areas 
        to successfully choose, implement, and use certified EHR 
        technology (as defined in section 1848(o)(4) of the Social 
        Security Act, as added by section 4201(a)).
            (2) Use of entities with expertise.--To the extent 
        practicable, the Secretary shall provide such assistance 
        through entities that have expertise in the choice, 
        implementation, and use of such certified EHR technology.

SEC. 4202. INCENTIVES FOR HOSPITALS.

    (a) Incentive Payment.--Section 1886 of the Social Security Act (42 
U.S.C. 1395ww) is amended by adding at the end the following new 
subsection:
    ``(n) Incentives for Adoption and Meaningful Use of Certified EHR 
Technology.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, with respect to inpatient hospital services 
        furnished by an eligible hospital during a payment year (as 
        defined in paragraph (2)(G)), if the eligible hospital is a 
        meaningful EHR user (as determined under paragraph (3)) for the 
        reporting period with respect to such year, in addition to the 
        amount otherwise paid under this section, there also shall be 
        paid to the eligible hospital, from the Federal Hospital 
        Insurance Trust Fund established under section 1817, an amount 
        equal to the applicable amount specified in paragraph (2)(A) 
        for the hospital for such payment year.
            ``(2) Payment amount.--
                    ``(A) In general.--Subject to the succeeding 
                subparagraphs of this paragraph, the applicable amount 
                specified in this subparagraph for an eligible hospital 
                for a payment year is equal to the product of the 
                following:
                            ``(i) Initial amount.--The sum of--
                                    ``(I) the base amount specified in 
                                subparagraph (B); plus
                                    ``(II) the discharge related amount 
                                specified in subparagraph (C) for a 12-
                                month period selected by the Secretary 
                                with respect to such payment year.
                            ``(ii) Medicare share.--The Medicare share 
                        as specified in subparagraph (D) for the 
                        hospital for a period selected by the Secretary 
                        with respect to such payment year.
                            ``(iii) Transition factor.--The transition 
                        factor specified in subparagraph (E) for the 
                        hospital for the payment year.
                    ``(B) Base amount.--The base amount specified in 
                this subparagraph is $2,000,000.
                    ``(C) Discharge related amount.--The discharge 
                related amount specified in this subparagraph for a 12-
                month period selected by the Secretary shall be 
                determined as the sum of the amount, based upon total 
                discharges (regardless of any source of payment) for 
                the period, for each discharge up to the 23,000th 
                discharge as follows:
                            ``(i) For the 1,150th through the 9,200th 
                        discharge, $200.
                            ``(ii) For the 9,201st through the 13,800th 
                        discharge, 50 percent of the amount specified 
                        in clause (i).
                            ``(iii) For the 13,801st through the 
                        23,000th discharge, 30 percent of the amount 
                        specified in clause (i).
                    ``(D) Medicare share.--The Medicare share specified 
                under this subparagraph for a hospital for a period 
                selected by the Secretary for a payment year is equal 
                to the fraction--
                            ``(i) the numerator of which is the sum 
                        (for such period and with respect to the 
                        hospital) of--
                                    ``(I) the number of inpatient-bed-
                                days (as established by the Secretary) 
                                which are attributable to individuals 
                                with respect to whom payment may be 
                                made under part A; and
                                    ``(II) the number of inpatient-bed-
                                days (as so established) which are 
                                attributable to individuals who are 
                                enrolled with a Medicare Advantage 
                                organization under part C; and
                            ``(ii) the denominator of which is the 
                        product of--
                                    ``(I) the total number of 
                                inpatient-bed-days with respect to the 
                                hospital during such period; and
                                    ``(II) the total amount of the 
                                hospital's charges during such period, 
                                not including any charges that are 
                                attributable to charity care (as such 
                                term is used for purposes of hospital 
                                cost reporting under this title), 
                                divided by the total amount of the 
                                hospital's charges during such period.
                Insofar as the Secretary determines that data are not 
                available on charity care necessary to calculate the 
                portion of the formula specified in clause (ii)(II), 
                the Secretary shall use data on uncompensated care and 
                may adjust such data so as to be an appropriate proxy 
                for charity care including a downward adjustment to 
                eliminate bad debt data from uncompensated care data. 
                In the absence of the data necessary, with respect to a 
                hospital, for the Secretary to compute the amount 
                described in clause (ii)(II), the amount under such 
                clause shall be deemed to be 1. In the absence of data, 
                with respect to a hospital, necessary to compute the 
                amount described in clause (i)(II), the amount under 
                such clause shall be deemed to be 0.
                    ``(E) Transition factor specified.--
                            ``(i) In general.--Subject to clause (ii), 
                        the transition factor specified in this 
                        subparagraph for an eligible hospital for a 
                        payment year is as follows:
                                    ``(I) For the first payment year 
                                for such hospital, 1.
                                    ``(II) For the second payment year 
                                for such hospital, \3/4\.
                                    ``(III) For the third payment year 
                                for such hospital, \1/2\.
                                    ``(IV) For the fourth payment year 
                                for such hospital, \1/4\.
                                    ``(V) For any succeeding payment 
                                year for such hospital, 0.
                            ``(ii) Phase down for eligible hospitals 
                        first adopting ehr after 2013.--If the first 
                        payment year for an eligible hospital is after 
                        2013, then the transition factor specified in 
                        this subparagraph for a payment year for such 
                        hospital is the same as the amount specified in 
                        clause (i) for such payment year for an 
                        eligible hospital for which the first payment 
                        year is 2013. If the first payment year for an 
                        eligible hospital is after 2015 then the 
                        transition factor specified in this 
                        subparagraph for such hospital and for such 
                        year and any subsequent year shall be 0.
                    ``(F) Form of payment.--The payment under this 
                subsection for a payment year may be in the form of a 
                single consolidated payment or in the form of such 
                periodic installments as the Secretary may specify.
                    ``(G) Payment year defined.--
                            ``(i) In general.--For purposes of this 
                        subsection, the term `payment year' means a 
                        fiscal year beginning with fiscal year 2011.
                            ``(ii) First, second, etc. payment year.--
                        The term `first payment year' means, with 
                        respect to inpatient hospital services 
                        furnished by an eligible hospital, the first 
                        fiscal year for which an incentive payment is 
                        made for such services under this subsection. 
                        The terms `second payment year', `third payment 
                        year', and `fourth payment year' mean, with 
                        respect to an eligible hospital, each 
                        successive year immediately following the first 
                        payment year for that hospital.
            ``(3) Meaningful ehr user.--
                    ``(A) In general.--For purposes of paragraph (1), 
                an eligible hospital shall be treated as a meaningful 
                EHR user for a reporting period for a payment year (or, 
                for purposes of subsection (b)(3)(B)(ix), for a 
                reporting period under such subsection for a fiscal 
                year) if each of the following requirements are met:
                            ``(i) Meaningful use of certified ehr 
                        technology.--The eligible hospital demonstrates 
                        to the satisfaction of the Secretary, in 
                        accordance with subparagraph (C)(i), that 
                        during such period the hospital is using 
                        certified EHR technology in a meaningful 
                        manner.
                            ``(ii) Information exchange.--The eligible 
                        hospital demonstrates to the satisfaction of 
                        the Secretary, in accordance with subparagraph 
                        (C)(i), that during such period such certified 
                        EHR technology is connected in a manner that 
                        provides, in accordance with law and standards 
                        applicable to the exchange of information, for 
                        the electronic exchange of health information 
                        to improve the quality of health care, such as 
                        promoting care coordination.
                            ``(iii) Reporting on measures using ehr.--
                        Subject to subparagraph (B)(ii) and using such 
                        certified EHR technology, the eligible hospital 
                        submits information for such period, in a form 
                        and manner specified by the Secretary, on such 
                        clinical quality measures and such other 
                        measures as selected by the Secretary under 
                        subparagraph (B)(i).
                The Secretary shall seek to improve the use of 
                electronic health records and health care quality over 
                time by requiring more stringent measures of meaningful 
                use selected under this paragraph.
                    ``(B) Reporting on measures.--
                            ``(i) Selection.--The Secretary shall 
                        select measures for purposes of subparagraph 
                        (A)(iii) but only consistent with the 
                        following:
                                    ``(I) The Secretary shall provide 
                                preference to clinical quality measures 
                                that have been selected for purposes of 
                                applying subsection (b)(3)(B)(viii) or 
                                that have been endorsed by the entity 
                                with a contract with the Secretary 
                                under section 1890(a).
                                    ``(II) Prior to any measure (other 
                                than a clinical quality measure that 
                                has been selected for purposes of 
                                applying subsection (b)(3)(B)(viii)) 
                                being selected under this subparagraph, 
                                the Secretary shall publish in the 
                                Federal Register such measure and 
                                provide for a period of public comment 
                                on such measure.
                            ``(ii) Limitations.--The Secretary may not 
                        require the electronic reporting of information 
                        on clinical quality measures under subparagraph 
                        (A)(iii) unless the Secretary has the capacity 
                        to accept the information electronically, which 
                        may be on a pilot basis.
                            ``(iii) Coordination of reporting of 
                        information.--In selecting such measures, and 
                        in establishing the form and manner for 
                        reporting measures under subparagraph (A)(iii), 
                        the Secretary shall seek to avoid redundant or 
                        duplicative reporting with reporting otherwise 
                        required, including reporting under subsection 
                        (b)(3)(B)(viii).
                    ``(C) Demonstration of meaningful use of certified 
                ehr technology and information exchange.--
                            ``(i) In general.--A hospital may satisfy 
                        the demonstration requirement of clauses (i) 
                        and (ii) of subparagraph (A) through means 
                        specified by the Secretary, which may include--
                                    ``(I) an attestation;
                                    ``(II) the submission of claims 
                                with appropriate coding (such as a code 
                                indicating that inpatient care was 
                                documented using certified EHR 
                                technology);
                                    ``(III) a survey response;
                                    ``(IV) reporting under subparagraph 
                                (A)(iii); and
                                    ``(V) other means specified by the 
                                Secretary.
                            ``(ii) Use of part d data.--Notwithstanding 
                        sections 1860D-15(d)(2)(B) and 1860D-15(f)(2), 
                        the Secretary may use data regarding drug 
                        claims submitted for purposes of section 1860D-
                        15 that are necessary for purposes of 
                        subparagraph (A).
            ``(4) Application.--
                    ``(A) Limitations on review.--There shall be no 
                administrative or judicial review under section 1869, 
                section 1878, or otherwise of the determination of any 
                incentive payment under this subsection and the payment 
                adjustment under subsection (b)(3)(B)(ix), including 
                the determination of a meaningful EHR user under 
                paragraph (3), determination of measures applicable to 
                services furnished by eligible hospitals under this 
                subsection, and the exception under subsection 
                (b)(3)(B)(ix)(II).
                    ``(B) Posting on website.--The Secretary shall post 
                on the Internet website of the Centers for Medicare & 
                Medicaid Services, in an easily understandable format, 
                a list of the names of the eligible hospitals that are 
                meaningful EHR users under this subsection or 
                subsection (b)(3)(B)(ix) and other relevant data as 
                determined appropriate by the Secretary. The Secretary 
                shall ensure that a hospital has the opportunity to 
                review the other relevant data that are to be made 
                public with respect to the hospital prior to such data 
                being made public.
            ``(5) Certified ehr technology defined.--The term 
        `certified EHR technology' has the meaning given such term in 
        section 1848(o)(4).
            ``(6) Definitions.--For purposes of this subsection:
                    ``(A) Eligible hospital.--The term `eligible 
                hospital' means--
                            ``(i) a subsection (d) hospital; and
                            ``(ii) a critical access hospital (as 
                        defined in section 1861(mm)(1)).
                    ``(B) Reporting period.--The term `reporting 
                period' means any period (or periods), with respect to 
                a payment year, as specified by the Secretary.''.
    (b) Incentive Market Basket Adjustment.--
            (1) In general.--Section 1886(b)(3)(B) of the Social 
        Security Act (42 U.S.C. 1395ww(b)(3)(B)) is amended--
                    (A) in clause (viii)(I), by inserting ``(or, 
                beginning with fiscal year 2016, by one-quarter)'' 
                after ``2.0 percentage points''; and
                    (B) by adding at the end the following new clause:
    ``(ix)(I) For purposes of clause (i) for fiscal year 2015 and each 
subsequent fiscal year, in the case of an eligible hospital (as defined 
in subsection (n)(6)(A)) that is not a meaningful EHR user (as defined 
in subsection (n)(3)) for the reporting period for such fiscal year, 
three-quarters of the applicable percentage increase otherwise 
applicable under clause (i) for such fiscal year shall be reduced by 
33\1/3\ percent for fiscal year 2015, 66\2/3\ percent for fiscal year 
2016, and 100 percent for fiscal year 2017 and each subsequent fiscal 
year. Such reduction shall apply only with respect to the fiscal year 
involved and the Secretary shall not take into account such reduction 
in computing the applicable percentage increase under clause (i) for a 
subsequent fiscal year.
    ``(II) The Secretary may, on a case-by-case basis, exempt a 
subsection (d) hospital from the application of subclause (I) with 
respect to a fiscal year if the Secretary determines, subject to annual 
renewal, that requiring such hospital to be a meaningful EHR user 
during such fiscal year would result in a significant hardship, such as 
in the case of a hospital in a rural area without sufficient Internet 
access. In no case may a hospital be granted an exemption under this 
subclause for more than 5 years.
    ``(III) For fiscal year 2015 and each subsequent fiscal year, a 
State in which hospitals are paid for services under section 1814(b)(3) 
shall adjust the payments to each subsection (d) hospital in the State 
that is not a meaningful EHR user (as defined in subsection (n)(3)) in 
a manner that is designed to result in an aggregate reduction in 
payments to hospitals in the State that is equivalent to the aggregate 
reduction that would have occurred if payments had been reduced to each 
subsection (d) hospital in the State in a manner comparable to the 
reduction under the previous provisions of this clause. The State shall 
report to the Secretary the methodology it will use to make the payment 
adjustment under the previous sentence.
    ``(IV) For purposes of this clause, the term `reporting period' 
means, with respect to a fiscal year, any period (or periods), with 
respect to the fiscal year, as specified by the Secretary.''.
            (2) Critical access hospitals.--Section 1814(l) of the 
        Social Security Act (42 U.S.C. 1395f(l)) is amended--
                    (A) in subparagraph (1), by striking ``paragraph 
                (2)'' and inserting ``paragraphs (2) and (3)''; and
                    (B) by adding at the end the following new 
                paragraph:
    ``(3)(A) Subject to subparagraph (B), for fiscal year 2015 and each 
subsequent fiscal year, in the case of a critical access hospital that 
is not a meaningful EHR user (as defined in section 1886(n)(3)) for the 
reporting period for such fiscal year, paragraph (1) shall be applied 
by substituting the applicable percent under subparagraph (C) for the 
percent described in such paragraph (1).
    ``(B) The Secretary may, on a case-by-case basis, exempt a critical 
access hospital from the application of subparagraph (A) with respect 
to a fiscal year if the Secretary determines, subject to annual 
renewal, that requiring such hospital to be a meaningful EHR user 
during such fiscal year would result in a significant hardship, such as 
in the case of a hospital in a rural area without sufficient Internet 
access. In no case may a hospital be granted an exemption under this 
subparagraph for more than 5 years.
    ``(C) The percent described in this subparagraph is--
            ``(i) for fiscal year 2015, 100.66 percent;
            ``(ii) for fiscal year 2016, 100.33 percent; and
            ``(iii) for fiscal year 2017 and each subsequent fiscal 
        year, 100 percent.''.
    (c) Application to Certain MA-Affiliated Eligible Hospitals.--
Section 1853 of the Social Security Act (42 U.S.C. 1395w-23), as 
amended by section 4201(c), is further amended by adding at the end the 
following new subsection:
    ``(m) Application of Eligible Hospital Incentives for Certain MA 
Organizations for Adoption and Meaningful Use of Certified EHR 
Technology.--
            ``(1) Application.--Subject to paragraphs (3) and (4), in 
        the case of a qualifying MA organization, the provisions of 
        sections 1814(l)(3), 1886(n), and 1886(b)(3)(B)(ix) shall apply 
        with respect to eligible hospitals described in paragraph (2) 
        of the organization which the organization attests under 
        subsection (l)(6) to be meaningful EHR users in a similar 
        manner as they apply to eligible hospitals under such sections. 
        Incentive payments under paragraph (3) shall be made to and 
        payment adjustments under paragraph (4) shall apply to such 
        qualifying organizations.
            ``(2) Eligible hospital described.--With respect to a 
        qualifying MA organization, an eligible hospital described in 
        this paragraph is an eligible hospital (as defined in section 
        1886(n)(6)(A)) that is under common corporate governance with 
        such organization and serves individuals enrolled under an MA 
        plan offered by such organization.
            ``(3) Eligible hospital incentive payments.--
                    ``(A) In general.--In applying section 1886(n)(2) 
                under paragraph (1), instead of the additional payment 
                amount under section 1886(n)(2), there shall be 
                substituted an amount determined by the Secretary to be 
                similar to the estimated amount in the aggregate that 
                would be payable if payment for services furnished by 
                such hospitals was payable under part A instead of this 
                part. In implementing the previous sentence, the 
                Secretary--
                            ``(i) shall, insofar as data to determine 
                        the discharge related amount under section 
                        1886(n)(2)(C) for an eligible hospital are not 
                        available to the Secretary, use such 
                        alternative data and methodology to estimate 
                        such discharge related amount as the Secretary 
                        determines appropriate; and
                            ``(ii) shall, insofar as data to determine 
                        the medicare share described in section 
                        1886(n)(2)(D) for an eligible hospital are not 
                        available to the Secretary, use such 
                        alternative data and methodology to estimate 
                        such share, which data and methodology may 
                        include use of the inpatient bed days (or 
                        discharges) with respect to an eligible 
                        hospital during the appropriate period which 
                        are attributable to both individuals for whom 
                        payment may be made under part A or individuals 
                        enrolled in an MA plan under a Medicare 
                        Advantage organization under this part as a 
                        proportion of the total number of patient-bed-
                        days (or discharges) with respect to such 
                        hospital during such period.
                    ``(B) Avoiding duplication of payments.--
                            ``(i) In general.--In the case of a 
                        hospital that for a payment year is an eligible 
                        hospital described in paragraph (2) and for 
                        which at least one-third of their discharges 
                        (or bed-days) of Medicare patients for the year 
                        are covered under part A, payment for the 
                        payment year shall be made only under section 
                        1886(n) and not under this subsection.
                            ``(ii) Methods.--In the case of a hospital 
                        that is an eligible hospital described in 
                        paragraph (2) and also is eligible for an 
                        incentive payment under section 1886(n) but is 
                        not described in clause (i) for the same 
                        payment period, the Secretary shall develop a 
                        process--
                                    ``(I) to ensure that duplicate 
                                payments are not made with respect to 
                                an eligible hospital both under this 
                                subsection and under section 1886(n); 
                                and
                                    ``(II) to collect data from 
                                Medicare Advantage organizations to 
                                ensure against such duplicate payments.
            ``(4) Payment adjustment.--
                    ``(A) Subject to paragraph (3), in the case of a 
                qualifying MA organization (as defined in section 
                1853(l)(5)), if, according to the attestation of the 
                organization submitted under subsection (l)(6) for an 
                applicable period, one or more eligible hospitals (as 
                defined in section 1886(n)(6)(A)) that are under common 
                corporate governance with such organization and that 
                serve individuals enrolled under a plan offered by such 
                organization are not meaningful EHR users (as defined 
                in section 1886(n)(3)) with respect to a period, the 
                payment amount payable under this section for such 
                organization for such period shall be the percent 
                specified in subparagraph (B) for such period of the 
                payment amount otherwise provided under this section 
                for such period.
                    ``(B) Specified percent.--The percent specified 
                under this subparagraph for a year is 100 percent minus 
                a number of percentage points equal to the product of--
                            ``(i) the number of the percentage point 
                        reduction effected under section 
                        1886(b)(3)(B)(ix)(I) for the period; and
                            ``(ii) the Medicare hospital expenditure 
                        proportion specified in subparagraph (C) for 
                        the year.
                    ``(C) Medicare hospital expenditure proportion.--
                The Medicare hospital expenditure proportion under this 
                subparagraph for a year is the Secretary's estimate of 
                the proportion, of the expenditures under parts A and B 
                that are not attributable to this part, that are 
                attributable to expenditures for inpatient hospital 
                services.
                    ``(D) Application of payment adjustment.--In the 
                case that a qualifying MA organization attests that not 
                all eligible hospitals are meaningful EHR users with 
                respect to an applicable period, the Secretary shall 
                apply the payment adjustment under this paragraph based 
                on a methodology specified by the Secretary, taking 
                into account the proportion of such eligible hospitals, 
                or discharges from such hospitals, that are not 
                meaningful EHR users for such period.
            ``(5) Posting on website.--The Secretary shall post on the 
        Internet website of the Centers for Medicare & Medicaid 
        Services, in an easily understandable format, --
                    ``(A) a list of the names, business addresses, and 
                business phone numbers of each qualifying MA 
                organization receiving an incentive payment under this 
                subsection for eligible hospitals described in 
                paragraph (2); and
                    ``(B) a list of the names of the eligible hospitals 
                for which such incentive payment is based.''.
    (d) Conforming Amendments.--
            (1) Section 1814(b) of the Social Security Act (42 U.S.C. 
        1395f(b)) is amended--
                    (A) in paragraph (3), in the matter preceding 
                subparagraph (A), by inserting ``, subject to section 
                1886(d)(3)(B)(ix)(III),'' after ``then''; and
                    (B) by adding at the end the following: ``For 
                purposes of applying paragraph (3), there shall be 
                taken into account incentive payments, and payment 
                adjustments under subsection (b)(3)(B)(ix) or (n) of 
                section 1886.''.
            (2) Section 1851(i)(1) of the Social Security Act (42 
        U.S.C. 1395w-21(i)(1)) is amended by striking ``and 
        1886(h)(3)(D)'' and inserting ``1886(h)(3)(D), and 1853(m)''.
            (3) Section 1853 of the Social Security Act (42 U.S.C. 
        1395w-23), as amended by section 4311(d)(1), is amended--
                    (A) in subsection (c)--
                            (i) in paragraph (1)(D)(i), by striking 
                        ``1848(o)'' and inserting ``, 1848(o), and 
                        1886(n)''; and
                            (ii) in paragraph (6)(A), by inserting 
                        ``and subsections (b)(3)(B)(ix) and (n) of 
                        section 1886'' after ``section 1848''; and
                    (B) in subsection (f), by inserting ``and 
                subsection (m)'' after ``under subsection (l)''.

SEC. 4203. PREMIUM HOLD HARMLESS AND IMPLEMENTATION FUNDING.

    (a) Premium Hold Harmless.--
            (1) In general.--Section 1839(a)(1) of the Social Security 
        Act (42 U.S.C. 1395r(a)(1)) is amended by adding at the end the 
        following: ``In applying this paragraph there shall not be 
        taken into account additional payments under section 1848(o) 
        and section 1853(l)(3) and the Government contribution under 
        section 1844(a)(3).''.
            (2) Payment.--Section 1844(a) of such Act (42 U.S.C. 
        1395w(a)) is amended--
                    (A) in paragraph (2), by striking the period at the 
                end and inserting ``; plus''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(3) a Government contribution equal to the amount of 
        payment incentives payable under sections 1848(o) and 
        1853(l)(3).''.
    (b) Implementation Funding.--In addition to funds otherwise 
available, out of any funds in the Treasury not otherwise appropriated, 
there are appropriated to the Secretary of Health and Human Services 
for the Center for Medicare & Medicaid Services Program Management 
Account, $100,000,000 for each of fiscal years 2009 through 2015 and 
$45,000,000 for each succeeding fiscal year through fiscal year 2018, 
which shall be available for purposes of carrying out the provisions of 
(and amendments made by) this part. Amounts appropriated under this 
subsection for a fiscal year shall be available until expended.

SEC. 4204. NON-APPLICATION OF PHASED-OUT INDIRECT MEDICAL EDUCATION 
              (IME) ADJUSTMENT FACTOR FOR FISCAL YEAR 2009.

    (a) In General.--Section 412.322 of title 42, Code of Federal 
Regulations, shall be applied without regard to paragraph (c) of such 
section, and the Secretary of Health and Human Services shall recompute 
payments for discharges occurring on or after October 1, 2008, as if 
such paragraph had never been in effect.
    (b) No Effect on Subsequent Years.--Nothing in subsection (a) shall 
be construed as having any effect on the application of paragraph (d) 
of section 412.322 of title 42, Code of Federal Regulations.

SEC. 4205. STUDY ON APPLICATION OF EHR PAYMENT INCENTIVES FOR PROVIDERS 
              NOT RECEIVING OTHER INCENTIVE PAYMENTS.

    (a) Study.--
            (1) In general.--The Secretary of Health and Human Services 
        shall conduct a study to determine the extent to which and 
        manner in which payment incentives (such as under title XVIII 
        or XIX of the Social Security Act) and other funding for 
        purposes of implementing and using certified EHR technology (as 
        defined in section 1848(o)(4) of the Social Security Act, as 
        added by section 4311(a)) should be made available to health 
        care providers who are receiving minimal or no payment 
        incentives or other funding under this Act, under title XVIII 
        or XIX of such Act, or otherwise, for such purposes.
            (2) Details of study.--Such study shall include an 
        examination of--
                    (A) the adoption rates of certified EHR technology 
                (as so defined) by such health care providers;
                    (B) the clinical utility of such technology by such 
                health care providers;
                    (C) whether the services furnished by such health 
                care providers are appropriate for or would benefit 
                from the use of such technology;
                    (D) the extent to which such health care providers 
                work in settings that might otherwise receive an 
                incentive payment or other funding under this Act, 
                title XVIII or XIX of the Social Security Act, or 
                otherwise;
                    (E) the potential costs and the potential benefits 
                of making payment incentives and other funding 
                available to such health care providers; and
                    (F) any other issues the Secretary deems to be 
                appropriate.
    (b) Report.--Not later than June 30, 2010, the Secretary shall 
submit to Congress a report on the findings and conclusions of the 
study conducted under subsection (a).

SEC. 4206. STUDY ON AVAILABILITY OF OPEN SOURCE HEALTH INFORMATION 
              TECHNOLOGY SYSTEMS.

    (a) In General.--
            (1) Study.--The Secretary of Health and Human Services 
        shall, in consultation with the Under Secretary for Health of 
        the Veterans Health Administration, the Director of the Indian 
        Health Service, the Secretary of Defense, the Director of the 
        Agency for Healthcare Research and Quality, the Administrator 
        of the Health Resources and Services Administration, and the 
        Chairman of the Federal Communications Commission, conduct a 
        study on--
                    (A) the current availability of open source health 
                information technology systems to Federal safety net 
                providers (including small, rural providers);
                    (B) the total cost of ownership of such systems in 
                comparison to the cost of proprietary commercial 
                products available;
                    (C) the ability of such systems to respond to the 
                needs of, and be applied to, various populations 
                (including children and disabled individuals); and
                    (D) the capacity of such systems to facilitate 
                interoperability.
            (2) Considerations.--In conducting the study under 
        paragraph (1), the Secretary of Health and Human Services shall 
        take into account the circumstances of smaller health care 
        providers, health care providers located in rural or other 
        medically underserved areas, and safety net providers that 
        deliver a significant level of health care to uninsured 
        individuals, Medicaid beneficiaries, SCHIP beneficiaries, and 
        other vulnerable individuals.
    (b) Report.--Not later than October 1, 2010, the Secretary of 
Health and Human Services shall submit to Congress a report on the 
findings and the conclusions of the study conducted under subsection 
(a), together with recommendations for such legislation and 
administrative action as the Secretary determines appropriate.

                       PART II--MEDICAID FUNDING

SEC. 4211. MEDICAID PROVIDER EHR ADOPTION AND OPERATION PAYMENTS; 
              IMPLEMENTATION FUNDING.

    (a) In General.--Section 1903 of the Social Security Act (42 U.S.C. 
1396b) is amended--
            (1) in subsection (a)(3)--
                    (A) by striking ``and'' at the end of subparagraph 
                (D);
                    (B) by striking ``plus'' at the end of subparagraph 
                (E) and inserting ``and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(F)(i) 100 percent of so much of the sums 
                expended during such quarter as are attributable to 
                payments for certified EHR technology (and support 
                services including maintenance and training that is 
                for, or is necessary for the adoption and operation of, 
                such technology) by Medicaid providers described in 
                subsection (t)(1); and
                    ``(ii) 90 percent of so much of the sums expended 
                during such quarter as are attributable to payments for 
                reasonable administrative expenses related to the 
                administration of payments described in clause (i) if 
                the State meets the condition described in subsection 
                (t)(9); plus''; and
            (2) by inserting after subsection (s) the following new 
        subsection:
    ``(t)(1)(A) For purposes of subsection (a)(3)(F), the payments for 
certified EHR technology (and support services including maintenance 
that is for, or is necessary for the operation of, such technology) by 
Medicaid providers described in this paragraph are payments made by the 
State in accordance with this subsection of the applicable percent of 
the net allowable costs of Medicaid providers (as defined in paragraph 
(2)) for such technology (and support services).
    ``(B) For purposes of subparagraph (A), the term `applicable 
percent' means--
            ``(i) in the case of a Medicaid provider described in 
        paragraph (2)(A), 85 percent;
            ``(ii) in the case of a Medicaid provider described in 
        clause (i) or (ii) of paragraph (2)(B), 100 percent; and
            ``(iii) in the case of a Medicaid provider described in 
        clause (iii) of paragraph (2)(B), a percent specified by the 
        Secretary, but not less than 85 percent.
    ``(2) In this subsection and subsection (a)(3)(F), the term 
`Medicaid provider' means--
            ``(A) an eligible professional (as defined in paragraph 
        (3)(B)) who is not hospital-based and has at least 30 percent 
        of the professional's patient volume (as estimated in 
        accordance with standards established by the Secretary) 
        attributable to individuals who are receiving medical 
        assistance under this title; and
            ``(B)(i) a children's hospital,
    ``(ii) an acute-care hospital that is not described in clause (i) 
and that has at least 10 percent of the hospital's patient volume (as 
estimated in accordance with standards established by the Secretary) 
attributable to individuals who are receiving medical assistance under 
this title, or
    ``(iii) Federally-qualified health center or rural health clinic 
that has at least 30 percent of the center's or clinic's patient volume 
(as estimated in accordance with standards established by the 
Secretary) attributable to individuals who are receiving medical 
assistance under this title.
An eligible professional shall not qualify as a Medicaid provider under 
this subsection unless the professional has waived, in a manner 
specified by the Secretary, any right to payment under section 1848(o) 
with respect to the adoption or support of certified EHR technology by 
the eligible professional. In applying clauses (ii) and (iii) of 
subparagraph (B), the standards established by the Secretary for 
patient volume shall include individuals enrolled in a Medicaid managed 
care plan (under section 1903(m) or section 1932).
    ``(3) In this subsection and subsection (a)(3)(F):
            ``(A) The term `certified EHR technology' means a qualified 
        electronic health record (as defined in 3000(13) of the Public 
        Health Service Act) that is certified pursuant to section 
        3001(c)(5) of such Act as meeting standards adopted under 
        section 3004 of such Act that are applicable to the type of 
        record involved (as determined by the Secretary, such as an 
        ambulatory electronic health record for office-based physicians 
        or an inpatient hospital electronic health record for 
        hospitals).
            ``(B) The term `eligible professional' means a physician as 
        defined in paragraphs (1) and (2) of section 1861(r), and 
        includes a nurse mid-wife and a nurse practitioner.
            ``(C) The term `hospital-based' means, with respect to an 
        eligible professional, a professional (such as a pathologist, 
        anesthesiologist, or emergency physician) who furnishes 
        substantially all of the individual's professional services in 
        a hospital setting (whether inpatient or outpatient) and 
        through the use of the facilities and equipment, including 
        qualified electronic health records, of the hospital.
    ``(4)(A) The term `allowable costs' means, with respect to 
certified EHR technology of a Medicaid provider, costs of such 
technology (and support services including maintenance and training 
that is for, or is necessary for the adoption and operation of, such 
technology) as determined by the Secretary to be reasonable.
    ``(B) The term `net allowable costs' means allowable costs reduced 
by any payment that is made to the Medicaid provider involved from any 
other source that is directly attributable to payment for certified EHR 
technology or services described in subparagraph (A).
    ``(C) In no case shall--
            ``(i) the aggregate allowable costs under this subsection 
        (covering one or more years) with respect to a Medicaid 
        provider described in paragraph (2)(A) for purchase and initial 
        implementation of certified EHR technology (and services 
        described in subparagraph (A)) exceed $25,000 or include costs 
        over a period of longer than 5 years;
            ``(ii) for costs not described in clause (i) relating to 
        the operation, maintenance, or use of certified EHR technology, 
        the annual allowable costs under this subsection with respect 
        to such a Medicaid provider for costs not described in clause 
        (i) for any year exceed $10,000;
            ``(iii) payment described in paragraph (1) for costs 
        described in clause (ii) be made with respect to such a 
        Medicaid provider over a period of more than 5 years;
            ``(iv) the aggregate allowable costs under this subsection 
        with respect to such a Medicaid provider for all costs exceed 
        $75,000; or
            ``(v) the allowable costs, whether for purchase and initial 
        implementation, maintenance, or otherwise, for a Medicaid 
        provider described in paragraph (2)(B)(iii) exceed such 
        aggregate or annual limitation as the Secretary shall 
        establish, based on an amount determined by the Secretary as 
        being adequate to adopt and maintain certified EHR technology, 
        consistent with paragraph (6).
    ``(5) Payments described in paragraph (1) are not in accordance 
with this subsection unless the following requirements are met:
            ``(A) The State provides assurances satisfactory to the 
        Secretary that amounts received under subsection (a)(3)(F) with 
        respect to costs of a Medicaid provider are paid directly to 
        such provider without any deduction or rebate.
            ``(B) Such Medicaid provider is responsible for payment of 
        the costs described in such paragraph that are not provided 
        under this title.
            ``(C) With respect to payments to such Medicaid provider 
        for costs other than costs related to the initial adoption of 
        certified EHR technology, the Medicaid provider demonstrates 
        meaningful use of certified EHR technology through a means that 
        is approved by the State and acceptable to the Secretary, and 
        that may be based upon the methodologies applied under section 
        1848(o) or 1886(n). In establishing such means, which may 
        include the reporting of clinical quality measures to the 
        State, the State shall ensure that populations with unique 
        needs, such as children, are appropriately addressed.
            ``(D) To the extent specified by the Secretary, the 
        certified EHR technology is compatible with State or Federal 
        administrative management systems.
    ``(6)(A) In no case shall the payments described in paragraph (1), 
with respect to a hospital, exceed in the aggregate the product of--
            ``(i) the overall hospital EHR amount for the hospital 
        computed under subparagraph (B); and
            ``(ii) the Medicaid share for such hospital computed under 
        subparagraph (C).
    ``(B) For purposes of this paragraph, the overall hospital EHR 
amount, with respect to a hospital, is the sum of the applicable 
amounts specified in section 1886(n)(2)(A) for such hospital for the 
first 4 payment years (as estimated by the Secretary) determined as if 
the Medicare share specified in clause (ii) of such section were 1. The 
Secretary shall publish in the Federal Register the overall hospital 
EHR amount for each hospital eligible for payments under this 
subsection. In computing amounts under clause (ii) for payment years 
after the first payment year, the Secretary shall assume that in 
subsequent payment years discharges increase at the average annual rate 
of growth of the most recent three years for which discharge data are 
available.
    ``(C) The Medicaid share computed under this subparagraph, for a 
hospital for a period specified by the Secretary, shall be calculated 
in the same manner as the Medicare share under section 1886(n)(2)(D) 
for such a hospital and period, except that there shall be substituted 
for the numerator under clause (i) of such section the amount that is 
equal to the number of inpatient-bed-days (as established by the 
Secretary) which are attributable to individuals who are receiving 
medical assistance under this title and who are not described in 
section 1886(n)(2)(D)(i). In computing inpatient-bed-days under the 
previous sentence, the Secretary shall take into account inpatient-bed-
days attributable to inpatient-bed-days that are paid for individuals 
enrolled in a Medicaid managed care plan (under section 1903(m) or 
section 1932).
    ``(7) With respect to health care providers other than hospitals, 
the Secretary shall establish and implement a detailed process to 
ensure coordination of the different programs for payment of such 
health care providers for adoption or use of health information 
technology (including certified EHR technology), as well as payments 
for such health care providers provided under this title or title 
XVIII, to assure no duplication of funding. The Secretary shall 
promulgate regulations to carry out the preceding sentence.
    ``(8) In carrying out paragraph (5)(C), the State and Secretary 
shall seek, to the maximum extent practicable, to avoid duplicative 
requirements from Federal and State Governments to demonstrate 
meaningful use of certified EHR technology under this title and title 
XVIII. In doing so, the Secretary may deem satisfaction of requirements 
for such meaningful use for a payment year under title XVIII to be 
sufficient to qualify as meaningful use under this subsection. The 
Secretary may also specify the reporting periods under this subsection 
in order to carry out this paragraph.
    ``(9) In order to be provided Federal financial participation under 
subsection (a)(3)(F)(ii), a State must demonstrate to the satisfaction 
of the Secretary, that the State--
            ``(A) is using the funds provided for the purposes of 
        administering payments under this subsection, including 
        tracking of meaningful use by Medicaid providers;
            ``(B) is conducting adequate oversight of the program under 
        this subsection, including routine tracking of meaningful use 
        attestations and reporting mechanisms; and
            ``(C) is pursuing initiatives to encourage the adoption of 
        certified EHR technology to promote health care quality and the 
        exchange of health care information under this title, subject 
        to applicable laws and regulations governing such exchange.
    ``(10) The Secretary shall periodically submit reports to the 
Committee on Energy and Commerce of the House of Representatives and 
the Committee on Finance of the Senate on status, progress, and 
oversight of payments under paragraph (1).''.
    (b) Implementation Funding.--In addition to funds otherwise 
available, out of any funds in the Treasury not otherwise appropriated, 
there are appropriated to the Secretary of Health and Human Services 
for the Center for Medicare & Medicaid Services Program Management 
Account, $40,000,000 for each of fiscal years 2009 through 2015 and 
$20,000,000 for each succeeding fiscal year through fiscal year 2018, 
which shall be available for purposes of carrying out the provisions of 
(and the amendments made by) this part. Amounts appropriated under this 
subsection for a fiscal year shall be available until expended.
    (c) HHS Report on Implementation of Detailed Process To Assure No 
Duplication of Funding.--Not later than July 1, 2012, the Secretary of 
Health and Human Services shall submit to Congress a report on the 
establishment and implementation of the detailed process under section 
1903(t)(7) of the Social Security Act, as added by subsection (a), 
together with recommendations for such legislation and administrative 
action as the Secretary determines appropriate.

                      TITLE V--STATE FISCAL RELIEF

SEC. 5000. PURPOSES; TABLE OF CONTENTS.

    (a) Purposes.--The purposes of this title are as follows:
            (1) To provide fiscal relief to States in a period of 
        economic downturn.
            (2) To protect and maintain State Medicaid programs during 
        a period of economic downturn, including by helping to avert 
        cuts to provider payment rates and benefits or services, and to 
        prevent constrictions of income eligibility requirements for 
        such programs, but not to promote increases in such 
        requirements.
    (b) Table of Contents.--The table of contents for this title is as 
follows:

                      TITLE V--STATE FISCAL RELIEF

Sec. 5000. Purposes; table of contents.
Sec. 5001. Temporary increase of Medicaid FMAP.
Sec. 5002. Extension and update of special rule for increase of 
                            Medicaid DSH allotments for low DSH States.
Sec. 5003. Payment of Medicare liability to States as a result of the 
                            Special Disability Workload Project.
Sec. 5004. Funding for the Department of Health and Human Services 
                            Office of the Inspector General.
Sec. 5005. GAO study and report regarding State needs during periods of 
                            national economic downturn.

SEC. 5001. TEMPORARY INCREASE OF MEDICAID FMAP.

    (a) Permitting Maintenance of Fmap.--Subject to subsections (e), 
(f), and (g), if the FMAP determined without regard to this section for 
a State for--
            (1) fiscal year 2009 is less than the FMAP as so determined 
        for fiscal year 2008, the FMAP for the State for fiscal year 
        2008 shall be substituted for the State's FMAP for fiscal year 
        2009, before the application of this section;
            (2) fiscal year 2010 is less than the FMAP as so determined 
        for fiscal year 2008 or fiscal year 2009 (after the application 
        of paragraph (1)), the greater of such FMAP for the State for 
        fiscal year 2008 or fiscal year 2009 shall be substituted for 
        the State's FMAP for fiscal year 2010, before the application 
        of this section; and
            (3) fiscal year 2011 is less than the FMAP as so determined 
        for fiscal year 2008, fiscal year 2009 (after the application 
        of paragraph (1)), or fiscal year 2010 (after the application 
        of paragraph (2)), the greatest of such FMAP for the State for 
        fiscal year 2008, fiscal year 2009, or fiscal year 2010 shall 
        be substituted for the State's FMAP for fiscal year 2011, 
        before the application of this section, but only for the first 
        calendar quarter in fiscal year 2011.
    (b) General 7.6 Percentage Point Increase.--Subject to subsections 
(e), (f), and (g), for each State for calendar quarters during the 
recession adjustment period (as defined in subsection (h)(2)), the FMAP 
(after the application of subsection (a)) shall be increased (without 
regard to any limitation otherwise specified in section 1905(b) of the 
Social Security Act) by 7.6 percentage points.
    (c) Additional Relief Based on Increase in Unemployment.--
            (1) In general.--Subject to subsections (e), (f), and (g), 
        if a State is a qualifying State under paragraph (2) for a 
        calendar quarter occurring during the recession adjustment 
        period, the FMAP for the State shall be further increased by 
        the number of percentage points equal to the product of the 
        State percentage applicable for the State under section 1905(b) 
        of the Social Security Act (42 U.S.C. 1396d(b)) after the 
        application of subsections (a) and (b) and the applicable 
        percent determined in paragraph (3) for the calendar quarter 
        (or, if greater, for a previous such calendar quarter, subject 
        to paragraph (4)) .
            (2) Qualifying criteria.--
                    (A) In general.--For purposes of paragraph (1), a 
                State qualifies for additional relief under this 
                subsection for a calendar quarter occurring during the 
                recession adjustment period if the State is 1 of the 50 
                States or the District of Columbia and the State 
                satisfies any of the following criteria for the 
                quarter:
                            (i) An increase of at least 1.5 percentage 
                        points, but less than 2.5 percentage points, in 
                        the average monthly unemployment rate, 
                        seasonally adjusted, for the State or District, 
                        as determined by comparing months in the most 
                        recent previous 3-consecutive-month period for 
                        which data are available for the State or 
                        District to the lowest average monthly 
                        unemployment rate, seasonally adjusted, for the 
                        State or District for any 3-consecutive-month 
                        period preceding that period and beginning on 
                        or after January 1, 2006 (based on the most 
                        recently available monthly publications of the 
                        Bureau of Labor Statistics of the Department of 
                        Labor).
                            (ii) An increase of at least 2.5 percentage 
                        points, but less than 3.5 percentage points, in 
                        the average monthly unemployment rate, 
                        seasonally adjusted, for the State or District 
                        (as so determined).
                            (iii) An increase of at least 3.5 
                        percentage points for the State or District, in 
                        the average monthly unemployment rate, 
                        seasonally adjusted, for the State or District 
                        (as so determined).
                    (B) Maintenance of status.--If a State qualifies 
                for additional relief under this subsection for a 
                calendar quarter, it shall be deemed to have qualified 
                for such relief for each subsequent calendar quarter 
                ending before July 1, 2010.
            (3) Applicable percent.--For purposes of paragraph (1), the 
        applicable percent is--
                    (A) 2.5 percent, if the State satisfies the 
                criteria described in paragraph (2)(A)(i) for the 
                calendar quarter;
                    (B) 4.5 percent if the State satisfies the criteria 
                described in paragraph (2)(A)(ii) for the calendar 
                quarter; and
                    (C) 6.5 percent if the State satisfies the criteria 
                described in paragraph (2)(A)(iii) for the calendar 
                quarter.
            (4) Maintenance of higher percentage reduction for period 
        after lower percentage deduction would otherwise take effect.--
                    (A) Hold harmless period.--If the percentage 
                reduction applied to a State under paragraph (3) for 
                any calendar quarter in the recession adjustment period 
                beginning on or after January 1, 2009, and ending 
                before July 1, 2010, (determined without regard to this 
                paragraph) is less than the percentage reduction 
                applied for the preceding quarter (as so determined), 
                the higher percentage reduction shall continue in 
                effect for each subsequent calendar quarter ending 
                before July 1, 2010.
                    (B) Notice of decrease in percentage reduction.--
                The Secretary shall notify a State at least 3 months 
                prior to applying any lower percentage reduction to the 
                State under paragraph (3).
    (d) Increase in Cap on Medicaid Payments to Territories.--Subject 
to subsections (f) and (g), with respect to entire fiscal years 
occurring during the recession adjustment period and with respect to 
fiscal years only a portion of which occurs during such period (and in 
proportion to the portion of the fiscal year that occurs during such 
period), the amounts otherwise determined for Puerto Rico, the Virgin 
Islands, Guam, the Northern Mariana Islands, and American Samoa under 
subsections (f) and (g) of section 1108 of the Social Security Act (42 
6 U.S.C. 1308) shall each be increased by 15.2 percent.
    (e) Scope of Application.--The increases in the FMAP for a State 
under this section shall apply for purposes of title XIX of the Social 
Security Act and shall not apply with respect to--
            (1) disproportionate share hospital payments described in 
        section 1923 of such Act (42 U.S.C. 1396r-4);
            (2) payments under title IV of such Act (42 U.S.C. 601 et 
        seq.) (except that the increases under subsections (a) and (b) 
        shall apply to payments under part E of title IV of such Act 
        (42 U.S.C. 670 et seq.));
            (3) payments under title XXI of such Act (42 U.S.C. 1397aa 
        et seq.);
            (4) any payments under title XIX of such Act that are based 
        on the enhanced FMAP described in section 2105(b) of such Act 
        (42 U.S.C. 1397ee(b)); or
            (5) any payments under title XIX of such Act that are 
        attributable to expenditures for medical assistance provided to 
        individuals made eligible under a State plan under title XIX of 
        the Social Security Act (including under any waiver under such 
        title or under section 1115 of such Act (42 U.S.C. 1315)) 
        because of income standards (expressed as a percentage of the 
        poverty line) for eligibility for medical assistance that are 
        higher than the income standards (as so expressed) for such 
        eligibility as in effect on July 1, 2008.
    (f) State Ineligibility.--
            (1) Maintenance of eligibility requirements.--
                    (A) In general.--Subject to subparagraphs (B) and 
                (C), a State is not eligible for an increase in its 
                FMAP under subsection (a), (b), or (c), or an increase 
                in a cap amount under subsection (d), if eligibility 
                standards, methodologies, or procedures under its State 
                plan under title XIX of the Social Security Act 
                (including any waiver under such title or under section 
                1115 of such Act (42 U.S.C. 1315)) are more restrictive 
                than the eligibility standards, methodologies, or 
                procedures, respectively, under such plan (or waiver) 
                as in effect on July 1, 2008.
                    (B) State reinstatement of eligibility permitted.--
                Subject to subparagraph (C), a State that has 
                restricted eligibility standards, methodologies, or 
                procedures under its State plan under title XIX of the 
                Social Security Act (including any waiver under such 
                title or under section 1115 of such Act (42 U.S.C. 
                1315)) after July 1, 2008, is no longer ineligible 
                under subparagraph (A) beginning with the first 
                calendar quarter in which the State has reinstated 
                eligibility standards, methodologies, or procedures 
                that are no more restrictive than the eligibility 
                standards, methodologies, or procedures, respectively, 
                under such plan (or waiver) as in effect on July 1, 
                2008.
                    (C) Special rules.--A State shall not be ineligible 
                under subparagraph (A)--
                            (i) for the calendar quarters before July 
                        1, 2009, on the basis of a restriction that was 
                        applied after July 1, 2008, and before the date 
                        of the enactment of this Act, if the State 
                        prior to July 1, 2009, has reinstated 
                        eligibility standards, methodologies, or 
                        procedures that are no more restrictive than 
                        the eligibility standards, methodologies, or 
                        procedures, respectively, under such plan (or 
                        waiver) as in effect on July 1, 2008; or
                            (ii) on the basis of a restriction that was 
                        directed to be made under State law as of July 
                        1, 2008, and would have been in effect as of 
                        such date, but for a delay in the request for, 
                        and approval of, a waiver under section 1115 of 
                        such Act with respect to such restriction.
            (2) Compliance with prompt pay requirements.--No State 
        shall be eligible for an increased FMAP rate as provided under 
        this section for any claim submitted by a provider subject to 
        the terms of section 1902(a)(37)(A) of the Social Security Act 
        (42 U.S.C. 1396a(a)(37)(A)) during any period in which that 
        State has failed to pay claims in accordance with section 
        1902(a)(37)(A) of such Act. Each State shall report to the 
        Secretary, no later than 30 days following the 1st day of the 
        month, its compliance with the requirements of section 
        1902(a)(37)(A) of the Social Security Act as they pertain to 
        claims made for covered services during the preceding month.
            (3) No waiver authority.--The Secretary may not waive the 
        application of this subsection or subsection (g) under section 
        1115 of the Social Security Act or otherwise.
    (g) Requirements.--
            (1) In general.--A State may not deposit or credit the 
        additional Federal funds paid to the State as a result of this 
        section to any reserve or rainy day fund maintained by the 
        State.
            (2) State reports.--Each State that is paid additional 
        Federal funds as a result of this section shall, not later than 
        September 30, 2011, submit a report to the Secretary, in such 
        form and such manner as the Secretary shall determine, 
        regarding how the additional Federal funds were expended.
            (3) Additional requirement for certain states.--In the case 
        of a State that requires political subdivisions within the 
        State to contribute toward the non-Federal share of 
        expenditures under the State Medicaid plan required under 
        section 1902(a)(2) of the Social Security Act (42 U.S.C. 
        1396a(a)(2)), the State is not eligible for an increase in its 
        FMAP under subsection (b) or (c), or an increase in a cap 
        amount under subsection (d), if it requires that such political 
        subdivisions pay for quarters during the recession adjustment 
        period a greater percentage of the non-Federal share of such 
        expenditures, or a greater percentage of the non-Federal share 
        of payments under section 1923, than the respective percentage 
        that would have been required by the State under such plan on 
        September 30, 2008, prior to application of this section.
    (h) Definitions.--In this section, except as otherwise provided:
            (1) FMAP.--The term ``FMAP'' means the Federal medical 
        assistance percentage, as defined in section 1905(b) of the 
        Social Security Act (42 U.S.C. 1396d(b)), as determined without 
        regard to this section except as otherwise specified.
            (2) Poverty line.--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.
            (3) Recession adjustment period.--The term ``recession 
        adjustment period'' means the period beginning on October 1, 
        2008, and ending on December 31, 2010.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (5) State.--The term ``State'' has the meaning given such 
        term for purposes of title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.).
    (i) Sunset.--This section shall not apply to items and services 
furnished after the end of the recession adjustment period.

SEC. 5002. EXTENSION AND UPDATE OF SPECIAL RULE FOR INCREASE OF 
              MEDICAID DSH ALLOTMENTS FOR LOW DSH STATES.

    Section 1923(f)(5) of the Social Security Act (42 U.S.C. 1396r-
4(f)(5)) is amended--
            (1) in subparagraph (B)--
                    (A) in the subparagraph heading, by striking ``year 
                2004 and subsequent fiscal years'' and inserting 
                ``years 2004 through 2008'';
                    (B) in clause (i), by inserting ``and'' after the 
                semicolon;
                    (C) in clause (ii), by striking ``; and'' and 
                inserting a period; and
                    (D) by striking clause (iii); and
            (2) by adding at the end the following subparagraph:
                    ``(C) For fiscal year 2009 and subsequent fiscal 
                years.--In the case of a State in which the total 
                expenditures under the State plan (including Federal 
                and State shares) for disproportionate share hospital 
                adjustments under this section for fiscal year 2006, as 
                reported to the Administrator of the Centers for 
                Medicare & Medicaid Services as of August 31, 2009, is 
                greater than 0 but less than 3 percent of the State's 
                total amount of expenditures under the State plan for 
                medical assistance during the fiscal year, the DSH 
                allotment for the State with respect to--
                            ``(i) fiscal year 2009, shall be the DSH 
                        allotment for the State for fiscal year 2008 
                        increased by 16 percent;
                            ``(ii) fiscal year 2010, shall be the DSH 
                        allotment for the State for fiscal year 2009 
                        increased by 16 percent;
                            ``(iii) fiscal year 2011 for the period 
                        ending on December 31, 2010, shall be \1/4\ of 
                        the DSH allotment for the State for fiscal year 
                        2010 increased by 16 percent;
                            ``(iv) fiscal year 2011 for the period 
                        beginning on January 1, 2011, and ending on 
                        September 30, 2011, shall be \3/4\ of the DSH 
                        allotment that would have been determined under 
                        this subsection for the State for fiscal year 
                        2010 if this subparagraph had not been enacted;
                            ``(v) fiscal year 2012, shall be the DSH 
                        allotment that would have been determined under 
                        this subsection for the State for fiscal year 
                        2010 if this subparagraph had not been enacted; 
                        and
                            ``(vi) fiscal year 2013 and any subsequent 
                        fiscal year, shall be the DSH allotment for the 
                        State for the previous fiscal year subject to 
                        an increase for inflation as provided in 
                        paragraph (3)(A).''.

SEC. 5003. PAYMENT OF MEDICARE LIABILITY TO STATES AS A RESULT OF THE 
              SPECIAL DISABILITY WORKLOAD PROJECT.

    (a) In General.--The Secretary, in consultation with the 
Commissioner, shall work with each State to reach an agreement, not 
later than 3 months after the date of enactment of this Act, on the 
amount of a payment for the State related to the Medicare program 
liability as a result of the Special Disability Workload project, 
subject to the requirements of subsection (c).
    (b) Payments.--
            (1) Deadline for making payments.--Not later than 30 days 
        after reaching an agreement with a State under subsection (a), 
        the Secretary shall pay the State, from the amounts 
        appropriated under paragraph (2), the payment agreed to for the 
        State.
            (2) Appropriation.--Out of any money in the Treasury not 
        otherwise appropriated, there is appropriated $3,000,000,000 
        for fiscal year 2009 for making payments to States under 
        paragraph (1).
            (3) Limitations.--In no case may--
                    (A) the aggregate amount of payments made by the 
                Secretary to States under paragraph (1) exceed 
                $3,000,000,000; or
                    (B) any payments be provided by the Secretary under 
                this section after the first day of the first month 
                that begins 4 months after the date of enactment of 
                this Act.
    (c) Requirements.--The requirements of this subsection are the 
following:
            (1) Federal data used to determine amount of payments.--The 
        amount of the payment under subsection (a) for each State is 
        determined on the basis of the most recent Federal data 
        available, including the use of proxies and reasonable 
        estimates as necessary, for determining expeditiously the 
        amount of the payment that shall be made to each State that 
        enters into an agreement under this section. The payment 
        methodology shall consider the following factors:
                    (A) The number of SDW cases found to have been 
                eligible for benefits under the Medicare program and 
                the month of the initial Medicare program eligibility 
                for such cases.
                    (B) The applicable non-Federal share of 
                expenditures made by a State under the Medicaid program 
                during the time period for SDW cases.
                    (C) Such other factors as the Secretary and the 
                Commissioner, in consultation with the States, 
                determine appropriate.
            (2) Conditions for payments.--A State shall not receive a 
        payment under this section unless the State--
                    (A) waives the right to file a civil action (or to 
                be a party to any action) in any Federal or State court 
                in which the relief sought includes a payment from the 
                United States to the State related to the Medicare 
                liability under title XVIII of the Social Security Act 
                (42 U.S.C. 1395 et seq.) as a result of the Special 
                Disability Workload project; and
                    (B) releases the United States from any further 
                claims for reimbursement of State expenditures as a 
                result of the Special Disability Workload project.
            (3) No individual state claims data required.--No State 
        shall be required to submit individual claims evidencing 
        payment under the Medicaid program as a condition for receiving 
        a payment under this section.
            (4) Ineligible states.--No State that is a party to a civil 
        action in any Federal or State court in which the relief sought 
        includes a payment from the United States to the State related 
        to the Medicare liability under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.) as a result of the 
        Special Disability Workload project shall be eligible to 
        receive a payment under this section while such an action is 
        pending or if such an action is resolved in favor of the State.
    (d) Definitions.--In this section:
            (1) Commissioner.--The term ``Commissioner'' means the 
        Commissioner of Social Security.
            (2) Medicaid program.--The term ``Medicaid program'' means 
        the program of medical assistance established under title XIX 
        of the Social Security Act (42 U.S.C. 1396a et seq.) and 
        includes medical assistance provided under any waiver of that 
        program approved under section 1115 or 1915 of such Act (42 
        U.S.C. 1315, 1396n) or otherwise.
            (3) Medicare program.--The term ``Medicare program'' means 
        the program established under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.).
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (5) SDW case.--The term ``SDW case'' means a case in the 
        Special Disability Workload project involving an individual 
        determined by the Commissioner to have been eligible for 
        benefits under title II of the Social Security Act (42 U.S.C. 
        401 et seq.) for a period during which such benefits were not 
        provided to the individual and who was, during all or part of 
        such period, enrolled in a State Medicaid program.
            (6) Special disability workload project.--The term 
        ``Special Disability Workload project'' means the project 
        described in the 2008 Annual Report of the Board of Trustees of 
        the Federal Old-Age and Survivors Insurance and Federal 
        Disability Insurance Trust Funds, H.R. Doc. No. 110-104, 110th 
        Cong. (2008).
            (7) State.--The term ``State'' means each of the 50 States 
        and the District of Columbia.

SEC. 5004. FUNDING FOR THE DEPARTMENT OF HEALTH AND HUMAN SERVICES 
              OFFICE OF THE INSPECTOR GENERAL.

    For purposes of ensuring the proper expenditure of Federal funds 
under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.), 
there is appropriated to the Office of the Inspector General of the 
Department of Health and Human Services, out of any money in the 
Treasury not otherwise appropriated and without further appropriation, 
$31,250,000 for the recession adjustment period (as defined in section 
5001(h)(3)). Amounts appropriated under this section shall remain 
available for expenditure until expended and shall be in addition to 
any other amounts appropriated or made available to such Office for 
such purposes.

SEC. 5005. GAO STUDY AND REPORT REGARDING STATE NEEDS DURING PERIODS OF 
              NATIONAL ECONOMIC DOWNTURN.

    (a) In General.--The Comptroller General of the United States shall 
study the period of national economic downturn in effect on the date of 
enactment of this Act, as well as previous periods of national economic 
downturn since 1974, for the purpose of developing recommendations for 
addressing the needs of States during such periods. As part of such 
analysis, the Comptroller General shall study the past and projected 
effects of temporary increases in the Federal medical assistance 
percentage under the Medicaid program with respect to such periods.
    (b) Report.--Not later than April 1, 2011, the Comptroller General 
of the United States shall submit a report to the appropriate 
committees of Congress on the results of the study conducted under 
paragraph (1). Such report shall include the following:
            (1) Such recommendations as the Comptroller General 
        determines appropriate for modifying the national economic 
        downturn assistance formula for temporary adjustment of the 
        Federal medical assistance percentage under Medicaid (also 
        referred to as a ``countercyclical FMAP'') described in GAO 
        report number GAO-07-97 to improve the effectiveness of the 
        application of such percentage in addressing the needs of 
        States during periods of national economic downturn, including 
        recommendations for--
                    (A) improvements to the factors that would begin 
                and end the application of such percentage;
                    (B) how the determination of the amount of such 
                percentage could be adjusted to address State and 
                regional economic variations during such periods; and
                    (C) how the determination of the amount of such 
                percentage could be adjusted to be more responsive to 
                actual Medicaid costs incurred by States during such 
                periods.
            (2) An analysis of the impact on States during such periods 
        of--
                    (A) declines in private health benefits coverage;
                    (B) declines in State revenues; and
                    (C) caseload maintenance and growth under Medicaid, 
                the State Children's Health Insurance Program, or any 
                other publicly funded programs to provide health 
                benefits coverage for State residents.
            (3) Identification of, and recommendations for addressing, 
        the effects on States of any other specific economic indicators 
        that the Comptroller General determines appropriate.
                                                        Calendar No. 20

111th CONGRESS

  1st Session

                                 S. 350

_______________________________________________________________________

                                 A BILL

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

_______________________________________________________________________

                            January 29, 2009

                 Read twice and placed on the calendar
```