766 
shall not be regarded as failing to comply with the 
requirements of such title solely on the basis of its 
failure to meet these additional requirements before 
the first day of the first calendar quarter beginning 
after the close of the first regular session of the 
State legislature that begins after the date of the en-
actment of this Act. For purposes of the previous 
sentence, in the case of a State that has a 2-year 
legislative session, each year of such session shall be 
deemed to be a separate regular session of the State 
legislature. 
SEC. 1712. TOBACCO CESSATION. 
(a) DROPPING TOBACCO CESSATION EXCLUSION 
FROM
COVERED
OUTPATIENT
DRUGS.—Section 
1927(d)(2) of the Social Security Act (42 U.S.C. 1396r– 
8(d)(2)) is amended— 
(1) by striking subparagraph (E); 
(2) in subparagraph (G), by inserting before the 
period at the end the following: ‘‘, except agents ap-
proved by the Food and Drug Administration for 
purposes of promoting, and when used to promote, 
tobacco cessation’’; and 
(3) 
by 
redesignating 
subparagraphs 
(F) 
through (K) as subparagraphs (E) through (J), re-
spectively. 
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(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to drugs and services furnished 
on or after January 1, 2010. 
SEC. 1713. OPTIONAL COVERAGE OF NURSE HOME VISITA-
TION SERVICES. 
(a) IN GENERAL.—Section 1905 of the Social Secu-
rity Act (42 U.S.C. 1396d), as amended by sections 
1701(a)(2) and 1711(a), is amended— 
(1) in subsection (a)— 
(A) in paragraph (27), by striking ‘‘and’’ 
at the end; 
(B) by redesignating paragraph (28) as 
paragraph (29); and 
(C) by inserting after paragraph (27) the 
following new paragraph: 
‘‘(28) nurse home visitation services (as defined 
in subsection (aa)); and’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(aa) The term ‘nurse home visitation services’ 
means home visits by trained nurses to families with a 
first-time pregnant woman, or a child (under 2 years of 
age), who is eligible for medical assistance under this title, 
but only, to the extent determined by the Secretary based 
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upon evidence, that such services are effective in one or 
more of the following: 
‘‘(1) Improving maternal or child health and 
pregnancy outcomes or increasing birth intervals be-
tween pregnancies. 
‘‘(2) Reducing the incidence of child abuse, ne-
glect, and injury, improving family stability (includ-
ing reduction in the incidence of intimate partner vi-
olence), or reducing maternal and child involvement 
in the criminal justice system. 
‘‘(3) Increasing economic self-sufficiency, em-
ployment advancement, school-readiness, and edu-
cational achievement, or reducing dependence on 
public assistance.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to services furnished on or after 
January 1, 2010. 
(c) CONSTRUCTION.—Nothing in the amendments 
made by this section shall be construed as affecting the 
ability of a State under title XIX or XXI of the Social 
Security Act to provide nurse home visitation services as 
part of another class of items and services falling within 
the definition of medical assistance or child health assist-
ance under the respective title, or as an administrative ex-
penditure for which payment is made under section 
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1903(a) or 2105(a) of such Act, respectively, on or after 
the date of the enactment of this Act. 
SEC. 1714. STATE ELIGIBILITY OPTION FOR FAMILY PLAN-
NING SERVICES. 
(a) 
COVERAGE
AS
OPTIONAL
CATEGORICALLY 
NEEDY GROUP.— 
(1) IN
GENERAL.—Section 1902(a)(10)(A)(ii) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1396a(a)(10)(A)(ii)) is amended— 
(A) in subclause (XVIII), by striking ‘‘or’’ 
at the end; 
(B) in subclause (XIX), by adding ‘‘or’’ at 
the end; and 
(C) by adding at the end the following new 
subclause: 
‘‘(XX) who are described in subsection (hh) (re-
lating to individuals who meet certain income stand-
ards);’’. 
(2) GROUP DESCRIBED.—Section 1902 of such 
Act (42 U.S.C. 1396a), as amended by section 1703, 
is amended by adding at the end the following new 
subsection: 
‘‘(hh)(1) Individuals described in this subsection are 
individuals— 
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‘‘(A) whose income does not exceed an in-
come eligibility level established by the State 
that does not exceed the highest income eligi-
bility level established under the State plan 
under this title (or under its State child health 
plan under title XXI) for pregnant women; and 
‘‘(B) who are not pregnant. 
‘‘(2) At the option of a State, individuals de-
scribed in this subsection may include individuals 
who, had individuals applied on or before January 1, 
2007, would have been made eligible pursuant to the 
standards and processes imposed by that State for 
benefits described in clause (XV) of the matter fol-
lowing subparagraph (G) of section subsection 
(a)(10) pursuant to a waiver granted under section 
1115. 
‘‘(3) At the option of a State, for purposes of 
subsection (a)(17)(B), in determining eligibility for 
services under this subsection, the State may con-
sider only the income of the applicant or recipient.’’. 
(3) 
LIMITATION
ON
BENEFITS.—Section 
1902(a)(10) of such Act (42 U.S.C. 1396a(a)(10)) 
is amended in the matter following subparagraph 
(G)— 
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(1) IN GENERAL.—Title XIX of the Social Se-
curity Act (42 U.S.C. 1396 et seq.) is amended by 
inserting after section 1920B the following: 
‘‘PRESUMPTIVE ELIGIBILITY FOR FAMILY PLANNING 
SERVICES 
‘‘SEC. 1920C. (a) STATE OPTION.—State plan ap-
proved under section 1902 may provide for making med-
ical assistance available to an individual described in sec-
tion 1902(hh) (relating to individuals who meet certain 
income eligibility standard) during a presumptive eligi-
bility period. In the case of an individual described in sec-
tion 1902(hh), such medical assistance shall be limited to 
family planning services and supplies described in 
1905(a)(4)(C) and, at the State’s option, medical diag-
nosis and treatment services that are provided in conjunc-
tion with a family planning service in a family planning 
setting. 
‘‘(b) DEFINITIONS.—For purposes of this section: 
‘‘(1) PRESUMPTIVE ELIGIBILITY PERIOD.—The 
term ‘presumptive eligibility period’ means, with re-
spect to an individual described in subsection (a), 
the period that— 
‘‘(A) begins with the date on which a 
qualified entity determines, on the basis of pre-
liminary information, that the individual is de-
scribed in section 1902(hh); and 
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‘‘(B) ends with (and includes) the earlier 
of— 
‘‘(i) the day on which a determination 
is made with respect to the eligibility of 
such individual for services under the State 
plan; or 
‘‘(ii) in the case of such an individual 
who does not file an application by the last 
day of the month following the month dur-
ing which the entity makes the determina-
tion referred to in subparagraph (A), such 
last day. 
‘‘(2) QUALIFIED ENTITY.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘qualified entity’ means 
any entity that— 
‘‘(i) is eligible for payments under a 
State plan approved under this title; and 
‘‘(ii) is determined by the State agen-
cy to be capable of making determinations 
of the type described in paragraph (1)(A). 
‘‘(B) RULE OF CONSTRUCTION.—Nothing 
in this paragraph shall be construed as pre-
venting a State from limiting the classes of en-
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tities that may become qualified entities in 
order to prevent fraud and abuse. 
‘‘(c) ADMINISTRATION.— 
‘‘(1) IN GENERAL.—The State agency shall pro-
vide qualified entities with— 
‘‘(A) such forms as are necessary for an 
application to be made by an individual de-
scribed in subsection (a) for medical assistance 
under the State plan; and 
‘‘(B) information on how to assist such in-
dividuals in completing and filing such forms. 
‘‘(2) NOTIFICATION REQUIREMENTS.—A quali-
fied 
entity 
that 
determines 
under 
subsection 
(b)(1)(A) that an individual described in subsection 
(a) is presumptively eligible for medical assistance 
under a State plan shall— 
‘‘(A) notify the State agency of the deter-
mination within 5 working days after the date 
on which determination is made; and 
‘‘(B) inform such individual at the time 
the determination is made that an application 
for medical assistance is required to be made by 
not later than the last day of the month fol-
lowing the month during which the determina-
tion is made. 
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‘‘(3) 
APPLICATION
FOR
MEDICAL
ASSIST-
ANCE.—In the case of an individual described in 
subsection (a) who is determined by a qualified enti-
ty to be presumptively eligible for medical assistance 
under a State plan, the individual shall apply for 
medical assistance by not later than the last day of 
the month following the month during which the de-
termination is made. 
‘‘(d) PAYMENT.—Notwithstanding any other provi-
sion of law, medical assistance that— 
‘‘(1) is furnished to an individual described in 
subsection (a)— 
‘‘(A) during a presumptive eligibility pe-
riod; 
‘‘(B) by a entity that is eligible for pay-
ments under the State plan; and 
‘‘(2) is included in the care and services covered 
by the State plan, 
shall be treated as medical assistance provided by such 
plan for purposes of clause (4) of the first sentence of 
section 1905(b).’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1902(a)(47) of the Social Se-
curity Act (42 U.S.C. 1396a(a)(47)) is amend-
ed by inserting before the semicolon at the end 
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the following: ‘‘and provide for making medical 
assistance available to individuals described in 
subsection (a) of section 1920C during a pre-
sumptive eligibility period in accordance with 
such section’’. 
(B) Section 1903(u)(1)(D)(v) of such Act 
(42 U.S.C. 1396b(u)(1)(D)(v)) is amended— 
(i) by striking ‘‘or for’’ and inserting 
‘‘for’’; and 
(ii) by inserting before the period the 
following: ‘‘, or for medical assistance pro-
vided to an individual described in sub-
section (a) of section 1920C during a pre-
sumptive eligibility period under such sec-
tion’’. 
(c) CLARIFICATION OF COVERAGE OF FAMILY PLAN-
NING SERVICES AND SUPPLIES.—Section 1937(b) of the 
Social Security Act (42 U.S.C. 1396u–7(b)) is amended 
by adding at the end the following: 
‘‘(5) COVERAGE OF FAMILY PLANNING SERV-
ICES AND SUPPLIES.—Notwithstanding the previous 
provisions of this section, a State may not provide 
for medical assistance through enrollment of an indi-
vidual with benchmark coverage or benchmark-equiv-
alent coverage under this section unless such cov-
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erage includes for any individual described in section 
1905(a)(4)(C), medical assistance for family plan-
ning services and supplies in accordance with such 
section.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section take effect on the date of the enactment of 
this Act and shall apply to items and services furnished 
on or after such date. 
Subtitle C—Access 
SEC. 1721. PAYMENTS TO PRIMARY CARE PRACTITIONERS. 
(a) IN GENERAL.— 
(1) 
FEE-FOR-SERVICE
PAYMENTS.—Section 
1902(a)(13) of the Social Security Act (42 U.S.C. 
1396b(a)(13)) is amended— 
(A) by striking ‘‘and’’ at the end of sub-
paragraph (A); 
(B) by adding ‘‘and’’ at the end of sub-
paragraph (B); and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(C) payment for primary care services (as 
defined in section 1848(j)(5)(A), but applied 
without regard to clause (ii) thereof) furnished 
by physicians (or for services furnished by other 
health care professionals that would be primary 
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care services under such section if furnished by 
a physician) at a rate not less than 80 percent 
of the payment rate applicable to such services 
and physicians or professionals (as the case 
may be) under part B of title XVIII for services 
furnished in 2010, 90 percent of such rate for 
services and physicians (or professionals) fur-
nished in 2011, and 100 percent of such pay-
ment rate for services and physicians (or pro-
fessionals) furnished in 2012 or a subsequent 
year;’’. 
(2) 
UNDER
MEDICAID
MANAGED
CARE 
PLANS.—Section 1923(f) of such Act (42 U.S.C. 
1396u–2(f)) is amended— 
(A) in the heading, by adding at the end 
the following: ‘‘; ADEQUACY OF PAYMENT FOR 
PRIMARY CARE SERVICES’’; and 
(B) by inserting before the period at the 
end the following: ‘‘and, in the case of primary 
care 
services 
described 
in 
section 
1902(a)(13)(C), consistent with the minimum 
payment rates specified in such section (regard-
less of the manner in which such payments are 
made, including in the form of capitation or 
partial capitation)’’. 
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(b) INCREASE IN PAYMENT USING 100% FMAP.— 
Section 1905(y), as added by section 1701(a)(2)(B) and 
as amended by section 1701(c)(2), is amended by adding 
at the end the following: 
‘‘(3)(A) The portion of the amounts expended 
for medical assistance for services described in sec-
tion 1902(a)(13)(C) furnished on or after January 
1, 2010, that is attributable to the amount by which 
the minimum payment rate required under such sec-
tion (or, by application, section 1932(f)) exceeds the 
payment rate applicable to such services under the 
State plan as of June 16, 2009. 
‘‘(B) Subparagraphs (A) shall not be construed 
as preventing the payment of Federal financial par-
ticipation based on the Federal medical assistance 
percentage for amounts in excess of those specified 
under such subparagraphs.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to services furnished on or after 
January 1, 2010. 
SEC. 1722. MEDICAL HOME PILOT PROGRAM. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall establish under this section a med-
ical home pilot program under which a State may apply 
to the Secretary for approval of a medical home pilot 
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project described in subsection (b) (in this section referred 
to as a ‘‘pilot project’’) for the application of the medical 
home concept under title XIX of the Social Security Act. 
The pilot program shall operate for a period of up to 5 
years. 
(b) PILOT PROJECT DESCRIBED.— 
(1) IN GENERAL.—A pilot project is a project 
that applies one or more of the medical home models 
described in section 1866E(a)(3) of the Social Secu-
rity Act (as inserted by section 1302(a)) or such 
other model as the Secretary may approve, to high 
need beneficiaries (including medically fragile chil-
dren and high-risk pregnant women) who are eligible 
for medical assistance under title XIX of the Social 
Security Act. The Secretary shall provide for appro-
priate coordination of the pilot program under this 
section with the medical home pilot program under 
section 1866E of such Act. 
(2) LIMITATION.—A pilot project shall be for a 
duration of not more than 5 years. 
(c) ADDITIONAL INCENTIVES.—In the case of a pilot 
project, the Secretary may— 
(1) 
waive 
the 
requirements 
of 
section 
1902(a)(1) of the Social Security Act (relating to 
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statewideness) and section 1902(a)(10)(B) of such 
Act (relating to comparability); and 
(2) increase to up to 90 percent (for the first 
2 years of the pilot program) or 75 percent (for the 
next 3 years) the matching percentage for adminis-
trative expenditures (such as those for community 
care workers). 
(d) MEDICALLY FRAGILE CHILDREN.—In the case of 
a model involving medically fragile children, the model 
shall ensure that the patient-centered medical home serv-
ices received by each child, in addition to fulfilling the re-
quirements under 1866E(b)(1) of the Social Security Act, 
provide for continuous involvement and education of the 
parent or caregiver and for assistance to the child in ob-
taining necessary transitional care if a child’s enrollment 
ceases for any reason. 
(e) EVALUATION; REPORT.— 
(1) EVALUATION.—The Secretary, using the 
criteria described in section 1866E(g)(1) of the So-
cial Security Act (as inserted by section 1123), shall 
conduct an evaluation of the pilot program under 
this section. 
(2) REPORT.—Not later than 60 days after the 
date of completion of the evaluation under para-
graph (1), the Secretary shall submit to Congress 
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and make available to the public a report on the 
findings of the evaluation under such paragraph. 
(f) FUNDING.—The additional Federal financial par-
ticipation resulting from the implementation of the pilot 
program under this section may not exceed in the aggre-
gate $1,235,000,000 over the 5-year period of the pro-
gram. 
SEC. 1723. TRANSLATION OR INTERPRETATION SERVICES. 
(a) IN GENERAL.—Section 1903(a)(2)(E) of the So-
cial Security Act (42 U.S.C. 1396b(a)(2)), as added by 
section 201(b)(2)(A) of the Children’s Health Insurance 
Program Reauthorization Act of 2009 (Public Law 111– 
3), is amended by inserting ‘‘and other individuals’’ after 
‘‘children of families’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to payment for translation or 
interpretation services furnished on or after January 1, 
2010. 
SEC. 1724. OPTIONAL COVERAGE FOR FREESTANDING 
BIRTH CENTER SERVICES. 
(a) IN GENERAL.—Section 1905 of the Social Secu-
rity Act (42 U.S.C. 1396d), as amended by section 
1713(a), is amended— 
(1) in subsection (a)— 
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(A) by redesignating paragraph (29) as 
paragraph (30); 
(B) in paragraph (28), by striking at the 
end ‘‘and’’; and 
(C) by inserting after paragraph (28) the 
following new paragraph: 
‘‘(29) freestanding birth center services (as de-
fined in subsection (l)(3)(A)) and other ambulatory 
services that are offered by a freestanding birth cen-
ter (as defined in subsection (l)(3)(B)) and that are 
otherwise included in the plan; and’’; and 
(2) in subsection (l), by adding at the end the 
following new paragraph: 
‘‘(3)(A) The term ‘freestanding birth center services’ 
means services furnished to an individual at a freestanding 
birth center (as defined in subparagraph (B)), including 
by a licensed birth attendant (as defined in subparagraph 
(C)) at such center. 
‘‘(B) The term ‘freestanding birth center’ means a 
health facility— 
‘‘(i) that is not a hospital; and 
‘‘(ii) where childbirth is planned to occur away 
from the pregnant woman’s residence. 
‘‘(C) The term ‘licensed birth attendant’ means an 
individual who is licensed or registered by the State in-
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volved to provide health care at childbirth and who pro-
vides such care within the scope of practice under which 
the individual is legally authorized to perform such care 
under State law (or the State regulatory mechanism pro-
vided by State law), regardless of whether the individual 
is under the supervision of, or associated with, a physician 
or other health care provider. Nothing in this subpara-
graph shall be construed as changing State law require-
ments applicable to a licensed birth attendant.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to items and services furnished on 
or after the date of the enactment of this Act. 
SEC. 1725. INCLUSION OF PUBLIC HEALTH CLINICS UNDER 
THE VACCINES FOR CHILDREN PROGRAM. 
Section 1928(b)(2)(A)(iii)(I) of the Social Security 
Act (42 U.S.C. 1396s(b)(2)(A)(iii)(I)) is amended— 
(1) by striking ‘‘or a rural health clinic’’ and in-
serting ‘‘, a rural health clinic’’; and 
(2) by inserting ‘‘or a public health clinic,’’ 
after ‘‘‘1905(l)(1)),’’. 
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Subtitle D—Coverage 
SEC. 1731. OPTIONAL MEDICAID COVERAGE OF LOW-IN-
COME HIV-INFECTED INDIVIDUALS. 
(a) IN GENERAL.—Section 1902 of the Social Secu-
rity Act (42 U.S.C. 1396a), as amended by section 
1714(a)(1), is amended— 
(1) in subsection (a)(10)(A)(ii)— 
(A) by striking ‘‘or’’ at the end of sub-
clause (XIX); 
(B) by adding ‘‘or’’ at the end of subclause 
(XX); and 
(C) by adding at the end the following: 
‘‘(XXI) who are described in subsection (ii) (re-
lating to HIV-infected individuals);’’; and 
(2) by adding at the end, as amended by sec-
tions 1703 and 1714(a), the following: 
‘‘(ii) individuals described in this subsection are indi-
viduals not described in subsection (a)(10)(A)(i)— 
‘‘(1) who have HIV infection; 
‘‘(2) whose income (as determined under the 
State plan under this title with respect to disabled 
individuals) does not exceed the maximum amount 
of income a disabled individual described in sub-
section (a)(10)(A)(i) may have and obtain medical 
assistance under the plan; and 
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‘‘(3) whose resources (as determined under the 
State plan under this title with respect to disabled 
individuals) do not exceed the maximum amount of 
resources a disabled individual described in sub-
section (a)(10)(A)(i) may have and obtain medical 
assistance under the plan.’’. 
(b) ENHANCED MATCH.—The first sentence of sec-
tion 1905(b) of such Act (42 U.S.C. 1396d(b)) is amended 
by striking ‘‘section 1902(a)(10)(A)(ii)(XVIII)’’ and in-
serting 
‘‘subclause 
(XVIII) 
or 
(XX) 
of 
section 
1902(a)(10)(A)(ii)’’. 
(c) CONFORMING AMENDMENTS.—Section 1905(a) of 
such Act (42 U.S.C. 1396d(a)) is amended, in the matter 
preceding paragraph (1)— 
(1) by striking ‘‘or’’ at the end of clause (xii); 
(2) by adding ‘‘or’’ at the end of clause (xiii); 
and 
(3) by inserting after clause (xiii) the following: 
‘‘(xiv) individuals described in section 
1902(ii),’’. 
(d) EXEMPTION FROM FUNDING LIMITATION FOR 
TERRITORIES.—Section 1108(g) of the Social Security 
Act (42 U.S.C. 1308(g)) is amended by adding at the end 
the following: 
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‘‘(5) DISREGARDING MEDICAL ASSISTANCE FOR 
OPTIONAL
LOW-INCOME
HIV-INFECTED
INDIVID-
UALS.—The limitations under subsection (f) and the 
previous provisions of this subsection shall not apply 
to amounts expended for medical assistance for indi-
viduals described in section 1902(ii) who are only el-
igible for such assistance on the basis of section 
1902(a)(10)(A)(ii)(XX).’’. 
(e) EFFECTIVE DATE; SUNSET.—The amendments 
made by this section shall apply to expenditures for cal-
endar quarters beginning on or after the date of the enact-
ment of this Act, and before January 1, 2013, without 
regard to whether or not final regulations to carry out 
such amendments have been promulgated by such date. 
SEC. 1732. EXTENDING TRANSITIONAL MEDICAID ASSIST-
ANCE (TMA). 
Sections 1902(e)(1)(B) and 1925(f) of the Social Se-
curity Act (42 U.S.C. 1396a(e)(1)(B), 1396r–6(f)), as 
amended by section 5004(a)(1) of the American Recovery 
and Reinvestment Act of 2009 (Public Law 111–5), are 
each amended by striking ‘‘December 31, 2010’’ and in-
serting ‘‘December 31, 2012’’. 
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SEC. 1733. REQUIREMENT OF 12-MONTH CONTINUOUS COV-
ERAGE UNDER CERTAIN CHIP PROGRAMS. 
(a) IN GENERAL.—Section 2102(b) of the Social Se-
curity Act (42 U.S.C. 1397bb(b)) is amended by adding 
at the end the following new paragraph: 
‘‘(6) REQUIREMENT
FOR
12-MONTH
CONTIN-
UOUS ELIGIBILITY.—In the case of a State child 
health plan that provides child health assistance 
under this title through a means other than de-
scribed in section 2101(a)(2), the plan shall provide 
for implementation under this title of the 12-month 
continuous eligibility option described in section 
1902(e)(12) for targeted low-income children whose 
family income is below 200 percent of the poverty 
line.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to determinations (and redeter-
minations) of eligibility made on or after January 1, 2010. 
Subtitle E—Financing 
SEC. 1741. PAYMENTS TO PHARMACISTS. 
(a) PHARMACY REIMBURSEMENT LIMITS.— 
(1) IN GENERAL.—Section 1927(e) of the So-
cial Security Act (42 U.S.C. 1396r–8(e)) is amend-
ed— 
(A) by striking paragraph (5) and insert-
ing the following: 
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‘‘(5) USE OF AMP IN UPPER PAYMENT LIM-
ITS.—The Secretary shall calculate the Federal 
upper reimbursement limit established under para-
graph (4) as 130 percent of the weighted average 
(determined on the basis of manufacturer utiliza-
tion) of monthly average manufacturer prices.’’. 
(2) 
DEFINITION
OF
AMP.—Section 
1927(k)(1)(B) of such Act (42 U.S.C. 1396r– 
8(k)(1)(B)) is amended— 
(B) in the heading, by striking ‘‘EX-
TENDED
TO
WHOLESALERS’’ and inserting 
‘‘AND OTHER PAYMENTS’’; and 
(C) by striking ‘‘regard to’’ and all that 
follows through the period and inserting the fol-
lowing: ‘‘regard to— 
‘‘(i) customary prompt pay discounts 
extended to wholesalers; 
‘‘(ii) bona fide service fees paid by 
manufacturers; 
‘‘(iii) reimbursement by manufactur-
ers for recalled, damaged, expired, or oth-
erwise unsalable returned goods, including 
reimbursement for the cost of the goods 
and any reimbursement of costs associated 
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with return goods handling and processing, 
reverse logistics, and drug destruction; 
‘‘(iv) sales directly to, or rebates, dis-
counts, or other price concessions provided 
to, pharmacy benefit managers, managed 
care organizations, health maintenance or-
ganizations, insurers, mail order phar-
macies that are not open to all members of 
the public, or long term care providers, 
provided that these rebates, discounts, or 
price concessions are not passed through to 
retail pharmacies; 
‘‘(v) sales directly to, or rebates, dis-
counts, or other price concessions provided 
to, hospitals, clinics, and physicians, unless 
the drug is an inhalation, infusion, or 
injectable drug, or unless the Secretary de-
termines, as allowed for in Agency admin-
istrative procedures, that it is necessary to 
include such sales, rebates, discounts, and 
price concessions in order to obtain an ac-
curate AMP for the drug. Such a deter-
mination shall not be subject to judicial re-
view; or 
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‘‘(vi) rebates, discounts, and other 
price concessions required to be provided 
under agreements under subsections (f) 
and (g) of section 1860D–2(f).’’. 
(3) MANUFACTURER
REPORTING
REQUIRE-
MENTS.—Section 1927(b)(3) of such Act (42 U.S.C. 
1396r–8(b)(3)) is amended— 
(A) in subparagraph (A), by adding at the 
end the following new clause: 
‘‘(iv) not later than 30 days after the 
last day of each month of a rebate period 
under the agreement, on the manufactur-
er’s total number of units that are used to 
calculate the monthly average manufac-
turer price for each covered outpatient 
drug.’’. 
(4) AUTHORITY
TO
PROMULGATE
REGULA-
TION.—The Secretary of Health and Human Serv-
ices may promulgate regulations to clarify the re-
quirements for upper payment limits and for the de-
termination of the average manufacturer price in an 
expedited manner. Such regulations may become ef-
fective on an interim final basis, pending oppor-
tunity for public comment. 
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(5) PHARMACY
REIMBURSEMENTS
THROUGH 
DECEMBER 31, 2010.—The specific upper limit under 
section 447.332 of title 42, Code of Federal Regula-
tions (as in effect on December 31, 2006) applicable 
to payments made by a State for multiple source 
drugs under a State Medicaid plan shall continue to 
apply through December 31, 2010, for purposes of 
the availability of Federal financial participation for 
such payments. 
(b) DISCLOSURE OF PRICE INFORMATION TO THE 
PUBLIC.—Section 1927(b)(3) of such Act (42 U.S.C. 
1396r–8(b)(3)) is amended— 
(1) in subparagraph (A)— 
(A) in clause (i), in the matter preceding 
subclause (I), by inserting ‘‘month of a’’ after 
‘‘each’’; and 
(B) in the last sentence, by striking ‘‘and 
shall,’’ and all that follows through the period; 
and 
(2) in subparagraph (D)(v), by inserting 
‘‘weighted’’ before ‘‘average manufacturer prices’’. 
SEC. 1742. PRESCRIPTION DRUG REBATES. 
(a) ADDITIONAL REBATE FOR NEW FORMULATIONS 
OF EXISTING DRUGS.— 
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(1) IN
GENERAL.—Section 1927(c)(2) of the 
Social Security Act (42 U.S.C. 1396r–8(c)(2)) is 
amended by adding at the end the following new 
subparagraph: 
‘‘(C) TREATMENT
OF
NEW
FORMULA-
TIONS.—In the case of a drug that is a line ex-
tension of a single source drug or an innovator 
multiple source drug that is an oral solid dos-
age form, the rebate obligation with respect to 
such drug under this section shall be the 
amount computed under this section for such 
new drug or, if greater, the product of— 
‘‘(i) the average manufacturer price of 
the line extension of a single source drug 
or an innovator multiple source drug that 
is an oral solid dosage form; 
‘‘(ii) the highest additional rebate 
(calculated as a percentage of average 
manufacturer price) under this section for 
any strength of the original single source 
drug or innovator multiple source drug; 
and 
‘‘(iii) the total number of units of 
each dosage form and strength of the line 
extension product paid for under the State 
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plan in the rebate period (as reported by 
the State). 
In this subparagraph, the term ‘line extension’ 
means, with respect to a drug, an extended re-
lease formulation of the drug.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to drugs dispensed 
after December 31, 2009. 
(b) INCREASE MINIMUM REBATE PERCENTAGE FOR 
SINGLE SOURCE DRUGS.—Section 1927(c)(1)(B)(i) of the 
Social Security Act (42 U.S.C. 1396r–8(c)(1)(B)(i)) is 
amended— 
(1) in subclause (IV), by striking ‘‘and’’ at the 
end; 
(2) in subclause (V)— 
(A) by inserting ‘‘and before January 1, 
2010’’ after ‘‘December 31, 1995,’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; and 
(3) by adding at the end the following new sub-
clause: 
‘‘(VI) after December 31, 2009, 
is 22.1 percent.’’. 
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SEC. 1743. EXTENSION OF PRESCRIPTION DRUG DIS-
COUNTS TO ENROLLEES OF MEDICAID MAN-
AGED CARE ORGANIZATIONS. 
(a) IN GENERAL.—Section 1903(m)(2)(A) of the So-
cial Security Act (42 U.S.C. 1396b(m)(2)(A)) is amend-
ed— 
(1) in clause (xi), by striking ‘‘and’’ at the end; 
(2) in clause (xii), by striking the period at the 
end and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(xiii) such contract provides that the entity 
shall report to the State such information, on such 
timely and periodic basis as specified by the Sec-
retary, as the State may require in order to include, 
in the information submitted by the State to a man-
ufacturer under section 1927(b)(2)(A), information 
on covered outpatient drugs dispensed to individuals 
eligible for medical assistance who are enrolled with 
the entity and for which the entity is responsible for 
coverage of such drugs under this subsection.’’. 
(b) CONFORMING AMENDMENTS.—Section 1927 of 
such Act (42 U.S.C. 1396r-8) is amended—— 
(1) in the first sentence of subsection (b)(1)(A), 
by inserting before the period at the end the fol-
lowing: ‘‘, including such drugs dispensed to individ-
uals enrolled with a medicaid managed care organi-
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zation if the organization is responsible for coverage 
of such drugs’’; 
(2) in subsection (b)(2), by adding at the end 
the following new subparagraph: 
‘‘(C) REPORTING ON MMCO DRUGS.—On a 
quarterly basis, each State shall report to the 
Secretary the total amount of rebates in dollars 
received from pharmacy manufacturers for 
drugs provided to individuals enrolled with 
Medicaid managed care organizations that con-
tract under section 1903(m).’’; and 
(3) in subsection (j)— 
(A) in the heading by striking ‘‘EXEMP-
TION’’ and inserting ‘‘SPECIAL RULES’’; and 
(B) in paragraph (1), by striking ‘‘not’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section take effect on July 1, 2010, and shall apply 
to drugs dispensed on or after such date, without regard 
to whether or not final regulations to carry out such 
amendments have been promulgated by such date. 
SEC. 1744. PAYMENTS FOR GRADUATE MEDICAL EDU-
CATION. 
(a) IN GENERAL.—Section 1905 of the Social Secu-
rity Act (42 U.S.C. 1396d), as amended by sections 
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1701(a)(2), 1711(a), and 1713(a), is amended by adding 
at the end the following new subsection: 
‘‘(bb) PAYMENT
FOR GRADUATE MEDICAL EDU-
CATION.— 
‘‘(1) IN GENERAL.—The term ‘medical assist-
ance’ includes payment for costs of graduate medical 
education consistent with this subsection, whether 
provided in or outside of a hospital. 
‘‘(2) SUBMISSION OF INFORMATION.—For pur-
poses 
of 
paragraph 
(1) 
and 
section 
1902(a)(13)(A)(v), payment for such costs is not 
consistent with this subsection unless— 
‘‘(A) the State submits to the Secretary, in 
a timely manner and on an annual basis speci-
fied by the Secretary, information on total pay-
ments for graduate medical education and how 
such payments are being used for graduate 
medical education, including— 
‘‘(i) the institutions and programs eli-
gible for receiving the funding; 
‘‘(ii) the manner in which such pay-
ments are calculated; 
‘‘(iii) the types and fields of education 
being supported; 
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‘‘(iv) the workforce or other goals to 
which the funding is being applied; 
‘‘(v) State progress in meeting such 
goals; and 
‘‘(vi) such other information as the 
Secretary determines will assist in carrying 
out paragraphs (3) and (4); and 
‘‘(B) such expenditures are made con-
sistent with such goals and requirements as are 
established under paragraph (4). 
‘‘(3) REVIEW OF INFORMATION.—The Secretary 
shall make the information submitted under para-
graph (2) available to the Advisory Committee on 
Health Workforce Evaluation and Assessment (es-
tablished under section 2261 of the Public Health 
Service Act). The Secretary and the Advisory Com-
mittee shall independently review the information 
submitted under paragraph (2), taking into account 
State and local workforce needs. 
‘‘(4) SPECIFICATION OF GOALS AND REQUIRE-
MENTS.—The Secretary shall specify by rule, ini-
tially published by not later than December 31, 
2011— 
‘‘(A) program goals for the use of funds 
described in paragraph (1), taking into account 
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recommendations of the such Advisory Com-
mittee and the goals for approved medical resi-
dency training programs described in section 
1886(h)(1)(B); and 
‘‘(B) requirements for use of such funds 
consistent with such goals. 
Such rule may be effective on an interim basis pend-
ing revision after an opportunity for public com-
ment.’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
1902(a)(13)(A) of such Act (42 U.S.C. 1396a(a)(13)(A)) 
is amended— 
(1) by striking ‘‘and’’ at the end of clause (iii); 
(2) by striking ‘‘; and’’ and inserting ‘‘, and’’; 
and 
(3) by adding at the end the following new 
clause: 
‘‘(v) in the case of hospitals and at 
the option of a State, such rates may in-
clude, to the extent consistent with section 
1905(bb), payment for graduate medical 
education; and’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. Nothing in this section shall be construed as 
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affecting payments made before such date under a State 
plan under title XIX of the Social Security Act for grad-
uate medical education. 
Subtitle F—Waste, Fraud, and 
Abuse 
SEC. 1751. HEALTH-CARE ACQUIRED CONDITIONS. 
(a) MEDICAID NON-PAYMENT FOR CERTAIN HEALTH 
CARE-ACQUIRED CONDITIONS.—Section 1903(i) of the 
Social Security Act (42 U.S.C. 1396b(i)) is amended— 
(1) by striking ‘‘or’’ at the end of paragraph 
(23); 
(2) by striking the period at the end of para-
graph (24) and inserting ‘‘; or’’; and 
(3) by inserting after paragraph (24) the fol-
lowing new paragraph: 
‘‘(25) with respect to amounts expended for 
services related to the presence of a condition that 
could be identified by a secondary diagnostic code 
described in section 1886(d)(4)(D)(iv) and for any 
health care acquired condition determined as a non- 
covered service under title XVIII.’’. 
(b) APPLICATION TO CHIP.—Section 2107(e)(1)(G) 
of such Act (42 U.S.C. 1397gg(e)(1)(G)) is amended by 
striking ‘‘and (17)’’ and inserting ‘‘(17), and (25)’’. 
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(c) PERMISSION TO INCLUDE ADDITIONAL HEALTH 
CARE-ACQUIRED CONDITIONS.—Nothing in this section 
shall prevent a State from including additional health 
care-acquired conditions for non-payment in its Medicaid 
program under title XIX of the Social Security Act. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to discharges occurring on or after 
January 1, 2010. 
SEC. 1752. EVALUATIONS AND REPORTS REQUIRED UNDER 
MEDICAID INTEGRITY PROGRAM. 
Section 1936(c)(2)) of the Social Security Act (42 
U.S.C. 1396u–7(c)(2)) is amended— 
(1) by redesignating subparagraph (D) as sub-
paragraph (E); and 
(2) by inserting after subparagraph (C) the fol-
lowing new subparagraph: 
‘‘(D) For the contract year beginning in 
2011 and each subsequent contract year, the 
entity provides assurances to the satisfaction of 
the Secretary that the entity will conduct peri-
odic evaluations of the effectiveness of the ac-
tivities carried out by such entity under the 
Program and will submit to the Secretary an 
annual report on such activities.’’. 
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802 
SEC. 1753. REQUIRE PROVIDERS AND SUPPLIERS TO 
ADOPT 
PROGRAMS 
TO 
REDUCE 
WASTE, 
FRAUD, AND ABUSE. 
Section 1902(a) of such Act (42 U.S.C. 42 U.S.C. 
1396a(a)), as amended by sections 1631(b)(1) and 1703, 
is further amended— 
(1) in paragraph (74), by striking at the end 
‘‘and’’; 
(2) in paragraph (75), by striking at the end 
the period and inserting ‘‘; and’’; and 
(3) by inserting after paragraph (75) the fol-
lowing new paragraph: 
‘‘(76) provide that any provider or supplier 
(other than a physician or nursing facility) providing 
services under such plan shall, subject to paragraph 
(5) of section 1874(d), establish a compliance pro-
gram described in paragraph (1) of such section in 
accordance with such section.’’. 
SEC. 1754. OVERPAYMENTS. 
(a) IN GENERAL.—Section 1903(d)(2)(C) of the So-
cial Security Act (42 U.S.C. 1396b(d)(2)(C)) is amended 
by inserting ‘‘(or 1 year in the case of overpayments due 
to fraud)’’ after ‘‘60 days’’. 
(b) EFFECTIVE DATE.—In the case overpayments 
discovered on or after the date of the enactment of this 
Act. 
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SEC. 1755. MANAGED CARE ORGANIZATIONS. 
(a) MINIMUM MEDICAL LOSS RATIO.— 
(1) MEDICAID.—Section 1903(m)(2)(A) of the 
Social Security Act (42 U.S.C. 1396b(m)(2)(A)), as 
amended by section 1743(a)(3), is amended— 
(A) by striking ‘‘and’’ at the end of clause 
(xii); 
(B) by striking the period at the end of 
clause (xiii) and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
clause: 
‘‘(xiv) such contract has a medical loss ratio, as 
determined in accordance with a methodology speci-
fied by the Secretary that is a percentage (not less 
than 85 percent) as specified by the Secretary.’’. 
(2) CHIP.—Section 2107(e)(1) of such Act (42 
U.S.C. 1397gg(e)(1)) is amended— 
(A) by redesignating subparagraphs (H) 
through (L) as subparagraphs (I) through (M); 
and 
(B) by inserting after subparagraph (G) 
the following new subparagraph: 
‘‘(H) Section 1903(m)(2)(A)(xiv) (relating 
to application of minimum loss ratios), with re-
spect to comparable contracts under this title.’’. 
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(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to contracts entered 
into or renewed on or after July 1, 2010. 
(b) PATIENT ENCOUNTER DATA.— 
(1) IN
GENERAL.—Section 1903(m)(2)(A)(xi) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1396b(m)(2)(A)(xi)) is amended by inserting ‘‘and 
for the provision of such data to the State at a fre-
quency and level of detail to be specified by the Sec-
retary’’ after ‘‘patients’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply with respect to contract 
years beginning on or after January 1, 2010. 
SEC. 1756. TERMINATION OF PROVIDER PARTICIPATION 
UNDER MEDICAID AND CHIP IF TERMINATED 
UNDER MEDICARE OR OTHER STATE PLAN 
OR CHILD HEALTH PLAN. 
(a) 
STATE
PLAN
REQUIREMENT.—Section 
1902(a)(39) of the Social Security Act (42 U.S.C. 42 
U.S.C. 1396a(a)) is amended by inserting after ‘‘1128A,’’ 
the following: ‘‘terminate the participation of any indi-
vidual or entity in such program if (subject to such excep-
tions are are permitted with respect to exclusion under 
sections 1128(b)(3)(C) and 1128(d)(3)(B)) participation 
of such individual or entity is terminated under title 
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XVIII, any other State plan under this title, or any child 
health plan under title XXI,’’. 
(b) APPLICATION TO CHIP.—Section 2107(e)(1)(A) 
of such Act (42 U.S.C. 1397gg(e)(1)(A)) is amended by 
inserting before the period at the end the following: ‘‘and 
section 1902(a)(39) (relating to exclusion and termination 
of participation)’’. 
(c) EFFECTIVE DATE.— 
(1) Except as provided in paragraph (2), the 
amendments made by this section shall apply to 
services furnished on or after JJanuary 1, 2011, 
without regard to whether or not final regulations to 
carry out such amendments have been promulgated 
by such date. 
(2) In the case of a State plan for medical as-
sistance under title XIX of the Social Security Act 
or a child health plan under title XXI of such Act 
which the Secretary of Health and Human Services 
determines requires State legislation (other than leg-
islation appropriating funds) in order for the plan to 
meet the additional requirement imposed by the 
amendments made by this section, the State plan or 
child health plan shall not be regarded as failing to 
comply with the requirements of such title solely on 
the basis of its failure to meet this additional re-
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ance Program Reauthorization Act of 2009 (Public Law 
111–3) is amended by striking ‘‘legal residents’’ and in-
serting ‘‘lawfully residing in the United States’’. 
(e) TECHNICAL CORRECTION TO SECTION 1905 OF 
THE SOCIAL SECURITY ACT.—Section 1905(a) of the So-
cial Security Act (42 U.S.C. 1396d(a)) is amended by in-
serting ‘‘or the care and services themselves, or both’’ be-
fore ‘‘(if provided in or after’’. 
(f) CLARIFYING AMENDMENT TO SECTION 1115 OF 
THE SOCIAL SECURITY ACT.—Section 1115(a) of the So-
cial Security Act (42 U.S.C. 1315(a)) is amended by add-
ing at the end the following: ‘‘If an experimental, pilot, 
or demonstration project that relates to title XIX is ap-
proved pursuant to any part of this subsection, such 
project shall be treated as part of the State plan, all med-
ical assistance provided on behalf of any individuals af-
fected by such project shall be medical assistance provided 
under the State plan, and all provisions of this Act not 
explicitly waived in approving such project shall remain 
fully applicable to all individuals receiving benefits under 
the State plan.’’. 
SEC. 1782. EXTENSION OF QI PROGRAM. 
(a) IN GENERAL.—Section 1902(a)(10)(E)(iv) of the 
Social Security Act (42 U.S.C. 1396b(a)(10)(E)(iv)) is 
amended— 
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the State shall identify and prioritize serving 
communities that are in high need of such serv-
ices, especially communities with a high propor-
tion of low-income families or a high incidence 
of child maltreatment; 
‘‘(B) the State will reserve 5 percent of the 
grant funds for training and technical assist-
ance to the home visitation programs using 
such funds; 
‘‘(C) in supporting home visitation pro-
grams using funds provided under this section, 
the State will promote coordination and collabo-
ration with other home visitation programs (in-
cluding programs funded under title XIX) and 
with other child and family services, health 
services, income supports, and other related as-
sistance; 
‘‘(D) home visitation programs supported 
using such funds will, when appropriate, pro-
vide referrals to other programs serving chil-
dren and families; and 
‘‘(E) the State will comply with subsection 
(i), and cooperate with any evaluation con-
ducted under subsection (j). 
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